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Enstar’s Cavello Bay renewed $25 million investment in Ark sidecar Outrigger Re for 2024

When Ark Insurance sponsored an extension of its collateralized reinsurance sidecar Outrigger Re Ltd. worth $250 million for the calendar year 2024, one of the third-party investors that renewed its interest in the vehicle was the reinsurance company Cavello Bay, owned by Enstar.

enstar logoArk Insurance, a property and casualty insurance and reinsurance subsidiary of White Mountains Insurance Group, Ltd., has now managed the Outrigger Re Ltd. insurance company since the 2023 insurance year. covered reinsurance sidecar.

The first vintage of Ark’s $250 million collateralized reinsurance sidecar Outrigger Re Ltd was launched in December 2022, for the 2023 insurance year, and was referred to at the time as “a subsidiary of Enstar Group Limited” as one of the associated third-party investors providing a share in the vehicle.

White Mountains itself was the lead investor and when Ark renewed its reinsurance sidecar for the 2024 underwriting year, White Mountains was again the largest investor, contributing $130 million of the $250 million in capital for the year.

Now we have learned from a filing that the Enstar subsidiary that invested in the first year of the Ark-sponsored Outrigger Re sidecar was Cavello Bay Reinsurance Limited.

The same filing also notes that Cavello Bay Reinsurance has extended its sidecar investment for the 2024 insurance year, making a $25 million investment in Outrigger Re Ltd.

The way the filing is worded also suggests that the investment was likely to be $25 million for the previous insurance year of 2023 as well.

Naturally, Enstar is a recognized specialist in the field of legacy and run-off reinsurance, and one of the largest players in that market.

As a result, the core focus is typically on medium to longer term insurance and reinsurance lines, so diversification through an investment in a real estate catastrophe-focused sidecar with a well-known and respected market player makes sense as an additional source of income. for the company.

The Outrigger Re sidecar was a profitable investment for White Mountains until 2023.

The company had invested $205 million in the vehicle for that underwriting year and reported that its investment in the Outrigger Re collateralized reinsurance sidecar gave the company $69 million in pre-tax income.

So it stands to reason that Enstar’s investment, if it were to reach $25 million in 2023, could have netted the company somewhere around $8 million (that’s our estimate), in terms of income if all sidecar revenues were equally would have been distributed among the participating companies. investors (obviously we do not know the specific investment conditions or returns).

That would have been a very profitable use of that invested capital and an attractive diversified source of return for the old specialist player.

View details of many reinsurance sidecar transactions in our directory.

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