Lloyd’s of London Syndicate 2357, the first syndicate to enter the Lloyd’s reinsurance market backed by an insurance-linked securities player , Nephila Capital, has an increased capacity of £72.5m for 2014, according to a report by economists at Moody’s Analytics.
Syndicate 2357 is 100% backed by the world’s largest manager of insurance-linked securities and reinsurance linked investments, Nephila Capital.
The syndicate was launched in 2013 and began underwriting in the second half of the year with a capacity of £9m. The business written by Syndicate 2357 is unique to Lloyd’s, in that it is all industry loss warranties written on a county basis, often known as CWIL (county-weighted industry loss).
Nephila had always targeted increasing the capacity of Syndicate 2357 for 2014. According to economists at Moody’s the syndicates stamp capacity has been lifted to £72.5m for the 2014 underwriting year. This is a small piece of the $10 billion, or so, of assets that Nephila Capital manages, but a meaningful amount of industry-loss business, written with third-party capital, coming into Lloyd’s.
The book of business underwritten at Syndicate 2357 is primarily based on renewals of Nephila Capital’s existing account, previously written outside of the Lloyd’s market, according to Moody’s. It makes sense for Nephila to renew business in Lloyd’s which is perhaps a better fit within the market or where cedents have requested it.
Operating at Lloyd’s brings various benefits to Nephila Capital, not least access to business and a new marketing platform for its products. The Lloyd’s market gives Nephila a way to utilise its investors assets to underwrite business which perhaps may not have come its way as a collateralized reinsurer, given Lloyd’s rated nature and the long-standing reputation of the market.
For Lloyd’s, Nephila Capital brings a fresh product in its CWIL approach and a source of capital from outside of the market which will boost overall capacity at the market. We’d expect to see further increases in capacity for Syndicate 2357 over the coming years and it will be fascinating to see how this develops as part of Nephila’s business strategy going forwards.