QBE Insurance Group is transferring approximately US$1.6 billion of reserves from discontinued North American and international business segments to RiverStone International, in a deal that signals the Australian insurer’s continued push to clean up its balance sheet heading into a softening cycle.
The loss portfolio transfer agreements are subject to regulatory approval and cover three portfolios: North American middle market, workers’ compensation, and European liability books. All three are long-tail classes where reserve development can extend for decades – workers’ compensation claims can run for the life of a claimant, and European casualty liabilities regularly develop well beyond 10 years from the date of loss. That tail length is precisely what makes these books attractive to a specialist legacy acquirer like RiverStone and difficult for a primary insurer to carry efficiently alongside an active underwriting operation.
