Enstar Group Limited (NASDAQ:ESGR) ("Enstar") announced today that
it has agreed to a recapitalization of StarStone U.S. Holdings,
Inc. (“StarStone U.S.” or the “Company”) led by SkyKnight Capital,
L.P. (“SkyKnight”), Dragoneer Investment Group (“Dragoneer”) and
Aquiline Capital Partners LLC (“Aquiline,” and together with
SkyKnight and Dragoneer, the “Investors”). The Investors have
committed $610 million in new equity capital which, together with
the rollover of Enstar’s existing ownership, and an additional
equity commitment of over $20 million from management, will
increase the equity capitalization of StarStone U.S. to over $850
million. Enstar will receive a combination of cash
consideration and shares in the recapitalized StarStone U.S, valued
at a modest premium to book value.
As part of the capital infusion, a new
management team and Board of Directors will be appointed to
StarStone U.S. Jeff Consolino will be CEO and Ed Noonan will be
Executive Chairman. The new Board of Directors will include Messrs.
Noonan and Consolino; Paul O’Shea and Robert Campbell from Enstar;
Steve DeCarlo; Matthew Ebbel, Managing Partner of SkyKnight; Marc
Stad, Managing Partner of Dragoneer; and Chris Watson, Partner of
Aquiline.
In conjunction with the capital infusion, one of
Enstar’s wholly owned subsidiaries will enter into a combination
loss portfolio and adverse development cover reinsurance agreement
with StarStone U.S. The recapitalization is expected to close in
the second half of 2020 after obtaining customary regulatory
approvals.
Dominic Silvester, CEO of Enstar, said: “This is
a pivotal moment for StarStone U.S. as we reposition the Company
towards specialty E&S growth. In partnership with experienced
investors and a talented management team, which have built and led
winning organizations, Enstar is committed to realizing StarStone
U.S.’ full potential as a specialty commercial property &
casualty insurer. StarStone U.S. will work with Enstar, as
opportunities warrant, in our ongoing acquisition activities.”
Jeff Consolino is an experienced insurance
industry leader with over 28 years of industry experience. Most
recently, Jeff was Executive Vice President, Chief Financial
Officer and a Director of American Financial Group, Inc. He was
previously a founding executive of Validus Holdings, Ltd. (“Validus
Group”) where he served as President and Chief Financial
Officer.
“I am delighted and honored to take on the role
of CEO of StarStone U.S.,” said Mr. Consolino. “I am looking
forward to working with the Company’s many talented underwriters,
employees, and distribution partners as well as the reconstituted
Board of Directors to build a market leading specialty insurance
company. We observe premium pricing increasing and capacity
contracting across multiple classes of business including
commercial property, D&O, excess casualty, marine &
aviation and professional liability. Social inflation and natural
catastrophe losses, including floods and wildfires, have also added
to market rate momentum. In addition, the COVID-19 pandemic has led
to market dislocation and additional capital need. We believe a
specialist insurance company with the right leadership, financial
backing, protection from legacy exposures and niche orientation can
create significant value in this environment.”
Ed Noonan brings more than 40 years of industry
experience to the Company. He served most recently as Chairman and
CEO of Validus Group, a position he held from 2005 to 2018. Under
Mr. Noonan’s leadership, Validus Group experienced significant
growth, and ultimately was acquired by AIG in 2018 after more than
a decade as a leading independent public company. Mr. Noonan also
served as President and CEO of American Re from 1997 to 2002, after
joining the firm in 1983. A recognized market leader, Mr. Noonan
brings vast expertise to the position of Executive Chairman.
Mr. Noonan said: “Having had the chance to work
with the StarStone U.S. team, I am really pleased to have the
opportunity to help them build on the excellent work they have
done. We have assembled a Board comprised of company founders and
business builders which we believe is second to none. I have worked
closely with Jeff and many of the directors for years and believe
the mix of their skills and experience will greatly benefit the
development of the enhanced StarStone U.S. business plan. We are
very pleased to have the opportunity to partner with patient,
long-term investors Dragoneer and SkyKnight who bring a valuable
network across both the technology and insurance industries.
Following the formation and successful sale of Validus, we are also
excited that Aquiline will again invest with us.”
Mr. Ebbel said: “We are excited to partner with
Jeff, Ed, Steve, and Enstar to build StarStone U.S. into an
exceptional specialty carrier executing across both admitted and
E&S lines of business. This partnership has been nearly a
decade in the making, and we believe this is the ideal time for
StarStone U.S. to execute on an expansion strategy with both a
clean balance sheet and fresh capital.”
