News Archives 2001

THE ENSTAR GROUP, INC. ANNOUNCES JOINT VENTURE

Montgomery, Alabama - October 1, 2001... The Enstar Group, Inc. ("Enstar") (ESGR:OTC) today announced that it has signed definitive agreements with Trident II, L.P. ("Trident") and the shareholders and senior management of Castlewood Limited ("Castlewood") to form a new venture, Castlewood Holdings Limited ("Castlewood Holdings"), to pursue the management and acquisition of reinsurance companies, including companies in run-off. Trident is managed by MMC Capital, Inc. ("MMC Capital"), which is a global private equity firm that serves as the investment manager to three families of funds that have received over $2 billion of capital commitments. MMC Capital is a wholly owned subsidiary of Marsh & McLennan Companies, Inc. Castlewood is a private Bermuda-based firm, experienced in managing and acquiring reinsurance operations.

The current owners of Castlewood (the "Castlewood Principals") will contribute at closing all the shares of Castlewood to Castlewood Holdings in exchange for a one-third economic interest in the newly incorporated Castlewood Holdings, plus notes and cash totaling $4.275 million. As part of the transaction, Enstar and Trident will make equal capital commitments as of the closing date totaling $79 million in exchange for their one-third economic interests in Castlewood Holdings. Enstar expects to use internal funds to satisfy its commitment. Enstar will receive 50% of the voting stock of Castlewood Holdings and the Castlewood Principals and Trident will each receive 25% of the new company's voting stock. On closing, Castlewood Holdings will have total capital available in excess of $100 million. The contributions of capital will be made to Castlewood Holdings and its subsidiaries to finance acquisitions and provide working capital as and when called for by the Board of Directors of Castlewood Holdings over a ten-year period.

The management of Castlewood will continue to run the business of Castlewood Holdings and its subsidiaries, with Dominic Silvester as President and Chief Executive Officer of Castlewood Holdings. Paul O'Shea will become President and Chief Operating Officer of Castlewood.

In June 2001, Enstar announced that Enstar and Castlewood, through Revir Limited ("Revir"), a newly formed Bermuda holding company, had agreed to acquire two reinsurance companies, River Thames Insurance Company Limited, based in London, England, and Overseas Reinsurance Corporation Limited, based in Bermuda. Upon the closing, Enstar's shares in Revir will be transferred, at cost, to Castlewood. Consummation of the River Thames/Overseas Reinsurance acquisition is subject to certain regulatory approvals.

In July 2000, Enstar, through B.H. Acquisition Limited ("B.H. Acquisition), a joint venture with Castlewood and Trident, acquired two reinsurance subsidiaries of Petrofina S.A., a subsidiary of TotalFina Elf S.A. The reinsurance companies, Brittany Insurance Company Ltd. and Compagnie Europeenne d'Assurances Industrielles S.A., were purchased by B.H. Acquisition for $28.5 million. As a result of the contribution of Castlewood's outstanding stock to Castlewood Holdings, Enstar's 33% direct economic interest in B.H. Acquisition will increase by an additional 15% indirect economic interest through Castlewood Holdings. Enstar will retain its 50% voting interest in B.H. Acquisition.

"We are extremely pleased with the deepening of our relationships with Castlewood and Trident through this transaction. We believe that Dominic Silvester, the founding shareholder of Castlewood, and his management team, will lead the way for Enstar, through Castlewood Holdings, to be an effective player in the global insurance run-off management business," said Nimrod T. Frazer, Enstar's Chairman and CEO.

The Castlewood Holdings transaction is subject to certain conditions, including obtaining regulatory approvals in Bermuda, Belgium and the United Kingdom.


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This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, without limitation, statements regarding the intent, belief or current expectations of Enstar and its management team regarding Castlewood Holdings' acquisition of Castlewood. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements contained in this press release include the receipt of required regulatory approvals, adverse changes in the companies' financial results and conditions, changes in general economic and business conditions and other factors set forth in the Safe Harbor Compliance Statement for Forward-Looking Statements included as Exhibit 99.1 to Enstar's Form 10-K for the year ended December 31, 2000, which are hereby incorporated herein by reference.

October 1, 2001   Nimrod T. Frazer

Immediately   (334) 834-5483