Core Specialty launches with $900m capital raise; appoints new management
Core Specialty Insurance Holdings has completed the $900 million recapitalisation of StarStone US Holdings, with Enstar receiving a combination of cash and approximately 25 percent of the shares in the specialty property/casualty insurer carrier.
Core Specialty is an insurance holding company operating through StarStone Specialty Insurance Company, a US excess and surplus lines insurer, and StarStone National Insurance Company, a US admitted markets insurer.
The recapitalisation was led by SkyKnight Capital, Dragoneer Investment Group and Aquiline Capital Partners, which between them provided $610 million in new equity capital.
The investment, together with the rollover of Enstar's existing ownership, and an additional equity purchase of over $60 million from management and selected other investors, will increase Core Specialty’s equity capitalisation to over $900 million.
SkyKnight and Dragoneer will each have beneficial ownership of approximately 27 percent of StarStone US, with Enstar owning 25 percent, Aquiline 11 percent, management and directors owning 6 percent and other investors holding 4 percent.
In conjunction with the capital infusion, one of Enstar's wholly owned subsidiaries has entered into a combination loss portfolio and adverse development cover reinsurance agreement with Core Specialty.
Core Specialty has also appointed a new management team and board of directors. Jeff Consolino becomes president and chief executive officer, while Ed Noonan becomes executive chairman. The Core Specialty board of directors includes Noonan and Consolino, as well as Enstar’s Paul O'Shea and Robert Campbell; Steve DeCarlo; Dom Addesso; Don Larson; Matthew Ebbel, managing partner of SkyKnight; Marc Stad, managing partner of Dragoneer; and Chris Watson, partner of Aquiline.
Consolino has more than 28 years of industry experience, most recently as chief financial officer and a director of American Financial Group (AFG). He was previously a founding executive of Validus Holdings where he served as president & CFO and a director.
Noonan has more than 40 years of industry experience. He served most recently as chairman and CEO of Validus Group, a position he held from 2005 to 2018. Noonan also served as president and CEO of American Re from 1997 to 2002, after joining the firm in 1983.
Dominic Silvester, chief executive of Enstar, said: "Enstar is committed to realising Core Specialty's full potential as a specialty commercial property and casualty insurer. Enstar will work with the company, as opportunities warrant, in our ongoing acquisition activities and we are pleased to maintain our significant investment in the company.”
Consolino commented: "Core Specialty has the expanded capital to take on risk, the underwriting talent in place, a proven and decisive leadership team and a track record of making things happen fast. Collectively and in each of our specialist niche business units, we intend to operate with strong entrepreneurial spirit and drive, speed, agility, and empowered decision-making."
Noonan added: "We have assembled a Board comprised of company founders and business builders which we believe is second to none. I have worked closely with Jeff and many of the Directors for years and believe the mix of their skills and experience will greatly benefit Core Specialty. We are very pleased to partner with patient, long-term investors Dragoneer and SkyKnight who bring a valuable network across both the technology and insurance industries. Following the formation and successful sale of Validus, we are also excited that Aquiline has again invested with us."
Jeff Greenberg, chairman and CEO of Aquiline, noted: "Today's dynamic market conditions have created a need for dedicated underwriting capacity across multiple E&S and admitted lines of business. We witnessed the strength of the Validus management team first-hand and believe Jeff and Ed will build a market leader at Core Specialty."
