Insurance run-off specialist Enstar has accepted a $US5.1 billion ($7.8 billion) takeover offer from a consortium led by global investment firm Sixth Street.

Under a definitive merger agreement, Sixth Street will acquire the business, with Liberty Strategic Capital, J.C. Flowers & Co and other institutional investors participating in the deal.

“Enstar has a proven track record of delivering innovative legacy property and casualty solutions and capitalising on attractive opportunities in the reinsurance market, while maintaining a conservative balance sheet and strong risk management culture,” Sixth Street co-founder and partner Michael Muscolino said. “As an existing investor in Enstar, we have a deep respect for the business Enstar’s management team has built and look forward to continuing supporting the company’s current strategy.”

Nasdaq-listed insurer Enstar’s directors unanimously approved the deal and have recommended shareholders vote in favour.

The deal is expected to close next year, subject to shareholder backing, regulatory clearance and other closing conditions.

“Enstar will maintain its current operations and business strategy,” the insurer said.

The agreement includes a 35-day “go-shop” period expiring on September 2, which permits Enstar’s board and advisers to solicit alternative acquisition proposals.

Enstar focuses on acquiring and managing run-off insurance and reinsurance liabilities, primarily from other (re)insurance companies.

It has a diversified portfolio of companies across the world’s major insurance hubs, including in Australia, the US and London, according to its website.

insuranceNEWS.com.au has reached out to Enstar about its Australian business.

In June, Enstar and IAG announced an adverse development cover agreement, under which Enstar will provide $650 million of excess cover to certain long-tail insurance business. The deal includes product and public liability, compulsory third-party motor, professional risks and workers’ compensation for losses incurred on or before June 30 last year.

Enstar’s 2023 annual report says in June last year it completed a $US180 million ($227 million) loss portfolio transfer with RACQ Insurance to reinsure 80% of the Australian mutual’s motor vehicle CTP liabilities for accident years 2021 and prior.

“We continue to enjoy significant market share for legacy deals in Australia,” the annual report said.