AXIS Capital has entered into a loss portfolio transfer (LPT) reinsurance agreement with Enstar Group, advancing its transition to specialty underwriter.
The agreement will see AXIS retrocede $2.3bn of reinsurance segment reserves to Enstar.
Structured as a 75% ground-up quota share, the deal encompasses casualty portfolios from 2021 and earlier underwriting years, which total $3.1bn as of 30 September 2024.
AXIS anticipates an approximate $60m benefit from the excess of reserves ceded over the consideration, recognisable over the coming years based on the payment patterns of these reserves.
AXIS will retain claims control for the covered reserves, with Enstar having certain administrative rights.
The LPT reinsurance agreement will be facilitated by Enstar subsidiary Cavello Bay Reinsurance, which boasts an ‘A’ financial strength rating from S&P.
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By GlobalDataAXIS CEO and president Vince Tizzio said: “This transaction aligns our balance sheet with our previously stated underwriting strategy of leaning into our specialty insurance business. Furthermore, we continue to be focused on advancing the strategic priorities laid out at our Investor Day in May of driving organic growth, reinvesting in the business and managing our capital for the benefit of shareholders.”
The transaction is set to close in the first half of 2025, pending regulatory approvals and customary conditions.
Enstar CEO Dominic Silvester said: “This transaction showcases Enstar’s market-leading position and, being the largest loss portfolio transfer announced in the industry so far this year, it is another example of our ability to deliver significant reinsurance solutions to our global clients. We look forward to building a lasting partnership with AXIS, a leading provider of specialty lines insurance and reinsurance.”
Last month, Enstar Group confirmed that its shareholders have approved the proposed acquisition by investment firm Sixth Street. The deal is expected to be finalised by mid-2025, subject to regulatory approvals and customary closing conditions.
Enstar has acquired more than 120 companies and portfolios since its formation in 2001.
