CINCINNATI, Nov. 30, 2020 /PRNewswire/ -- Core Specialty
Insurance Holdings, Inc. ("Core Specialty" or the "Company")
announced today that it has completed the recapitalization of
StarStone U.S. Holdings, Inc. ("StarStone U.S."). The
recapitalization was 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"). Enstar Group Limited
(NASDAQ:ESGR) ("Enstar") has received a combination of cash
consideration and shares in Core Specialty as part of the
recapitalization.
The Recapitalization
The $610
million in new equity capital provided by the Investors,
together with the rollover of Enstar's existing ownership, and an
additional equity purchase of over $60
million from management and selected other investors, will
increase the equity capitalization of the Company to over
$900 million.
After giving effect to the recapitalization, SkyKnight and
Dragoneer will each have beneficial ownership of approximately 27%,
Enstar 25%, Aquiline 11%, management and Directors 6% and other
investors 4%.
Loss Portfolio and Adverse Development Cover
In
conjunction with the capital infusion, one of Enstar's wholly owned
subsidiaries has entered into a combination loss portfolio and
adverse development cover reinsurance agreement with the
Company.
New Management Team and Board of Directors
As part of
the capital infusion, Core Specialty has appointed a new management
team and Board of Directors. Jeff
Consolino will be President & CEO and Ed Noonan will be Executive Chairman. The
Core Specialty Board of Directors will include Messrs. Noonan and
Consolino; Paul O'Shea and
Robert Campbell from Enstar;
Steve DeCarlo; Dom Addesso;
Don Larson; Matthew Ebbel, Managing
Partner of SkyKnight; Marc Stad,
Managing Partner of Dragoneer; and Chris
Watson, Partner of Aquiline. The additions of Messrs.
Addesso and Larson have not been announced previously. Each
of the members of Core Specialty's Board of Directors have an
exceptional track record of building successful businesses.
Jeff Consolino is an accomplished
insurance industry leader with more than 28 years of sector
experience. Most recently, Jeff was Executive Vice President,
Chief Financial Officer and a Director of American Financial Group,
Inc. ("AFG"). He was previously a founding executive of
Validus Holdings, Ltd. ("Validus Group") where he served as
President & Chief Financial Officer and a Director.
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 and Mr. Consolino's
leadership, Validus Group experienced significant growth from its
start-up formation. Validus ultimately was acquired by AIG in
2018 after more than a decade as a leading independent public
company with Mr. Noonan as CEO. Mr. Noonan also served as
President and CEO of American Re from 1997 to 2002, after joining
the firm in 1983.
Rebranding as Core Specialty
Core Specialty's vision
is to become the leading specialty insurer. The new name
represents the company's purpose – to be the core, or most
important part, of their clients' businesses, and their commitment
as a specialist to niche insurance markets. These foundational
elements of the brand, combined with a striking visual expression
and vibrant new logo, comprise an identity that conveys a bold
energy and an inspired confidence.
Commenting on the rebranding, Mr. Consolino said "Core Specialty
has the expanded capital to take on risk, the underwriting talent
in place, a proven and decisive leadership team and a track record
of making things happen fast. Collectively and in each of our
specialist niche business units, we intend to operate with strong
entrepreneurial spirit and drive, speed, agility, and empowered
decision-making."
More information about Core Specialty can be found by visiting
www.corespecialtyinsurance.com.
Achievements Prior to Closing and Additions at
Closing
Mr. Consolino joined the Company as a consultant
with immediate effect following the June
2020 announcement of the recapitalization. During this
period, the Company has: created an Excess & Surplus Property
Division (a sixth specialty business unit, led by Alison Oliphant); managed the A.M. Best review
process leading to Company ratings of A- "Excellent" (developing);
received additional equity commitments of $50 million; added two highly qualified
Directors; and recruited key executive, underwriting and support
roles. Financial results for the Company have been very
strong through the first nine months of 2020. Adjusted for
intercompany cessions, the combined ratio was 94.9% through the
nine months of 2020. Rate increases through the first nine
months of 2020 were 8% across the Company's entire portfolio and
17% excluding workers' compensation.
Effective with the closing of the recapitalization, Mr.
