The Hartford strikes $300m ADC deal for Navigators with Berkshire Hathaway

US-based property/casualty insurer The Hartford has agreed a $300 million aggregate excess of loss reinsurance treaty with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway.

The coverage will protect the company against unfavourable prior year loss development at the Navigators Group, which The Hartford is acquiring in an all-cash deal of approximately $2.1 billion.

Subject to regulatory approval, the reinsurance treaty will be effective after the closing of the acquisition of Navigators.

It will provide up to $300 million of coverage for potential adverse PYD in excess of $100 million above Navigators’ Dec. 31, 2018 loss reserves of $1.8 billion.

The Hartford will pay a premium of approximately $91 million, before tax, or $72 million, after tax, for the coverage.

“In order to provide greater certainty about the impact this may have to The Hartford, we decided to purchase from NICO an adverse loss development cover [ADC] for Navigators' reserves," said The Hartford’s chief financial officer Beth Costello.

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