Global insurance and reinsurance group Enstar has agreed to acquire Accident Fund Holdings, Inc. (AF Group) and is “excited” about future opportunities and sees ample room for growth, driven by industry tailwinds.
During a recent trip to Bermuda, Reinsurance News spoke with Enstar Managing Director of Mergers and Acquisitions Dan Sanford to discuss the regulatory environment for legacy players in Bermuda, opportunities in the United States and the company’s recently announced pending acquisition of AF Group.
“Bermuda is very important,” Sanford said. “We are group regulated here and have been operating in Bermuda for over 30 years. Cavello Bay Re is our largest carrier and owns 80 to 90 per cent of the group’s business and it is a Bermudian company. So it is very important to us and to the reinsurance industry as a whole.”
Sanford explained that the regulations Enstar receives from the Bermuda Monetary Authority (BMA) are very stringent, describing the regulator as an important stakeholder in the business.
“We view them as partners and communicate regularly. They have built a very strong framework for legacy companies and a very strong team with a wealth of experience and expertise,” he said.
With so many traditional companies in Bermuda subject to group regulation, the BMA already has extensive knowledge of the industry.
“At its core, Enstar is an innovative and agile company and the BMA, as the regulator, is an important stakeholder,” Sanford said.
Of course, Enstar is also heavily regulated in places like the UK, Lloyd’s and Australia, but Bermuda is somewhat unique in terms of regulatory dialogue and active engagement between the BMA and companies like Enstar.
Back in February, Enstar announced its acquisition of AF Group, which the group is very excited about.
“This acquisition complements our core legacy business and we believe it provides growth opportunities,” Sanford said.
“On the traditional side, engagement with the insurance-linked securities (ILS) market is an area that has seen real growth over the past few years. On the real estate side, transactions will be largely driven by events as they create necessity. However, trapped collateral is a clear area of focus for all managers. A key trend is the growth of third-party capital interest in long-term casualty and specialty businesses that are focused on cutting the tail – here we have a strong pipeline in particular for our forward exit options products.
“Beyond ILS, there are always opportunities for us in the US casualty space and it is vital to remain disciplined and pick the right risks. Elsewhere, we are seeing activity pick up in continental Europe and within Lloyd’s, where London Bridge 2 is effectively connecting institutional investors to insurance risks in the market.”
Sanford went on to stress a greater focus on business development and building one’s network, noting that there are more bilateral deals in the market than at any time in history.
“We are very focused on building strong relationships and sustainable partnerships going forward, working closely with our counterparties to achieve mutually beneficial transactions,” he commented.
Expanding on the education perspective, Sanford emphasized that while there is still a need to educate the market about the impact of legacy solutions, brokers are doing a good job of identifying new opportunities.
“We’ve moved away from the environment we had five years ago where legacy companies were holding on to taking over claims management, which probably limited the number of opportunities. Over the past five years, we’ve become much more agile in our operating structure, working closely with our counterparties. In many of our transactions, they retain ultimate control, but we work with them and they’ve actually seen the benefit of the expertise that we have in some of these claims areas. So, that’s one of the selling points. Some of these structures work very well as long as there’s natural alignment,” he said.
Sanford said the U.S. remains a region with significant untapped potential, which remains a huge opportunity for Enstar and the broader traditional market.
“It’s such a big place, getting to know everyone is challenging, and brokers’ coverage isn’t guaranteed everywhere – which may mean they increasingly rely on their future colleagues for introductions. But there are still a lot of large insurance companies in the U.S. that don’t necessarily put legacy first.
“The idea is that companies buy forward-looking reinsurance to deal with volatility and capital allowances. Retrospective reinsurance does the same thing in a slightly different way. So it really should be part of the reinsurance buyer and CFO toolkit. While the industry as a whole hasn’t fully realized this yet, there are a lot of frequent buyers of traditional solutions, such as Zurich and QBE, and it’s worked very well for them,” he said.
Looking ahead, Sanford noted that he is encouraged by the range of different types of counterparties seeking solutions in traditional markets.
“If you look at our pipeline, there’s not necessarily a common theme. We’re seeing a lot of U.S. regional or national airlines entering the market for the first time. We’re also seeing M&A and companies with less capitalized balance sheets looking for recurring products to support growth. And there’s really a range of business categories.
“This is a very good development and a positive sign that counterparties are trying to think creatively about how to strengthen their capital positions or shore up their balance sheets.
“We see a pretty strong pipeline for 2026, and that appears to be the case from some of our peers,” he said.
