Reinsurance News

Enstar enters into $3.12bn LPT transaction with Aspen

11th January 2022 - Author: Luke Gallin

A wholly owned subsidiary of Enstar Group Limited has reached an agreement for a ground-up loss portfolio transfer (LPT) with Aspen Insurance Holdings Limited for its 2019 and prior business.

handshake-bwUnder the terms of the arrangement, Enstar’s subsidiary will reinsure losses incurred on or prior to December 31st, 2019, on a diverse mix of Aspen’s property, liability, and specialty lines across the UK, US, and other jurisdictions.

In total, the transaction sees Enstar assume net loss reserves of $3.12 billion subject to a limit of $3.57 billion.

The existing adverse development cover (ADC) between the pair, which closed in June 2020, will be absorbed into this new LPT.

Dominic Silvester, Enstar’s Chief Executive Officer (CEO), commented: “The expansion of our reinsurance of Aspen’s legacy reserves is a great opportunity for us to play a larger role in managing a portfolio we know well.

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“This transaction, which reflects our strong partnership with Aspen, provides an attractive growth opportunity and reaffirms our position as the preferred partner for global insurers seeking the transfer of significant legacy business.”

This LPT transaction remains subject to regulatory approvals and satisfaction of other closing conditions, during which time Enstar says the existing ADC will remain in place.

Additionally, premiums and reserves under the LPT will be adjusted at closing for claims paid on or after the October 1st, 2021, effective date. It’s expected that this deal will close in H1 2022.

Mark Cloutier, Executive Chairman and Group CEO at Aspen, said: “Continuing to build capital strength, flexibility and efficiency is an important part of our strategy and we are therefore pleased to announce this loss portfolio transfer with Enstar, which is a natural evolution of our previous reinsurance agreement and builds upon our strong relationship.

“This transaction will positively impact our capital position and enable us to further deploy into the continued attractive market environment while significantly improving the protection of our balance sheet and future earnings from the potential impact of the recent soft market cycle.

“In addition, this transaction allows us to take forward our repositioned underwriting portfolio while continuing to focus on servicing the needs of our clients.”

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