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22 August 2022

Enstar prepares to exit catastrophe business

Enstar subsidiary Cavello Bay Reinsurance is to 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, which the parties will co-operate in good faith to novate to a third party on commercially reasonable terms.

Enhanzed Re–a partnership of Enstar, Allianz and Hillhouse Capital Management–had been expected to underwrite and reinsure life, non-life run-off, and property and casualty insurance business but, last September, Enstar bought Hillhouse out

Cavello Bay has now entered into a master agreement with Allianz and Enhanzed Re that includes 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 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.

Enhanzed Re is Enstar’s joint venture with Allianz. The agreement will eliminate Enstar's direct exposure to catastrophe business, resulting in an approximate $62 million increase in Enstar's book value.

The completion of the transactions is subject to customary closing conditions, including the receipt of certain regulatory approvals.




More on this story

article
10 August 2022   Market ‘dislocation’ led to material unrealised losses in its investment portfolio.
article
5 September 2022   The split reinsurance-to-close transaction will cover previous account exposures.
article
7 November 2022   That’s a 250% worsening of its prior year loss.

More on this story

article
10 August 2022   Market ‘dislocation’ led to material unrealised losses in its investment portfolio.
article
5 September 2022   The split reinsurance-to-close transaction will cover previous account exposures.
article
7 November 2022   That’s a 250% worsening of its prior year loss.