Enstar Completes Reinsurance Transaction with Accredited
Enstar Group (NASDAQ: ESGR) has successfully completed a reinsurance transaction involving legacy business of Accredited Surety and Casualty Company and Accredited Insurance (Europe) The deal, integral to Onex Partners' acquisition of Accredited, covers net reserves approximating $234 million. This reinsurance encompasses diversified portfolios including asbestos, general casualty, and workers' compensation across the US and UK/European markets. Enstar will now handle all administrative and claims duties. The transaction's completion follows broader acquisition finalization and regulatory approval.
- Completion of a significant reinsurance transaction covering $234 million in net reserves.
- Enstar's role in facilitating Onex Partners' broader acquisition of Accredited.
- Transfer of administrative and claims handling to Enstar, enhancing operational control.
- None.
Insights
This reinsurance transaction between Enstar Group Limited and Accredited Surety and Casualty Company, Inc. forms part of a larger acquisition by Onex Partners. The transfer of legacy business involving portfolios like asbestos, general casualty and workers' compensation is noteworthy for several reasons.
First, the reinsurance covers net reserves of approximately
In the short term, this transaction is likely to bolster Accredited’s balance sheet by freeing up capital previously tied to these reserves. For Enstar, the deal enhances their revenue from administrative duties and claims handling. Investors in Enstar may view this deal positively as it showcases the company's expertise in managing complex reinsurance transactions, potentially leading to improved profitability and operational efficiency.
However, in the long term, the success of this arrangement depends on effective claims management and the reliability of reserve estimates. Misestimating liabilities or failing to manage claims efficiently could pose financial risks. This move aligns well with industry trends where companies are increasingly focusing on their core activities by shedding non-core liabilities through reinsurance.
From an industry perspective, this transaction highlights a growing trend in the insurance sector: the use of reinsurance to manage legacy liabilities. By transferring these responsibilities to Enstar, Accredited can now focus on its program management business with a stronger capital base, as mentioned by Dominic Silvester, Enstar’s CEO.
The portfolio includes diverse exposures, such as asbestos and workers' compensation, which are typically challenging to manage due to their long-tail nature. Enstar's expertise in handling legacy insurance provides Accredited with more stability and the ability to leverage Enstar's claims management systems.
One important aspect is the regulatory approval that this transaction required. Regulatory bodies closely scrutinize such deals to ensure policyholders are protected and that the reinsuring company can adequately cover future claims. The receipt of regulatory approvals indicates confidence in Enstar’s financial robustity and operational capabilities.
Overall, this transaction is strategically sound for both parties. Accredited alleviates risk, while Enstar solidifies its position as a specialist in legacy insurance. This deal could serve as a blueprint for future transactions in the sector.
Deal forms part of Onex Partners’ acquisition of Accredited
HAMILTON, Bermuda, June 28, 2024 (GLOBE NEWSWIRE) -- Enstar Group Limited (NASDAQ: ESGR) today announces that one of its wholly owned subsidiaries has completed a transaction to reinsure legacy business written by Accredited Surety and Casualty Company, Inc. and Accredited Insurance (Europe) Limited (together, “Accredited”). Enstar has provided reinsurance in connection with the acquisition of Accredited by Onex Partners.
The reinsurance addresses Accredited’s assumed and underwritten legacy deals, comprising diversified portfolios, including asbestos, general casualty, workers’ compensation, and other exposures in both the US and the UK/European markets.
The reinsurance provides cover for net reserves of approximately
The closing of the transaction, in which Guy Carpenter acted as the broker, followed the closing of the broader acquisition of Accredited by Onex Partners and receipt of regulatory approvals and satisfaction of other closing conditions.
Dominic Silvester, Enstar’s Chief Executive Officer, said: “This partnership with Onex is a strong example of how Enstar can step in to facilitate broader M&A transactions in support of our partner’s long-term strategic goals. The legacy arrangement will enable Accredited to continue to focus on serving its programme management business with a strong capital base.”
About Enstar
Enstar is a NASDAQ-listed leading global insurance group that offers innovative capital release solutions through its network of group companies in Bermuda, the United States, the United Kingdom, Continental Europe, Australia, and other international locations. A market leader in completing legacy acquisitions, Enstar has acquired more than 117 companies and portfolios since its formation in 2001. For further information about Enstar, see www.enstargroup.com.
Cautionary Statement
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include statements regarding the intent, belief or current expectations of Enstar and its management team. Investors can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as ‘aim’, ‘anticipate’, ‘estimate’, ‘expect’, ‘intend’, ‘will’, ‘project’, ‘plan’, ‘believe’, ‘target’ and other words and terms of similar meaning in connection with any discussion of future events or performance. Investors are cautioned that any such forward-looking statements speak only as of the date they are made, are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Important risk factors regarding Enstar can be found under the heading "Risk Factors" in our Form 10-K for the year ended December 31, 2023 and are incorporated herein by reference. Furthermore, Enstar undertakes no obligation to update any written or oral forward-looking statements or publicly announce any updates or revisions to any of the forward-looking statements contained herein, to reflect any change in its expectations with regard thereto or any change in events, conditions, circumstances or assumptions underlying such statements, except as required by law.
Contact: Enstar Communications
Telephone: +1 (441) 292-3645
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