Enstar Group Limited (Nasdaq: ESGR) today announced financial
results for the fourth quarter and full year 2023.
Fourth Quarter 2023 Highlights: |
-
Net income attributable to Enstar ordinary shareholders of $599
million, or $39.71 per diluted ordinary share, for the quarter
compared to net loss attributable to Enstar ordinary shareholders
of $227 million, or $13.26 per diluted ordinary share, for the
three months ended December 31, 2022.
-
Return on equity ("ROE") of 13.7% and Adjusted ROE* of 9.0% for the
quarter compared to 5.5% and 4.0%, respectively, in the fourth
quarter of 2022. ROE performance was driven by investment returns
of $463 million and a tax benefit from the enactment of the Bermuda
Corporate Income Tax Act 2023 in December 2023 of $205 million.
Adjusted ROE* excludes $194 million of net realized and unrealized
gains on our fixed maturities and funds held - directly
managed.
-
Run-off liability earnings ("RLE") of $96 million for the quarter
was driven by favorable development on our workers' compensation
and property lines of business and a reduction in the provisions
for ULAE, partially offset by a charge to increase the value of
certain portfolios that are held at fair value due to decreases in
global corporate bond yields and adverse development on our general
casualty line of business. In comparison, RLE of $280 million in
the comparative quarter was positively impacted by income resulting
from reductions in the value of certain portfolio liabilities that
are held at fair value due to increases in global corporate bond
yields, favorable development in our workers’ compensation and
marine, aviation and transit lines of business, and the recognition
of a gain on commutation of Enhanzed Re’s catastrophe reinsurance
business. The comparative annual results were partially offset by
adverse development on our general casualty and motor lines of
business.
-
Annualized total investment return (“TIR”) of 14.8% and Annualized
Adjusted TIR* of 5.5% compared to 3.5% and 1.9%, respectively, for
the three months ended December 31, 2022. Recognized investment
results benefited from net realized and unrealized gains on our
fixed maturities, including other comprehensive income (“OCI”) of
$414 million, net investment income of $176 million and net
unrealized gains on our other investments, including equities, of
$102 million.
-
Signed agreement with American International Group, Inc. (“AIG”) to
provide protection to AIG on its retained exposure to adverse
development on Validus Re carried loss reserves, up to a limit of
$400 million. The agreement became effective as of November 1,
2023, corresponding to the closing of AIG’s sale of Validus Re to
RenaissanceRe.
-
Repurchased 841,735 voting ordinary shares for $191 million at
a price per share of $227.18, representing a 5% discount to the
trailing 10-day volume weighted average price of our voting
ordinary shares at the agreed November 2023 measurement date.
-
Acquired remaining 41.0% equity interest in StarStone Specialty
Holdings Limited (“SSHL”) in exchange for total consideration of
$182 million. Following the completion of the transaction,
SSHL became a wholly-owned subsidiary and we no longer have any
ownership interest in Atrium.
* Non-GAAP measure; refer to "Non-GAAP Financial
Measures" further below for explanatory notes and a reconciliation
to the most directly comparable GAAP measure.
Dominic Silvester, Enstar CEO, said: |
“We finished 2023 strong off the back of an
excellent fourth quarter, as we received sizeable contributions
from our investment portfolio and generated solid run-off liability
earnings, which resulted in ROE for the full year of 24.2%. In
addition, we repurchased $532 million of shares during the year,
which contributed to our total growth in book value.”
“Turning to M&A, we maintained our leading
market position through our completed loss portfolio transfer
transactions with QBE and RACQ, as well as our bespoke agreement
with AIG - all in acquiring $2.2 billion of liabilities. Looking
ahead, we continue to see demand for our innovative legacy
solutions and are confident that our strategy and robust business
model will ensure we continue to meet our clients’ evolving needs
as the dominant legacy player, while driving long-term shareholder
value.”
Year Ended December 31, 2023 Highlights: |
-
Net income attributable to Enstar ordinary shareholders of $1.1
billion, or $68.47 per diluted ordinary share, compared to net loss
attributable to Enstar ordinary shareholders of $906 million, or
$52.65 per diluted ordinary share, for the year ended December 31,
2022.
-
ROE of 24.2% and Adjusted ROE* of 18.8%, compared to (15.6)% and
(1.1)%, respectively, for the year ended December 31, 2022. ROE
performance was driven by investment returns of $1.1 billion, a tax
benefit from the enactment of the Bermuda Corporate Income Tax Act
2023 of $205 million and a year-to-date net gain recognized on the
completion of the novation of the Enhanzed Re reinsurance of a
closed block of life annuity policies of $196 million.
-
RLE of $131 million was driven by favorable development on our
workers' compensation and property lines of business and a
reduction in the provisions for ULAE, partially offset by charges
to increase the value of certain portfolios that are held at fair
value and adverse development on our general casualty line of
business. In comparison, RLE of $756 million for the year ended
December 31, 2022 was positively impacted by favorable development
in our workers’ compensation and marine, aviation and transit lines
of business and a reduction in the provisions for ULAE, as well as
from reductions in the value of certain portfolio liabilities that
are held at fair value. The favorable results in 2022 were
partially offset by adverse development in our general casualty and
motor lines of business.
-
TIR of 7.2% and Adjusted TIR* of 5.3%, compared to (9.0)% and
(0.2)%, respectively, for the year ended December 31, 2022.
Recognized investment results benefited from net unrealized gains
on our other investments, including equities, of $397 million, net
investment income of $647 million, and net realized and unrealized
gains on our fixed maturities, including OCI of $288 million.
-
Completed LPT agreements with certain subsidiaries of QBE Insurance
Group Limited (“QBE”) and with RACQ Insurance Limited (“RACQ”). At
closing, we assumed net loss reserves of $2.0 billion from QBE and
$179 million from RACQ in exchange for consideration of $1.9
billion and $179 million, respectively.
-
Amended and restated our existing revolving credit agreement,
increasing commitments from $600 million to $800 million and
increasing the term by five years.
-
In addition to the voting ordinary shares repurchased in the fourth
quarter, repurchased our remaining 1,597,712 non-voting convertible
ordinary shares outstanding for $341 million at a price per share
of $213.13, representing a 5% discount to the trailing 10-day
volume weighted average price of our voting ordinary shares at the
agreed March 2023 measurement date.
