Enstar completes ADC agreement with IAG for long-tail reserves coverage

Enstar has completed a transaction between its wholly-owned subsidiary, Cavello Bay Reinsurance Limited, and Insurance Australia Limited, on behalf of IAG, to provide adverse development cover (ADC) for IAG’s long-tail reserves.

IAG announced this transaction in June 2024, alongside a five-year natural perils reinsurance agreement with National Indemnity Company and Canada Life Reinsurance.

Under the terms of the ADC agreement, Enstar will provide approximately USD 442 million in excess coverage over USD 1.7 billion in underlying reserves for specific long-tail insurance businesses.

The portfolio includes Product & Public Liability, Compulsory Third-Party Motor, Professional Risks, and Workers’ Compensation for losses incurred on or before June 30, 2023.

The ADC also includes specific coverage for Molestation and Silicosis, with a sub-limit of $50 million.

This new protection adds to IAG’s existing long-tail coverage, which had reserves of around USD 2.5 billion as of January 1, 2024.

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