AM Best has placed the ratings of Torus under review with negative implications following the announcement on Tuesday that Bermuda’s Enstar Group has entered into a definitive agreement to acquire the insurer.Both companies are domiciled in Wilmington, Delaware and are wholly owned subsidiaries of their ultimate parent, Torus Insurance Holdings of Bermuda.The agency placed both the financial strength rating of A- (Excellent) and issuer credit ratings of “a-” of Torus Specialty Insurance Company and Torus National Insurance Company under review.Enstar said it will issue ordinary voting shares and newly created non-voting preferred shares to an aggregate value of approximately $346 million to partially fund the transaction.In addition, AM Best said Enstar will contribute approximately $69 million in cash, while affiliates of Stone Point Capital (Stone Point) will contribute approximately $277 million through an equity co-investment.The total consideration for the transaction is $692 million. Following the closing of the transaction, Enstar will own 60 percent of Torus with Stone Point owning the remaining 40 percent. The transaction is expected to close in the fourth quarter of 2013.“Torus’ consolidated financial results have been sub-par over the last three years and additional capital injections have been required to support growth and offset retained losses,” AM Best said.“Management has taken actions to reduce earnings volatility and improve performance but these are not yet fully tested. 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. As a result, the ratings have been placed under review with negative implications. AM Best expects to resolve the under review status upon completion of the transaction, following discussions with Torus’ management, Enstar and Stone Point.”