* Non-GAAP measure; refer to "Non-GAAP Financial
Measures" further below for explanatory notes and a reconciliation
to the most directly comparable GAAP measure.
Key Financial and Operating Metrics |
We use the following GAAP and Non-GAAP measures
to monitor the performance of and manage the company:
|
Year Ended |
|
|
|
Year Ended |
|
|
|
December 31, |
|
|
|
December 31, |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
$ / pp / bp Change |
|
|
2021 |
|
|
$ / pp / bp Change |
|
(in millions of U.S. dollars, except per share
data) |
Key Earnings
Metrics |
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Enstar ordinary shareholders |
$ |
1,082 |
|
|
$ |
(906 |
) |
|
$ |
1,988 |
|
|
$ |
502 |
|
|
$ |
(1,408 |
) |
Adjusted operating income (loss) attributable to Enstar ordinary
shareholders* |
$ |
1,102 |
|
|
$ |
(61 |
) |
|
$ |
1,163 |
|
|
$ |
565 |
|
|
$ |
(626 |
) |
ROE |
|
24.2 |
% |
|
(15.6 |
)% |
|
|
39.8 |
pp |
|
|
7.9 |
% |
|
|
(23.5 |
)pp |
Adjusted ROE* |
|
18.8 |
% |
|
(1.1 |
)% |
|
|
19.9 |
pp |
|
|
10.1 |
% |
|
|
(11.2 |
)pp |
|
|
|
|
|
|
|
|
|
|
Key Run-off
Metrics |
|
|
|
|
|
|
|
|
|
Prior period development |
$ |
131 |
|
|
$ |
756 |
|
|
$ |
(625 |
) |
|
$ |
403 |
|
|
$ |
353 |
|
Adjusted prior period development* |
$ |
227 |
|
|
$ |
489 |
|
|
$ |
(262 |
) |
|
$ |
381 |
|
|
$ |
108 |
|
RLE |
|
1.1 |
% |
|
|
6.3 |
% |
|
|
(5.2 |
)pp |
|
|
3.9 |
% |
|
|
2.4 |
pp |
Adjusted RLE* |
|
1.8 |
% |
|
|
3.9 |
% |
|
|
(2.1 |
)pp |
|
|
3.6 |
% |
|
|
0.3 |
pp |
|
|
|
|
|
|
|
|
|
|
Key Investment Return
Metrics |
|
|
|
|
|
|
|
|
|
Total investable assets |
$ |
18,243 |
|
|
$ |
19,540 |
|
|
$ |
(1,297 |
) |
|
$ |
21,708 |
|
|
$ |
(2,168 |
) |
Adjusted total investable assets* |
$ |
18,968 |
|
|
$ |
21,367 |
|
|
$ |
(2,399 |
) |
|
$ |
21,619 |
|
|
$ |
(252 |
) |
Investment book yield |
|
3.86 |
% |
|
|
2.47 |
% |
|
|
139 |
bp |
|
|
1.84 |
% |
|
|
63 |
bp |
TIR |
|
7.2 |
% |
|
(9.0 |
)% |
|
|
16.2 |
pp |
|
|
2.0 |
% |
|
|
(11.0 |
)pp |
Adjusted TIR* |
|
5.3 |
% |
|
(0.2 |
)% |
|
|
5.5 |
pp |
|
|
3.6 |
% |
|
|
(3.8 |
)pp |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
As of |
|
|
Key Shareholder
Metrics |
December 31, 2023 |
|
December 31, 2022 |
|
|
|
December 31,2021 |
|
|
Book value per ordinary share |
$ |
343.45 |
|
|
$ |
262.24 |
|
|
$ |
81.21 |
|
|
$ |
329.20 |
|
|
$ |
(66.96 |
) |
Fully diluted book value per ordinary share* |
$ |
336.72 |
|
|
$ |
258.92 |
|
|
$ |
77.80 |
|
|
$ |
323.43 |
|
|
$ |
(64.51 |
) |
pp - Percentage point(s)
bp - Basis point(s)
*Non-GAAP measure; refer to "Non-GAAP Financial Measures"
further below for explanatory notes and a reconciliation to the
most directly comparable GAAP measure.
Results of Operations By Segment - For the Years Ended
December 31, 2023, 2022 and 2021 |
Run-off Segment
The following is a discussion and analysis of
the results of operations for our Run-off segment.
|
|
2023 |
|
|
|
2022 |
|
|
$ Change |
|
|
2021 |
|
|
$ Change |
REVENUES |
(in millions of U.S. dollars) |
Net premiums earned |
$ |
43 |
|
|
$ |
40 |
|
|
$ |
3 |
|
|
$ |
182 |
|
|
$ |
(142 |
) |
Other income: |
|
|
|
|
|
|
|
|
|
Reduction in estimates of net ultimate defendant A&E
liabilities - prior periods |
|
(1 |
) |
|
|
2 |
|
|
|
(3 |
) |
|
|
38 |
|
|
|
(36 |
) |
Reduction in estimated future defendant A&E expenses |
|
2 |
|
|
|
1 |
|
|
|
1 |
|
|
|
5 |
|
|
|
(4 |
) |
All other income |
|
9 |
|
|
|
19 |
|
|
|
(10 |
) |
|
|
30 |
|
|
|
(11 |
) |
Total other income |
|
10 |
|
|
|
22 |
|
|
|
(12 |
) |
|
|
73 |
|
|
|
(51 |
) |
Total revenues |
|
53 |
|
|
|
62 |
|
|
|
(9 |
) |
|
|
255 |
|
|
|
(193 |
) |
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
Net incurred losses and
LAE: |
|
|
|
|
|
|
|
|
|
Current period |
|
30 |
|
|
|
44 |
|
|
|
(14 |
) |
|
|
144 |
|
|
|
(100 |
) |
Prior period |
|
(226 |
) |
|
|
(486 |
) |
|
|
260 |
|
|
|
(338 |
) |
|
|
(148 |
) |
Total net incurred losses and
LAE |
|
(196 |
) |
|
|
(442 |
) |
|
|
246 |
|
|
|
(194 |
) |
|
|
(248 |
) |
Acquisition costs |
|
10 |
|
|
|
22 |
|
|
|
(12 |
) |
|
|
44 |
|
|
|
(22 |
) |
General and administrative
expenses |
|
177 |
|
|
|
143 |
|
|
|
34 |
|
|
|
188 |
|
|
|
(45 |
) |
Total expenses |
|
(9 |
) |
|
|
(277 |
) |
|
|
268 |
|
|
|
38 |
|
|
|
(315 |
) |
SEGMENT NET INCOME |
$ |
62 |
|
|
$ |
339 |
|
|
$ |
(277 |
) |
|
$ |
217 |
|
|
$ |
122 |
|
|
Overall Results
2023 versus
2022: Net income from our Run-off
segment decreased by $277 million, primarily due to:
-
A $260 million decrease in favorable prior period development
(“PPD”), mainly driven by a $198 million decrease in the reduction
in estimates of net ultimate losses in comparison to 2022.
