Enstar Legacy Syndicate 2008 Agrees $196m LPT Deal with Atrium Syndicate 609

Rhea-AI Summary

Enstar Group (Nasdaq: ESGR) announced that its Lloyd's syndicate (Syndicate 2008) has entered into a loss portfolio transfer (LPT) agreement with Atrium Syndicate 609. The deal involves Atrium's discontinued portfolios, including Marine Treaty Reinsurance, Property Treaty Reinsurance, and US Contractors General Liability.

Under the agreement, Atrium Syndicate 609 will transfer net loss reserves of approximately $196 million to Enstar's Syndicate 2008, based on Atrium's Q3 2024 carried reserves. The reinsurance covers business underwritten in 2023 and prior years, with all claims handling responsibilities transferring to Syndicate 2008. The transaction is expected to complete in Q1 2025, subject to regulatory approvals and customary closing conditions.

Positive

• Acquisition of $196 million in loss reserves expands Enstar's portfolio
• Strategic expansion in Lloyd's marketplace
• Additional revenue stream from claims handling services

Negative

• Assumes potential liability risks from discontinued portfolios
• Transaction completion subject to regulatory approval uncertainty

Insights

Insurance Industry Analyst

The $196 million loss portfolio transfer between Enstar's Syndicate 2008 and Atrium Syndicate 609 represents a strategic move in the Lloyd's insurance market. This deal specifically targets discontinued portfolios in three key areas: Marine Treaty Reinsurance, Property Treaty Reinsurance and US Contractors General Liability. The transaction's structure allows Atrium to effectively transfer risk and responsibility for claims handling to Enstar, potentially freeing up capital and reducing administrative burden.

The timing of this LPT is particularly noteworthy, as it comes during a period of increased focus on portfolio optimization within the Lloyd's market. By taking over claims handling for business written through 2023, Enstar can leverage its expertise in managing legacy portfolios while Atrium can streamline its operations and focus on core business lines. The deal's size indicates a significant level of risk transfer and demonstrates Enstar's continued expansion in the legacy solutions market.

For investors, this transaction showcases Enstar's growing strength in executing complex legacy transactions and its ability to generate fee income through specialized claims handling services. The regulatory approval requirement suggests a thorough due diligence process, which adds credibility to the deal's structure and pricing.

Financial Risk Analyst

This loss portfolio transfer represents a calculated risk management strategy that benefits both parties. For Enstar, assuming $196 million in net loss reserves adds to their portfolio while potentially generating attractive returns through efficient claims management. The transaction's focus on discontinued lines suggests these are mature risks where loss patterns are more predictable, allowing for more accurate pricing and reserving.

The deal's structure involving three distinct insurance lines - marine treaty, property treaty and US contractors liability - provides natural diversification within the portfolio. The transfer of claims handling responsibilities to Syndicate 2008 indicates Enstar's confidence in their ability to manage these claims more efficiently than the original underwriter, potentially unlocking value through superior claims management expertise.

Looking at the broader market implications, this transaction reflects the ongoing trend of legacy portfolio optimization in the insurance sector, particularly within Lloyd's. The Q1 2025 expected completion timeline allows for proper regulatory review while providing near-term visibility on the transaction's impact on Enstar's financial statements.

HAMILTON, Bermuda, Jan. 14, 2025 (GLOBE NEWSWIRE) -- Enstar Group Limited (“Enstar”) (Nasdaq: ESGR) announced today its Lloyd’s syndicate (“Syndicate 2008”), managed by Enstar Managing Agency Limited, has agreed a ground-up loss portfolio transfer (“LPT”) with Atrium Syndicate 609, managed by Atrium Underwriters Limited. The transaction involves Syndicate 609’s discontinued portfolios, comprising Marine Treaty Reinsurance, Property Treaty Reinsurance and US Contractors General Liability.

Under the terms of the LPT, Atrium Syndicate 609 will cede net loss reserves of approximately $196 million, based on Atrium’s carried reserves as at Q3 2024, to Enstar’s Syndicate 2008. The reinsurance relates to business underwritten in the 2023 and prior years of account, with all claims handling transferring to Syndicate 2008.

The transaction is expected to complete in the first quarter of 2025 upon receipt of regulatory approvals and satisfaction of other customary closing conditions.

Dominic Silvester, Enstar Chief Executive Officer, said: “We are pleased to deliver a legacy solution for the Atrium team, with whom we maintain a strong relationship and partnership. This transaction allows us to apply our specialist claims handling capabilities and bespoke solution approach to a portfolio in the Lloyd’s marketplace.”

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 120 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’, ‘ambition’, ‘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. In particular, Enstar may not be able to complete the proposed transaction on the terms summarized above or other acceptable terms, or at all, due to a number of factors, including but not limited to the failure to obtain regulatory approvals or to satisfy other closing conditions. Important risk factors regarding Enstar can be found under the heading “Risk Factors” in Enstar’s Form 10-K for the year ended December 31, 2023 and Enstar’s Form 10-Q for the quarter ended September 30, 2024 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:

For Enstar:
For Investors: Matthew Kirk (investor.relations@enstargroup.com)
For Media: Jenna Kerr (communications@enstargroup.com)

FAQ

What is the value of the loss portfolio transfer between Enstar (ESGR) and Atrium Syndicate 609?

The loss portfolio transfer involves net loss reserves of approximately $196 million, based on Atrium's carried reserves as of Q3 2024.

Which portfolios are included in Enstar's (ESGR) LPT deal with Atrium?

The LPT includes Atrium's discontinued portfolios comprising Marine Treaty Reinsurance, Property Treaty Reinsurance, and US Contractors General Liability.

When is the Enstar (ESGR) and Atrium Syndicate 609 LPT deal expected to complete?

The transaction is expected to complete in the first quarter of 2025, subject to regulatory approvals and customary closing conditions.

What years of account are covered in the Enstar (ESGR) LPT agreement with Atrium?

The reinsurance relates to business underwritten in the 2023 and prior years of account.

Will Enstar (ESGR) handle claims processing for the transferred Atrium portfolios?

Yes, all claims handling responsibilities will transfer to Enstar's Syndicate 2008 as part of the agreement.