Bermuda domiciled insurer and reinsurer, Arch Reinsurance Ltd. (Arch) has entered into a reinsurance transaction with Catalina Holdings (Bermuda) Ltd subsidiary, Catalina General Insurance Ltd (Catalina), which sees the latter assume a portfolio of U.S. property & casualty (P&C) liabilities in run-off from Arch.
The U.S. P&C legacy portfolio assumed by Catalina has net outstanding reserve of approximately $410 million, and the portfolio consists of discontinued program business issued by managing general agents (MGAs) throughout the U.S., written from 2002 to 2017, and also includes a book of discontinued Construction Defect business, written between 2002 and 2013.
Arch Reinsurance initially assumed the liabilities from affiliate Arch Insurance Company, over time via internal reinsurance transactions.
Nicolas Papadopoulo, Chairman & Chief Executive Officer (CEO) of Arch Worldwide Insurance Group and Chief Underwriting Officer (CUO) for Property & Casualty Operations, commented: “As part of our normal risk management practices, Arch continuously reviews potential solutions available to protect us against the downside risk from our run-off portfolios. Going forward, this transaction will both provide capital relief and allow management more time to support further growth of our insurance platform and underwriting activities.”
The transaction closed on April 20th, 2018, after receiving regulatory approval from the Bermuda Monetary Authority (BMA).
According to a statement on the transaction, total assets of Catalina pro forma for this deal will be $4.5 billion, and Catalina also reveals that the TigerRisk Legacy Practice Team served as the adviser for the transaction.
Furthermore, as part of the transaction, Catalina is to handle all claims for the run-off businesses, which includes some business that date back to the early years of Arch Insurance Company.