Markel Group has reported an increase in insurance-linked securities (ILS) revenues for 2024 from the managed ILS funds of its Nephila Capital unit, while premiums ceded to Nephila reinsurance structures rose by 55% year-on-year.Expansion of Nephila Capital’s property catastrophe and specialty programs over the course of the year resulted in premium volume fronted for the ILS operation of Markel increasing to more than $1.306 billion in 2024.That represents a 55% increase compared to the almost $841 million in premium fronted for the Nephila ILS business in 2023, which was itself an increase of 52% from $554 million in 2022.That reflects the growing role the Nephila Capital operation plays within the Markel business, as significant catastrophe and specialty risk premium flow to the ILS capital backed reinsurance structures utilised, the returns of which benefit the third-party investors backing them while Markel itself earns ceding fees.

Markel reported that operating revenue for its insurance-linked securities (ILS) business segment, so the Nephila Capital business, rose to just over $127.5 million for full-year 2024, an increase of almost 8% over 2023.Operating income for the ILS segment is reported as just over $41.24 million for the year, which was slightly down on 2023’s $42.34 million.However, Markel noted that its ILS business had benefitted from $31.1 million of management fees recognised due to the release of capital from side pocket reserves in 2023, while there had been no comparable activity in 2024.

Presumably this refers to the arrangement in 2023 that saw Nephila Capital, the insurance-linked securities (ILS) asset manager owned by Markel, .With that one off from 2023 not being repeated, Markel explained that the drivers of higher revenues in 2024 was “primarily attributable to the impact of a higher effective management fee rate in 2024 compared to 2023,” as well as the aforementioned significant growth in premiums fronted for Nephila’s ILS structures.Markel also noted that the higher gross premium volume fronted through its ILS operations in 2024 was “primarily due to growth of Nephila’s property catastrophe and specialty programs.” Finally, Markel also reported an estimated impact from the recent California wildfires, saying that the range of underwriting losses, including the impact of reinstatement premiums, is likely to fall between $90 million and $130 million, pre-tax.

The wildfire event would naturally be expected to affect some of Nephila’s funds and programs, given the ILS manager is the key conduit for property catastrophe premiums within the Markel business.Markel said it will refine its estimate of wildfire losses and refine them for its first-quarter results statement, to be reported after the quarter.Recall that, , to end September 2024 at $7 billion.

.All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.Our can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.