Enstar finalises $376m loss portfolio transfer agreement with QBE

Enstar Group Limited, a company specialising in managing runoff insurance and reinsurance portfolios, recently confirmed that one of its wholly-owned subsidiaries has finalised a previously announced loss portfolio transfer agreement with subsidiaries of QBE Insurance Group Limited.

Through this agreement, Enstar reinsures a portfolio of US commercial liability and workers’ compensation policies, mainly from programmes that have been recently discontinued.

Under the arrangement’s terms, QBE transferred approximately $376 million in net reserves, with Enstar’s subsidiary providing an extra $175 million in coverage beyond these transferred reserves.

Completion of the transaction depended on regulatory approvals and other conditions, all of which have now been met.

This agreement aligns with QBE’s broader strategy to lower its risk exposure.

In addition to the transaction with Enstar, QBE has also completed a loss portfolio transfer (LPT) with RiverStone International, further diversifying its reinsurance structure and reducing its long-term liabilities.

Effective July 1, 2024, these arrangements allow QBE to offload approximately $1.6 billion in reserves, de-risking its exposure across various North American portfolios.

Specifically, this includes all North American middle-market reserves up to June 30, 2024, and remaining non-core long-tail reserves that were not part of prior reinsurance transactions.

Additional select portfolios in both International and North American segments are included, with factors like volatility and capital efficiency considerations driving these decisions.

The overall reserve transaction with RiverStone and Enstar is anticipated to close in the second quarter of 2024, pending regulatory approvals.

This arrangement will incur an upfront cost for QBE of about $85 million in Q2 2024, which will be allocated across insurance operating results and restructuring-related expenses.

However, QBE expects the transaction to have a largely neutral impact on future earnings, bringing an estimated capital benefit of $230 million and a slight boost to QBE’s APRA PCA multiple by approximately 0.03x.

Together, these transactions underscore QBE’s commitment to strengthening its balance sheet and capital position, ensuring stability across both legacy and active portfolios while refining its exposure in critical markets.

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