DARAG Bermuda unit completes legacy reinsurance deal with Hallmark
Two units of legacy acquirer DARAG including one in Bermuda has competed a substantial deal with Hallmark Financial Services covering certain primary commercial automobile liability insurance policies.
Five property/casualty insurance subsidiaries of Hallmark have entered into a loss portfolio transfer reinsurance contract with legacy acquirer DARAG Bermuda and DARAG Guernsey.
Under the agreement, American Hallmark Insurance Company of Texas, Hallmark Specialty Insurance Company, Hallmark Insurance Company, Hallmark County Mutual Insurance Company and Hallmark National Insurance Company will transfer to DARAG all existing and future claims for losses occurring on or before to December 31, 2019, on certain primary commercial automobile liability insurance policies, up to an aggregate limit of $240 million.
The first layer of $151.2 million in reinsurance will be provided by DARAG Bermuda, with the Hallmark Insurers retaining a loss corridor of the next $24.9 million in losses.
DARAG Bermuda will reinsure a second layer of $27.8 million above the first layer and the Hallmark Insurers’ loss corridor.
Finally, DARAG Guernsey will reinsure the top layer of $36.1 million in losses, net of third-party reinsurance and other recoveries.
Hallmark will pay DARAG Bermuda and Guernsey $172.9 million as reinsurance premiums.
The contract is expected to close on or before August 31, 2020, subject to regulatory approval and other customary closing conditions.
Upon closing, the parties will enter into a trust and services agreement, wherein DARAG Bermuda and Guernsey will initially deposit $179 million into a collateral trust account as security for their obligations to Hallmark.