James River Group Holdings has announced that two of its principal operating subsidiaries have entered into a loss portfolio reinsurance transaction with Aleka Insurance, a wholly owned captive insurer of Uber Technologies.
Under the agreement, Aleka will reinsure substantially all of James River’s legacy portfolio of commercial auto policies related to Uber’s ride-sharing business. Under the terms of the deal, James River ceded to Aleka approximately $345.1 million of commercial auto business liabilities relating to business written for Uber between 2013 and 2019. The coverage being provided by Aleka is fully collateralized and not subject to an aggregate limit, James River said.
James River will recognize an after-tax loss associated with the transfer of about $23.5 million during the third quarter of 2021. The loss stems largely from claims-handling costs incurred in connection with the transaction.
As part of the transaction, the two James River subsidiaries and Aleka have entered into an administrative services agreement with Helmsman Management Services for certain claims-management services. Helmsman will assume responsibility for claims handling for the reinsured commercial auto policies for the remaining life of those claims, following a transition period, James River said.
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“We are confident in our carried reserves for this portfolio,” said James River CEO Frank D’Orazio. “The transaction brings economic finality to substantially all of our commercial auto run-off portfolio, effectively insulating the portfolio from further potential reserve development. This decisive step enables James River to focus firmly on the future and continue to build on the progress we have made in advancing our core businesses and risk management practices. We are pleased to be working with a long-term insured partner in Uber to pursue our stated goals.”