To enhance its insurance business, Bermuda based
Enstar Group Limited
) has inked a deal to acquire global specialty insurer Torus
Insurance Holdings Limited. The purchase consideration equates to
Enstar will partially finance the deal by issuing 1.9 ordinary
voting shares and 0.7 million newly created non-voting preferred
shares. These shares sum up to $346 million or 50% of the
Out of the remaining $346 million of the purchase price,
Enstar will provide $69 million in cash and the other $277
million will be provided by affiliates of Stone Point Capital LLC
through an equity co-investment. Stone Point is a private equity
firm that makes investments and manages financial services
businesses. The deal is expected to culminate by the end of 2013.
In addition to Torus, StonePoint has also partnered with Enstar
for its previously announced acquisitions of Atrium Underwriting
Group and Arden Reinsurance Company.
Stone Point affiliates will provide up to $106 million of equity
capital for the acquisition of Atrium Underwriting Group and
Arden Reinsurance Company from Arden Holdings Limited which was
announced in Jun 2013 to provide live underwriting services. This
deal is also expected to culminate by the end of 2013. On
culmination of both the aforementioned deals, Enstar and Stone
Point will have an ownership interest of 60% and 40% respectively
in Torus and Arden Holdings.
The company has been taking frequent steps to foray into the live
insurance market. At this juncture, the aforementioned endeavors
make us pose an optimistic stance on the company. First, the
acquisition of Atrium is in line with the company's objective of
portfolio expansion. Second, the company has also been working
towards enhancing its existing business.
The acquisition of Torus satisfies this aim of the company by
enhancing its core legacy operations. Last but not least, the
partnership with Stone Point for the past 13 years have proved
successful and is thus expected to add value to the above
ASSURED GUARNTY (AGO): Free Stock Analysis
CIGNA CORP (CI): Free Stock Analysis Report
CNO FINL GRP (CNO): Free Stock Analysis
ENSTAR GROUP LT (ESGR): Free Stock Analysis
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Concurrently, Enstar has entered into an amended and restated
five-year revolving credit facility with National Australia Bank,
Barclays Bank and Royal Bank of Canada, effective Jul 2018. As
per this deal, Enstar can borrow up to $375 million for a coupon
rate of LIBOR plus 2.75% for amounts drawn and 1.1% commitment
fee on undrawn funds.
Enstar currently carries a Zacks Rank #1 (Strong Buy). Among
other favorable names in the insurance industry,
CNO Financial Group Inc.
Assured Guaranty Ltd
) also carry a Zacks Rank #1 (Strong Buy).