Mr. Stad said: “At Dragoneer, we focus on
partnering with exceptional teams that are building truly
differentiated businesses in large markets. We look forward to
working with Jeff and Ed as they build a leading specialty carrier
at a time when we see very positive, long-term market trends. We
have been impressed by Jeff and Ed’s track record of operational
excellence, orientation towards disciplined underwriting, and usage
of both data and technology.”
Jeff Greenberg, Chairman and CEO of Aquiline,
said: “Today’s dynamic market conditions have created a need for
dedicated underwriting capacity across multiple E&S and
admitted lines of business. We witnessed the strength of the
Validus management team first-hand and believe Jeff and Ed will
build a market leader at StarStone.”
Enstar today also announced that StarStone
International has contributed its renewal rights to Atrium
Underwriters Limited, which manages Lloyd’s Syndicate 609.
International business not assumed by Atrium will be placed into an
orderly run-off.
With the signing of the transaction, John
Hendrickson stepped down from his role as StarStone Group CEO. Mr.
Silvester commented, “I would like to thank John for his
significant contribution to StarStone, and we all wish him well
with his future endeavors.”
StarStone U.S.StarStone U.S. offers a
diversified range of property and casualty insurance products for
small to mid-sized businesses. From eight underwriting offices
spanning the U.S., StarStone U.S. focuses on niche markets, local
distribution, and superior underwriting knowledge, offering
traditional as well as innovative insurance solutions to meet the
needs of its customers and brokers. StarStone U.S. is an insurance
holding company operating through StarStone Specialty Insurance
Company, a U.S. excess and surplus lines insurer, and StarStone
National Insurance Company, a U.S. admitted markets insurer.
StarStone is rated A- (Excellent) by A.M. Best.
Enstar Group LimitedEnstar is a multi-faceted
insurance group, with approximately $19.1 billion in assets, that
offers innovative capital release solutions and specialty
underwriting capabilities through its network of group companies in
Bermuda, the United States, the United Kingdom, Continental Europe,
Australia, and other international locations. Enstar is a market
leader in completing legacy acquisitions, having acquired
approximately 100 companies and portfolios since its formation in
2001. Enstar Group includes the StarStone group of companies, an A-
rated global specialty insurance group with multiple global
underwriting platforms, and the Atrium group of companies, which
manage and underwrite specialist insurance and reinsurance business
for Lloyd’s Syndicate 609. For further information about Enstar,
see www.enstargroup.com.
SkyKnight Capital, L.P.Founded in 2015,
SkyKnight manages over $1 billion in private equity capital on
behalf of institutional family offices and leading foundations and
endowments. SkyKnight makes long-term investments into high-quality
businesses in acyclical growth sectors alongside exceptional
management teams.www.skyknightcapital.com
Dragoneer Investment GroupDragoneer is a
growth-oriented investment firm with over $10 billion in
long-duration capital from many of the world’s largest endowments,
foundations, sovereign wealth funds, allocators, and family
offices. Dragoneer has a history of partnering with management
teams in companies characterized by sustainable differentiation and
superior economic models. The firm has a global orientation and
invests in market leaders, primarily in the financial services and
technology sectors. https://dragoneer.com/
Aquiline Capital Partners LLCAquiline Capital
Partners, founded in 2005, is a private investment firm based in
New York and London investing in businesses across the financial
services sector in financial technology, insurance, investment
management, business services, credit and healthcare. The firm has
$5.3 billion in assets under management as of December 31, 2019.
For more information about Aquiline, its investment professionals,
and its portfolio companies, please visit: www.aquiline.com.
Cautionary StatementThis press
release contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These statements include statements regarding the intent, belief or
current expectations of Enstar and its management team. Investors
are cautioned that any such forward-looking statements speak only
as of the date they are made, are not guarantees of future
performance and involve risks and uncertainties, and that actual
results may differ materially from those projected in the
forward-looking statements as a result of various factors,
including the evolving COVID-19 pandemic and the related
uncertainty and volatility in the financial markets. Important risk
factors regarding Enstar can be found under the heading "Risk
Factors" in our Form 10-K for the year ended December 31, 2019 and
in our Form 10-Q for the three months ended March 31, 2020 and are
incorporated herein by reference. Furthermore, Enstar undertakes no
obligation to update any written or oral forward-looking statements
or publicly announce any updates or revisions to any of the
forward-looking statements contained herein, to reflect any change
in its expectations with regard thereto or any change in events,
conditions, circumstances or assumptions underlying such
statements, except as required by law.
Contact:
Enstar Communications
Telephone: +1 (441) 292-3645
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