• October 19, 2022
    Regulatory Update: The Insurance Business Transfer Mechanism
    NAIC publishes Foundation Principles and Best Practices   The Restructuring Mechanisms Subgroup of the National Association of Insurance Commissioners has issued two draft publications on the insurance business transfers (IBT) and corporate divisions (CD), as authorized by various States, for the State insurance regulators to use in approving the IBT/CD transactions: Foundational Principles and Best Practices Procedures for IBT/Corporate Divisions. Learn more about what an IBT is and our view of the mechanism in our piece, Insurance Business Transfer Finality Getting Closer to Reality.   The Restructuring Mechanisms Working Group had released a white paper in December 2021 on restructuring mechanisms associated with transfers of legacy business. Although the draft white paper takes no position for or against IBTs/CDs, it provides a useful overview on the history of such transactions and considerations for regulators. The Subgroup’s recent publications address the expected level of reserves, capital expected after transfer, and the adequacy of long-term liquidity needs, among various other matters. The Best Practices Procedures for IBT/Corporate Divisions also includes monitoring companies after the transaction is completed. Observations on the Foundational Principles and Best Practices Procedures include: Policyholders should be left in the “same or a better position” after completion of the transaction. The Subgroup has requested comments on the term “no worse off” and how this is measured. The Foundational Principles further note that the transaction should not have any “adverse impact” on policyholders, including services, suggesting that the NAIC may recognize that in an IBT, an impact to the policyholder clearly arises (e.g. change in counterparty), but “no impact” is not the standard for approving an IBT. Prior to an IBT or corporate division transaction, an independent expert should conduct the following: an actuarial review of the reserves and capital (e.g. RBC and financial strength) before and after the transaction; the assets transferred to insurers involved are adequate to cover liabilities being transferred; consideration of any plans to liquidate another involved insurer or make changes resulting in an impact on capital and policyholders; and solvency assessment. (In a corporate division, an insurer is divided into two or more resulting insurers, and the dividing insurer’s assets and liabilities are allocated between or among the resulting insurers, without requiring policyholder consent.) The Subgroup requested comment on the use of an independent expert for corporate divisions. Prescribed conservative assumptions should be included in capital calculations to avoid the manipulation of capital thresholds. Capital reviews of the transaction should consider the following: - capital and/or reinsurance limits assessments should include quantitative analysis; - risk-exposure modeling; - horizon and confidence levels to address short term (1 year), mid‐term (5 to 10 years), and long term (relatively consistent with liability horizon); - stress scenarios and their relationship to capital adequacy; - impact on capital needs attributable to diversification in liabilities, asset mix; and amount and quality of “outside” existing inuring reinsurance and internal hedging. Prescribed conservative assumptions should be included in capital calculations to avoid the manipulation of capital thresholds. Consideration of the plans to consolidate, dividend or sell assets, liquidate or make other similar changes, and the resulting impact on capital, policyholders, reinsurers, and guaranty associations. The Best Practices Procedures further note that one way that IBT laws can differ from corporate division laws is that some states’ IBT laws, the liabilities of the transferee are segregated from the other liabilities not associated with such a transfer and under laws can be expected to be both self-sustaining (e.g. no more monies may be transferred to fund such liabilities under the terms of the transfer) and self-containing (e.g. cannot be used to cover liabilities not associated with the transfer). For IBTs or other transactions which will not have access to additional capital, an actuarial report of the adequacy of run-off reserves (gross and net) being transferred should include an analysis and comparison of stressed reserves under reasonable deterministic criteria/scenarios provided by the state of domicile; and if the reviewing authority requires additional capital, which is higher than the required reserve, the additional amount should be reported in special surplus. Comments on the publications were due on June 21. RiverStone submitted a comment letter specifically related to risk-based capital recommendations for run-off insurers as well as general comments on the Best Practices and Guidelines. We welcome continuing dialogue with regulators and other stakeholders on these issues. Posted: Oct 19, 2022