-
Results for the year ended December 31, 2023 were driven by
favorable development of $200 million on our workers’ compensation
line of business as a result of continued favorable claim
settlements, most notably in the 2018, 2019 and 2021 acquisition
years. We also had favorable development of $68 million on our
property line of business relating to the 2022 acquisition year as
a result of continued favorable claims experience; partially offset
by
-
Adverse development on our general casualty line of business of
$127 million, most notably impacting the 2019 and 2020 acquisition
years, driven by increased average incurred losses in comparison to
IBNR reserve assumptions.
-
Results for the year ended December 31, 2022 were driven by
favorable development of $318 million on our workers’ compensation
line of business as a result of favorable claim settlements, most
notably in the 2017 to 2021 acquisition years. We also had
favorable development of $56 million on our marine, aviation and
transit lines of business relating to the 2014, 2018 and 2019
acquisition years as a result of favorable experience across a
variety of claim types; partially offset by
-
Adverse development on our general casualty and motor lines of
business of $57 million and $74 million, respectively, most notably
impacting the 2020 acquisition year, as a result of worse than
expected claims experience, adverse development on claims and
higher than expected claims severity.
-
An increase in general and administrative expenses of $34 million,
primarily driven by an increase in salaries and benefits
expenses and professional fees; and
-
Reductions in current period net incurred losses and LAE and
acquisition costs that were greater than our reductions in net
premiums earned, following our exit of our StarStone International
business beginning in 2020.
2022 versus
2021: Net income from our Run-off segment
increased by $122 million, primarily due to:
-
A $148 million increase in favorable PPD, mainly driven by a $78
million increase in the reduction in estimates of net ultimate
losses in comparison to 2021.
-
As described above, results for the year ended December 31, 2022
were driven by favorable development on our workers’ compensation
and marine, aviation and transit lines of business, partially
offset by adverse development on our general casualty and motor
lines of business.
-
Results for the year ended December 31, 2021 were primarily related
to favorable development on our workers’ compensation, property and
marine, aviation and transit lines of business as a result of
better than expected claims experience and favorable results from
actuarial reviews, partially offset by adverse development on our
general casualty line of business due to an increase in opioid
exposure and increased expectations of latent claims and a
lengthening of the payment pattern related to our 2019 acquisition
year.
-
A decrease in general and administrative expenses of $45 million,
primarily driven by a continued decrease in salaries and benefits
and other costs following our exit of our StarStone business
beginning in 2020 and a reduction in IT costs as a result of
reduced project activity; partially offset by
-
A reduction in other income of $51 million, primarily driven by
lower favorable prior period development related to our defendant
A&E liabilities; and
- Reductions in
current period net incurred losses and LAE and acquisition costs
that were less than our reductions in net premiums earned,
following our exit of our StarStone International business
beginning in 2020.
Investments Segment
The following is a discussion and analysis of
the results of operations for our Investments segment.
|
|
2023 |
|
|
|
2022 |
|
|
$ Change |
|
|
2021 |
|
|
$ Change |
REVENUES |
(in millions of U.S. dollars) |
Net investment income: |
|
|
|
|
|
|
|
|
|
Fixed income securities |
$ |
539 |
|
|
$ |
380 |
|
|
$ |
159 |
|
$ |
273 |
|
|
$ |
107 |
|
Cash and restricted cash |
|
36 |
|
|
|
8 |
|
|
|
28 |
|
|
— |
|
|
|
8 |
|
Other investments, including equities |
|
92 |
|
|
|
82 |
|
|
|
10 |
|
|
73 |
|
|
|
9 |
|
Less: Investment expenses |
|
(20 |
) |
|
|
(25 |
) |
|
|
5 |
|
|
(37 |
) |
|
|
12 |
|
Total net investment
income |
|
647 |
|
|
|
445 |
|
|
|
202 |
|
|
309 |
|
|
|
136 |
|
Net realized (losses)
gains: |
|
|
|
|
|
|
|
|
|
Fixed income securities |
|
(65 |
) |
|
|
(111 |
) |
|
|
46 |
|
|
(4 |
) |
|
|
(107 |
) |
Other investments, including equities |
|
— |
|
|
|
— |
|
|
|
— |
|
|
(57 |
) |
|
|
57 |
|
Total net realized (losses)
gains |
|
(65 |
) |
|
|
(111 |
) |
|
|
46 |
|
|
(61 |
) |
|
|
(50 |
) |
Net unrealized gains
(losses): |
|
|
|
|
|
|
|
|
|
Fixed income securities, trading |
|
131 |
|
|
|
(1,060 |
) |
|
|
1,191 |
|
|
(203 |
) |
|
|
(857 |
) |
Other investments, including equities |
|
397 |
|
|
|
(433 |
) |
|
|
830 |
|
|
384 |
|
|
|
(817 |
) |
Total net unrealized gains
(losses) |
|
528 |
|
|
|
(1,493 |
) |
|
|
2,021 |
|
|
181 |
|
|
|
(1,674 |
) |
Total revenues |
|
1,110 |
|
|
|
(1,159 |
) |
|
|
2,269 |
|
|
429 |
|
|
|
(1,588 |
) |
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
General and administrative
expenses |
|
43 |
|
|
|
37 |
|
|
|
6 |
|
|
37 |
|
|
|
— |
|
Total expenses |
|
43 |
|
|
|
37 |
|
|
|
6 |
|
|
37 |
|
|
|
— |
|
Income (losses) from equity
method investments |
|
13 |
|
|
|
(74 |
) |
|
|
87 |
|
|
93 |
|
|
|
(167 |
) |
SEGMENT NET INCOME (LOSS) |
$ |
1,080 |
|
|
$ |
(1,270 |
) |
|
$ |
2,350 |
|
$ |
485 |
|
|
$ |
(1,755 |
) |
|
Overall Results
2023 versus
2022: Net income from our
Investments segment was $1.1 billion compared to a net loss of $1.3
billion in 2022. The favorable movement of $2.4 billion was
primarily due to:
-
Net realized and unrealized gains on our fixed income securities of
$66 million, driven by a decline in interest rates and tightening
of investment grade credit spreads, compared to net realized and
unrealized losses of $1.2 billion in 2022, primarily due to a
significant increase in interest rates and widening of investment
grade credit spreads;
-
Net unrealized gains on our other investments, including equities,
of $397 million, in comparison to losses of $433 million in 2022.
