A. Description of Nephila Advisors LLC. Nephila Advisors LLC (the “Advisor”), a Delaware limited
liability company, was formed on June 30, 2010. The Advisor provides non-discretionary sub-
advisory services to its affiliate, Nephila Capital Ltd. (“Nephila Capital”), with respect to many funds
managed by Nephila Capital (each such fund, a “Fund” and, together, the “Funds”) and assists
Nephila Capital generally in investment advisory services, investor relations, risk management and
business development. Nephila Capital is an investment manager specializing in catastrophe risk
and weather risk investments for sophisticated institutional and high net worth clients. Nephila
Capital also is registered with the SEC as an investment adviser. The Advisor’s owner is Markel
Corporation (“Markel”).
Previously, KKR Nevada Ventures LLC and Man Group Holdings Ltd. ("Man Holdings”) held
minority passive interests in Nephila Holdings, the Advisor’s previous sole shareholder. On
November 14, 2018, Markel purchased 100% of Nephila Holdings Ltd. from KKR Nevada Ventures
LLC, Man Holdings and Nephila Partners, L.P. Markel now owns 100% of the Advisor directly.
Markel is a holding company for insurance, reinsurance, and investment operations around the
world and is a publicly traded company listed on the New York Stock Exchange (NYSE – MKL).
In August 2012 and July 2014 respectively, Paul Gregory Hagood and Frank William Majors, Co-
Founders of Nephila Capital, joined the Advisor as principals. In connection with this, the Advisor
has an additional location in Nashville, TN.
B. Advisory Services Offered. The Advisor provides non-discretionary sub-advisory services to
Nephila Capital with respect to the Funds managed by Nephila Capital in addition to providing
investor relations and business development services to Nephila Capital. The Advisor does not
have discretionary authority to act as an investment manager for any Fund, and all investment
recommendations of the Advisor are subject to review and approval by Nephila Capital, which has
full discretionary investment authority to determine and implement all investments of the Funds.
The Advisor does not have a direct contractual arrangement with any Fund, and the Funds do not
pay fees to the Advisor.
Nephila Capital acts as the investment manager of the Funds, which may be organized as Delaware
limited partnerships or Bermuda exempted companies or may be domiciled in other jurisdictions.
The Funds may be structured as stand-alone funds or master-feeder funds, and may be open to
sophisticated private investors generally, or may be customized for single investors or a related
group of investors.
The Advisor provides non-discretionary investment advisory services primarily with respect to
“Catastrophe” and “Weather” strategies. The Catastrophe and Weather strategies involve the
purchase or sale of catastrophe insurance or weather-linked investment instruments, including
catastrophe swaps, weather derivatives and other financial instruments, the returns of which are
tied primarily to catastrophe risk or weather risk. The Advisor expects that its sub-advisory
services will be limited to advice regarding the foregoing investment strategies and instruments, as
generally described.
The foregoing transactions are typically structured as securities in the form of notes, as
International Swap and Derivatives Association, Inc. (ISDA)-based over-the-counter swaps or other
derivatives contracts, or weather futures and options traded over-the-counter or on U.S. or non-U.S.
futures exchanges.
The primary differences between the Funds are the degree of leverage used, the extent of portfolio
diversification, the nature and terms of specific portfolio investments, Nephila Capital’s fees, and
the investors' redemption or withdrawal rights. A Fund may be organized into one or more classes
of shares or interests, each with its own terms and conditions. For a complete description of the
investment objectives and strategies of the Funds advised by Nephila Capital, as well as a
description of the material terms of an investment in a Fund (including the risks of an investment
and associated conflicts of interest), please refer to the relevant Fund's Confidential Offering
Memorandum (the “Memorandum”).
To facilitate the Funds’ access to the traditional reinsurance market,
Nephila Capital has caused to
organize Poseidon Re Ltd. (“Poseidon”), Nephila Syndicate Holdings Ltd. (“NSH”) and Ananke Re
Ltd. (“Ananke”). To facilitate the Funds’ access to the weather market, Nephila Capital has caused to
organize Demeter Re Ltd. (“Demeter”). Together, Poseidon, Ananke, NSH and Demeter are the
“Transformers”. Poseidon, Ananke and Demeter are licensed as Bermuda Class 3 reinsurance
companies, and NSH is a Bermuda exempted company. Nephila Capital is the manager of Poseidon,
Ananke, Demeter and NSH. Nephila Capital currently expects that all such reinsurance-related
derivative and the weather derivative transactions for the Funds generally will be entered into with
the Transformers as opposed to with a third-party transformer. The Advisor may make non-specific
recommendations to Nephila Capital regarding such reinsurance and weather-related derivative
transactions for the Fund accounts. The primary purpose of using the Transformers is to eliminate
the “mark-up” that would otherwise be charged to the Funds by a third-party transformer on the
derivative transaction. It is currently expected that Poseidon, Ananke, NSH and Demeter will enter
into derivative transactions only with the Funds, and not with third parties. The Transformers do
not make a profit.
Nephila Capital also acts as the insurance manager to a Bermuda incorporated reinsurance
company (the “Bermuda Reinsurance Company”).
As of the date of this Brochure, the Advisor provides non-discretionary investment advice and
services to Nephila Capital. For regulatory and compliance purposes, the Advisor takes the position
that Nephila Capital and its Funds and the Bermuda Reinsurance Company are the Advisor’s sole
clients. In addition, although not currently contemplated, the Advisor may provide advisory
services to other entities or accounts that are not managed by or affiliated with Nephila Capital.
For more information regarding Nephila Capital’s advisory services and the Funds, please refer to
the Form ADV Part 2A of Nephila Capital, which is available from Nephila Capital or on the SEC’s
website.
C. Tailored Services. The Advisor provides non-discretionary investment advisory services
primarily with respect to “Catastrophe” and “Weather” strategies. The Catastrophe and Weather
strategies involve the purchase or sale of catastrophe insurance or weather-linked investment
instruments, including catastrophe swaps, weather derivatives and other financial instruments, the
returns of which are tied primarily to catastrophe risk or weather risk. The Advisor expects that its
sub-advisory services will be limited to advice regarding the foregoing investment strategies and
instruments, as generally described. As the investment manager of the Funds, Nephila Capital, not
the Advisor, has the ultimate authority to make decisions regarding whether or not to engage in a
transaction for the Funds. Moreover, as the investment manager of all of the Funds, Nephila Capital,
not the Advisor, has the ultimate authority to make decisions regarding how each Fund should
allocate its assets to certain investments. Further, Nephila Capital selects the Funds’ brokers,
dealers, banks and other counterparties or intermediaries by or through whom portfolio
transactions are executed or carried out, monitors each Fund's investments, and takes all other
necessary or appropriate acts to carry out its portfolio management duties. The Advisor’s
investment recommendations and related advice may be accepted, rejected or modified by Nephila
Capital, as it determines in its sole discretion.
D. Wrap Fee Programs. The Advisor does not participate in any wrap fee programs. Please refer to
Item 5 – Fees and Compensation, below, for more information regarding the Advisor’s fees.
E. Client Assets the Advisor Manages. The Advisor’s client net assets under management as of
December 31, 2023 were approximately U.S. $6,020,000,000, representing the portfolio values of
the Funds. All such assets are managed on a non-discretionary basis (none being discretionary).
The amount disclosed under this item is calculated based on net assets after deducting investments
of one Fund in another Fund so as to avoid the double counting of net assets, which differs from the
Advisor’s “regulatory assets under management” disclosed under Part 1 of Form ADV.