Catalina will not mount bid for Maiden: sources

Catalina will not look to upset the Maiden-Enstar legacy deal by mounting a bid to acquire the Bermuda-domiciled reinsurer, The Insurance Insider can reveal.

Banking sources told this publication that the Apollo-owned legacy carrier Catalina was not poised to mount a bid to buy Maiden despite speculation in some circles to that effect.

In addition, the sources suggested that the idea that Catalina - an 8 percent shareholder in Maiden - would look to file for an injunction to prevent the $2.7bn loss portfolio transfer agreed with Enstar to proceed was far-fetched.

If the deal completes, it would represent the biggest single addition of reserves in Enstar’s history.

On Friday, Maiden disclosed that it had entered into a loss portfolio transfer for the portion of its reserves relating to the AmTrust quota share.

It did so as it reported a third quarter net loss of $309mn, driven by $210mn of unfavourable development in its AmTrust segment.

Maiden had appointed Bank of America Merrill Lynch to run a sales process after it attracted interest from run-off players Enstar and Catalina following a string of reversals.

However, it is understood that it also invited proposals for loss portfolio transfer deals from legacy players as an alternative means of realising value.

Banking sources added that to date the sale process had not yielded a formal bid from Catalina to buy the company.

As previously reported, AmTrust has started to market a major quota share reinsurance deal that would effectively replace the Maiden deal. 

Ceded premiums under the deal - which is being marketed by a trio of brokers - could be $2.5bn-$3bn, making it potentially the second biggest quota share in the US market.

Catalina built an 8 percent stake in Maiden through the course of the year, acquiring 5 percent of the company in March and April for $27.3mn, and adding the rest in September for a further $5.7mn.

It is not clear at this point if Catalina will look to hold the stock in case it recovers as the market digests the reduced downside risk following the LPT, or if it will look to cut its losses and exit.

Catalina declined to comment.