Lloyd’s of London Syndicate 2357, the first syndicate to enter the Lloyd’s reinsurance market backed by an established insurance-linked securities player in Nephila Capital, reported its 2013 results recently which show a profitable start for the unique Lloyd’s business.
Syndicate 2357 is 100% backed by the world’s largest manager of insurance-linked securities and reinsurance linked investments, Nephila Capital. With approximately $10 billion of assets under management, being the first ILS manager to access LLoyd’s business directly in this way looks like an increasingly smart move as Lloyd’s itself now looks set to become more welcoming to third-party sources of capital which could mean others will attempt to follow-suit.
Nephila Syndicate 2357 launched in 2013 but only began underwriting in the second half of the year, putting £9m of capacity to work. The syndicates reports reflect this, reporting just under $14m of gross written premiums, all capitalising property catastrophe reinsurance premiums for Nephila Capital’s County Weighted Industry Loss product.
The syndicate reported just under $2.55m of profit for the financial year, which on the $14m of premiums written is very good. Nephila Syndicate 2357 reported a combined ratio of 34% for 2013, again a good result.
During 2013 the syndicate entered into a stop-loss reinsurance contract costing $8.36m with Nephila Capital’s Poseidon Re, its Class 3 Bermuda reinsurance vehicle, likely an efficient way for Nephila to participate in the business by also providing protection.
Nephila Syndicate 2357 began 2014 with a much larger capacity, with £72.5m available for the 2014 underwriting year. If the syndicate can profit at a similar rate to 2013, which will be largely dependent on industry insured catastrophe losses in 2014, the syndicate will certainly show its worth and we’d expect Nephila would lift the capital again for the following year.