QBE turns to RiverStone, Enstar to de-risk $1.6 billion reserve exposure

(Reuters) – Australian QBE Insurance said on Friday it had struck deals with Britain-based RiverStone International and global insurance group Enstar in a bid to de-risk the company’s exposure to reserves totaling about 1.6 billions of dollars.

The reinsurance agreements with the parties will de-risk all of QBE’s North American middle market reserves and a small number of other portfolios in its international and North American businesses.

The transaction with reserves will also result in a net capital gain of $230 million for QBE in the second half of the year.

“In addition to prior reserve transactions, QBE has now hedged ~20% of long reserves, which have collectively contributed more than $1 billion to prior adverse development in recent periods,” the firm said in a statement .

The deal will serve to de-risk long reserves for older accident years, QBE said, adding that it would lead to greater capital efficiency for the company.