Enstar Group Announces Business Updates

August 20, 2022

Enstar Group Limited has announced updates relating to its joint venture with Allianz SE [Allianz], Enhanzed Reinsurance Ltd. [Enhanzed Re], and its recent investment portfolio performance.

A spokesperson said, “On August 18, 2022, Cavello Bay Reinsurance Limited [Cavello Bay], a wholly-owned subsidiary of Enstar, entered into a Master Agreement with Allianz and Enhanzed Re. Pursuant to the Master Agreement, Cavello Bay and Allianz have agreed to a series of transactions that will:

  • commute or novate all of the reinsurance contracts written by Enhanzed Re, except for one reinsurance transaction related to a block of annuity policies written by an affiliate of Allianz [the Annuities Portfolio], which the parties will cooperate in good faith to novate to a third party on commercially reasonable terms;
  • repay the $70.0 million of subordinated notes issued by Enhanzed Re to an affiliate of Allianz; and
  • distribute Enhanzed Re’s excess capital to Cavello Bay and Allianz in accordance with their respective equity ownership.

“The completion of the transactions contemplated by the Master Agreement is subject to customary closing conditions, including the receipt of certain regulatory approvals. The transactions will eliminate Enstar’s direct exposure to catastrophe business and are expected to result in an approximate $62 million increase in Enstar’s book value, which represents an increase of approximately $3.57 in book value per share, exclusive of the potential impact of a future novation of the Annuities Portfolio.

Investments Update

“During the six months ending June 30, 2022, Enstar reported total recognized and unrecognized investment losses of $1.3 billion, which were driven by continued volatility in the global financial markets. In the month of July 2022, our investment portfolio recognized an estimated unrealized gain of $221 million, or $12.72 per share, which was driven by an improvement in equity and credit markets and a drop in interest rates. These figures exclude the results of Enhanzed Re and certain other investments that are reported on a quarterly lag as disclosed in Enstar’s Quarterly Report on Form 10-Q for the period ended June 30, 2022.

“In addition to the strong July month end investment results, market conditions in August continue to improve which has favourably impacted our risk assets. As of today, equity markets were up and credit spreads have continued to improve. All in yields remain elevated year-to-date which allows us to invest new premium at attractive levels. Regardless of near-term volatility, we continue to have conviction that our investment portfolio is well positioned to deliver long term value.”

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