Nephila Capital, the Markel-owned and largest insurance-linked securities (ILS) fund manager in the market today, has sold a majority shareholding in its managing general agency (MGA) Velocity Risk to private equity and alternatives investor Oaktree Capital Management.
Funds under Oaktree’s management have acquired the majority of the MGA, leaving Nephila Capital with a minority shareholding in Velocity Risk.
Velocity Risk was founded by Nephila Capital in 2015, as the ILS manager created a platform for originating catastrophe exposed property risk more directly from the insurance consumer, allowing it to put its third-party investor backed reinsurance capital more efficiently behind it.
Now, Velocity Risk provides insurance coverage to customers in many of the most catastrophe-exposed areas of the United States.
Oaktree Capital Management has a number of interests in the insurance and reinsurance sector, not least the Acacia collateralized retrocession specialist manager that was established in late 2020.
Phil Bowie, Velocity Risk’s CEO, commented on the news of the sale, “The launch of Velocity Risk was designed to disrupt the value chain between insurance and capital, through innovative underwriting and operational efficiency. We are thrilled to have received Oaktree’s support and believe we have the right investor in Oaktree to help us continue building out our business.”
“Velocity Risk has established itself as a leading property-focused MGA through the quality of its management team, its strong underwriting results and its investment in enabling technologies. We are excited to partner with the Company and support its track record of driving growth and delivering value for its stakeholders,” Greg Share, Managing Director in Oaktree’s Global Opportunities Group also said.
Frank Majors, co-CEO of Nephila added, “We’re delighted to be partnering with Oaktree and are confident they will help Velocity Risk continue to build on its past successes. We look forward to continuing to work with Velocity Risk through our ongoing minority shareholding.”
The sale will bring in new capital and a long-term backer in Oaktree, which promises to help Velocity Risk further build out its business.
While for Markel owned Nephila Capital, the sale is a way to monetise its investment in the MGA, while retaining a relationship that will likely see it as a key reinsurance provider to Velocity Risk going forward.
TigerRisk Capital Markets & Advisory acted as the exclusive financial advisor to and Debevoise & Plimpton LLP served as legal counsel to Oaktree.
Evercore was the sole financial adviser and Willkie Farr & Gallagher LLP served as legal counsel to Velocity Risk.
