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Enstar Group Closes Reinsurance Deal with QBE Insurance

Zacks

A wholly owned unit of Enstar Group Limited ESGR recently closed the transaction, wherein the unit will reinsure U.S. multi-line property and casualty business of QBE Insurance Group Limited. The transaction was announced on Dec 6, 2016. Shares of Enstar Group gained about 2.03% since then, outperforming the Zacks categorized Multi line insurance industry’s growth of 0.29%.


Following the deal, the Enstar Group affiliate assumed gross reinsurance reserves of about $919 million (net reserves of $444 million) from QBE Insurance Group’s portfolio, which mainly comprises workers' compensation, construction defect, and general liability discontinued lines of business. Also, Enstar Group will pledge a portion of the premium as collateral to QBE Insurance Group’s affiliate. This apart, Enstar Group will offer additional security and a limited parental guarantee. Moreover, one of the units of Enstar Group will offer administrative services to the aforementioned reinsured portfolio.

The completion of this transaction will position Enstar Group as the provider of choice for complex reinsurance solutions. QBE Insurance Group’s confidence on Enstar Group also asserts industry-leading position of the latter as a manager of workers' compensation and property and casualty legacy portfolios.

We expect the latest deal to accelerate the multi line insurer’s growth and drive the stock higher.

Stocks to Consider

Investors interested in stocks from the same space might consider Radian Group Inc. RDN, The Hartford Financial Services Group, Inc. HIG, Kemper Corporation KMPR and Prudential Financial, Inc. PRU. Each of these stocks holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Radian Group offers mortgage and real estate products and services in the U.S. The company delivered positive surprises in two of the last four quarters with an average beat of 5.87%.

The Hartford Financial offers insurance and financial services to individual and business customers in the U.S. The company delivered positive surprises in two of the last four quarters but with an average miss of 11.69%.

Kemper Corporation is a diversified insurance holding company that offers property and casualty, as well as life and health insurance to individuals and businesses in the U.S. The company delivered positive surprises in one of the last four quarters but with an average miss of 47.62%.

Prudential Financial offers insurance, investment management, and other financial products and services in the U.S. and internationally. The company delivered positive surprise in one of the last four quarters but with an average miss of 10.66%.


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