ESGR - Enstar Group Allianz pact on JV will end Enstar exposure to catastrophes

Enstar Group ( NASDAQ: ESGR ) said Friday it and Allianz SE ( OTCPK:ALIZF ) came to an agreement on their joint venture, Enhanzed Reinsurance, that will  end Enstar's direct exposure to catastrophe businesses and is expected to increase ESGR's book value by ~$62M, or ~$3.57 per share.

The estimated book value increase is exclusive of the potential impact of a future novation of the joint venture's annuities portfolio, Enstar ( ESGR ) said.

Included in the agreement between the two companies, ESGR's Cavello Bay subsidiary and Allianz ( OTCPK:ALIZF ) will commute or novate all of the reinsurance contracts written by Enhanzed Re, except for one reinsurance transaction related to a block of annuity policies written by an affilate of Allianz, which the parties will cooperate in good faith to novate to a third party on commercially reasonable terms.

Enstar ( ESGR ) stock has slipped 0.9% in Friday morning trading and Allianz SE ( OTCPK:ALIZF ) is down 2.8% .

The agreement also includes repaying $70M of subordinated notes issued by Enhanzed Re to an affiliate of Allianz ( OTCPK:ALIZF ) and distributing Enhanzed Re's excess capital to Cavello Bay and Allianz in accordance with their equity ownership.

In an update of its investments activity, Enstar ( ESGR ) said July-end investment results were strong with market conditions continuing to improve in August. That has favorably affected its risk assets, it added. "All-in yields remain elevated year-to-date which allows us to invest new premium at attractive levels," ESGR said.

Enstar ( ESGR ) book value per ordinary share was $245.93 as of June 30, 2022 and adjusted BV per share was $241.05.

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