false0001363829D0Enstar Group LTD
0001363829 2020-06-10 2020-06-10 0001363829
us-gaap:SeriesDPreferredStockMember 2020-06-10 2020-06-10
0001363829 us-gaap:CommonStockMember 2020-06-10 2020-06-10
0001363829 us-gaap:SeriesEPreferredStockMember 2020-06-10
2020-06-10
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event
reported): June
10, 2020
Enstar Group Limited
(Exact name of registrant as specified in its charter)
|
|
|
|
|
|
|
Bermuda
|
|
001-33289
|
|
N/A
|
|
(State or other
jurisdiction
of
incorporation)
|
|
(Commission
File
Number)
|
|
(IRS
Employer
Identification
No.)
|
P.O. Box HM
2267,
Windsor
Place 3rd Floor
22 Queen
Street,
Hamilton
HM
JX Bermuda
N/A
(Address of
principal executive offices)
(Zip Code)
Registrant’s telephone number, including area
code: (441) 292-3645
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
|
|
|
|
☐
|
Written communications pursuant
to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
|
|
|
☐
|
Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
|
|
|
☐
|
Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
|
|
|
|
|
☐
|
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Securities
registered pursuant to Section 12(b) of the Act:
|
|
|
|
|
|
Title of Each Class
|
Trading Symbol(s)
|
Name of Each Exchange on Which Registered
|
|
Ordinary shares, par value
$1.00 per share
|
ESGR
|
The NASDAQ Stock
Market
|
LLC
|
|
Depositary Shares, Each
Representing a 1/1,000th Interest in a 7.00% Fixed-to-Floating
Rate
|
ESGRP
|
The NASDAQ Stock
Market
|
LLC
|
|
Perpetual Non-Cumulative
Preferred Share, Series D, Par Value $1.00 Per Share
|
|
|
|
|
Depositary Shares, Each
Representing a 1/1,000th Interest
|
ESGRO
|
The NASDAQ Stock
Market
|
LLC
|
|
in a 7.00% Perpetual
Non-Cumulative Preferred Share, Series E, Par Value $1.00 Per
Share
|
|
|
|
Indicate by check
mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§240.12b-2 of this chapter).
Emerging Growth
Company ☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
On
June 10, 2020, StarStone Finance Limited (“StarStone Finance”) and
North Bay Holdings Limited (“North Bay”) entered into a Stock
Purchase Agreement (the “Purchase Agreement”) with Core Specialty
Insurance Holdings, Inc. (“Buyer”), a newly formed entity with
equity backing from funds managed by SkyKnight Capital, L.P.
(“SkyKnight”), Dragoneer Investment Group (“Dragoneer”) and
Aquiline Capital Partners LLC (“Aquiline”). Enstar Group Limited
(“Enstar”) owns an indirect 59.0% interest in StarStone Finance and
North Bay.
Pursuant to the
Purchase Agreement, StarStone Finance has agreed to sell its
interests in StarStone US Holdings, Inc., which owns: (1) StarStone
Specialty Insurance Company (“SSIC”); (2) StarStone National
Insurance Company (“SNIC”); and (3) StarStone US Intermediaries,
Inc. Collectively, the sold entities represent the U.S. operations
of the StarStone reporting segment for Enstar. The purchase price
will be based on a $30.0 million premium to the GAAP tangible book
value of the acquired companies at the most recent calendar month
end prior to the closing and will consist of $235.0 million of
common shares of Buyer and cash. The $235.0 million of common
shares of Buyer that StarStone Finance will receive will represent
an approximately 27.8% continuing interest in the acquired
companies. Funds managed by SkyKnight, Dragoneer and Aquiline have
together committed $610.0 million of equity capital to Buyer.
The proposed management team, led by Jeff Consolino and Edward
Noonan, has collectively committed an additional $20.0 million of
equity capital to Buyer. The closing of the transaction is subject
to customary regulatory approvals and is expected to occur in the
second half of 2020.
The
Purchase Agreement contains representations and warranties with
respect to Buyer, StarStone Finance, North Bay and the acquired
companies, as well as customary pre-closing and post-closing
covenants. Following the closing, Buyer and StarStone Finance will
each indemnify the other for breaches of representations,
warranties, covenants and certain other matters. The obligations of
StarStone Finance under the Purchase Agreement are guaranteed by
North Bay.
