Among the factors driving the decision to wind down the business include challenges in fundraising. Credit: Kelly Sikkema on Unsplash

Hit by retro market headwinds, Markel has decided to shutter its Bermuda-based retrocessional insurance linked securities (ILS) fund manager Lodgepine Capital Management just two years after inception.

Among the factors driving the decision to wind down the business include challenges in fundraising.

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Lodgepine will now end writing new business, starting “the orderly run-off of its existing portfolio and the return of capital to investors”.

It is also having consultations with its 18 staff, with an aim to redeploy them at Markel.

Introduced in 2019, Lodgepine specialises in property catastrophe retrocessional investments.

It wrote a portfolio of property retrocessional business this year with initial limits of nearly $230m.

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The Lodgepine Fund was unveiled in July this year. This was backed by $98.9m in initial investor capital including an $18.9m boost from Markel.

Markel caters to different niche markets.

The firm’s earned premiums for the third quarter of 2021 soared 17%, while for the nine months to September 2021 the rise was 15%.

Its combined ratio improved by four percentage points to 93% for the third quarter.

The combined ratio at the end of the first nine months of 2021 was 91%, compared to 101% a year ago.

Speaking of the performance, co-CEOs Thomas Gayner and Richard Whitt said: “Our third quarter and year-to-date results reflect the strength and balance of our three-engine operating model of insurance, investments and Markel Ventures.

“This quarter our insurance operations saw the benefit of recent changes in our property catastrophe underwriting strategy as we delivered a combined ratio in the low 90s, despite significant natural catastrophe events.”

Earlier this year, Markel UK partnered with AI-driven insurtech Cytora to deploy the latter’s risk assessment platform.