Bermuda based insurance, reinsurance and run-off specialist Enstar Group has announced an exchange agreement with Trident V, L.P. and its affiliated funds managed by Stone Point Capital.
The transaction, if approved by regulators, will result in Enstar owning a greater share in StarStone US and the Trident V Funds owning a greater share in the holding company for Atrium Underwriting Group.
The transaction is conditioned upon the closing of the previously announced recapitalisation of StarStone US, pursuant to which a new management team and board of directors will be appointed.
New investors will also be brought in to increase its total equity capitalisation to over $850 million, with an Enstar subsidiary reinsuring legacy reserves.
In the exchange, Enstar will acquire all of the Trident V Funds’ interest in the recapitalized StarStone US, resulting in Enstar having approximately 26% of the ownership of StarStone US.
Following the completion of the recapitalisation and exchange transactions.
Furthermore, the Trident V Funds will receive a portion of Enstar’s indirect interest in Northshore Holdings Ltd., the holding company for Atrium, increasing their indirect ownership interest in Atrium from approximately 36% to approximately 80%, with Enstar decreasing from approximately 54% to approximately 11% and retaining one Northshore Holdings board seat.
Members of Atrium’s management team and funds managed by Dowling Capital will continue to own minority positions in Northshore Holdings.
Enstar, the Trident V Funds and Dowling will retain their respective ownership interests in StarStone’s non-US operations, partnering in the run-off of this business.
The Trident V Funds continue to own approximately 9% of Enstar Group Limited’s ordinary voting shares.
“This transaction deepens our successful relationship with Stone Point, which has been a valued partner of Enstar for two decades,” said Dominic Silvester, Enstar’s Chief Executive Officer.
“Enstar is ideally placed to capitalize on the increasing flow of large, attractive legacy opportunities, and will remain invested in high-quality live underwriting businesses with proven leadership, such as Atrium and StarStone U.S., through meaningful minority stakes and alongside trusted equity partners.”
Chuck Davis, Stone Point’s Chief Executive Officer, noted “We are delighted to increase our investment in Atrium. The company is led by an outstanding management team that has a long-term track record of producing underwriting profits.
“We also value our long-standing relationship with Dominic Silvester and his colleagues at Enstar, and we look forward to continuing our existing partnerships and identifying new opportunities for Enstar and Stone Point.”
Richard Harries, Atrium’s Chief Executive Officer, added, “Atrium has thrived under the joint ownership of Enstar and Stone Point. This change, which will have no operational impact on Atrium, is a further vote of confidence in the Atrium team.
I am pleased that Enstar will retain an ownership interest in Atrium, and we welcome the increased participation of Stone Point, whose management team we know well, as we pursue our strategic goals in an increasingly improving underwriting environment.”