Global legacy specialist Enstar Group’s wholly-owned subsidiary, Cavello Bay Reinsurance Limited, has entered into an adverse development cover (ADC) reinsurance agreement with Markel Insurance, the insurance operations within Markel Group, covering a portfolio of its run-off global reinsurance business and certain discontinued lines within its insurance operations for underwriting years 2025 and prior.
This ADC includes $4.8 billion of reserves, and Markel will retain the first $2.6 billion, and then retrocede the remaining $2.3 billion to Enstar.
Enstar will provide $1.2 billion of ADC above the $4.8 billion of subject reserves, while Markel will retain administrative and claims handling responsibilities for the portfolio. Markel will pay Enstar a risk premium of $120 million.
Thew subject reserves include 2025 and prior underwriting years of business written within Markel’s Global Reinsurance division and its exited risk-managed professional liability, architects and engineers and other run-off lines within its global insurance operations.
Readers might recall that last year Markel sold its reinsurance renewal rights to Nationwide, as it exited the market.
Markel explained that this ADC coverage will reduce the level of prudent management required in its best estimate of ultimate losses. Therefore, the insurer expects the transaction will not have an impact on its underwriting results in Q4’26.
Dominic Silvester, Chief Executive Officer (CEO), Enstar, commented, “Markel’s decision to partner with Enstar reflects our financial strength and our expertise in evaluating and underwriting complex portfolios at scale. The agreement will give Markel greater certainty over its legacy liabilities as it focuses on growing its core specialty insurance business. We look forward to continuing our work with Simon Wilson and his team once the transaction closes.”
Simon Wilson, CEO, Markel Insurance, added, “This transaction provides additional certainty as these liabilities continue to run off and allows us to continue our focus on growing our core specialty insurance business. Our focus remains on advancing our strategic priorities centered on maintaining an unwavering commitment to our customers, deepening our market-leading expertise, and accelerating decision-making.
“We are pleased to be partnering with Enstar on this transaction that advances our strategic priorities, enhances financial flexibility, and further strengthens our ability to deliver long-term value for our customers and shareholders.”
For the transaction, Enstar was advised by Insurance Advisory Partners LLC, while Aon acted as reinsurance broker and advisor to Markel.
