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Related Party Transactions
12 Months Ended
Dec. 31, 2015
Related Party Transactions [Abstract]  
Related Party Transactions
RELATED PARTY TRANSACTIONS
Stone Point Capital LLC
Following several private transactions occurring from May 2012 to July 2012, Trident acquired 1,350,000 of our Voting Ordinary Shares (which now constitutes approximately 8.4% of our outstanding Voting Ordinary Shares). On November 6, 2013, we appointed James D. Carey to our Board of Directors. Mr. Carey is the sole member of an entity that is one of four general partners of the entities serving as general partners for Trident, is a member of the investment committees of such general partners, and is a member and senior principal of Stone Point Capital LLC ("Stone Point"), the manager of the Trident funds.
In addition, we have entered into certain agreements with Trident with respect to Trident’s co-investments in the Atrium, Arden, and StarStone acquisitions. These include investors’ agreements and shareholders’ agreements, which provide for, among other things: (i) our right to redeem Trident’s equity interest in the Atrium/Arden and StarStone transactions in cash at fair market value within the 90 days following the fifth anniversary of the Arden and StarStone closings, respectively, and at any time following the seventh anniversary of the Arden and StarStone closings, respectively; and (ii) Trident’s right to have its equity co-investment interests in the Atrium/Arden and StarStone transactions redeemed by us at fair market value (which we may satisfy in either cash or our ordinary shares) following the seventh anniversaries of the Arden closing and StarStone closing, respectively. As of December 31, 2015, we have included $417.7 million (December 31, 2014: $374.6 million) as RNCI on our balance sheet relating to these Trident co-investment transactions. Pursuant to the terms of the shareholders’ agreements, Mr. Carey serves as a Trident representative on the boards of the holding companies established in connection with the Atrium/Arden and StarStone co-investment transactions. Trident also has a second representative on these boards who is a Stone Point employee.
As at December 31, 2015, we have investments in four funds (carried within other investments) and a registered investment company affiliated with entities owned by Trident or otherwise affiliated with Stone Point. The fair value of the investments in the four funds was $237.9 million and $202.6 million as of December 31, 2015 and December 31, 2014, respectively, while the fair value of our investment in the registered investment company was $21.0 million and $25.6 million as at December 31, 2015 and December 31, 2014, respectively. For the years ended December 31, 2015 and 2014, we recognized net realized and unrealized losses of $0.1 million and $0.7 million respectively, in respect of the fund investments and net realized and unrealized losses of $4.7 million and $1.2 million, respectively, in respect of the registered investment company investment. For the years ended December 31, 2015 and 2014, we recognized interest income of $2.8 million and $0.7 million in respect of the registered investment company.
We also have separate accounts, with a balance of $157.8 million and $127.8 million as at December 31, 2015 and 2014, respectively, managed by Eagle Point Credit Management and PRIMA Capital Advisors, which are affiliates of entities owned by Trident, with respect to which we incurred approximately $0.4 million and $0.1 million in management fees for the year ended December 31, 2015 and 2014, respectively.
During 2015, we received investment-related consulting services from a firm in which Trident V is a minority investor. We incurred approximately $0.4 million in expenses for these services for the twelve months ended December 31, 2015.
In addition, we are invested in two funds (carried within other investments) managed by Sound Point Capital, an entity in which Mr. Carey has an indirect minority ownership interest and serves as director. The fair value of our investments in Sound Point Capital funds was $34.5 million and $39.9 million as of December 31, 2015 and December 31, 2014, respectively. For the years ended December 31, 2015 and 2014, we have recognized net realized and unrealized gains of $0.6 million and $0.8 million, respectively, in respect of investments managed by Sound Point Capital.
Sound Point Capital has acted as collateral manager for certain of our direct investments in CLO equity securities. The fair value of these investments was $18.2 million and $10.0 million as at December 31, 2015 and December 31, 2014, respectively. For the year ended December 31, 2015, we recognized net realized and unrealized losses of $3.6 million and interest income of $3.4 million. No income was recognized in respect of these investments for 2014.
During 2015 we opened a separate account managed by Sound Point Capital, with a balance of $53.5 million as at December 31, 2015, with respect to which we incurred approximately $0.1 million in management fees for the year ended December 31, 2015.
Fees charged pursuant to investments affiliated with entities owned by Trident or Sound Point Capital were on an arm's-length basis.
Goldman Sachs & Co.
Affiliates of Goldman Sachs own approximately 4.1% of our Voting Ordinary Shares and 100% of our Series C Non-Voting Ordinary Shares. Sumit Rajpal, a managing director of Goldman Sachs, was appointed to the Board of Directors in connection with Goldman Sachs’ investment in Enstar. As of December 31, 2015 and December 31, 2014, we had investments in two funds (carried within other investments) affiliated with entities owned by Goldman Sachs, which had a fair value of $39.6 million and $36.3 million, respectively. As of December 31, 2015 and December 31, 2014, we had an indirect investment in non-voting interests of two companies affiliated with Hastings Insurance Group Limited which had a fair value of $44.6 million and $25.1 million, respectively. Goldman Sachs affiliates have an approximately 38% interest in the Hastings companies, and Mr. Rajpal serves as a director of the entities in which we have invested. For the years ended December 31, 2015 and 2014, we recognized net realized and unrealized gains of $24.1 million and $7.0 million, respectively, in respect of the Goldman Sachs-affiliated investments.
During 2015, a Goldman Sachs affiliate began providing investment management services to one of our subsidiaries. Our interests are held in accounts managed by affiliates of Goldman Sachs, with a balance of $695.8 million as at December 31, 2015, with respect to which we incurred approximately $0.6 million in management fees for the year ended December 31, 2015.
Fees charged pursuant to investments with affiliates of Goldman Sachs were on an arm's-length basis.
CPPIB
Canada Pension Plan Investment Board ("CPPIB"), together with management of Wilton Re, own 100% of the common stock of Wilton Re. Subsequent to the closing of our transaction with Wilton Re (described in Note 2 - "Acquisitions"), on June 3, 2015, CPPIB purchased voting and non-voting shares in Enstar from FR XI Offshore AIV, L.P., First Reserve Fund XII, L.P., FR XII-A Parallel Vehicle L.P. and FR Torus Co-Investment, L.P. (collectively, "First Reserve", and the transaction, the "CPPIB-First Reserve Transaction"). These shares constitute a 9.3% voting interest and a 9.9% aggregate economic interest in Enstar. On September 29, 2015, CPPIB exercised its acquired right to appoint a representative to our Board of Directors. CPPIB has also signed a definitive agreement to acquire additional voting shares that would increase its ownership in Enstar to a 13.9% voting interest and a 13.8% aggregate economic interest, subject to regulatory approval.
We also have a pre-existing reinsurance recoverable from a company later acquired by Wilton Re, which was carried on our balance sheet at $12.2 million as of December 31, 2015.