Enstar Group Closes Companion Buyout, Boosts P&C Business
Enstar Group Limited (ESGR) inked a deal to acquire Companion Property and Casualty Insurance Company (Companion) from Blue Cross and Blue Shield of South Carolina for $218 million. The transaction is expected to materialize by the end of this year pending closing conditions. Enstar Group intends to fund the acquisition with cash and debt financing.
The addition of Companion to its portfolio will enhance its property and casualty business in the U.S. Enstar Group intends to operate the business as part of its property and casualty legacy business. Moreover, Enstar and its Torus subsidiaries are evaluating whether Companion’s policies can be included in Torus’ business.
The company witnessed a substantial improvement in its net premium earned in the second quarter. With the addition of Companion, the numbers are expected to ramp up further.
Enstar Group has always travelled the inorganic path to ramp up its growth profile. In early April, the company along with Stone Point Capital LLC acquired specialty insurer Torus Insurance Holdings Limited. The recent acquisition is the second one this year. Last year, the company closed four acquisitions – Atrium Underwriting Group Ltd. from Arden Holdings Ltd, Arden Reinsurance Company Ltd. from Arden Holdings Ltd, Household Insurance Group Holding Company (a subsidiary of HSBC Holdings plc), and SeaBright Holdings, Inc. Its solid liquidity position supports its acquisitions.
In the last reported quarter, Enstar Group reported earnings of $1.39 per share, missing the Zacks Consensus Estimate by about 45% and year-ago earnings by 38%. There were no revisions in earnings estimates over the last 90 days. The Zacks Consensus Estimate for both 2014 and 2015 is currently pegged at $13.00. With optimism over the company’s continued acquisition story, we expect estimates to move up exerting upward pressure on the Zacks Rank. Enstar Group presently carries a Zacks Rank #3 (Hold).
Better-ranked multiline insurers include American International Group, Inc. (AIG), BB Seguridade Participa (BBSEY) and Fortegra Financial Corporation (FRF). All these carry a Zacks Rank #2 (Buy).
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