Nephila specialty lines Syndicate 2358 profit forecast lifted for 2024

Nephila Capital, the specialist insurance-linked securities (ILS) investment manager, has lifted the profit forecast for its Lloyd’s Syndicate 2358 for the 2024 year of account by 1.8% at the mid-point, implying a roughly $17.1 million profit based on the $150 million capacity base the syndicate had deployed for that underwriting year.

Syndicate 2358 is Nephila’s speciality lines focused underwriting vehicle in the Lloyd’s of London market, that the ILS investment manager launched for the 2022 underwriting year.

According to the latest syndicate forecast data, disclosed today in an update from Lloyd’s specialist firm Argenta Holdings, the outlook for the 2024 underwriting year has improved, while the 2023 year of account has worsened slightly.

Previously, the forecast for the 2024 year of account for Syndicate 2358 had stood at 4.6% to 14.6%, but that has now been updated to a range of 6.4% to 16.4%, an improvement of 1.8 percent at the mid-point.

Meanwhile, for the 2023 year of account at Lloyd’s the previous forecast for Nephila’s Syndicate 2358 was in a range from 4.5% to 14.5%, which at this new update has been revised to 4.2% to 14.2%, which is 0.26 percentage points worse at the mid,which still implies a mid-point forecast for almost $8.3 million of profit for the 2023 year.

The ranges for both years remain wide, as is typical for Lloyd’s syndicate performance forecasts as they develop over time, but notably with a positive return on capacity anticipated for both underwriting years and any further improvement could see the profitability rise meaningfully.

Also notable is the fact the Nephila Capital speciality lines syndicate has seen the second biggest improvement at the mid-year forecast update, of those reporting so far.

Syndicate 2358 was the first vehicle launched by Nephila Capital with a pure specialty lines of insurance and reinsurance underwriting focus.

In 2024, Syndicate 2358 underwrote 84% more in gross premiums over the year, compared to 2023, although the company noted that underwriting performance was disappointing due to losses related to the Baltimore Francis Scott Key Bridge collapse in that year.

So the improvement in the forecast will be welcomed by Nephila, as it looks to continue growing its specialty business at Lloyd’s with a larger stamp capacity of as much as $375 million planned for the current underwriting year as well.

Nephila Capital’s use of Lloyd’s syndicates remains an efficient way to access risk for its investors, while also allowing the ILS manager to benefit from the Lloyd’s infrastructure and global ratings.