KKR invests in Bermuda insurance fund manager

Wed Jan 23, 2013 5:23pm EST

Jan 23 (Reuters) - Private equity company KKR & Co LP said on Wednesday it acquired a 24.9 percent stake in Nephila Capital Ltd, an investment management firm that focuses on natural catastrophe and weather risk.

Terms of the deal were not disclosed. KKR obtained shares from Nephila's management as well as from hedge fund manager Man Group Plc, which retained an 18.75 percent stake in the firm.

The move comes as KKR, best known for its corporate buyouts, pushes further into asset management. Last June, KKR acquired Prisma Capital Partners, an investment firm focused on hedge funds.

Nephila, based in Bermuda, invests in insurance-linked securities, catastrophe bonds and weather derivatives.

The company was founded in 1998 as part of London-based Willis Ltd, a reinsurance broker that was a former KKR portfolio company. Nephila has around $8 billion in assets under management.

Reinsurance, in traditional forms and in alternative areas like insurance-linked securities, has become an attractive investment for hedge funds and pension plans in recent years. Because the sector is not correlated with broader financial markets, there is an opportunity to earn decent returns even in tough financial times.