As part of its $307.5 million acquisition of Maiden Re North America, which was announced last week, Enstar Group Limited will enter into a reinsurance agreement with Maiden Re via Enstar’s subsidiary, Cavello Bay Reinsurance Limited.
The transaction will see Cavello and Maiden Re enter into a novation agreement and a retrocession agreement pursuant to which certain assets and liabilities associated with Maiden Re’s U.S treaty business will be novated or retroceded to Cavello in exchange for a ceding commission.
Additionally, Maiden Re will provide Enstar with a reinsurance cover for loss reserve development in excess of $100 million in excess of net loss and loss adjustment expenses recorded as of June 30, 2018, up to a maximum of $25 million.
Following the acquisition, Enstar will operate Maiden Re North America in run-off, and will assume approximately $1.3 billion of net loss and loss adjustment expense reserves and unearned premium reserves.
The $307.5 purchase price is to be paid in cash following the closing of the transaction, which is expected to take place in the fourth quarter of 2018, subject to governmental and regulatory approvals.
Maiden Holdings confirmed that it was in advanced discussions regarding the sale of Maiden Re North America earlier in August when it announced the sale of its U.S treaty reinsurance business renewal rights to TransRe.
