Insurers and brokers are increasingly putting more resources behind their push into the world of alternative risk transfer, with some establishing dedicated units or seeking acquisitions, sources said.

“I would say over the last five years there has been more motivation from the insurers to set up special teams to focus on growth and innovation and, as part of that, alternative risk solutions,” said Michael Gruetzmacher, Aon PLC’s managing director of its alternative risk solutions team in Chicago.

In April 2017, managing general agent Victor, through its Victor O. Schinnerer & Co. subsidiary, created Alternus, providing Marsh LLC’s U.S.-domiciled property clients with direct access to a facility backed by alternative capital, in this case provided by Nephila Holdings Ltd., said Duncan Ellis, U.S. property practice leader for Marsh in New York.

In September, Lockton Cos. LLC launched Lockton Capital Markets in New York in partnership with Antarctica Capital LLC, a New York-based private equity firm, to focus on alternative capital, according to the Kansas City, Missouri-based brokerage.

The unit, among other things, provides alternative capital options for discontinued books of business.

“This is a natural expansion of brokers managing risks for clients,” said Timothy J. Cunningham, managing director of Optis Partners L.L.C., a Chicago-based investment banking and financial consulting firm.

Munich Reinsurance Co. has a capital partners business unit dedicated to alternative risk transfer and capital-driven reinsurance markets, according to Oliver J. Horbelt, head of capital partners, reinsurance division, for Munich Reinsurance America Inc. in New York.

“Since the unit was established in 2015, we have seen increased demand for ART solutions across all client segments, insurance companies, corporate clients and public entities,” he said.

On Aug. 31, Markel Corp. entered a definitive agreement to acquire all outstanding shares of insurance-liked securities manager Nephila, which manages more than $12 billion of assets.

“The purchase, which will be funded by Markel using cash on hand, will afford Markel a dominant position in the insurance-linked securities market,” A.M. Best Co. Inc. said in a note.

“Nephila will complement Markel’s existing businesses, and along with Markel CATCo Investment Management Ltd. (Markel CATCo) will further solidify Markel’s lead position as one of the largest alternative capital managers,” S&P Global Ratings Inc. said in a note. “We believe that despite some overlap with Markel CATCo, the combined presence gives Markel good ability to harness the opportunities pertaining to alternative capital.”

“Capital has an intent and a design to get closer to the front end of the business,” said Gary Marchitello, New York-based head of property broking for Willis Towers Watson PLC. “The Nephila-Markel deal is a huge manifestation of that.”