Eyeing Specialty Focus, AXIS Transfers $2.3B of Re Reserves to Enstar

AXIS Capital Holdings Limited and Enstar Group Limited announced that they have entered into a loss portfolio transfer reinsurance agreement under which AXIS will retrocede $2.3 billion of reinsurance segment reserves to Enstar.

“This transaction aligns our balance sheet with our previously stated underwriting strategy of leaning into our specialty insurance business,” said Vince Tizzio, President and CEO of AXIS, in a statement, explaining that an impetus for the deal involves advancing AXIS in the direction of being a specialty underwriter.

The LPT reinsurance agreement is structured as a 75 percent ground-up quota share, and predominately covers casualty portfolios related to 2021 and prior underwriting years. Reserves for those years totaled $3.1 billion as of Sept. 30.

In January this year, AXIS announced that it booked a fourth-quarter 2023 pre-tax reserve charge of $425 million attributable to both its insurance and reinsurance segments in liability lines and professional lines predominantly related to 2019 and older accident years.

With respect to the Enstar deal, AXIS expects to recognize an approximate $60 million benefit from the excess of reserves ceded over the consideration over the next several years, according to the payment patterns of these reserves.

AXIS will maintain claims control for the covered reserves subject to certain administrative rights of Enstar.

The LPT reinsurance agreement will be provided by Enstar’s wholly owned subsidiary and S&P ‘A’ financial strength rated reinsurance platform, Cavello Bay Reinsurance Limited.

Dominic Silvester, Enstar’s Chief Executive Officer said the “transaction showcases Enstar’s market-leading position,” pointing out the AXIS deal is the “the largest loss portfolio transfer announced in the industry so far this year.”

The closing of the transaction is subject to regulatory approvals and other customary conditions, and is expected to occur during the first half of 2025.

Sources: AXIS Capital, Enstar Group