Cincinnati, Ohio-based Core Specialty Insurance Holdings Inc. (Core Specialty) has completed its recapitalization of StarStone U.S. Holdings Inc. (StarStone U.S.) and named Jeff Consolino as president and CEO.
In a media release, the company said the recapitalization was led by SkyKnight Capital L.P. (SkyKnight), Dragoneer Investment Group (Dragoneer) and Aquiline Capital Partners LLC (Aquiline, and together with SkyKnight and Dragoneer, the investors). Enstar Group Limited (Enstar) has received a combination of cash consideration and shares in Core Specialty as part of the recapitalization.
Core Specialty offers a diversified range of property/casualty insurance products for small to mid-sized businesses. It has eight underwriting offices across the U.S. Core Specialty is an insurance holding company operating through StarStone Specialty Insurance Co., a U.S. excess and surplus lines insurer, and StarStone National Insurance Co., a U.S. admitted markets insurer.
As part of the capital infusion, Core Specialty has appointed a new management team. In addition to Consolino, Ed Noonan has been named executive chairman.
Consolino is an accomplished insurance industry leader with more than 28 years of sector experience. Most recently, he was executive vice president, chief financial officer and a director of American Financial Group Inc. (AFG). He was previously a founding executive of Validus Holdings Ltd. (Validus Group) where he served as president and chief financial officer and a director.
Noonan brings more than 40 years of industry experience to the company. He served most recently as chairman and CEO of Validus Group, a position he held from 2005 to 2018. Validus ultimately was acquired by AIG in 2018 after more than a decade as a leading independent public company with Noonan as CEO. Noonan also served as president and CEO of American Re from 1997 to 2002, after joining the firm in 1983.
The $610 million in new equity capital provided by the investors, together with the rollover of Enstar’s existing ownership, and an additional equity purchase of over $60 million from management and selected other investors, will increase the equity capitalization of the company to more than $900 million.
After giving effect to the recapitalization, SkyKnight and Dragoneer will each have beneficial ownership of approximately 27%, Enstar 25%, Aquiline 11%, management and directors 6% and other investors 4%.
In conjunction with the capital infusion, one of Enstar’s wholly owned subsidiaries has entered into a combination loss portfolio and adverse development cover reinsurance agreement with the company.
Consolino joined the company as a consultant following the June 2020 announcement of the recapitalization. During this period, the Core Specialty has: created an Excess & Surplus Property Division (a sixth specialty business unit, led by Alison Oliphant); managed the A.M. Best review process leading to company ratings of A- “Excellent” (developing); received additional equity commitments of $50 million; added two highly qualified directors; and recruited key executive, underwriting and support roles.
Financial results for the company have been very strong through the first nine months of 2020. Adjusted for intercompany cessions, the combined ratio was 94.9% through the nine months of 2020. Rate increases through the first nine months of 2020 were 8% across the company’s entire portfolio and 17% excluding workers’ compensation.
Source: Core Specialty Insurance Holdings
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