Bermudian-based Nephila Capital, the world’s largest manager of insurance-linked securities, has agreed to be bought out by US insurer Markel Corporation.

Nephila has about $12.2 billion of assets under management and Markel indicated today that the firm would continue to be run as a separate entity after the acquisition goes through.

Markel, an insurer, reinsurer and investment company, already has a presence on the island. The US firm acquired Bermudian reinsurer Alterra in 2013 and CatCo Investment Management, a Bermudian collateralised reinsurance specialist, in 2015.

The terms of the Nephila deal, which is expected to close during the fourth quarter of this year, were not disclosed.

Nephila was founded in 1997 in London as part of reinsurance broker Willis Ltd and relocated to Bermuda in 1999 to build relationships in Bermuda’s world-leading catastrophe reinsurance industry.

Over the past 20 years, the firm has grown in size and reputation, flourishing at the forefront of the ILS revolution.

It has offices on the third floor of Victoria Place, as well as in London, San Francisco and Nashville, Tennessee.

Founders Frank Majors and Greg Hagood are the firm’s co-chief executive officers.

The deal will make Markel a world leader in the ILS fund management sector, with the combined assets under management of Nephila and Markel CatCo standing at about $19 billion, or about 20 per cent of the ILS sector, according to Markel.

Richie Whitt, Markel’s co-CEO, said: “We are excited to welcome Nephila to the Markel team. Frank Majors and Greg Hagood have built the industry’s pre-eminent and longest-tenured insurance-linked securities manager.

“With a proven 20-year track record of success, they bring with them an incredibly experienced and talented management team and a culture of creativity, innovation and excellence that exemplifies the Markel style.

“The addition of Nephila to Markel’s insurance, reinsurance, insurtech, fronting, and existing insurance-linked securities capabilities will enhance and strengthen the breadth and depth of Markel’s offerings to policyholders, producers and investors.”

Nephila will be run as a separate unit by its existing management team at its existing office locations.

Mr Majors said: “We are delighted to be joining Markel, a company with a similar culture, strategic outlook and long-term focus. They have built a great company with a sterling reputation for both outstanding performance and a collaborative business approach, and have a proven track record of successful acquisitions.

“Markel shares our strategic vision for the future of the insurance markets; this transaction will allow us to accelerate our delivery of that strategy, creating additional value for our investors and our trading partners.”

Mr Hagood added: “As the industry continues to evolve, we believe the resources and expertise from both platforms will provide meaningful benefits to our investor base, as it combines the investment independence of a 20-year, stand-alone insurance-linked securities manager with the additional resources of a well-respected and strongly rated insurer.”