The favorable variance of $830 million was primarily driven by:
-
Net gains for the year ended December 31, 2023, primarily driven by
our public equities, private equity funds, private credit funds,
CLO equities, fixed income funds, hedge funds and infrastructure
funds, largely as a result of strong global equity market
performance and tightening of high yield and leveraged loan credit
spreads; in comparison to
-
Net losses for the year ended December 31, 2022, primarily driven
by our public equities, fixed income funds, hedge funds and CLO
equities, largely as a result of global equity market declines and
widening of high yield and loan credit spreads;
-
Income from equity method investments of $13 million, in comparison
to losses of $74 million in 2022. This was primarily due to income
on our investments in Core Specialty and Citco, which included a
gain recorded in the fourth quarter of 2023 following our decision
to divest our equity interest in Citco, partially offset by losses
on our investment in Monument Re during the year ended December 31,
2023, compared to losses on our investments in Monument Re and Core
Specialty in 2022; and
-
An increase in our net investment income of $202 million,
which is primarily due to the reinvestment of fixed maturities at
higher yields, deployment of consideration received from LPT and
insurance contract transactions closed over the past 12 months and
the impact of rising interest rates on the $3.1 billion of our
average fixed maturities outstanding during 2023 that are subject
to floating interest rates. Our floating rate investments generated
increased net investment income of $89 million, which equates
to an increase of 246 basis points on those investments in
comparison to 2022.
2022 versus
2021: Net loss from our
Investments segment was $1.3 billion compared to net income of $485
million in 2021. The unfavorable movement of $1.8 billion was
primarily due to:
-
An increase in net realized and unrealized losses on our fixed
income securities of $964 million, driven by rising interest
rates and widening of investment grade credit spreads in 2022;
-
Net unrealized losses on our other investments, including equities,
of $433 million in 2022, in comparison to net realized and
unrealized gains of $327 million in 2021. The unfavorable
variance of $760 million was primarily driven by negative
performance from our public equities, fixed income funds, CLO
equities and hedge funds in 2022 as a result of significant
volatility in global equity markets and widening of high yield and
leveraged loan credit spreads; and
-
Losses from equity method investments of $74 million, in
comparison to income of $93 million in 2021, primarily due to
losses on our investments in Monument Re and Core Specialty in 2022
and our acquisition of the controlling interest in Enhanzed Re,
effective September 1, 2021. Prior to that date, the results of
Enhanzed Re were recorded in income from equity method investments.
Our consolidated net loss from Enhanzed Re for the year ended
December 31, 2022 was $235 million which compared to $82
million from Enhanzed Re that was included in equity method
investment income in 2021; partially offset by
-
An increase in our net investment income of $136 million, which is
primarily due to the investment of new premium and reinvestment of
fixed maturities at higher yields and the impact of rising interest
rates on the $2.9 billion of our average fixed maturities
outstanding during the period that are subject to floating interest
rates. Our floating rate investments generated increased net
investment income of $59 million, which equates to an increase
of 195 basis points on those investments in comparison to
2021.
Total investment losses on the fixed maturities
that supported our Enhanzed Re life reinsurance (prior to the
novation) for the years ended December 31, 2022 and 2021 were $304
million and $17 million, respectively.
Income and (Loss) by Segment - For the Years Ended December
31, 2023, 2022 and 2021 |
|
Year Ended |
|
|
|
Year Ended |
|
|
|
December 31, |
|
|
|
December 31, |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
$ Change |
|
|
2021 |
|
|
$ Change |
|
(in millions of U.S. dollars) |
REVENUES |
|
|
|
|
|
|
|
|
|
Run-off |
$ |
53 |
|
|
$ |
62 |
|
|
$ |
(9 |
) |
|
$ |
255 |
|
|
$ |
(193 |
) |
Assumed Life |
|
277 |
|
|
|
17 |
|
|
|
260 |
|
|
|
5 |
|
|
|
12 |
|
Investments |
|
1,110 |
|
|
|
(1,159 |
) |
|
|
2,269 |
|
|
|
429 |
|
|
|
(1,588 |
) |
Legacy Underwriting |
|
— |
|
|
|
10 |
|
|
|
(10 |
) |
|
|
43 |
|
|
|
(33 |
) |
Subtotal |
|
1,440 |
|
|
|
(1,070 |
) |
|
|
2,510 |
|
|
|
732 |
|
|
|
(1,802 |
) |
Corporate and other |
|
(11 |
) |
|
|
12 |
|
|
|
(23 |
) |
|
|
57 |
|
|
|
(45 |
) |
Total revenues |
$ |
1,429 |
|
|
$ |
(1,058 |
) |
|
$ |
2,487 |
|
|
$ |
789 |
|
|
$ |
(1,847 |
) |
|
|
|
|
|
|
|
|
|
|
SEGMENT NET INCOME (LOSS) |
|
|
|
|
|
|
|
|
|
Run-off |
$ |
62 |
|
|
$ |
339 |
|
|
$ |
(277 |
) |
|
$ |
217 |
|
|
$ |
122 |
|
Assumed Life |
|
277 |
|
|
|
40 |
|
|
|
237 |
|
|
|
6 |
|
|
|
34 |
|
Investments |
|
1,080 |
|
|
|
(1,270 |
) |
|
|
2,350 |
|
|
|
485 |
|
|
|
(1,755 |
) |
Legacy Underwriting |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total segment net income
(loss) |
|
1,419 |
|
|
|
(891 |
) |
|
|
2,310 |
|
|
|
708 |
|
|
|
(1,599 |
) |
Corporate and other |
|
(337 |
) |
|
|
(15 |
) |
|
|
(322 |
) |
|
|
(206 |
) |
|
|
191 |
|
NET INCOME (LOSS) ATTRIBUTABLE
TO ENSTAR ORDINARY SHAREHOLDERS |
$ |
1,082 |
|
|
$ |
(906 |
) |
|
$ |
1,988 |
|
|
$ |
502 |
|
|
$ |
(1,408 |
) |
This press release contains certain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements include
statements regarding the intent, belief or current expectations of
Enstar and its management team. Investors can identify these
statements by the fact that they do not relate strictly to
historical or current facts. They use words such as ‘aim’,
‘anticipate’, ‘estimate’, ‘expect’, ‘intend’, ‘will’, ‘project’,
‘plan’, ‘believe’, ‘target’ and other words and terms of similar
meaning in connection with any discussion of future events or
performance. Investors are cautioned that any such forward-looking
statements speak only as of the date they are made, 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 risk factors regarding Enstar can be
found under the heading "Risk Factors" in our Form 10-K for the
year ended December 31, 2023 (which will be filed with the
Securities and Exchange Commission) and in our Form 10-K for the
year ended December 31, 2022 and are incorporated herein by
reference. Furthermore, Enstar undertakes no obligation to update
any written or oral forward-looking statements or publicly announce
any updates or revisions to any of the forward-looking statements
contained herein, to reflect any change in its expectations with
regard thereto or any change in events, conditions, circumstances
or assumptions underlying such statements, except as required by
law.
