16 December 2016 Insurance

Enstar finally launches new total return reinsurer – with Chinese backing

Bermuda-based insurance group Enstar has finally launched a long-awaited total return reinsurer – thanks to a significant investment from Chinese investment company Hillhouse Capital Management, which bought a 9.9 percent stake in Enstar in September this year.

KaylaRe has been launched as a Class 4 reinsurer on Bermuda with $620 million of initial capital. Some $300 million was provided by Enstar, $270 million from funds managed by Hillhouse Capital Management, and $50 million from funds managed by Stone Point Capital.

Enstar will act as exclusive reinsurance manager and Hillhouse as the primary investment manager to KaylaRe.

Enstar had previously tried to launch a similar venture with the help of UBS; it appears that KaylaRe is the ultimate manifestation of that desire though UBS is no longer involved.

Nick Packer, the co-founder of Enstar who has served as the company’s executive vice president and joint chief operating officer since 2001, has been appointed as the new venture’s chief executive officer. Dominic Silvester, the CEO of Enstar, becomes its non-executive chairman.

This deal confirms Enstar's commitment to building a significant book of live business. The company was only operating in the legacy space until 2013 when it acquired specialty insurer Torus for more than $600 million and then Lloyd's carrier Atrium for some $260 million.

The launch has also triggered a raft of other management changes at Enstar and its associated companies including StarStone (click  here for separate story).

KaylaRe, which is not yet rated, has entered into a 35 percent quota share agreement with StarStone, Enstar’s global underwriting subsidiary, and loss portfolio transfer agreements with Enstar for certain legacy business.

Dominic Silvester, Enstar’s CEO, said: “KaylaRe brings Enstar together with partners Hillhouse and Stone Point to create a unique global reinsurer.

“KaylaRe has great performance potential, and a dynamic and proven leader in Nick Packer, who has been a core contributor to Enstar’s growth and success. He has shown tremendous commitment to our investment in KaylaRe, and, while he will be greatly missed at Enstar, I look forward to working closely with him in his new role.”

Packer added: “KaylaRe is a differentiated total return reinsurer, and it is an honour to lead this company from its inception. Through Enstar, we have long-term access to a high-quality, diversified portfolio of low volatility specialty insurance risks and supporting infrastructure.

“Further, the additional investment and support of Hillhouse and Stone Point provide KaylaRe with the capability to create substantial incremental value for shareholders through market cycles.”

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