Markel agrees $4.8bn legacy reinsurance deal with Enstar
Markel Insurance has agreed a $4.8 billion adverse development cover deal with Enstar, transferring significant legacy reserve risk as it seeks greater financial certainty and focuses on expanding its core specialty insurance business.
Under the agreement, Markel will retain the first $2.6 billion of subject reserves and transfer the next $2.3 billion to Enstar, which will also provide $1.2 billion of cover for adverse loss development above the $4.8 billion reserve portfolio.
Enstar will receive $2.4 billion in consideration for the transaction, while Markel will pay a $120 million risk premium, according to Markel’s announcement.
The portfolio covers underwriting years 2025 and prior across Markel’s global reinsurance business and certain discontinued insurance lines, including risk-managed professional liability and architects and engineers. Markel will retain claims control, administrative and claims-handling responsibilities.
The reinsurance agreement will be provided by Cavello Bay Reinsurance, Enstar’s wholly owned subsidiary and an S&P ‘A’-rated reinsurance platform.
The transaction is expected to close by the end of the fourth quarter of 2026, subject to regulatory approval and other customary conditions. Markel expects the net impact on fourth-quarter underwriting results to be immaterial, as the additional cover reduces the level of prudency management requires in its best estimate of ultimate losses.
Simon Wilson, chief executive officer of Markel Insurance, said: “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 cantered 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.”
Dominic Silvester, Enstar’s chief executive officer, said: “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.”
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