21 January 2015 Insurance

State Auto buys adverse development cover from Munich Re

Property and casualty insurer State Auto has bought $40 million of adverse development cover from Munich Re.

The cover relates to the excess of carried reserves for the terminated Risk Evaluation & Design (RED) restaurant programme, which represents approximately 59 percent of carried RED reserves.

State Auto added that prior year loss and loss expense reserves will be strengthened by approximately $72 million pre-tax that will be reflected in the fourth quarter of 2014.

The increase relates primarily to the two largest RED programmes, the terminated restaurant and commercial trucking programmes, both of which are in run off.

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