Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Nephila Capital in 10% follow-form arrangement with Amwins


One of the interesting arrangements which was revealed at the SIFMA conference in New York last week, was the fact that the largest insurance-linked asset manager Nephila Capital has an arrangement to provide risk capital backing business through wholesale broker Amwins.

The arrangement, which had been rumoured in the market for some time, is being likened to a “follow-form” facility, where by Nephila Capital will follow the underwriting of property insurance covers brokered through Amwins. Nephila is said to be taking a 10% share of property deals transacted, with terms set by the lead underwriters in each case.

This arrangement will help Nephila to put even more of its risk capital to work backing property business, helping it to remain diversified and to become a reinsurance capital provider to business which is not always under as much pressure as, say, Florida property catastrophe risks.

The Amwins business will help Nephila expand the use of its risk capital into U.S. insurance regions where traditional ILS relationships may not have enabled it to expand previously.

Speakers at the SIFMA event said that the arrangement involves Allianz subsidiary Interstate Fire & Casualty, which will provide the fronting paper for it. Allianz is known for working with Nephila regularly to help the ILS capital manager gain access to risks.

For Nephila, arrangements such as this, and the State National one, allow its third-party investor sourced risk capital to be put forwards as catastrophe reinsurance capacity to back fronting carriers, thus enabling the world’s largest ILS manager to access the returns of primary insurance more directly.

As the property catastrophe reinsurance market becomes increasingly competitive, it is expected that large ILS managers will continue to find new ways to put capacity to work, working alongside fronting carriers and MGA’s in the U.S. insurance market.

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