Bermuda-based Enstar Group Ltd., a firm that typically acquires and manages insurance and reinsurance companies in run-off and portfolios of insurance and reinsurance business in run-off, has agreed to buy Torus Insurance Holdings Ltd. for $692 million to expand into “live” underwriting and direct sales of coverage.
Enstar said it will pay $415 million and Stone Point Capital LLC, led by Chairman Stephen Friedman, will provide $277 million, the Bermuda-based buyer said in a statement today.
Torus is the holding company of six wholly owned insurance vehicles, including one Lloyd’s syndicate.
Enstar said it will issue approximately 1,901,000 ordinary voting shares and approximately 711,000 newly created non-voting preferred shares having an aggregate value of approximately $346 million to partially fund the purchase price. Enstar will also contribute approximately $69 million in cash towards the purchase price, with affiliates of Stone Point Capital LLC funding the remaining approximately $277 million through an equity co-investment. Following the closing of the transaction, Enstar will own 60 percent of Torus and Stone Point will own 40 percent.
Private equity firms First Reserve and Corsair Capital, Torus’ largest shareholders, will receive both Enstar shares and cash consideration in the transaction, with the remaining Torus shareholders receiving all cash.
Following the closing of the transaction, affiliates of First Reserve, who will receive a mix of voting shares and all of the non-voting preferred shares being issued by Enstar in the transaction, will own an approximately 11.5 percent economic interest in Enstar, and Enstar will nominate one designee of First Reserve to Enstar’s Board of Directors. Completion of the transaction is conditioned on, among other things, governmental and regulatory approvals and satisfaction of various customary closing conditions.
The transaction is expected to close by the end of the year..
Enstar also announced today that affiliates of Stone Point have committed to provide up to $106 million of equity capital towards Enstar’s previously announced acquisitions of Atrium Underwriting Group and Arden Reinsurance Co.. Assuming both of those transactions are consummated, Enstar would own 60 percent of those companies and Stone Point would own 40 percent.
Dermot O’Donohoe, who Torus announced earlier today was named its group CEO, said, “We are very pleased with this transaction and the opportunity to join Enstar during this exciting time, as it expands into the live insurance market. We have a high regard for both Enstar and Stone Point and are confident in our collective abilities to achieve great results as a result of this deal.”
Dominic Silvester, Enstar CEO, said, “Following the recent announcement of our agreement to acquire Atrium, we are pleased to continue our expansion into ‘live’ underwriting through the acquisition of Torus. Torus provides us with an opportunity to acquire a large, international A- rated group of companies that both diversifies Enstar into the active market and enhances the opportunities available to our core legacy business.”