  • August 10, 2022
    RiverStone Acquires Its First Vermont Captive
    RiverStone, the U.S. insurance runoff specialist of the Fairfax insurance group, is pleased to announce the acquisition of Western Property & Casualty Insurance Company (Western P&C), effective August 31, 2022.   Western P&C was formed in Vermont to support a group of companies (which included companies engaged in energy production) as to its automobile liability, general liability and workers’ compensation exposures, on a deductible reimbursement basis. The shareholders of Western P&C will enter into a stock purchase agreement with Fairfax. The Vermont Department of Financial Regulation has approved the acquisition. Matt Kunish, Chief Business Development Officer, RiverStone said: “I am pleased to announce RiverStone’s first venture into the Vermont captive community. This is an exciting step for RiverStone as we look to take advantage of the various opportunities the Vermont captive market has to offer.” Post Last Updated: August 31, 2022
  • September 10, 2021
    Some of RiverStone’s actuarial experts will be presenting at this year’s virtual Casualty Loss Reserve Seminar on September 13-15, 2021.  This key event is presented by the Casualty Actuarial Society and the American Academy of Actuaries.    James Kahn, Brad Tumbleston, and Wilson Townsend will present at a concurrent session entitled Estimating Loss and ALAE Reserves in the Challenging World of Construction Defects (CD) Risks by Consideration of Closed Payment Segmentation.  Their presentation will highlight key observations and techniques noted in their recently published reserve call paper: Segmenting Closed Claim Payment Data to Estimate Loss and ALAE Reserves for Construction Defects.  Click here to read the complete paper.    Key points of the presentation will include discussion about: The scarcity of accompanying CD literature within the publications of the Casualty Actuarial Society Ease of data compilation with the cited technique Observations with claim severity and length of time from report date to settlement/closure date Ability to cap historical closed claims and provide historical excess “loads” so as not to distort claims history for large claims; and Segmentation and projection of Allocated Loss Adjustment Expense (ALAE) by ultimate claim status The speakers will highlight how these techniques may lead to earlier understanding and adjustments of changes to data versus traditional methodologies.  Among the most critical factors of success for an insurance company is a strong partnership between their actuarial and claims departments.  This partnership is key to the understanding of construction defect liabilities. 
  • August 23, 2021
    Fairfax Completes Sale of RiverStone Europe
    TORONTO, Aug. 23, 2021 (GLOBE NEWSWIRE) — Fairfax Financial Holdings Limited (“Fairfax”) (TSX: FFH and FFH.U) announces the successful completion of the previously announced sale of all of its interests in RiverStone Europe to CVC Capital Partners (“CVC”) for a purchase price of approximately US$700 million. Fairfax will also be entitled to receive up to US$235.7 million post-closing under a contingent value instrument. RiverStone Europe will now operate under the name RiverStone International. Certain subsidiaries of RiverStone Europe beneficially own a portion of Fairfax’s indirect holdings in various Canadian reporting issuers. See attached Schedule “A” for Fairfax’s early warning disclosure relating to these holdings. Fairfax is a holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and the associated investment management. For further information contact: Fairfax: John Varnell, Vice President, Corporate Development at (416) 367-4941   Click here to download a complete copy of this press release from the Fairfax website (including Schedule A, Early Warning Disclosure details).
