Markel to shutter Lodgepine after difficult cat quarter
Markel is shutting down its third-party capital vehicle Lodgepine Re, which launched two years ago and began writing business earlier this year, the Richmond-based company announced on Monday.
In a statement, Markel said Lodgepine’s 18 employees had entered a consultation period with the (re)insurer and that Markel would look to redeploy staff elsewhere in its business.
“Despite best efforts and in light of headwinds in the retrocessional ILS market, including a challenging fundraising environment, Lodgepine will cease to write any new business and commence the orderly run-off of its existing portfolio and the return of capital to investors,” the company said.
The news follows Markel reporting $114mn in catastrophe losses in the third quarter, including $68mn tied to its reinsurance operations.
Lodgepine had just gotten off the ground this past summer, after spending two years in development.
The company statement on Monday noted that the retrocessional ILS fund wrote about $230mn in property retrocessional limits in 2021 after getting underway with $98.9mn in investor capital. Markel set up Lodgepine in 2019 and invested $18.9mn of its own capital into the launch.
The move marks a turnaround for Markel, after earlier this month it said it was in the process of migrating its property retro reinsurance book to the ILS fund.
Markel co-CEO Richie Whitt said on the company’s third-quarter earnings call earlier this month that the property reinsurance book transferred to Nephila remains in run off, which contributed to the cat loss toll in Q3.
“After next year, you wouldn't expect those losses.”
He said that the company was in the position to achieve its goals of hitting a 90% combined ratio and double-digit growth for the year and that cutting its cat exposure had helped Markel hit a 93% combined ratio in the quarter, despite the industry toll of Hurricane Ida and the European floods.