Nephila Holdings Ltd, the parent company of the world’s largest insurance and reinsurance-linked fund manager, Nephila Capital Ltd, has expanded its weather and ESG-driven operations with the launch of Nephila Climate (NCx), a new specialty unit dedicated to weather risk transfer and climate resilience solutions.
Nephila has announced that head of its weather risk investment team, Dr. Richard Oduntan has been appointed Chief Executive Officer (CEO) of NCx.
The launch of NCx is in response to increasing demand from both hedgers and investors, and is the latest expansion of the company’s weather and climate-driven investing business.
Dr. Oduntan, commented; “NCx stands at the intersection of two trends: steadily increasing interest in weather risk transfer alternatives from companies and intermediaries around the world, and the investment community’s collective push to develop products aligned with impact and sustainable investing goals. NCx will also satisfy a growing demand from investors for additional non-correlated returns.”
Nephila Capital traded some of the first weather-risk instruments, and according to the Artemis insurance-linked securities (ILS) investment managers and funds directory, has ILS assets under management (AuM) of roughly $11 billion as at January 2018.
Chairman of Nephila Climate, Barney Schauble, said; “We are proud to have been early believers in climate-driven investments, developing the initial market for weather risk transfer and creating an opportunity for investors in a way which makes for a more sustainable economy.”
The firm explains how the impact to corporations from increasingly volatile weather is significant and often not fully protected by traditional means of risk transfer, insurance and reinsurance solutions, and states that weather impacts extend beyond the energy sector, to include retailers, airlines, food and agriculture, as well as outdoor entertainment.
Nephila explains that its long-term relationship with Allianz Risk Transfer, a division of global insurer Allianz, has seen it take the lead as a risk capacity provider for numerous weather-linked deals, including deals from the World Bank, as well as providing reinsurance capacity in the agricultural sector to protect farmers, in places like Africa.
“NCx will benefit from the larger relationships of Nephila Holdings, but is also seeking external partners who share the same interests and innovative spirit when exploring climate-related investment initiatives,” explains Nephila.
The new unit will look to scale its existing offerings and provide additional, adjacent products for renewable energy and energy markets, as well as in the agricultural and other sectors. Furthermore, NCx will look to establish weather-linked credit solutions to assist with the financing of renewable energy projects, “and also help commercial and government entities manage climate resilience risks due to weather volatility and extreme weather in sectors including logistics and transportation, construction, mining and minerals, food and agriculture, hospitality and retail,” says Nephila.
