The Hartford commutation with National Indemnity Company (“NICO”), a subsidiary of Berkshire Hathaway Inc., ended a reinsurance agreement between the two sides. In a Form 8-K, The Hartford reported that Hartford Fire Insurance Company received a cash payment of $1.12 billion and that the deal resolves the confidential arbitration regarding the parties’ dispute.
The Commutation Agreement and Its Parties
The Hartford describes the agreement in its Form 8-K report. The report states that on September 23, 2026, Hartford Fire Insurance Company and certain of its affiliates (collectively, the “Hartford Insurers”), entered into a Reinsurance Commutation and Release Agreement (the “Commutation Agreement”) with National Indemnity Company (“NICO”), a subsidiary of Berkshire Hathaway Inc.
According to the 8-K, the Hartford Insurers and NICO agreed to the commutation and termination of their existing Aggregate Excess of Loss Reinsurance Agreement (the “Reinsurance Agreement”), which has provided asbestos and environmental adverse development cover reinsurance since December 31, 2016. The 8-K’s wording also names certain related transaction documents.
The 8-K also addresses a dispute between the two sides. It states that the Commutation Agreement also resolves the confidential arbitration regarding the parties’ dispute under the Reinsurance Agreement.
Payment, Commutation and Release in the Filing
The 8-K also reports the payment. It states that on September 25, 2026, Hartford Fire Insurance Company received a cash payment of $1.12 billion.
On the termination, the filing states that upon receipt of such payment, the Reinsurance Agreement was commuted and terminated in accordance with the terms of the Commutation Agreement.
As to liabilities, the 8-K says the Hartford Insurers and NICO were released from liabilities and obligations arising under the Reinsurance Agreement and related transaction documents.
What The Hartford Expects to Recognize
The 8-K frames the financial effects as expected amounts. It says that for the three and nine months ended September 30, 2026, The Hartford expects to recognize a before tax net gain of $497 million, together with an increase in net income of $393 million, and no impact on core earnings.
On the origin of the gain, the 8-K states that the before tax gain reflects the release of the deferred gain on retroactive reinsurance after giving effect to the commutation.
The 8-K’s cautionary statement says that some of its statements may be considered forward-looking, and that these statements include, among others, statements regarding the expected financial and accounting effects of the transactions described above.
Second-Quarter Filing: Limits, Recoveries and a Suspended Payment
The Hartford’s second-quarter Form 10-Q report gives background on its reinsurance with NICO. It states that The Hartford has two ADC reinsurance agreements with National Indemnity Company, both accounted for as retroactive reinsurance.
According to the 10-Q, one agreement covered substantially all asbestos and environmental (“A&E”) reserve development for accident years prior to 2016 up to an aggregate limit of $1.5 billion.
The 10-Q states that The Hartford had previously ceded all available limits under the agreements, and that no remaining limit was available under the A&E ADC as of December 31, 2025. It adds that, as of December 31, 2025, the Company had paid A&E ADC claims in excess of the $1.7 billion attachment point.
The 10-Q’s notes to the financial statements state “Dollar amounts in millions, except for per share data, unless otherwise stated”. In those notes, the 10-Q says that during the three months ended March 31, 2026, the Company collected recoveries from NICO under the A&E ADC and, as a result, amortized $36 of the deferred gain. It also states that the deferred gain on the A&E ADC was $814 and $850, as of June 30, 2026 and December 31, 2025, respectively.
On the arbitration, the 10-Q states that, subsequently, during the first quarter of 2026, NICO suspended any further payment under the A&E ADC due to a dispute that is the subject of an arbitration proceeding. It adds that the timing of any resolution or outcome of the arbitration is not yet known, and that there may be impacts to the Company’s cash flows or operating results as a result of the dispute.
For readers who follow Hartford’s deals, InsuraBeat has separate coverage of Hartford’s purchase of Equitable’s employee benefits business.
For readers who follow Berkshire Hathaway’s reinsurance leadership, InsuraBeat has separate coverage of Berkshire Hathaway’s reinsurance leadership change.