  • December 2, 2020
    Fairfax Announces Sale of RiverStone Europe to CVC
    TORONTO, Dec. 02, 2020 (GLOBE NEWSWIRE) -- Fairfax Financial Holdings Limited (“Fairfax”) (TSX: FFH and FFH.U) announces that it has entered into a binding agreement with CVC Capital Partners (“CVC”) to sell all of its interests in RiverStone Europe to CVC Strategic Opportunities Fund II. OMERS, the pension plan for Ontario’s municipal employees, has also agreed to sell all of its interests in RiverStone Europe as part of the transaction. The purchase price to be received by Fairfax on closing of the transaction is approximately US$750 million.   Fairfax will also be entitled to receive up to US$235.7 million post-closing under a contingent value instrument. Luke Tanzer will remain the Managing Director of RiverStone Europe and Nick Bentley, the Chief Executive Officer of the RiverStone Group, will remain on the board of RiverStone Europe post-closing. After closing, RiverStone Europe will also operate under the name RiverStone International and will seek to continue its successful track record of acquisitions and growth led by its existing management team. “We are very pleased to enter into this transaction with CVC,” said Prem Watsa, Chairman and Chief Executive Officer of Fairfax. “RiverStone Europe is an industry leader in run-off insurance services, and CVC’s scale and vision will give RiverStone Europe, under the continued leadership of Luke and his management team, the opportunity to further grow the business. Nick and Luke are also fully supportive of this transaction, based on their strong beliefs that it was the best way for RiverStone Europe to continue to grow and pursue run-off transactions. We wish Luke and all of the employees at RiverStone Europe much success in the future.   Fairfax remains committed to continuing to grow its other European businesses, including its Lloyd’s of London activities.” “I am extremely happy to partner with CVC in this next chapter of our development,” said Luke Tanzer, Managing Director of RiverStone Europe. “This transaction will provide us with a runway for further growth as we continue to offer the most trusted and effective run-off solutions in the insurance market. We look forward to joining the CVC family and benefitting from their deep experience of financial services, global network and long term pool of capital.” “As one of the largest global consolidators of non-life run-off insurance books, with a leading position in the UK and Lloyd’s market, embedded cash flows and a predictable financial profile, RiverStone Europe is ideally suited to CVC’s Strategic Opportunities platform, which specializes in backing established businesses in stable markets that have long term growth ambitions,” said Peter Rutland, Managing Partner and Head of Financial Services at CVC. “We have got to know RiverStone and Fairfax over many years, and are delighted to now have the opportunity to work with Luke Tanzer and his experienced team.” The transaction is subject to customary closing conditions, including various regulatory approvals, and is expected to close in early 2021. Fairfax is a holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and the associated investment management. CVC is making this acquisition through Strategic Opportunities Fund II, a vehicle designed to invest in high-quality businesses that are suited to longer hold investment horizons. For further information contact: Fairfax: John Varnell, Vice President, Corporate Development at (416) 367-4941 CVC: Carsten Huwendiek, Global Head, Marketing & Communications at +44 207 420 4200 Click here to download a complete copy of this press release from the Fairfax website.
  • June 2, 2020
    Skuld agrees sale of Lloyd’s Syndicate 1897 to RiverStone
    Oslo and London: 2 June 2020 - Skuld, a leading marine insurance provider, today announces that it has reached an agreement with The RiverStone Group ("RiverStone") for the sale of its Lloyd’s Syndicate 1897, which was placed into run-off in July 2019. The transaction is subject to regulatory approval. Following a competitive process which began in autumn 2019, Skuld selected RiverStone as run-off provider for Syndicate 1897 from a number of bidders. Once the transfer of the management of corporate members to RiverStone is complete, Skuld will achieve economic and legal finality on the syndicate. Skuld will continue to underwrite all its hull and offshore energy business as Skuld Hull, the A-rated corporate platform of Skuld Assuranceforeningen, through Skuld UK in London and Skuld Marine Agency in Oslo. The majority of liabilities within Skuld Syndicate 1897 relate to marine hull & machinery and energy business. Willis Tower Watson Securities served as adviser to both parties in concluding the agreement. Ståle Hansen, Skuld President and CEO, said: "Skuld remains resolutely focused on the best outcome for our clients and members. We have successfully transitioned our non-P&I clients from Syndicate 1897 to Skuld Hull, our company-market platform, and the sale of the Skuld Syndicate portfolio is a significant step in improving Skuld's operational efficiency. "Professional support and honouring the solemn promise to our insureds were at the core of thinking throughout this process. RiverStone has an outstanding reputation in the legacy market and we have full confidence they will ensure the highest levels of service and claims handling to all of our clients." Luke Tanzer, Managing Director of RiverStone UK, added: "We are delighted to announce this transaction with Skuld, an outstanding marine insurer with a market-leading reputation. RiverStone is a respected and longstanding legacy provider that delivers on the promise to insureds and will continue to do so for all policyholders of Syndicate 1897. "The Skuld Management Team has been resolutely professional throughout this process and it has been a great pleasure to work with them. We have worked closely and collaboratively with the Skuld team to ensure that their strategic objectives are achieved through this transaction and our responsible management and adherence to our core principles, will ensure that their insureds continue to receive the highest possible level of service and that their excellent reputation is maintained."