Enstar is a NASDAQ-listed leading global
(re)insurance group that offers capital release solutions through
its network of group companies in Bermuda, the United States, the
United Kingdom, Continental Europe and Australia. A market leader
in completing legacy acquisitions, Enstar has acquired over 115
companies and portfolios since its formation. For further
information about Enstar, see www.enstargroup.com.
For Investors: Matthew Kirk
(investor.relations@enstargroup.com)For Media:
Jenna Kerr (communications@enstargroup.com)
ENSTAR GROUP
LIMITEDCONSOLIDATED STATEMENTS OF
OPERATIONSFor the Three Months Ended December 31,
2023 and 2022 and the Years Ended December 31, 2023, 2022 and
2021
|
Three Months EndedDecember
31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2021 |
|
|
(expressed in millions of U.S. dollars, except share and
per share data) |
REVENUES |
|
|
|
|
|
|
|
|
|
Net premiums earned |
$ |
14 |
|
|
$ |
14 |
|
|
$ |
43 |
|
|
$ |
66 |
|
|
$ |
245 |
|
Net investment income |
|
176 |
|
|
|
153 |
|
|
|
647 |
|
|
|
455 |
|
|
|
312 |
|
Net realized losses |
|
(10 |
) |
|
|
(23 |
) |
|
|
(65 |
) |
|
|
(111 |
) |
|
|
(61 |
) |
Net unrealized gains (losses) |
|
306 |
|
|
|
38 |
|
|
|
528 |
|
|
|
(1,503 |
) |
|
|
178 |
|
Other (expense) income |
|
(4 |
) |
|
|
2 |
|
|
|
276 |
|
|
|
35 |
|
|
|
42 |
|
Net gain on purchase and sales of subsidiaries |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
73 |
|
Total revenues |
|
482 |
|
|
|
184 |
|
|
|
1,429 |
|
|
|
(1,058 |
) |
|
|
789 |
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
Net incurred losses and loss adjustment expenses |
|
|
|
|
|
|
|
|
|
Current period |
|
12 |
|
|
|
9 |
|
|
|
30 |
|
|
|
48 |
|
|
|
172 |
|
Prior periods |
|
(96 |
) |
|
|
(280 |
) |
|
|
(131 |
) |
|
|
(756 |
) |
|
|
(403 |
) |
Total net incurred losses and loss adjustment expenses |
|
(84 |
) |
|
|
(271 |
) |
|
|
(101 |
) |
|
|
(708 |
) |
|
|
(231 |
) |
Policyholder benefit expenses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
25 |
|
|
|
(3 |
) |
Amortization of net deferred charge assets |
|
31 |
|
|
|
20 |
|
|
|
106 |
|
|
|
80 |
|
|
|
55 |
|
Acquisition costs |
|
4 |
|
|
|
3 |
|
|
|
10 |
|
|
|
23 |
|
|
|
57 |
|
General and administrative expenses |
|
104 |
|
|
|
97 |
|
|
|
369 |
|
|
|
331 |
|
|
|
367 |
|
Interest expense |
|
23 |
|
|
|
18 |
|
|
|
90 |
|
|
|
89 |
|
|
|
69 |
|
Net foreign exchange losses (gains) |
|
24 |
|
|
|
12 |
|
|
|
— |
|
|
|
(15 |
) |
|
|
(12 |
) |
Total expenses |
|
102 |
|
|
|
(121 |
) |
|
|
474 |
|
|
|
(175 |
) |
|
|
302 |
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME
TAXES |
|
380 |
|
|
|
305 |
|
|
|
955 |
|
|
|
(883 |
) |
|
|
487 |
|
Income tax benefit
(expense) |
|
238 |
|
|
|
16 |
|
|
|
250 |
|
|
|
12 |
|
|
|
(27 |
) |
(Losses) income from equity
method investments |
|
(9 |
) |
|
|
(86 |
) |
|
|
13 |
|
|
|
(74 |
) |
|
|
93 |
|
NET INCOME (LOSS) |
|
609 |
|
|
|
235 |
|
|
|
1,218 |
|
|
|
(945 |
) |
|
|
553 |
|
Net (income) loss attributable
to noncontrolling interest |
|
(1 |
) |
|
|
1 |
|
|
|
(100 |
) |
|
|
75 |
|
|
|
(15 |
) |
NET INCOME (LOSS) ATTRIBUTABLE
TO ENSTAR GROUP LIMITED |
|
608 |
|
|
|
236 |
|
|
|
1,118 |
|
|
|
(870 |
) |
|
|
538 |
|
Dividends on preferred
shares |
|
(9 |
) |
|
|
(9 |
) |
|
|
(36 |
) |
|
|
(36 |
) |
|
|
(36 |
) |
NET INCOME (LOSS) ATTRIBUTABLE
TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS |
$ |
599 |
|
|
$ |
227 |
|
|
$ |
1,082 |
|
|
$ |
(906 |
) |
|
$ |
502 |
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per ordinary share attributable to Enstar: |
|
|
|
|
|
|
Basic |
$ |
40.14 |
|
|
$ |
13.34 |
|
|
$ |
69.22 |
|
|
$ |
(52.65 |
) |
|
$ |
25.33 |
|
Diluted |
$ |
39.71 |
|
|
$ |
13.26 |
|
|
$ |
68.47 |
|
|
$ |
(52.65 |
) |
|
$ |
24.94 |
|
Weighted average ordinary
shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
14,923,541 |
|
|
|
17,021,348 |
|
|
|
15,631,770 |
|
|
|
17,207,229 |
|
|
|
19,821,259 |
|
Diluted |
|
15,083,306 |
|
|
|
17,121,606 |
|
|
|
15,802,618 |
|
|
|
17,323,130 |
|
|
|
20,127,131 |
|
ENSTAR GROUP
LIMITEDCONSOLIDATED BALANCE
SHEETSAs of December 31, 2023 and
2022
|