Consolino became President & CEO and Mr. Noonan became
Executive Chairman. Newly-announced additions to the Core
Specialty Board include Messrs. Addesso and Larson. Mr. Addesso was
President and CEO of Everest Re Group before retiring at the end of
2019 and brings more than 41 years of experience in the
(re)insurance market. Mr. Larson is the retired President and
Chief Operating Officer of Great American Insurance Company, where
he worked for more than 40 years including with Mr.
Consolino. Rob Kuzloski joins
Core Specialty as Executive Vice President & General Counsel
after previously serving as General Counsel for Validus where he
was a key business partner with Messrs. Consolino and Noonan.
William Vens joins Core Specialty as
Executive Vice President & Chief Financial Officer after
working most recently at AFG with Mr. Consolino and previously as
Chief Financial Officer of Protective Insurance Corporation, a
publicly traded insurer specializing in transportation and workers'
compensation.
Commentary
"Core Specialty is truly 'ready to go', a
theme we are emphasizing as part of our Company rebranding.
While others in the market struggle with the uncertainties of
catastrophe losses and the ultimate cost of the COVID-19 pandemic
or are engaged in the time consuming process of raising capital,
obtaining licenses and ratings and hiring qualified staff, we have
been executing on our clear business plan since arranging for our
capital infusion in early June," said Mr. Consolino. "I am
delighted and honored to formally become President & CEO of the
Company after working with StarStone U.S. over the past six
months. The Company has many talented underwriters and
employees and we have had a great response from insureds and their
distribution partners. Premium pricing has only further
escalated across our classes of business since June, including
commercial property, D&O, excess casualty, marine &
aviation and professional liability. We are more convinced
than ever that a specialist insurance company with the right
leadership, financial backing, protection from legacy exposures and
niche orientation can create significant value in this environment.
We're ready, equipped, and motivated to get the job done,
efficiently and professionally, by empowering our expert team to
move quickly on behalf of customers and their brokers."
Mr. Noonan said: "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 Core Specialty. We are very
pleased 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 has
again invested with us."
Mr. Ebbel said: "We are excited to partner with Jeff, Ed and
Enstar to build Core Specialty 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 the Company 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."
Dominic Silvester, CEO of Enstar,
said: "We are impressed with the actions taken to date and Enstar
is committed to realizing Core Specialty's full potential as a
specialty commercial property & casualty insurer. Enstar
will work with the Company, as opportunities warrant, in our
ongoing acquisition activities and we are pleased to maintain our
significant investment in the Company. In August, we
announced an exchange agreement with Trident V, L.P. and its
affiliated funds managed by Stone Point Capital. In the
exchange transaction, Enstar will acquire all the Trident V Funds'
interest in the recapitalized Core Specialty, resulting in Enstar
having approximately 25% beneficial ownership of the Company,
subject to regulatory approvals and closing conditions."
Jeff Greenberg, Chairman and CEO
of Aquiline, noted: "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 Core Specialty."
-Ends-
NOTES TO EDITOR
About Core Specialty
Core Specialty offers a
diversified range of property and casualty insurance products for
small to mid-sized businesses. From eight underwriting
offices spanning the U.S. the Company 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. Core Specialty 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. The Company is rated A- (Excellent) by A.M.
Best. For further information about Core Specialty, please
visit www.corespecialtyinsurance.com.
About Enstar Group Limited
Enstar is a NASDAQ-listed
leading global insurance group that offers innovative capital
release solutions through its network of group companies in
Bermuda, the United States, the United Kingdom, Continental Europe,
Australia, and other international
locations. A market leader in completing legacy acquisitions,
Enstar has acquired over 100 companies and portfolios since its
formation in 2001. For further information about Enstar, see
www.enstargroup.com.
About SkyKnight Capital, L.P.
Founded in 2015,
SkyKnight manages over $1.5 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
About Dragoneer Investment Group
Dragoneer 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/
About Aquiline Capital Partners LLC
Aquiline 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 Statement
This 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 Core Specialty 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. Core
Specialty 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:
Sam
Reinhardt
Associate Vice President
Prosek Partners
+1 646 818 9244
sreinhardt@prosek.com
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SOURCE Core Specialty Insurance Holdings