Enstar launches $300m casualty reinsurance sidecar Scaur Hill Re
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.
The creation of Scaur Hill Re Ltd. is a particular development as it marks the first time Enstar has used a managed ILS structure it owns to directly transfer risk to investors.
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.
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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.
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