Clyde & Co advises Enstar Group on Loss Portfolio Transfer with RACQ
Legal Development 09 June 2023 09 June 2023
Clyde & Co has advised Enstar Group Limited on the successful negotiation of a Loss Portfolio Transfer agreement between one of its wholly-owned subsidiaries and RACQ Insurance Limited (“RACQ”) to reinsure 80% of RACQ’s motor vehicle compulsory third party insurance liabilities, covering accident years 2021 and prior.
Under the reinsurance agreement, which is effective as of July 1, 2022, RACQ will cede net reserves of approximately AUD$ 360 million (USD$ 235 million), and Enstar’s subsidiary will provide approximately AUD$ 200 million (USD$ 130 million) of cover in excess of the ceded reserves. The amount of net loss reserves ceded, as well as the settlement and limit amounts provided in the agreement, will be adjusted for claims paid between the effective date and the closing date of the transaction, pursuant to the terms of the contract.
Completion of the transaction followed receipt of regulatory approvals and satisfaction of various other closing conditions.