Enstar and Maiden Re finalise ADC deal with AmTrust

Bermuda-based Cavello Bay Reinsurance, a subsidiary of global insurer Enstar, has completed an adverse development cover (ADC) reinsurance deal with Maiden Reinsurance.

The transaction will help “secure obligations” agreed in a quota share reinsurance contract between Maiden Re and AmTrust Financial Services Bermuda for losses incurred on or before December 31, 2018 in excess of a $2.178 billion retention, up to a $600 million limit.

As a result Cavello Bay Reinsurance will receive $445 million of premium and post $445 million of collateral in letters of credit.

Enstar said: "The retention, limit and premium were reduced from the previously announced transaction following the parties’ agreement to include only losses under the Bermuda quota share agreement between Maiden Re and AmTrust Bermuda."

The deal is subject to regulatory approvals and the satisfaction of various closing conditions.

ADCs are most often used to transfer risk, stabilise earnings, provide capital relief and enhanced investment returns.

In January this year, Enstar Group subsidiary Cavello Bay Reinsurance acquired Maiden Reinsurance North America from a subsidiary of Maiden Holdings.

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