A consortium of investors led by Sixth Street has agreed to purchase property and casualty insurer Enstar Group Ltd for $5.1bn in what will be the second-largest private equity-backed insurance deal of the year, according to a report by Bloomberg.
The investor group targeting the Bermuda-based business, which specialises in buying and managing run-off blocks of insurance policies, includes former US Treasury Secretary Steven Mnuchin’s Liberty Strategic Capital and JC Flowers & Co.
Under the terms of the deal, the group is offering $338 per share in cash, representing a slight discount of about 2.9% from Enstar’s closing share price of $348.31 on Friday. However, this price reflects a premium of approximately 8.5% over the 90-day volume-weighted average price through July 26.
Despite this premium, Enstar’s shares fell 6.7% to $325 in New York trading following the announcement, giving the company a market value of about $4.95bn.
Enstar, which will be taken private through this deal, plans to maintain its existing operations and business strategy. As part of the transaction, Enstar will return around $500m from its balance sheet to shareholders. The deal is expected to close in mid-2025, and Enstar has a 35-day period to seek alternative offers.
Founded in 1993, Enstar specialises in helping other insurance providers manage their risks by acquiring or re-insuring legacy business blocks, often accident-related policies written several years earlier. Enstar profits by efficiently managing these liabilities while reinvesting proceeds into new acquisition opportunities. The company has completed over 100 acquisitions since its inception.
The acquisition is the second-largest private equity-backed insurance deal in 2024, following Truist Financial Corp’s sale of its insurance brokerage business to a consortium led by Stone Point Capital and Clayton Dubilier & Rice, valued at $15.5bn.
This deal also represents another significant transaction for Liberty Strategic Capital, which Mnuchin founded after his tenure in the Trump administration. In March, Liberty led a $1bn rescue of commercial real estate lender New York Community Bancorp.
Sixth Street has also been active in the financial services and insurance sector, teaming up with Stone Point Capital in 2022 to purchase TIAA Bank. Additionally, Sixth Street acquired a minority stake in Enstar last year from the Canada Pension Plan Investment Board.