December 31, 2023 |
|
December 31, 2022 |
|
(in millions of U.S. dollars, except share
data) |
ASSETS |
|
|
|
Short-term investments, trading, at fair value |
$ |
2 |
|
|
$ |
14 |
|
Short-term investments,
available-for-sale, at fair value (amortized cost: 2023 — $62;
2022 — $37) |
|
62 |
|
|
|
38 |
|
Fixed maturities, trading, at
fair value |
|
1,949 |
|
|
|
2,370 |
|
Fixed maturities,
available-for-sale, at fair value (amortized cost: 2023 —
$5,642; 2022 — $5,871; net of allowance: 2023 — $16; 2022 —
$33) |
|
5,261 |
|
|
|
5,223 |
|
Funds held |
|
5,251 |
|
|
|
5,622 |
|
Equities, at fair value (cost:
2023 — $615; 2022 — $1,357) |
|
701 |
|
|
|
1,250 |
|
Other investments, at fair
value (includes consolidated variable interest entity: 2023 - $59;
2022 - $3) |
|
3,853 |
|
|
|
3,296 |
|
Equity method investments |
|
334 |
|
|
|
397 |
|
Total investments |
|
17,413 |
|
|
|
18,210 |
|
Cash and cash equivalents
(includes consolidated variable interest entity: 2023 — $8; 2022 —
$0) |
|
564 |
|
|
|
822 |
|
Restricted cash and cash
equivalents |
|
266 |
|
|
|
508 |
|
Accrued interest
receivable |
|
71 |
|
|
|
72 |
|
Reinsurance balances
recoverable on paid and unpaid losses (net of allowance: 2023 —
$131; 2022 — $131) |
|
740 |
|
|
|
856 |
|
Reinsurance balances
recoverable on paid and unpaid losses, at fair value |
|
217 |
|
|
|
275 |
|
Insurance balances recoverable
(net of allowance: 2023 and 2022 — $5) |
|
172 |
|
|
|
177 |
|
Net deferred charge
assets |
|
731 |
|
|
|
658 |
|
Other assets |
|
739 |
|
|
|
576 |
|
TOTAL ASSETS |
$ |
20,913 |
|
|
$ |
22,154 |
|
LIABILITIES |
|
|
|
Losses and loss adjustment
expenses |
$ |
11,196 |
|
|
$ |
11,721 |
|
Losses and loss adjustment
expenses, at fair value |
|
1,163 |
|
|
|
1,286 |
|
Future policyholder
benefits |
|
— |
|
|
|
821 |
|
Defendant asbestos and
environmental liabilities |
|
567 |
|
|
|
607 |
|
Insurance and reinsurance
balances payable |
|
43 |
|
|
|
100 |
|
Debt obligations |
|
1,831 |
|
|
|
1,829 |
|
Other liabilities (includes
consolidated variable interest entity: 2023 — $1; 2022 — $0) |
|
465 |
|
|
|
462 |
|
TOTAL LIABILITIES |
|
15,265 |
|
|
|
16,826 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
|
REDEEMABLE
NONCONTROLLING INTERESTS |
|
— |
|
|
|
168 |
|
|
|
|
|
SHAREHOLDERS’
EQUITY |
|
|
|
Ordinary Shares (par value $1
each, issued and outstanding 2023: 15,196,685; 2022:
17,588,050): |
|
|
|
Voting Ordinary Shares (issued and outstanding 2023: 15,196,685;
2022: 15,990,338) |
|
15 |
|
|
|
16 |
|
Non-voting convertible ordinary Series C Shares (issued and
outstanding 2023: 0; 2022: 1,192,941) |
|
— |
|
|
|
1 |
|
Non-voting convertible ordinary Series E Shares (issued and
outstanding 2023: 0; 2022: 404,771) |
|
— |
|
|
|
— |
|
Preferred Shares: |
|
|
|
Series C Preferred Shares (issued and held in treasury 2023 and
2022: 388,571) |
|
— |
|
|
|
— |
|
Series D Preferred Shares (issued and outstanding 2023 and 2022:
16,000; liquidation preference $400) |
|
400 |
|
|
|
400 |
|
Series E Preferred Shares (issued and outstanding 2023 and 2022:
4,400; liquidation preference $110) |
|
110 |
|
|
|
110 |
|
Treasury shares, at cost
(Series C Preferred shares 2023 and 2022: 388,571) |
|
(422 |
) |
|
|
(422 |
) |
Joint Share Ownership Plan
(voting ordinary shares, held in trust 2023 and 2022: 565,630) |
|
(1 |
) |
|
|
(1 |
) |
Additional paid-in
capital |
|
579 |
|
|
|
766 |
|
Accumulated other
comprehensive loss |
|
(336 |
) |
|
|
(302 |
) |
Retained earnings |
|
5,190 |
|
|
|
4,406 |
|
Total Enstar Shareholders’
Equity |
|
5,535 |
|
|
|
4,974 |
|
Noncontrolling interests |
|
113 |
|
|
|
186 |
|
TOTAL SHAREHOLDERS’
EQUITY |
|
5,648 |
|
|
|
5,160 |
|
TOTAL LIABILITIES, REDEEMABLE
NONCONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY |
$ |
20,913 |
|
|
$ |
22,154 |
|
Non-GAAP Financial Measures |
In addition to our key financial measures
presented in accordance with GAAP, we present other non-GAAP
financial measures that we use to manage our business, compare our
performance against prior periods and against our peers, and as
performance measures in our incentive compensation program.
