An investor group led by Sixth Street agreed to buy property and casualty insurer Enstar Group Ltd for US$5.1 billion , in the second-largest private equity backed insurance deal of the year.

Former US Treasury secretary Steven Mnuchin’s Liberty Strategic Capital and JC Flowers & Co are also participating in the deal for Hamilton, Bermuda-based Enstar, which specialises in buying and managing blocks of insurance policies that are in run-off, according to a statement on Monday. 

The group is paying US$338 per share in cash, or about 2.9% below Enstar’s closing share price of US$348.31 last Friday. The price is a premium of about 8.5% to its 90-day volume weighted average price through July 26, according to the statement. 

Enstar fell 6.7% to US$325 at 11.51am in New York trading, giving the company a market value of about US$4.95 billion. 

Enstar, which is going private in the deal, will maintain its current operations and business strategy. Enstar will return about US$500 million from its balance sheet to shareholders as part of the deal, which is expected to close in mid-2025. Enstar also has 35 days to solicit other offers. 

Enstar, formed in 1993, helps other insurance providers manage their risks by acquiring or re-insuring legacy blocks of business, often accident-related policies written several years before. The company makes money by carefully managing the liabilities as they run off while investing proceeds in investments and new acquisition opportunities, according to its annual report. It’s made more than 100 acquisitions since its founding, according to its website. 

The deal marks the second largest private equity backed insurance deal this year, behind Truist Financial Corp’s sale of its insurance brokerage business to a group led by Stone Point Capital and Clayton Dubilier & Rice, which valued the business at US$15.5 billion, according to data compiled by Bloomberg. 

The deal is also the latest big financial services transaction for Liberty, which Mnuchin started after serving in the Donald Trump administration. In March, the firm led a US$1 billion rescue of commercial real estate lender New York Community Bancorp. 

Sixth Street also teamed up with an investor group including Stone Point Capital in 2022 on the purchase of TIAA Bank. Sixth Street acquired a minority stake in Enstar last year from Canada Pension Plan Investment Board. 

  - Bloomberg