Cavello Bay Reinsurance, a subsidiary of legacy insurance specialist Enstar Group, has entered into an adverse development cover reinsurance agreement with Markel Insurance.

The agreement covers Markel’s run-off global reinsurance portfolio and certain discontinued lines within its insurance operations for underwriting years 2025 and prior.

Under the terms of the agreement, Bermudian-based Enstar will receive $2.4 billion in consideration to reinsure the “last-to-pay” $2.3 billion of reserves within a $4.8 billion portfolio, with Markel retaining the first $2.6 billion.

In addition, Enstar will provide $1.2 billion of adverse development cover above the $4.8 billion of subject reserves. Markel will retain administrative and claims handling responsibilities for the portfolio.

Completion of the transaction is expected by the end of the fourth quarter of 2026, subject to the receipt of regulatory approval and satisfaction of other customary closing conditions.

Dominic Silvester, Enstar’s chief executive officer, said: “Markel’s decision to partner with Enstar reflects our financial strength and our expertise in evaluating and underwriting complex portfolios at scale.

“The agreement will give Markel greater certainty over its legacy liabilities as it focuses on growing its core specialty insurance business. We look forward to continuing our work with Simon Wilson and his team once the transaction closes.”

Insurance Advisory Partners LLC acted as adviser to Enstar on the transaction. Aon acted as reinsurance broker and adviser to Markel.