  • March 23, 2020
    RiverStone COVID-19 update on 23 March, 2020
    As we continue to navigate through this unprecedented time, we want to share some of the steps that we are taking to maintain business continuity and the support of our clients, business partners and teams across the U.K and U.S. Last week saw the closure of all our U.K and U.S offices and the activation of our business continuity plans. We have invested in better communication platforms and our ability to work remotely, but not in isolation with regular team calls via both telephone and video taking place. Our response plan We designated various task forces both in the U.K. and the U.S. to ensure we continue to provide seamless operations and first-class service. We established a support network to ensure our employees have access to the right services to help them navigate this difficult time and to look after their mental well-being. We are incredibly proud of everyone's efforts in keeping the company running seamlessly, delivering on our promises and the tremendous team spirit demonstrated by all. We remain confident in our ability to continue to operate remotely, keeping open communications with all our clients, business partners and teams across the U.K and U.S and would like to thank everyone for their outstanding efforts.
  • March 14, 2020
    RiverStone COVID-19 update
    In view of the continued disruption caused by the COVID-19 coronavirus outbreak, please be rest assured that our priority is to continue to provide the first-class client service to which you’ve become accustomed, while protecting the health and safety of our team and their friends and families. Accordingly, we have taken the decision to close all of our offices across the U.K. and U.S.  We are committed to minimising any disruption. All key personal and functions will operate remotely, accessing systems that ensure the confidentiality, integrity and availability of email, documents and servicing. We are completely confident in our ability to seamlessly maintain operations and will continue to monitor the situation closely and review all our procedures accordingly.
  • February 26, 2020
    Part VII Transfer of Japanese Reinsurance Portfolios to RiverStone
    RiverStone is pleased to announce that, with effect from 31 January 2020, a portfolio of reinsurance business has been transferred from the UK branch of Aioi Nissay Dowa Insurance Company, Ltd (“ADI”) to RiverStone Insurance (UK) Limited under Part VII of the Financial Services and Markets Act 2000. This transfer provides ADI with legal and economic finality in respect of the transferred portfolio and enables ADI to focus its resources on its core business. For further information please contact: Luke Tanzer Managing Director RiverStone Insurance (UK) Limited Luke.Tanzer@rsml.co.uk
  • February 11, 2020
    RiverStone Completes RITC Transaction With The Channel Syndicate
    10 February 2020 – RiverStone has completed its RITC transaction with The Channel Syndicate, SCOR Specialty’s Lloyd’s arm. The transaction is effective from 1 January 2020, and covers the 2017 and prior years of account of Syndicate 2015. RiverStone and Channel are working closely together to ensure the continuity of their excellent service to all stakeholders. “We are delighted that Channel has chosen us to help deliver their strategic aims,” said Luke Tanzer, Managing Director of RiverStone UK. “This transaction will enable Channel to concentrate on their ongoing core business safe in the knowledge that their reputation will be protected by RiverStone’s commitment and focus on the delivery of excellence in the management of legacy business.” RiverStone Managing Agency Limited and its service company, RiverStone Management Limited, will be managing the business with effect from 1 April 2020. Until this date, Channel will retain the day-to-day management of the portfolio on behalf of RiverStone. This transaction, brokered by Guy Carpenter, enables SCOR to deploy its capital efficiently and for RiverStone to bring its claims management expertise and focus onto this portfolio. For further information please contact: Luke Tanzer Managing Director RiverStone Managing Agency Limited Luke.Tanzer@rsml.co.uk