Insight and Intelligence on the London & International Insurance Markets 24 Apr 2018

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Arch agrees to $400mn legacy deal with Catalina

  • Adam McNestrie 19 March 2018
  • Arch Capital has struck a legacy deal with Catalina that calls for it to transfer around $400mn of reserves to the run-off specialist, The Insurance Insider can reveal.

    Legal sources said that the liabilities which would be handed off to Apollo-backed Catalina as part of the transaction relate to a portfolio of casualty insurance business written out of Bermuda, where both companies are based.

    Arch is the latest example of elevated activity in the run off market, as carriers look to release capital on back-books owing to price competition in the run-off market and depressed yields on reserves.

    It is understood that the deal has been signed, with regulatory approval from the Bermuda Monetary Authority pending.

    Arch itself has involvement in the run-off market via Premia Re.

    Premia was founded in January 2017 by former Chubb executive Bill O'Farrell with backing from Kelso & Co and Arch executives.

    Arch is a strategic partner of Premia and works with it to offer rated reinsurance solutions to clients.

    Catalina is passing through a change of ownership, with existing investor Apollo agreeing to buy out Caisse de dépôt et placement du Québec (CDPQ) and the Ontario Teachers' Pension Plan in October last year, in a deal first revealed by this publication.

    In January Catalina followed this up by agreeing to sell a minority stake to RenaissanceRe, with the transaction also first reported in this publication.

    Arch and Catalina declined to comment.

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