These non-GAAP financial measures provide an
additional view of our operational performance over the long-term
and provide the opportunity to analyze our results in a way that is
more aligned with the manner in which our management measures our
underlying performance.
The presentation of these non-GAAP financial
measures, which may be defined and calculated differently by other
companies, is used to enhance the understanding of certain aspects
of our financial performance. It is not meant to be considered in
isolation, superior to, or as a substitute for the directly
comparable financial measures prepared in accordance with GAAP.
Some of the adjustments reflected in our
non-GAAP measures are recurring items, such as the exclusion of
adjustments to net realized and unrealized (gains)/losses on fixed
maturity investments recognized in our income statement, the fair
value of certain of our loss reserve liabilities for which we have
elected the fair value option, and the amortization of fair value
adjustments.
Management makes these adjustments in assessing
our performance so that the changes in fair value due to interest
rate movements, which are applied to some but not all of our assets
and liabilities as a result of preexisting accounting elections, do
not impair comparability across reporting periods.
It is important for the readers of our periodic
filings to understand that these items will recur from period to
period.
However, we exclude these items for the purpose
of presenting a comparable view across reporting periods of the
impact of our underlying claims management and investments without
the effect of interest rate fluctuations on assets that we
anticipate to hold to maturity and non-cash changes to the fair
value of our reserves.
Similarly, our non-GAAP measures reflect the
exclusion of certain items that we deem to be nonrecurring, unusual
or infrequent when the nature of the charge or gain is such that it
is not reasonably likely that such item may recur within two years,
nor was there a similar charge or gain in the preceding two years.
This includes adjustments related to bargain purchase gains on
acquisitions of businesses, net gains or losses on sales of
subsidiaries, net assets of held for sale or disposed subsidiaries
classified as discontinued operations and other items that we
separately disclose.
The following table presents more information on
each non-GAAP measure. The results and GAAP reconciliations for
these measures are set forth further below.
Non-GAAP Measure |
|
Definition |
|
Purpose of Non-GAAP Measure over GAAP Measure |
Fully diluted book value per ordinary share |
|
Total Enstar ordinary shareholders' equityDivided byNumber of
ordinary shares outstanding, adjusted for:-the ultimate effect of
any dilutive securities on the number of ordinary shares
outstanding |
|
Increases the number of ordinary shares to reflect the exercise of
equity awards granted but not yet vested as, over the long term,
this presents both management and investors with a more
economically accurate measure of the realizable value of
shareholder returns by factoring in the impact of share dilution.We
use this non-GAAP measure in our incentive compensation
program. |
Adjusted return on equity (%) |
|
Adjusted operating income (loss) attributable to Enstar ordinary
shareholders divided by adjusted opening Enstar ordinary
shareholder's equity |
|
Calculating the operating income (loss) as a percentage of our
adjusted opening Enstar ordinary shareholders' equity provides a
more consistent measure of the performance of our business by
enabling comparison between the financial periods presented. We
eliminate the impact of net realized and unrealized (gains) losses
on fixed maturities and funds-held directly managed and the change
in fair value of insurance contracts for which we have elected the
fair value option, as:
- we typically hold most of our fixed maturities until the
earlier of maturity or the time that they are used to fund any
settlement of related liabilities which are generally recorded at
cost; and
- removing the fair value option improves comparability since
there are limited acquisition years for which we elected the fair
value option.
Therefore, we believe that excluding their impact on our earnings
improves comparability of our core operational performance across
periods. We include fair value adjustments
as non-GAAP adjustments to the adjusted operating income (loss)
attributable to Enstar ordinary shareholders as they are non-cash
charges that are not reflective of the impact of our claims
management strategies on our loss portfolios. We eliminate the
net gain (loss) on the purchase and sales of subsidiaries and net
income from discontinued operations, as these items are not
indicative of our ongoing operations. We use this
non-GAAP measure in our incentive compensation program. |
Adjusted operating income
(loss) attributable to Enstar ordinary
shareholders(numerator) |
|
Net income (loss) attributable to
Enstar ordinary shareholders, adjusted for:-net realized and
unrealized (gains) losses on fixed maturities and funds
held-directly managed,-change in fair value of insurance contracts
for which we have elected the fair value option (1),-amortization
of fair value adjustments,-net gain/loss on purchase and sales of
subsidiaries (if any),-net income from discontinued operations (if
any),-tax effects of adjustments, and-adjustments attributable to
noncontrolling interests |
|
Adjusted opening Enstar ordinary shareholders' equity
(denominator) |
|
Opening Enstar ordinary shareholders' equity, less:-net unrealized
gains (losses) on fixed maturities and funds held-directly
managed,-fair value of insurance contracts for which we have
elected the fair value option (1),-fair value adjustments, and-net
assets of held for sale or disposed subsidiaries classified as
discontinued operations (if any) |
|
Adjusted run-off liability earnings (%) |
|
Adjusted PPD divided by average adjusted net loss reserves. |
|
Calculating the RLE as a percentage of our adjusted average net
loss reserves provides a more meaningful and comparable measurement
of the impact of our claims management strategies on our loss
portfolios across acquisition years and also to our overall
financial periods. We use this measure to evaluate the
impact of our claims management strategies because it provides
visibility into our ability to settle our claims obligations for
amounts less than our initial estimate at the point of acquiring
the obligations. The following
components of periodic recurring net incurred losses and LAE and
net loss reserves are not considered key components of our claims
management performance for the following reasons:
- Prior to the settlement of the contractual arrangements, the
results of our Legacy Underwriting segment were economically
transferred to a third party primarily through use of reinsurance
and a Capacity Lease Agreement(2); as such, the results were not a
relevant contribution to Adjusted RLE, which is designed to analyze
the impact of our claims management strategies;
- The results of our Assumed Life segment relate only to our
prior exposure to active property catastrophe business; as this
business was not in run-off, the results were not a relevant
contribution to Adjusted RLE;
- The change in fair value of insurance contracts for which we
have elected the fair value option(1) has been removed to support
comparability between the two acquisition years for which we
elected the fair value option in reserves assumed and the
acquisition years for which we did not make this election
(specifically, this election was only made in the 2017 and 2018
acquisition years and the election of such option is irrevocable);
and
- The amortization of fair value adjustments are non-cash charges
that obscure our trends on a consistent basis.
