Four Factors Plaintiffs Should Consider When Evaluating Loss Portfolio Transfers in Mass Tort Cases

Loss portfolio transfers are reinsurance contracts where a self-insured organization or an insurer typically cedes legacy liabilities to a reinsurer. The reinsurer assumes and accepts the ceding entity’s current and future claim liabilities, including the loss reserves. In exchange, the ceding entity agrees to pay the reinsurer for those reserves, often at a premium over the present value of the reserves, but at a discount to what the reinsurer believes it can earn over time by investing those reserves today.