Nephila Capital, the largest investment manager in the insurance-linked securities (ILS) and reinsurance sector, and Allianz Risk Transfer (ART), the specialist alternative risk transfer business division within the Allianz Group, are to continue a mutually beneficial working relationship. The two firms have finalized an agreement which secures another three years of risk capacity for Nephila, according to a press release distributed today.
The agreement will see Allianz Risk Transfer continue to assist Nephila in both its natural catastrophe and weather risk strategies. ART will provide specialist services to Nephila, such as balance sheet access, non-recourse leverage and other flexibility which it says will continue to benefit Nephila’s investors.
It’s a mutually beneficial agreement though, and while it extends and enhances Nephila’s ability to offer a diversified, high quality alternative investment opportunity to its clients, it also offers Allianz Risk Transfer a way to diversify the lines of business it is involved in.
Bill Guffey, Chief Underwriting Officer of Allianz Risk Transfer Group said; “ART and Nephila have been working together from the earliest days of the insurance linked investment fund market. We have consistently been at the forefront of the market’s developments and have mutually benefited from the growth in our respective businesses. We wanted to cement that continuing relationship and send a clear message to our respective shareholders/investors and the market that we are both committed to this business model and its on-going evolution.”
By working with firms like Allianz, Nephila Capital get access to huge balance sheets and the stability associated with one of the world’s largest re/insurance groups, which can only help them to expand their collateralized underwriting and increase their attractiveness for large, institutional investors who have been looking at ILS and catastrophe risk as an asset class.
By formalising this working relationship with a press release today, it perhaps shows the continuing growth in stature and profile of both Nephila Capital and the ILS or reinsurance-linked asset class. With Nephila’s recent move into Lloyd’s by backing a Syndicate and the investment in the firm made by KKR, the ILS fund manager will be receiving an increasing amount of scrutiny from investors. Many of these investors will be new to the ILS asset class and so Nephila demonstrating how it makes its business more robust through relationships such as this will help to promote its services and the asset class as a whole.
As part of a joint statement Nephila’s Management Committee commented; “We are extremely grateful for the significant contributions ART has made to Nephila over the years. They have been an outstanding trading partner for more than 10 years, during which their flexibility and creativity have generated significant value for our investors. We are very appreciative that ART has made this commitment to Nephila, and we look forward to working together for many more years.”