Global legacy re/insurance specialist Enstar has launched Scaur Hill Re Ltd., its first casualty reinsurance sidecar funded by a small group of third-party institutional investors providing $300 million in capacity, as reported by Artemis, our insurance-linked securities (ILS) focused sister publication.
While Enstar has a history of collaboration with third-party capital through ventures like Aligned Re, Kayla Re and Enhanzed Re, this is the first time it has ceded a portion of its risk to a structure of this kind to be backed by outside investors, Artemis reported.
A Bermuda-based collateralized insurer class of company, Scaur Hill Re Ltd. has been established to be used as a sidecar structure, through which Enstar can cede risk to investors.
The structure will be issuing shares or notes to enable the company to allocate to different series opportunities.
-->
The $300 million cession features a vertical slice of a large, legacy transaction that Enstar had previously entered into. This transaction is both large and diversified and a 10% slice of it has been ceded to the sidecar, presumably on a quota share basis.
The diversified legacy transaction that Scaur Hill Re now supports a slice of, is a longer-tailed casualty arrangement, making the structure the latest casualty sidecar reinsurer to be launched.
Enstar will continue to manage the assets related to the risk ceded, with a performance based fee system in place to ensure alignment between the company and the investors.
This initial transaction also provides investors with exit opportunities at pre-specified pricing, as well as with an optional commutation at year 7 and a mandatory exit at year 10.
The launch of Scaur Hill Re Ltd. indicates a new phase in Enstar’s use of ILS techniques and its relationship with third-party capital, as noted by our sister publication Artemis.
You can find details of numerous reinsurance sidecar investments and transactions in Artemis’ directory of collateralized reinsurance sidecars transactions.
About the Author
