Acquisitions by Bermuda-based insurer Enstar Group Ltd. underscore the company's efforts to evolve its business to become a live underwriter.

Last week, Enstar said it would acquire London-based specialty insurer Torus Insurance Holdings Ltd. for $692 million.

In early June, Enstar said it would acquire London-based Atrium Underwriting Group Ltd., a Lloyd's of London underwriter, and Arden Reinsurance Co. Ltd. from Arden Holdings Ltd. for about $262 million.

The aggressive moves demonstrate Hamilton-based Enstar's intent to diversify beyond its roots as an acquirer and manager of insurers and reinsurers going out of business to the active underwriting business.

“In the last year, Enstar has undergone a significant transformation,” Robert J. Campbell, chairman of the firm's board of directors, said last week during a meeting with securities analysts. “In addition to adding to our substantial runoff liabilities, we have announced several transactions that expand our platform into live underwriting.”

While the company's core business founded in Bermuda in 1993 provides predictable earnings and cash flow, a lack of live underwriting may have hindered Enstar's competitiveness for runoff acquisitions, Enstar CEO Dominic Silvester said during the meeting.

Eamonn Flanagan, Liverpool, England-based director at asset management firm Shore Capital group Ltd., said it makes sense for Enstar to diversify into the active underwriting environment.

“There is a skill set in managing runoffs that can be easily exported into the live market,” he said.

Mr. Silvester said the structure of the Lloyd's market would help Enstar as it transitions to live underwriting. Atrium Underwriting Agency manages underwriting of syndicate 609, which underwrites accident and health, aviation, marine, space, professional liability, energy, war and terrorism coverages. In April, Torus assumed management of Lloyd's syndicate 1301, which underwrites accident and health, aviation, bloodstock, construction, marine, property direct and facultative, specie and war and terrorism coverage.

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“Atrium is a high-quality Lloyd's operation,” Mr. Silvester said during the meeting. “Atrium's corporate capital vehicle provides only 25% of the underwriting capacity, with the balance provided by traditional Lloyd's names.”

Likewise, Mr. Silvester expressed confidence in Torus, despite its uneven underwriting results since it launched in 2008.

“Poor results and underperforming areas masked substantial, well-structured and profitable business in the Torus Group,” he said, noting that Enstar hopes to “re-engineer” Torus and that Dermot O'Donohoe has been appointed CEO of Torus, replacing Clive Tobin, who is retiring.

Yet, A.M. Best Europe last week placed under review with negative implications the financial-strength ratings of Torus Group.

“While the acquisition, once completed, will improve Torus' financial flexibility and likely lead to expense savings, uncertainty exists surrounding the group's prospective operating performance, capital position and business strategy under its new ownership,” A.M. Best Europe said in a statement.

One way Enstar is looking to reduce the risk of adding live underwriting is through a partnership with Greenwich. Conn.-based private equity firm Stone Point Capital L.L.C., which has a long record of working with insurers and reinsurers, Mr. Silvester said. “To complement our skills, we have teamed up with StonePoint Capital. They have 40% investment in both Atrium and Torus.”

Enstar and StonePoint's purchase of Torus acquired the interests of private equity firms First Reserve and Corsair Capital.

Do the recent acquisitions indicate there will be more deals among insurers/reinsurers?

Gloria Vogel, senior vice president at Drexel Hamilton L.L.C. in New York, said a better barometer has been the recent uptick of insurer stock market share prices.

“I don't know if this will or will not be the start of a trend in more M&A, given that Torus is a very specialized firm,” Ms. Vogel said. “However, I will note that as valuations of (property/casualty) insurers and reinsurers have approached or exceeded book values, the difference between buyer and seller expectations has become smaller.”