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Money Management

Markel to acquire reinsurance specialist manager Nephila

Markel Corp. announced Friday it will acquire reinsurance specialist money manager Nephila Holdings.

Nephila manages $12 billion in a range of investment strategies focused on instruments including insurance-linked securities, catastrophe bonds, insurance swaps and weather derivatives.

The firm will continue to operate independently under its own name, led by current co-CEOs Greg Hagood and Frank Majors.

"There won't be any integration," Mr. Hagood confirmed in an interview, noting, "we'll be left alone and will have more tools at our disposal from Markel."

Terms of the cash deal, which is expected to close in the fourth quarter pending regulatory approval, are not being disclosed, Mr. Hagood said.

Senior executives at Nephila will invest a portion of the proceeds from the sale in the firm's investment funds, furthering the alignment with the firm's investors, which are primarily institutional asset owners, Mr. Hagood added.

The minority ownership stakes in Nephila held by KKR & Co. (24.9%) and Man Group (18.75%) are among the outstanding shares Markel is acquiring.

Messrs. Hagood and Majors have a "proven 20-year track record of success (and) they bring with them an incredibly experienced and talented management team," said Richard R. Whitt III, co-CEO of Markel, in the release, adding "the addition of Nephila to Markel's insurance, reinsurance, insurtech, fronting and existing insurance-linked securities capabilities will enhance and strengthen the breadth and depth of Markel's offerings."

Markel acquired reinsurance specialist CATCo Investment Management in 2015, which now manages $7 billion.

Mr. Hagood said Markel CATCo's reinsurance investment approach is differentiated but complementary to Nephila's strategies and there won't be overlap between the two businesses after Nephila's acquisition is final.