26 July 2019ILS

Markel builds ILS platform

Markel Corporation is building a new retrocessional insurance linked securities (ILS) fund platform in Bermuda.

The platform will be overseen by Jed Rhoads and Andrew Barnard, global reinsurance executives at Markel. It will comprise of a reinsurance company, a fund entity and an investment manager, allowing Markel to expand on its current range of ILS capabilities, drawing on resources across the Markel organisation.

Initial product offerings are expected to include a property catastrophe retrocessional investment, ahead of the 2020 renewal period, while the fund is expected to offer cedants a suite of property retrocession products. Coverage will be provided either on a collateralised basis, written by the new reinsurance company, or on a rated paper basis, written by Markel’s existing class 4 Bermuda-based licensed insurance company, Markel Bermuda Limited, or a combination of both.

Richard Whitt, co-chief executive officer at Markel, said the company is “tremendously optimistic about the future of the ILS market.” The platform will expand Markel's capabilities in ILS, complementing its existing Nephila and State National operations, he added.

"The 2020 Retro Fund is expected to provide investors with access to property catastrophe retrocession exposure via a single-entry point and platform, and we expect it will additionally present a convenient and compelling offering to both our cedants and brokers," said Whitt.

Meanwhile, Markel CATCo Investment Management will cease accepting new investments in Markel CATCo Reinsurance Fund, and will not write any new business through Markel CATCo Re.

Markel CATCo will commence the orderly run-off of the existing portfolio, which is expected to take approximately three years. The fund will return capital to its investors, including the CATCo Reinsurance Opportunities Fund, as such capital becomes available. Assets will continue to be subject to side pockets.