The Enstar Group Inc. reported that its partially owned equity affiliate, Castlewood Holdings Limited, and Shinsei Bank, Limited have signed definitive agreements for the purchase of Aioi Insurance Company of Europe Limited (“Aioi Europe”), a London-based subsidiary of Aioi Insurance Company, Limited.
The aggregate purchase price to be paid for Aioi Europe is 62 million pounds Sterling (approximately $108 million), with 50 million pounds in cash upon the closing of the transaction and 12 million pounds in the form of a promissory note, payable 12 months from the date of the closing.
The acquisition will be effected through Hillcot Holdings Ltd., a Bermuda-based company, which is jointly owned by Castlewood Holdings and Shinsei. Castlewood Holdings has a 50.1% economic and 50% voting interest in Hillcot. Subject to regulatory approval, the acquisition is expected to be completed during the first quarter of 2006.
Aioi Europe has underwritten general insurance and reinsurance business in Europe for its own account and in conjunction with Toyota Financial Services.
During 2002, Aioi Europe generally ceased underwriting, and placed into run-off, its general insurance and reinsurance business. However, Aioi Europe continued its underwriting with Toyota Financial Services and for the European operations of certain Japanese companies. This ongoing portion of Aioi Europe’s business will be transferred effective Jan. 1, 2006, to Aioi Motor and General Insurance Company of Europe, Limited, a new UK subsidiary of Aioi Insurance Company, Limited, and will not be acquired by Hillcot.
Aioi Europe had total consolidated assets of approximately 332 million pounds and total equity of approximately 64 million pounds at Dec. 31, 2004, as reported in its UK regulatory financial statements.
Castlewood Holdings, a Bermuda corporation, manages and acquires insurance and reinsurance companies, including companies in run-off, and provides management, consulting and other services to the insurance and reinsurance industry. Enstar owns an approximately 33% economic interest in Castlewood Holdings and 50% of its voting stock. Castlewood Holdings’ share of the Aioi Europe acquisition is expected to be funded from cash on hand.
J. Christopher Flowers, a member of Enstar’s board of directors and its largest shareholder, is also a director of Shinsei.