Bermuda-based specialist insurer Hiscox Ltd. has completed a loss portfolio transfer (LPT) agreement with Enstar Group Ltd., whereby Enstar’s Syndicate 2008 will assume historical liabilities for selected lines of Hiscox Syndicate 3624, including the majority of Hiscox USA’s surplus lines broker business.
Under the terms of the agreement, Hiscox secures coverage for potential adverse development in respect of reserves valued at approximately $520 million at Dec. 31, 2020, relating to 2019 and prior-year business.
The transaction is capital accretive to Hiscox adding an estimated 10 points to the group’s Bermuda Solvency Capital Ratio and will result in a P&L charge of $26 million in H1 2021.
A research note from the Royal Bank of Canada said the deal was a sensible move for management, “as it will allow the company more time to focus on the more profitable front book in the current market and removes some uncertainty from reserve volatility going forward.”
“We have not been concerned about Hiscox’s capital position since the equity raise in 2020. However, the capital benefit from the deal is welcome, and in theory will allow the company to reinvest into stronger markets…,” said the research note, authored by, Kamran Hossain, analyst for RBC Europe Ltd.
“Hiscox should see stronger performance in its London market and reinsurance business as the market hardens. Retail continues to offer strong growth, though we would prefer to wait to see whether the business can hit its combined ratio targets once economies and claims activity resumes normal levels following the crisis,” added RBC’s research note.
Source: Hiscox and Royal Bank of Canada
Topics Reinsurance
Was this article valuable?
Here are more articles you may enjoy.
GM Ends OnStar Driver Safety Program After Privacy Complaints 
UnitedHealth Says Hackers Possibly Stole Large Number of Americans’ Data 
California Sees Two More Property Insurers Withdraw From Market 
Chubb Wins Latest Battle With New York Diocese in Bid to Avoid Sex Abuse Claims 
