A link-up between a US private-equity firm and a Bermuda-based reinsurance firm has been a marriage made in heaven, according to an industry watchdog.

American-based KKR & Co bought nearly a quarter of Nephila Capital, which has been based in Bermuda for 14 years, nearly a year ago.

And specialist website artemis.bm predicted that Nephila, already the largest asset manager in the insurance-linked securities (ILS) and reinsurance sectors, was set to grow as a result of the tie-up.

The site said: “If the opportunities to deploy capital can be found, and KKR exerted its fullest influence to help Nephila grow, the benefits that both firms gain from the relationship stand to become significantly larger.”

Artemis.bm added: “Nephila Capital, as the largest asset manager in ILS and reinsurance, stands to feature strongly in the January reinsurance renewals, likely participating in many of the world’s largest programmes as it deploys its $9 billion or so of capital.

“As we move into 2014 it will be interest ing to watch Nephila to see whether it can find the opportunities to allow it to fully embrace the growth that its relationship with KKR could potentially bring to it.”

And the site said that Nephila had become “a prominent voice” calling for the reinsurance market to seek new opportunities by looking to areas and risks where there is insufficient capacity, or where ILS capital can be more efficient than the incumbent traditional capacity.

Nephila also signalled that the industry could also develop entirely new reinsurance markets where “catastrophe risks are greatly underestimated”.

Artemis.bm said: “Having a partner like KKR will assist with these goals. It has already no doubt helped Nephila Capital raise its profile and gain a voice in conversations that it perhaps would have been seen as too small, or niche, to be involved in previously.

“This is not just good for Nephila, it is good for the entire reinsurance market, both traditional and alternative.”

KKR co-chairman and CEO George Roberts said that KKR can — if capital deployment opportunities can be found — introduce Nephila to some key investors.

He added that, at the time of the buy-in into Nephila, there had been very little overlap between its investor base and Nephila investors.

He added that the link-up would help Nephila to grow — which would also boost KKR’s bottom line even further.

Ratings agency Standard & Poors cited the acquisition when in raised KKR’s issuer credit rating to “A” and said that KKR had expanded significantly in recent years and developed a “broader and more durable business model.”

At the time of the deal, which saw KKR buy 24.9 percent of Nephila, the Bermuda firm’s management committee said: “Having access to KKR’s global network of relationships, infrastructure and management expertise will open up new doors for Nephila and our investors.

“Over the course of 2013, Nephila Capital’s position in the reinsurance world has certainly risen and it is now considered one of the most innovative and forward-thinking firms in the reinsurance space — not just in ILS and third-party capital.”

And, at a recent conference held by investment banking firm Goldman Sachs, Mr Roberts said that lower cost of capital associated with third-party reinsurance capital made ILS and asset managers like Nephila an attractive target for investment.

He added: “If you want to find out what the secret sauce is, their cost of capital is cheaper than the insurance company and so it’s a pretty neat product.”