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Hartford & Berkshire Call Time on A&E Cover — $1.12 Billion Buys Finality on a Decade-Old Deal
Hartford has commuted its 2016 asbestos and environmental adverse development cover with Berkshire Hathaway’s National Indemnity. It takes $1.12 billion in cash, and the deal settles a confidential arbitration between the two.
28 September 2026 • Page 3 • Stop Press • Commutations & Finality
The Transaction
The Hartford’s insurance subsidiaries, led by Hartford Fire Insurance Company, have entered into a Reinsurance Commutation and Release Agreement with National Indemnity Company (NICO), the Berkshire Hathaway reinsurer. The agreement ends the Aggregate Excess of Loss Reinsurance Agreement that has protected Hartford’s asbestos and environmental (A&E) reserves since 31 December 2016.
The agreement was signed on 23 September. Hartford Fire received $1.12 billion in cash on 25 September, and on payment the reinsurance agreement was commuted and terminated. Both sides were released from all further obligations under it and the related transaction documents. The deal also settles a confidential arbitration between the parties over their dispute under the agreement.
Hartford expects to book a before-tax net gain of $497 million, and a $393 million increase in net income, for the third quarter and nine months to 30 September. The gain comes from releasing the deferred gain on retroactive reinsurance. The company says there is no impact on core earnings
28 September 2026 • Page 3 • Stop Press • Commutations & Finality
Market Context
The original deal was one of the landmark legacy transactions of its time. Hartford paid NICO a $650 million premium for up to $1.5 billion of cover against adverse development above its $1.7 billion of net A&E reserves carried at the end of 2016.
Commutations of adverse development covers are rare, and one of this size is rarer still, especially one that settles an arbitration with a Berkshire counterparty. For cedants holding long-dated retroactive covers, it shows that finality can run both ways. A cover bought to put A&E exposure to rest can itself become the subject of a dispute, and commutation is the way out.
By the Numbers
- $1.12bn: cash paid to Hartford on commutation
- $497m: expected pre-tax gain
- $393m: expected increase in net income
- $1.5bn: original aggregate limit, bought for a $650m premium in 2016
Key Points
- Hartford and NICO commute their 2016 A&E adverse development cover
- $1.12 billion cash received on 25 September
- Confidential arbitration between the parties resolved
- $497m pre-tax gain and $393m net income uplift in Q3, with no effect on core earnings
- Both parties fully released from future obligations
28 September 2026 • • Page 3 • Stop Press • Commutations & Finality
JDCC VIEW
This issue has two stories about adverse development covers ending in different ways. James River’s ran out, and Hartford’s was closed by agreement. Hartford gets $1.12 billion in cash and finality. Berkshire ends an arbitration and a long-tail exposure it had held for almost a decade. Neither side has said what the arbitration was about, and that is probably the most interesting part of the deal. It’s unusual for a cover this large to end in a dispute, and other buyers of long-dated retroactive cover will be asking what went wrong.
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