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Liberty seeks to dispose of near-$1bn of run-off liabilities


Liberty Mutual is in the early stages of marketing two legacy portfolios worth a near-$1bn of liabilities combined, this publication has learned.

Sources said the carrier is looking to dispose of a US construction defects book totalling liabilities of around $650mn, and a circa $300mn UK motor book, which is understood to encompass underwriting years from 2018 and prior.

As revealed by this publication, Liberty Specialty Markets opted to exit the UK motor treaty market in 2019.

Liberty Mutual is an active user of the run-off space to dispose of prior-year liabilities, with activity having increased in recent months. A number of live carriers have sought to execute on run-off deals in the past year in order to free up capital to redeploy in a hardening market.

The carrier is currently in advanced talks with RiverStone Europe to take on the legacy liabilities for Hamilton Syndicate 4000, which still sit with Liberty, the prior owner of the business. As this publication reported, the liabilities in scope are said to be around the $400mn mark for the 2018 years and prior.

In December last year, Liberty Mutual Insurance Europe signed a $420mn reinsurance deal with Enstar on a number of US energy liability, construction liability and homebuilders liability portfolios, previously written out of the insurer’s London operation.

With books of this size, there are only a handful of carrier which would look to take on the Liberty portfolios. The biggest and most likely legacy acquirers in the market are Enstar, Catalina and RiverStone, although it is unclear how the separation of RiverStone via CVC’s buyout of RiverStone Europe may impact the appetite of the two halves of the business.

The recent scale-up of carriers such as Darag and Compre may also bring them in scope for the smaller UK motor portfolio. Premia and start-up Marco could also show interest in the portfolios.

There has been a recent surge in private equity and pension fund interest in the legacy market. RiverStone Europe recently secured a $750mn deal with CVC, while Cinven alongside pension fund BCI agreed to acquire a majority stake in legacy specialist Compre from backers CBPE Capital, Hudson Structured and management.

Premia also launched a $265mn sidecar in December, bringing total managed capital to more than $900mn.

Liberty was contacted for comment.

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