Liberty Mutual has bought adverse development cover with an aggregate limit of $6.5 billion from Berkshire Hathaway subsidiary National Indemnity Company.
The cover, for substantially all of Liberty’s US workers compensation, asbestos and environmental liabilities, saw Liberty pay a premium of $3 billion, which attaches at approximately $12.5 billion of combined aggregate reserves.
At the closing of this transaction, effective as of January 1, 2014, Liberty ceded approximately $3.3 billion of existing liabilities under a retroactive reinsurance agreement. NICO will provide approximately $3.2 billion of additional aggregate adverse development cover.
Liberty said the agreement covers potentially volatile US asbestos and environmental liabilities arising under policies of insurance and reinsurance with effective dates before January 1, 2005, as well as commercial insurance’s workers compensation liabilities as respects injuries or accidents occurring before January 1, 2014.
NICO will assume responsibility for claims handling related to Liberty Mutual Insurance’s asbestos and environmental claims. Liberty Mutual Insurance will continue to handle all workers compensation claims.
"We believe that this agreement further strengthens our financial position as it eliminates a substantial source of uncertainty in these liabilities and allows us to focus on execution in our core businesses,” said David Long, Liberty Mutual Insurance chairman and chief executive officer.
To continue reading, you need a subscription to Intelligent Insurer. Start a subscription today for £655.
In-house feature articles, the archive and expert comment require a paid subscription. Subscribe now.
Want to give it a try? We are offering a two week free trial to the Intelligent Insurer website – register and select “Two Week Free Trial” to begin access to the full Intelligent Insurer archive and read the latest news, features and expert comment. Begin your free trial here.
Is your 2 week free trial about to end? Upgrade to a 12 month subscription for £655 now.
If you have already subscribed please login.
If you have any technical issues please contact support.
Liberty Mutual, Berkshire Hathaway, National Indemnity Company, North America