Enstar sees fronting for ILS capital as diversifying solution to selectively develop: Zaprianov

Enstar, one of the largest legacy and run-off reinsurance specialists in the world, has recently begun fronting for capital providers including insurance-linked securities managers and sees this new offering a diversifying solution for its toolkit and one it intends to selectively develop further, Anguel Zaprianov explained to Artemis in a recent interview.

Speaking with us at the 2026 Monte Carlo Rendez-vous event, Zaprianov revealed that the entry into the fronting for ILS capital space is both diversifying for Enstar in terms of the solutions it can offer, as well as for its own portfolio of risk.

Zaprianov told us, “We have started fronting for ILS and reinsurance capital providers in a few select cases. For us, fronting is a diversifying tool for Enstar’s business and broadens our offering to the market. It allows us to diversify the solutions we provide to clients, and it also generates income.

“We’ve selectively started fronting on the ILS side and on the property cat side. We’re also fronting for one casualty MGA as well in Bermuda, and for specialty, and that’s 100% reinsured.”

Enstar’s activity in fronting for ILS managers originally came to light earlier this year, when signed lines disclosures made by Florida’s Citizens Property Insurance Corporation after its mid-year 2026 reinsurance renewal showed the firms Cavello Bay reinsurer as a participant.

In that disclosure, as we reported at the time, Cavello Bay was listed as the fronting entity for some of Nephila Capital’s participations in the Florida Citizens reinsurance renewal, the first time that reinsurer had been identified as a front for any ILS manager’s capital deployment.

Zaprianov explained more about Enstar’s fronting activities, saying, “When fronting for ILS managers or ILS capital, in property catastrophe risks, we need to try to balance how much tail-risk we take as part of the engagement. We are careful around it, because historically we haven’t been taking property cat risk.

“So, we’ll be deliberate in the way we approach the market, and we’re going to be humble and try to learn as we go.”

He went on to say that. “It’s certainly one business that we have an interest in developing further and it’s a market that we want to be in. But we’re not looking to front for the sake of fronting, we’re looking at providing fronting as another solution to the client, so we obviously want to tie it to our legacy business somehow.

“We are underweight property risk so this is also a diversifier for us. We are looking to be deliberate and develop a few select partners and not be a solutions provider for everyone.”

Enstar also has an ambition to provide a differentiated fronting solution for risk capital providers, including ILS, whereby it embeds one of its exit solutions into the arrangements.

Zaprianov told us, “We also want to provide fronting with a forward exit option as well. With that we’re beginning to close the cycle effectively, where we front, and then after a certain period of time, we’re able to take the reserves on our balance sheet and provide an exit for the capital provider.”

During our interview in Monte Carlo, we also discussed Enstar’s activities in casualty insurance-linked securities with its forward-exit-option (FOE) solution, provision of other exit solutions for ILS capital providers and its own reinsurance sidecar vehicle, Scaur Hill Re.

On the growing casualty ILS market, Zaprianov said, “The investor appetite across casualty and property ILS has been fairly strong. We’re seeing it in the casualty sidecars currently being set up, with several transactions progressing. Last year there was a lot of capital raised, this year we are probably going to see more.

“That’s particularly true in casualty, where some investors would like a forward exit option at the end of the sidecar term. We have been one of the providers of that solution and pioneered the product. Since then, we’ve seen multiple variations emerge, which is great to see and it’s becoming more and more mainstream.

“Now we see brokers, cedents and senior insurance professionals talking about forward exit options. They use FEOs as an acronym. We came up with that, and we love to see it. It’s natural to see people innovating at the edges and introducing new features, We fully expected that, and we’re glad to see the market develop.”

More broadly, Enstar continues to see interest in its exit solutions from across the ILS market.

“We’ve done several forward exit option transactions for both property and casualty ILS and we continue to be interested in providing these going forward.

“We’re seeing more and more capital looking to enter the reinsurance market, and much of it will seek an exit at some point, We are ready and willing to provide the exit then,” Zaprianov explained.

He also noted the importance that capital partners with a strong solution provider, to ensure certainty.

“We differentiate ourselves pretty well because we have a very strong balance sheet. One aspect that I’m not convinced the market fully appreciates is that, when an investor buys an option, it takes on credit exposure to the option writer. Having Cavello Bay as the counterparty, being A-rated and having $6 billion of surplus is a strong assurance that the counterparty will be there in three, four, five years, whatever the tenure of the option is, to meet those obligations. If you are using a less capitalised provider, you probably should take that into consideration,” Zaprianov said.

“The credit component is critical from my perspective. If I’m a buyer of the option, I’d like to know that, at the relevant point in time, I will be able to cede my reserves and the associated risk to someone that’s going to still be there.”

Earlier this year Enstar entered into a partnership on structured exit options with Artex Capital Solutions, the insurance-linked securities market service provider and insurance management specialist.

Zaprianov said this partnership has proven promising for Enstar, “Artex is a very valuable partner of ours. They have a formidable presence in the ILS space, and this was one of the arrangements we wanted to do. They can refer clients who are seeking a liquidity event or an exit, and it’s working pretty well.

“The arrangement allows them to provide this service to their clients, and allows us to participate in more of these transactions. We find them to be a very valuable partner.”

On how use of exit solutions is gaining more traction, he added, “It’s becoming increasingly mainstream and we’re not surprised. Because of the capital that’s looking to get into insurance, some of that capital will want to exit after some defined period. It’s also good for that capital to have some term limitations.

“We’re happy to look at those trapped ILS capital opportunities. We’ve done a few of these transactions and we continue to look at them. We continue to see interest from ILS funds seeking liquidity and an exit.”

For Enstar, this is becoming a core component of its business offering and one the company has an appetite to grow.

Zaprianov told us, “Part of the intention for us is to build a business, and a book that will earn a return on this investment.

“We can react quickly, we can be creative around solutions and we’re flexible. There is a capability that we have that I think differentiates us from the rest of the market, in addition to the strength of our balance sheet and the fact we pioneered the product.”

Finally, Zaprianov highlighted Enstar’s own Scaur Hill Re reinsurance sidecar as an initiative it sees as valuable and repeatable.

“Scaur Hill Re was a proof-of-concept transaction, we would like to utilise it again as we continue to grow our presence, most likely on the legacy side or as a capital and risk management tool. We definitely intend to utilise that again,” he explained.

Closing by saying that, “The intention there is to always have a very strong alignment with the investors that are participating, in that we’re not looking to retain 20% and cede 80%.

“We’re going to be looking to retain a lot more, because ultimately it’s our underwriting. So, our goal there is to really diversify and maybe share some of the risks, but not the majority of the risk.”

Read all of our interviews with ILS market and reinsurance sector professionals here.