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Markel halfway through shift of retro property book to Lodgepine

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Markel has moved roughly half the underwriting risk from its retro property reinsurance book to Lodgepine, with the plan to fully transition the book to the ILS model, the company said on its Q3 earnings call.

After the move, Markel’s participation will be as a minority investor in Lodgepine.

The firm said it had fully transferred its reinsurance property business to Nephila. With some retro and multi-year reinsurance exposure remaining, Markel recognised $68.4mn of its $114.4mn cat losses in the quarter within its reinsurance business, but said the transition of business to Nephila had benefited its result.

Asked about the Q3 catastrophe loss, the company confirmed that it related 70% to Hurricane Ida and 30% to the European flooding.

On ILS revenues, Richard Whitt, co-chief executive at Markel, said: “The Lodgepine impact on the year-to-date ILS results was minimal as the fund only recently launched. For the year, revenues from the ILS operations were up slightly due to continued growth of MGA revenue at Nephila. This was partially offset by lower investment management fees due to lower average AuM.”

Nephila’s AuM dropped by $500mn to $9.3bn in Q3, down from $9.8bn as of 30 June.

Markel reaffirmed on the earnings call that it would return up to $270mn of investor capital to Markel Catco investors in a proposed buyout deal, with the insurer set to recognise up to $75mn of related expense. It will recoup the $270mn as Catco capital is freed up.

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