James River cedes Uber policies to rideshare’s captive

Uber’s captive Aleka Insurance is to reinsure substantially all of James River’s legacy portfolio of commercial auto policies related to the ridesharing business.

Under a loss portfolio transfer (LPT) reinsurance transaction announced yesterday, James River has ceded approximately $345.1 million of commercial auto liabilities relating to the business it wrote for Uber between 2013 and 2019. Aleka’s coverage is fully collateralized and not subject to an aggregate limit.

Under the agreement, James River will recognize an after-tax loss associated with the LPT of approximately $23.5 million during the third quarter of 2021 – mainly from claims handling costs in connection with the transaction. Two James River subsidiaries and Aleka have also entered into an administrative services agreement with Helmsman Management Services for certain claims management services. After a transition period, Helmsman will assume claims handling responsibility for the reinsured commercial auto policies for their remaining life.

Following the deal, rating agency AM Best responded by revising the insurer’s outlook to stable from negative. It also affirmed the long-term issuer credit rating of “bbb-” (Good) of James River Group Holdings.

“While we are confident in our carried reserves for this portfolio, the transaction brings economic finality to substantially all of our commercial auto run off portfolio, effectively insulating the portfolio from further potential reserve development,” said James River chief executive officer Frank D’Orazio.

“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.”