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Enstar to Buy Arden Subsidiaries

Zacks Equity Research

Recently, Enstar Group Limited (ESGR) announced that it will acquire Atrium Underwriting Group Limited and Arden Reinsurance Company Limited from their holding company Arden Holdings Limited. Enstar has entered into definitive agreements with Arden Holding for the same.

Both the acquisitions are independent of each other and are governed by separate purchase agreements. Enstar expects to close the transactions by the end of 2013.

However, the acquisitions are subject to customary closing conditions apart from the attainment of approval from the government and regulatory bodies. Enstar will pay about $183 million as purchase consideration for Atrium and $79.6 million for Arden Reinsurance.

Enstar believes that the addition of Atrium’s live underwriting platform will help in the development of its business. Atrium will add a proficient underwriting and management team to Enstar.

Atrium is an underwriting business at Lloyd's of London, a specialist insurance market. It offers accident and health, aviation, marine property, non-marine property, professional liability, property and casualty binding authorities, reinsurance, upstream energy, war and terrorism insurance, cargo and fine art.

Meanwhile, Bermuda-based Arden Reinsurance acts as a reinsurer for Atrium. The company also had other businesses earlier, which have been discontinued.

Enstar follows an active inorganic growth strategy. The company usually acquires insurance and reinsurance companies that are in run-off.

Enstar currently carries a Zacks Rank #1 (Strong Buy). Other multi-line insurance companies worth considering are Assured Guaranty Ltd. (AGO), Eastern Insurance Holdings, Inc. (EIHI) and Kemper Corporation (KMPR). All these stocks carry a Zacks Rank #1 (Strong Buy).

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