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Eastern Insurance closes sale of Eastern Atlantic RE

Eastern Insurance Holdings Inc (EIHI) has completed the sale of its Cayman Islands-based run-off specialty reinsurance segment Eastern Atlantic RE to an investor group advised by Dowling Advisors.

In this transaction, Dowling purchased 100% of the outstanding stock of Atlantic RE for $2.3m of cash. The after-tax loss on the sale of Atlantic RE is expected to approximate $14.5m.

Eastern Insurance Holdings CEO Bruce Eckert said the sale of this business reduces overall earnings volatility and allows management to focus all of its attention on the very profitable workers’ compensation insurance book of business, including the segregated portfolio cell reinsurance business.

"The sale of Atlantic RE eliminates the risk that EIHI will record unfavorable loss reserve development in its specialty reinsurance segment for business, the same business that is responsible for unfavorable loss reserve development on prior accident years of $27.3m over the last four years," Eckert said.

The transaction has been approved by the Cayman Islands Monetary Authority. EIHI was advised by Towers Watson. Stevens & Lee acted as counsel to EIHI.