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Enstar Group Limited (NASDAQ:ESGR), a global insurance group with a market capitalization of $4.75 billion, has announced the issuance of $350 million in junior subordinated notes due in 2045, according to a recent filing with the Securities and Exchange Commission (SEC). The notes, with a 7.500% fixed interest rate that resets after 2035, were issued on Tuesday, March 18, 2025. According to InvestingPro data, the company maintains a GOOD overall financial health score, suggesting solid fundamentals despite short-term obligations exceeding liquid assets.
The Bermuda-based company stated that the notes were offered and sold in the United States to accredited investors under an exemption from the Securities Act of 1933. The offering was also made to qualified institutional buyers and non-U.S. persons in offshore transactions compliant with Regulation S under the Securities Act. With a current debt-to-equity ratio of 0.31 and total debt of $1.84 billion, this new issuance reflects the company’s ongoing capital management strategy.
The notes will initially bear interest at a fixed rate of 7.500% per annum until April 1, 2035. Thereafter, the interest rate will reset every five years to a rate equal to the Five-Year Treasury Rate plus 3.186%. Interest payments are scheduled semi-annually, with the first payment due on October 1, 2025.
Enstar Group also clarified that under certain circumstances, such as a breach of enhanced capital requirements by the company or its regulated insurance subsidiaries, it would be required to defer interest payments on the notes.
The notes are scheduled to mature on April 1, 2045, but may not be redeemed prior to April 1, 2030, without approval from the Bermuda Monetary Authority. Furthermore, redemption or repayment is not allowed at any time if it would result in a breach of the enhanced capital requirements, unless the capital is replaced with equal or better capital treatment under applicable insurance supervisory laws.
The SEC filing detailed events of default, which include nonpayment of principal or interest (except due to mandatory deferral), and certain events of bankruptcy, insolvency, or reorganization of the company. In the event of such defaults, the principal and accrued interest may become due immediately upon declaration by the Trustee or holders of at least 25% of the outstanding notes.
This financial move by Enstar Group LTD, as reported in the SEC filing, is part of the company’s broader capital management strategy. The stock currently trades near its 52-week high of $348.48, with a current price of $332.05. For deeper insights into Enstar’s financial health and detailed analysis, investors can access comprehensive research reports and additional ProTips through InvestingPro’s extensive coverage of over 1,400 US equities.
In other recent news, Enstar Group Limited has announced the pricing of its $350 million junior subordinated notes with a fixed interest rate of 7.500%, set to mature in 2045. The company plans to use the proceeds to repurchase existing notes due in 2040 and possibly redeem additional notes in the future. Enstar has also implemented its 2025 Annual Incentive Compensation Program to provide cash bonuses to senior executives, replacing the previous program that ended in 2024. Additionally, Enstar finalized a reinsurance coverage deal with James River Group (NASDAQ:JRVR) Holdings, providing an extra $75 million in coverage to bolster protection against potential adverse reserve developments. The company also invested $12.5 million in James River common stock as part of this arrangement. Furthermore, Enstar has accelerated compensatory arrangements for its Chief Strategy Officer, David Ni, in connection with ongoing mergers. This move aims to mitigate potential tax impacts related to these mergers. These developments reflect Enstar’s strategic efforts to manage its financial obligations and enhance its market presence.
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