Nephila specialty Syndicate 2358 profits in first-year, targets 80% stamp increase

Insurance and reinsurance linked investment manager Nephila Capital saw its specialty lines focused Syndicate 2358 at Lloyd’s deliver a profit in its first year of trading, with an 88.3% combined ratio.

For its second underwriting year, 2023, the Nephila specialty Syndicate 2358 will have an 80% increase in stamp capacity, allowing it write significantly more business across its balanced specialty lines approach.

Nephila launched Syndicate 2358 at Lloyd’s as its first vehicle with a true specialty lines of insurance and reinsurance underwriting focus, as the investment manager looked to expand its sourcing of risk through the London marketplace.

The syndicate was launched for the 2022 underwriting year and over the course of it underwrote a balanced book, across lines including casualty, motor, marine, aviation, property and reinsurance.

In fact, while there is a lot of discussion of casualty insurance-linked securities (ILS) at this time, Nephila’s largest line of business written in the syndicate was casualty risk, demonstrating the appetite to source longer-tailed business and find a way to enable its investor base to access those returns in an efficient manner.

Across Nephila’s Syndicate 2358, almost $48.6 million of premiums were written in 2022, delivering $2.3 million of profit against a 48.6% loss ratio and 39.7% expense ratio, for the combined ratio of 88.3%.

For a first year underwriting result in the Lloyd’s market that is a good result, although given the longer-tailed nature of many of the risks underwritten in syndicate 2358 it will be some time before a true result of the underwriting year is known, 24 months before the first forecasts.

The syndicate is planned for growth in 2023, across the general direct insurance and reinsurance specialty lines available in the Lloyd’s market.

For 2022, Nephila Syndicate 2358 had a stamp capacity of £50 million (US $60 million), but for the coming year that has been raised by 80% to £90 million (around US $112m).

It’s a good start to the specialty lines syndicate at Lloyd’s and Nephila’s investors backing the structure will benefit from a positive return, while the future growth of the syndicate in 2023 appears assured through the higher stamp capacity now available to underwrite with.