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Enstar Group Closes Transaction With Neon, Boosts Portfolio

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Enstar Group Limited’s ESGR Lloyd managing agency, StarStone Underwriting Limited, completed the previously announced reinsurance-to-close transaction with Neon Underwriting Limited for Enstar Group’s Syndicate 2008. The closure of this transaction is expected to help Enstar Group’s Syndicate 2008 undertake the liabilities of the 2015 underwriting year of Neon’s Syndicate 2468 (which comprised underwriting years starting from 2008 to 2015).

The transaction, first announced on Dec 20, 2017, satisfied the required regulatory approvals and got completed in the first quarter of 2018, well within the stipulated time frame. Following the completion of the transaction, Enstar Group assumed net reinsurance reserves of £337.8 million (about $456.4 million) pertaining to the portfolio and gross reserves of £402.2 million (about $543.4 million).

In fact, Enstar Group is likely to undertake the responsibility for claims handling and offer a complete finality to Neon post wrapping up of the transaction.

Enstar Group’s already strong relationship with Neon will possibly be further enhanced and cemented with the close of this deal. Notably, a similar transaction was completed in 2016. The latest reinsurance-to-close transaction will raise the total number of Enstar Group’s completed legacy transactions on Lloyd’s platform to 21 since its inception. This not only strengthens but also boosts the Multi line insurer’s position as one of the industry-leading providers of legacy solutions to the Lloyd’s market.

Enstar Group as a multi-faceted insurance group provides its clients with innovative capital release solutions and specialty underwriting capabilities. Given a strong track record of purchasing more than 80 companies and portfolios as well as closed legacy transactions, the Multi line insurer has made a name for itself in the industry. Banking on a sustained operational performance and solid underwriting capabilities, we expect this insurer to continue to undertake such transactions in the near term. Consequently, this will provide an impetus to the company’s already solid portfolio and accelerate its overall growth.

Shares of Enstar Group have outperformed the industry year to date. The stock has lost 1.4% compared with the industry’s decline of 2.2%. Further, we anticipate better investment results, improving fees and commission income plus a robust capital position to drive the shares higher in the near term.


Stocks That Warrant a Look

Investors interested in stocks from the insurance industry can consider Radian Group Inc. RDN, Loews Corporation L, Alleghany Corporation Y, The Allstate Corporation ALL and MGIC Investment Corporation MTG, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Radian Group offers mortgage and real estate products and services in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 7.87%.

Loews Corporation provides commercial property and casualty insurance in the United States, Canada, the United Kingdom, Continental Europe and Singapore. The company delivered positive surprises in three of the last four quarters with an average beat of 561.78%.  

Alleghany Corporation provides property and casualty reinsurance and insurance products in the United States and internationally. The company delivered positive surprises in two of the last four quarters with an average beat of 2.91%.   

Allstate engages in property-liability insurance and life insurance business in the United States as well as Canada. The company came up with positive surprises in all the trailing four quarters with an average beat of 58.04%.

MGIC Investment provides private mortgage insurance and ancillary services to lenders and government sponsored entities in the United States. The company pulled off positive surprises in all the last four quarters with an average beat of 35.11%.

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