Bermuda-based Nephila Capital has raised $800 million in the second quarter of this year from institutional investors targeting catastrophe reinsurance funds.

Greg Hagood, the fund's co-founder, told the Financial Standard that pension funds, hedge funds and fund of funds are actively seeking non-correlated investments such catastrophe bonds and other insurance linked securities.

"After the recent financial market turmoil, institutional investors are actively seeking return streams that are independent from the capital markets and catastrophe reinsurance certainly provides that portfolio benefit," he said.

The firm's funds attracted over $40 million from AMP in June and MLC has been investing in the funds since 2007.

Nephila Capital sold 25 per cent of its management company to Man Group in July last year. Man Group's sales and marketing team now provide the fund managers products worldwide.

Frank Majors and Greg Hagood, as part of Willis, the world's third largest reinsurance broker, founded Nephila Capital in 1998. The firm has been trading weather risk since 2000 and launched a weather product in 2005.