In
connection with the Purchase Agreement, Clarendon National
Insurance Company (“Clarendon”), a wholly-owned subsidiary of
Enstar, will enter into a Loss Portfolio Transfer and Adverse
Development Cover Reinsurance Agreement (the “Reinsurance
Agreement”) with SSIC and SNIC (collectively, the “StarStone U.S.
Insurance Companies”) pursuant to which Clarendon will reinsure all
ultimate net loss of the StarStone U.S. Insurance Companies
incurred in respect of premium earned prior to the end of the most
recent calendar month prior to the closing. Clarendon will receive
a reinsurance premium equal to the GAAP net reserves for such
liabilities as of such date, as finally determined under the
Purchase Agreement (the “Valuation Date Reserves”), plus
approximately $16.0 million. The Reinsurance Agreement contains an
aggregate limit on Clarendon’s liability equal to
$130.0 million in excess of the Valuation Date Reserves.
Clarendon’s obligations under the Reinsurance Agreement will be
guaranteed by Enstar.
At
the closing, a wholly-owned subsidiary of Enstar will enter into an
Administrative Services Agreement with the StarStone U.S. Insurance
Companies pursuant to which Enstar’s subsidiary will administer the
policies reinsured under the Reinsurance Agreement, subject to
customary terms and conditions. StarStone Finance will also enter
into a Stockholders Agreement with Buyer and its other shareholders
at the closing, which provides for its right to designate two
members to Buyer’s Board of Directors, among other
rights.
Additional Information
The
foregoing description of the Purchase Agreement and the
transactions contemplated thereby does not purport to be complete
and is subject to, and qualified in its entirety by, the full text
of the Purchase Agreement, a copy of which is attached hereto as
Exhibit 10.1 and is incorporated into this Item 1.01 by reference.
The Purchase Agreement is not intended to provide any other factual
information about the parties thereto. In particular, the
representations and warranties contained in the Purchase Agreement
were made only for the purposes of the agreement as of the specific
date therein and were solely for the benefit of the parties to the
agreement. The representations and warranties contained in
the
Purchase
Agreement may be subject to limitations agreed upon by the parties
thereto and are qualified by information in confidential disclosure
schedules provided in connection with the signing
thereof.
Cautionary Statement Regarding Forward-Looking
Statements
This
Current Report on Form 8-K 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. In particular, Enstar may not be able to
complete the proposed transaction on the terms summarized above or
other acceptable terms, or at all, due to a number of factors,
including but not limited to the failure to obtain governmental and
regulatory approvals or to satisfy other closing conditions.
Important risk factors regarding Enstar can be found
under the heading "Risk Factors" in Enstar's Form 10-K
for the year ended December 31, 2019 and in Enstar’s Form 10-Q
for the period 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.
Item 9.01. Financial Statements and Exhibits
Exhibits
|
|
|
|
|
Exhibit
No.
|
|
Description
|
|
|
|
|
|
|
|
Stock Purchase Agreement, dated
as of June 10, 2020, by and among StarStone Finance Limited, Core
Specialty Insurance Holdings, Inc. and North Bay Holdings
Limited.*
|
|
|
|
|
|
101
|
|
Pursuant to Rule 406 of
Regulation S-T, the cover page information in formatted in Inline
XBRL.
|
|
|
|
|
|
104
|
|
Cover page Interactive Data
File (embedded within the Inline XBRL document and included in
Exhibit 101)
|
|
|
|
|
|
*
|
|
Schedules have been omitted
pursuant to Item 601(a)(5) of Regulation S-K. Enstar Group Limited
agrees to furnish to the Securities and Exchange Commission a copy
of such schedules and exhibits, or any section thereof, upon
request.
|
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
|
|
|
|
|
|
|
ENSTAR GROUP
LIMITED
|
|
|
|
|
|
|
June 11, 2020
|
|
By:
|
/s/ Guy
Bowker
|
|
|
|
|
Guy Bowker
|
|
|
|
|
Chief Financial
Officer
|
