Enstar Group Ltd. (ESGR: Quote) said Tuesday that the company and private equity firm Stone Point Capital LLC have agreed to buy specialty insurer Torus Insurance Holdings Ltd. for $692 million in cash and stock.
Torus is the holding company of six wholly-owned insurance vehicles, including one Lloyd's syndicate. The transaction is expected to close by the end of 2013.
Bermuda-based Enstar said it will pay a total of $415 million for a 60 percent stake in Torus, while Greenwich, Connecticut-based Stone Point will pay $277 million for a 40 percent stake.
Enstar recently announced its expansion into live underwriting with its June 2013 agreement to acquire Atrium Underwriting Group. The company noted that the acquisition of Torus will enable it to further expand into live underwriting.
Enstar will issue about 1.901 million ordinary voting shares and 711,000 newly created non-voting preferred shares having an aggregate value of about $346 million to partially fund the purchase price for Torus. Enstar will also pay about $69 million in cash towards the purchase price. Meanwhile, affiliates of Stone Point will fund the remaining $277 million through an equity co-investment.
Torus offers property, casualty and specialty insurance, as well as reinsurance products. Torus' largest shareholders - private equity firms First Reserve and Corsair Capital - will receive both Enstar shares as well as cash consideration in the transaction, while all the remaining Torus shareholders will receive cash.
Following the closing of the transaction, affiliates of First Reserve will own an approximately 11.5 percent economic interest in Enstar, and Enstar will nominate one designee of First Reserve to Enstar's board of directors.
Dominic Silvester, chief executive officer of Enstar said, "Following the recent announcement of our agreement to acquire Atrium, we are pleased to continue our expansion into 'live' underwriting through the acquisition of Torus. Torus provides us with an opportunity to acquire a large, international A- rated group of companies that both diversifies Enstar into the active market and enhances the opportunities available to our core legacy business."
Dermot O'Donohoe, who Torus announced earlier today was named its group chief executive officer, said, "We are very pleased with this transaction and the opportunity to join Enstar during this exciting time, as it expands into the live insurance market."
In addition, Enstar said it has entered into an amended and restated revolving credit facility with National Australia Bank, Barclays Bank, and Royal Bank of Canada. The restated five-year revolving credit facility is effective until July 2018 and permits Enstar to borrow up to an aggregate of $375 million.
In early June, Enstar said it agreed to buy Atrium Underwriting Group Ltd. and Arden Reinsurance Co. Ltd. from Arden Holdings Ltd. The acquisition price for Atrium would be around $183.0 million, while the purchase price for Arden Reinsurance would be some $79.6 million. The transaction is expected to close by the end of 2013.
Enstar said today that affiliates of Stone Point have committed to provide up to $106 million of equity capital towards the company's acquisitions of Atrium Underwriting and Arden Reinsurance. Assuming both of those transactions are consummated, Enstar would own a 60 percent stake in those companies, while Stone Point would own the remaining 40 percent stake.
In Tuesday's regular trading session, ESGR is trading at $138.00, up $0.75 or 0.54 percent on a volume of 3,000 shares.
by RTT Staff Writer
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