Enstar Group In Reinsurance Transaction
The Bermuda-based Enstar Group Limited announced that on December 31, 2010, through a wholly-owned subsidiary, it entered into a 100 percent reinsurance agreement, administrative services agreement, and related transaction documents with three affiliates of CIGNA Corporation pursuant to which the Enstar subsidiary has reinsured all of the run-off workers compensation and personal accident reinsurance business of those CIGNA affiliates.
Enstar, a Bermuda company based out of Windsor Place on Reid Street, acquires and manages insurance and reinsurance companies in run-off and provides management, consultancy and other services to the insurance and reinsurance industry.
Pursuant to the transaction documents, the CIGNA affiliates have transferred assets into three reinsurance collateral trusts securing the obligations of Enstar’s subsidiary under the reinsurance agreement and administrative services agreement. Enstar’s subsidiary has transferred approximately $50 million of additional funds to the trusts to further support these obligations. Enstar funded the contribution to the trusts through a draw on a new $115 million credit facility entered into with Barclays Bank PLC on December 29, 2010.
In addition to the trusts, Enstar has provided a limited parent guarantee supporting certain obligations of its subsidiary. The amount of the guarantee will increase or decrease over time under certain circumstances, but will always be subject to an overall maximum cap with respect to reinsurance liabilities.
Enstar also announced today that in a separate transaction it has completed the acquisition of Claremont Liability Insurance Company, a California insurance company in run-off, for approximately $14 million. This transaction was completed on December 31, 2010.
Enstar, a Bermuda company, acquires and manages insurance and reinsurance companies in run-off and provides management, consultancy and other services to the insurance and reinsurance industry.
