Enstar completes LPT deal with Hiscox

Enstar Group has completed a loss portfolio transfer with Hiscox.

The deal was completed via a wholly owned subsidiary of Enstar, Syndicate 2008, which has reinsured a diversified portfolio of legacy insurance business underwritten by Hiscox Syndicate 3624.

The business includes the majority of Hiscox USA’s surplus lines broker business.

Hiscox has ceded net insurance reserves of approximately $520 million at December 31, 2020, relating to 2019 and prior-year business.

RBC Capital Markets said the deal will benefit Hiscox’s capital position, adding around 10 basis points to its group Bermuda solvency capital ratio, which stood at 190 percent at the end of 2020. It will result in a profit and loss charge of $26 million in 2021, RBC said.

“We view the deal as a sensible one for management to have pursued, as it will allow the company more time to focus on the more profitable front book in the current market and removes some uncertainty from reserve volatility going forward,” RBC explained in a note. “We have not been concerned about Hiscox’s capital position since the equity raise in 2020. However, the capital benefit from the deal is welcome, and in theory will allow the company to reinvest into stronger markets.”