Two of the Lloyd’s syndicates operated by specialist ILS investment manager Nephila Capital are set to provide capacity support to a new property treaty consortium launched by MS Amlin, with data centre risk underwriting said to be a key focus for the new venture.This morning, MS Amlin announced the launch of what it calls “an industry-first consortium to boost property treaty capacity for all property Per Risk lines.” This consortium is expected to increase MS Amlin’s maximum line size to $67.5 million for this business, while also simplifying placement for brokers and bringing new capacity to Lloyd’s.“This additional capacity is expected to be particularly relevant for global data centres, where demand for higher limits continues to grow,” MS Amlin said.MS Amlin will act as lead underwriter for the consortium, retaining authority for underwriting and claims, but sitting behind it to boost underwriting capacity are four Lloyd’s syndicates, which include Nephila Syndicate 2358, Nephila Syndicate 2359, Hampden Syndicate 2689 and Apollo Syndicate 1969.

Nephila Capital, the dedicated investment manager focused on the insurance-linked securities (ILS), weather and catastrophe reinsurance space, owns and operates the first two Nephila Syndicate’s.Nephila Syndicate 2358 has a focus on specialty underwriting lines, while has a purer focus on property catastrophe risk.Stephen Price, MS Amlin’s Head of North American Property Reinsurance, commented, “This consortium increases our line size by more than a third, giving brokers access to additional A-rated Lloyd’s capital through a single placement while allowing us to maintain full oversight of underwriting and claims.

“By consolidating Lloyd’s capacity into a single smart follow offering, the consortium will simplify placement for brokers, reduce panel complexity, and ensure consistent terms and claims handling across the placement.“In addition, the facility brings in new and diversified capital into the property treaty market from syndicates not traditionally active in this space, boosting Lloyd’s market capacity overall and increasing the relevance of Lloyd’s pricing and wordings stance in the global market.” For both of the Nephila Capital syndicates, this presents an opportunity to deploy capacity behind a market-leading underwriter, while also allowing them to access opportunities such as the risk transfer required for data centres and digital infrastructure.Both of the syndicates managed by Nephila are backed by capital that flows from its investment fund strategies and by its third-party investors.

Notably, the Hampden and Apollo syndicates also feature third-party capital backing, making this a consortium that will be fuelled in a large part by investor appetite for reinsurance-linked returns.Also showing how the Lloyd’s infrastructure can be a good way for investors to access these kinds of differentiated property risks, that may not be so easy to access via a traditional ILS fund at this stage.Investment in data centre infrastructure is forecast to increase to nearly $7 trillion by 2030, according to McKinsey, which is driving meaningful demand for increased reinsurance capacity and an opportunity for those able to access these risks.

Price added, “The challenge for the market is balancing the scale of capacity required with careful management of accumulation risks.Detailed understanding of exposures and careful risk selection will be essential as this emerging class of business grows.” .All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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