AXIS Capital agrees $2.3bn LPT with Enstar

AXIS Capital has agreed to a $2.3 billion loss portfolio transfer reinsurance agreement with legacy insurer Enstar aimed at shoring up casualty losses incurred in 2021 and in earlier years. 

The Bermuda-based re/insurer took a $425 million charge in January to cover claims in liability and professional lines related to 2019 and prior years.  That resulted in a fourth quarter loss of $150 million compared to a $40.9 million profit in 2022.

Under the LPT reinsurance agreement, which is structured as a 75% ground-up quota share, AXIS will retrocede to Bermuda-based Enstar $2.3 billion of reinsurance segment reserves. 

AXIS said the transaction was predominantly attributable to casualty portfolios related to 2021 and prior underwriting years totalling $3.1 billion at September 30 . 

“AXIS expects to recognise 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,” the company said. “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.

AXIS exited the property catastrophe reinsurance market in 2022 and has been focusing on specialty lines since. 

“This transaction aligns our balance sheet with our previously stated underwriting strategy of leaning into our specialty insurance business,” said Vince Tizzio, president and chief executive officer of AXIS. “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. We are pleased to be partnering with Enstar in advancing our strategic priorities.”

Dominic Silvester, Enstar’s CEO, 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.”

The transaction is expected to close during the first half of 2025. 

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