Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Nephila reapproved as Blackstone sub-advisor after Markel acquisition


Nephila Capital, the largest investment fund manager of insurance-linked securities (ILS) and reinsurance linked assets, has been reapproved as a sub-advisor for a multi-strategy fund by asset management giant Blackstone.

Nephila Capital LogoBlackstone Alternative Asset Management, the hedge fund solutions group of Blackstone which has around $78 billion under management, had first added Nephila Capital as a sub-advisor to one of its multi-manager alternative investment funds back in 2013.

The firm then added Nephila to another of its alternative strategies, the Blackstone Alternative Multi-Strategy Fund, in 2015, as the asset management giant looked to deliver ILS returns as part of its alternatives platform using Nephila Capital’s expertise and deep reach into reinsurance and risk markets.

With Nephila Capital having recently been acquired by Markel Corporation, Blackstone had to take another look at the ILS fund manager and reapprove its inclusion as a sub-advisor to the Blackstone Alternative Multi-Strategy Fund.

Following the completion of the acquisition of Nephila by Markel, the change of control meant that the original sub-advisory agreement with Nephila had to be terminated.

But on the same day it was terminated Blackstone entered into a fresh sub-advisory agreement with Nephila Capital, showing its commitment to channeling a portion of its investors funds into the ILS and reinsurance market.

The Board and trustees of the Blackstone multi-strategy alternatives fund voted to continue the arrangement, after assessing numerous factors, including Nephila’s performance, the fees associated with the allocation and the quality of its service.

The reapproval is a vote of confidence in Nephila’s ability to remain an independent investment management firm under Markel Corporation ownership and shows Blackstone’s confidence that the change of ownership does not change the service it expects to receive.

Neither does the change of ownership take away from the benefits of adding the allocation to ILS within its multi-strategy fund, as the low-correlation and diversifying nature of the asset class remain key to this strategy.

Nephila Capital will therefore continue to manage a portion of the Blackstone fund’s assets, allocating them to ILS and reinsurance linked investments.

Given the size of Blackstone and its reach into institutional and high-net worth investment markets, the relationship is likely a key one for Nephila too.

Register today for ILS Asia 2023, our next insurance-linked securities (ILS) market conference. Held in Singapore, July 13th, 2023.

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