ESGRF offers a 7.94% current yield and discounted $25 preference value, with attractive reset upside offset by AF Group integration, leverage, and OTC liquidity risks.
Overview
Enstar is a Bermuda-domiciled specialist in acquiring and managing non-life insurance and reinsurance run-off portfolios, generating value through claims resolution, reserve releases, and asset-liability optimization. It became private on July 2, 2025 after Sixth Street and co-investors acquired it for $5.1 billion, paying $338.00 per ordinary share; ESGRF, the Series D preferred depositary share, remains OTC-traded and is the focus of this analysis. **At approximately $22.05, ESGRF trades below its $25.00 liquidation preference and pays a $1.75 annual dividend, producing a 7.94% current yield.** Enstar’s scale is supported by $21.7 billion of total investable assets, $5.5 billion of Q1 2026 equity, $0.5 billion of FY 2025 net income, and 10.1% ROE. Net investment income increased to $0.9 billion from $0.7 billion in FY 2024. The key strategic catalyst is the planned AF Group acquisition, which adds $2.8 billion of net written premiums and continuous float but introduces live underwriting risk. **The September 1, 2028 reset to three-month SOFR plus 4.015% provides longer-term rate protection.** Near-term catalysts include AF Group closing, leverage reduction toward the high-20s by 2028, rating stability, and successful refinancing.