Sale of Nephila Capital’s MGA Velocity Risk to Oaktree completes

The previously announced sale of ILS fund manager Nephila Capital’s managing general agency (MGA) Velocity Risk Underwriters LLC to funds managed by Oaktree Capital Management, L.P. has now completed.

The managing general agency (MGA) operation, which was established and operated by reinsurance, catastrophe, climate and weather risk-linked investment manager Nephila Capital, has been sold to investor Oaktree for an undisclosed sum.

As a catastrophe-focused property and specialty insurance risks managing general agent, Velocity Risk had exclusively sourced business for funds under the management of Nephila Capital.

But now, under new owners, the MGA can expand its ambitions significantly, while Nephila has retained an interest in the company.

Nephila set up and launched its MGA Velocity Risk Underwriters LLC in 2015, as the largest insurance-linked securities (ILS) investment fund manager in the market sought out new routes to gain access to catastrophe exposed property risks more directly.

Velocity was constructed by Nephila as a pipeline for more direct access to primary sources of risk, to provide a more efficient way to deploy Nephila’s third-party investor backed reinsurance capital.

Oaktree Capital Management, L.P., a leading global investment manager specialised in private equity and alternative investments, has now purchased a majority stake in Velocity Risk, with the transaction closing yesterday, February 1st.

Nephila Capital has retained a minority stake in the managing general agent, providing it with both an economic interest and also a relationship that will undoubtedly still see the MGA working alongside the ILS investment manager.

But, now more independent, Velocity Risk will also have the ability to work with a wider range of capital and capacity providers, if it chooses, as it looks to scale up its operations to support the ambitions of its new majority owners Oaktree.

Oaktree has a number of interests in insurance and reinsurance, including as the main backer for retrocession focused collateralized reinsurance investment manager Acacia Holdings Ltd.

Velocity Risk now has an opportunity to continue building out its business with the support of a long-term investor in Oaktree, while still connected to Nephila Capital, but also likely having more freedom to work with other partners and to expand its scope of business as well.

Evercore acted as sole financial adviser and Willkie Farr & Gallagher LLP acted as legal counsel, to Velocity Risk.

TigerRisk Capital Markets & Advisory was the exclusive financial advisor and Debevoise & Plimpton LLP acted as legal counsel, to Oaktree Capital Management.