Brian Costanzo, Chief Financial Officer at Markel, indicated that the business that is fronted for Nephila Capital through Markel Bermuda Ltd (MBL) is performing very well this year, given the low level of catastrophe losses experienced.
In its Q3 2025 results Markel reported that Nephila Capital generated fund management revenues of $30.3 million for the quarter, a solid increase from $25.1 million in the prior year.
While in the first nine months of 2025, total fund management revenues attributed to unconsolidated entities managed by Nephila reached $85 million, also up on the prior year period’s $66.2 million.
Speaking during Markel’s Q3’25 earnings call today; Costanzo commented on how the business that is fronted for Nephila through MBL is performing this year.
“From what we’ve seen, Nephila has had some nice growth in premium. We’ve used the MBL balance sheet that’s allowed them to place more business with the AUM that they have on their books and grow that business at attractive rates that are out there in the property market,” Costanzo said.
“If you think back to when they placed a lot of that business in the first four to six months of this year, with a very attractive rate environment, that book is going to perform very well on the fronting side, and it’s going to perform very well considering where we are this far in the year from an investor standpoint with the low level of cat losses that are out there. So, the vast majority of that is property cat business that’s fronted in the program space.
“With the rate environment and growth aspirations at Nephila that’s really what drives the fronting revenues that we see in the programs and solutions division.”
Moreover, these trends appear sustainable heading into 2026, though Costanzo notes that results of some segments may fluctuate with changes in the property market and program mix.
“The property market is certainly going to be a bigger driver on the division and the Nephila fronting, whereas it’s going to be more broader insurance trends and our ability to add on new programs.
“In the program space, you can have chunky things come in and out. You sign new agreements, people either move on, or if you’re fronting for them because they’ve been downgraded from a rating standpoint, they cure that and that program goes away. So, there can be some chunky movements from time to time in that program services business in both directions,” the CFO added.
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