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Investment firm Cedent Ltd. has formed Bermuda-based corporate advisory firm Resilience Economics Ltd. with $500 million in pledged capacity to offer organizations help managing climate-related risks, the company announced Wednesday.
New York-based Cedent, which specializes in insurance and technology investments, is partnering with asset manager Nephila Capital Ltd. in Bermuda on the venture. Nephila will provide $500 million in capacity, a Cedent statement said.
Michael Ian Coles, president and CEO of Cedent, said Resilience is not a risk-bearing entity but it will “work with companies around helping them understand the impact climate risk has on their financials,” taking weather and operating data and “performing analysis to help them understand and quantify that impact.”
Nephila is “basically pledging” $500 million in capacity and will serve as a risk counterparty for Resilience, he said. Other organizations will also supply capacity, Mr. Coles added.
“We start with this initial partnership,” but while only about $3 billion in climate-related premiums has been transferred into the insurance industry so far, “it can be up to a $300 billion market, so one counterparty won’t be able to hold all that risk for the market,” he said. “The idea is, there will be many more players in the market” than there are today.
The capacity Nephila will provide “can take many forms, including a business interruption policy, and it can be some sort of financial instrument. It’s really tailored for what the client asks for,” Mr. Coles said.