We include our performance in managing claims and estimated future
expenses on our defendant A&E liabilities because such
performance is relevant to assessing our claims management
strategies even though such liabilities are not included within the
loss reserves.We use this measure to assess the performance of our
claim strategies and part of the performance assessment of our past
acquisitions. |
Adjusted prior period
development(numerator) |
|
Prior period net incurred losses
and LAE, adjusted to: Remove: -Legacy Underwriting and Assumed Life
operations-amortization of fair value adjustments, -change in fair
value of insurance contracts for which we have elected the fair
value option (1), and Add: -the reduction/(increase) in
estimates of net ultimate liabilities and reduction in estimated
future expenses of our defendant A&E liabilities. |
|
Adjusted net loss reserves
(denominator) |
|
Net losses and LAE, adjusted to:Remove:-Legacy Underwriting and
Assumed Life net loss reserves-current period net loss reserves-net
fair value adjustments associated with the acquisition of
companies,-the fair value adjustments for contracts for which we
have elected the fair value option (1) andAdd:-net nominal
defendant A&E liability exposures and estimated future
expenses. |
|
Adjusted total investment return (%) |
|
Adjusted total investment return (dollars) recognized in earnings
for the applicable period divided by period average adjusted total
investable assets. |
|
Provides a
key measure of the return generated on the capital held in the
business and is reflective of our investment strategy. Provides a
consistent measure of investment returns as a percentage of all
assets generating investment returns. We adjust our investment
returns to eliminate the impact of the change in fair value of
fixed maturities (both credit spreads and interest rates), as we
typically hold most of these investments until the earlier of
maturity or used to fund any settlement of related liabilities
which are generally recorded at cost. |
Adjusted total investment
return ($)
(numerator) |
|
Total investment return
(dollars), adjusted for:-net realized and unrealized (gains) losses
on fixed maturities and funds held-directly managed; and-unrealized
(gains) losses on fixed maturities, AFS included within OCI, net of
reclassification adjustments and excluding foreign exchange. |
|
Adjusted average aggregate total investable assets
(denominator) |
|
Total average investable assets, adjusted for: -net unrealized
(gains) losses on fixed maturities, AFS included within AOCI-net
unrealized (gains) losses on fixed maturities, trading |
|
(1) Comprises the discount rate and risk margin components.
(2) The reinsurance contractual arrangements (including the
Capacity Lease Agreement) were settled during the second quarter of
2023. As a result of the settlement, we did not record any
transactions in the Legacy Underwriting segment in 2023.
Reconciliation of GAAP to Non-GAAP Measures |
The table below presents a reconciliation of
BVPS to Fully Diluted BVPS*:
|
December 31, 2023 |
|
December 31, 2022 |
|
December 31, 2021 |
|
Equity (1) |
|
Ordinary Shares |
|
Per Share Amount |
|
Equity (1) (2) |
|
Ordinary Shares |
|
Per Share Amount |
|
Equity (1) |
|
Ordinary Shares |
|
Per Share Amount |
|
(in millions of U.S. dollars, except share and per share
data) |
Book value per ordinary share |
$ |
5,025 |
|
14,631,055 |
|
$ |
343.45 |
|
$ |
4,464 |
|
17,022,420 |
|
$ |
262.24 |
|
$ |
5,813 |
|
17,657,944 |
|
$ |
329.20 |
Non-GAAP adjustment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation plans |
|
|
292,190 |
|
|
|
|
|
218,171 |
|
|
|
|
|
315,205 |
|
|
Fully diluted book
value per ordinary share* |
$ |
5,025 |
|
14,923,245 |
|
$ |
336.72 |
|
$ |
4,464 |
|
17,240,591 |
|
$ |
258.92 |
|
$ |
5,813 |
|
17,973,149 |
|
$ |
323.43 |
(1) Equity comprises Enstar ordinary
shareholders' equity, which is calculated as Enstar shareholders'
equity less preferred shares ($510 million as of each of December
31, 2023, 2022 and 2021) prior to any non-GAAP adjustments.
(2) Enstar ordinary shareholders’ equity as of
December 31, 2022 has been retrospectively adjusted by $273 million
for the impact of adopting ASU 2018-12.
*Non-GAAP measure.
The tables below present a reconciliation of ROE
to Adjusted ROE*:
|
Three Months Ended |
|
December 31, 2023 |
December 31, 2022 |
|
Net (loss) earnings (1) |
|
Opening equity (1) |
|
(Adj) ROE |
|
Net (loss) earnings (1) |
|
Opening equity (1)(7) |
|
(Adj) ROE |
|
(in millions of U.S. dollars) |
Net income/Opening equity/ROE
(1) |
$ |
599 |
|
|
$ |
4,367 |
|
|
13.7 |
% |
|
$ |
227 |
|
|
$ |
4,099 |
|
|
5.5 |
% |
Non-GAAP adjustments for loss
(gains): |
|
|
|
|
|
|
|
|
|
|
|
Net realized losses (gains) on fixed maturities, AFS (2) / Net
unrealized losses (gains) on fixed maturities, AFS (3) |
|
10 |
|
|
|
634 |
|
|
|
|
|
23 |
|
|
|
757 |
|
|
|
Net unrealized (gains) losses on fixed maturities, trading (2) /
Net unrealized losses (gains) on fixed maturities, trading (3) |
|
(108 |
) |
|
|
366 |
|
|
|
|
|
(53 |
) |
|
|
530 |
|
|
|
Net unrealized (gains) losses on funds held - directly managed (2)
/ Net unrealized losses (gains) on funds held - directly managed
(3) |
|
(96 |
) |
|
|
222 |
|
|
|
|
|
50 |
|
|
|
639 |
|
|
|
Change in fair value of insurance contracts for which we have
elected the fair value option / Fair value of insurance contracts
for which we have elected the fair value option (4) |
|
54 |
|
|
|
(292 |
) |
|
|
|
|
28 |
|
|
|
(305 |
) |
|
|
Amortization of fair value adjustments / Fair value
adjustments |
|
4 |
|
|
|
(112 |
) |
|
|
|
|
(29 |
) |
|
|
(95 |
) |
|
|
Tax effects of adjustments (5) |
|
5 |
|
|
|
— |
|
|
|
|
|
(1 |
) |
|
|
— |
|
|
|
Adjustments attributable to noncontrolling interests (6) |
|
— |
|
|
|
— |
|
|
|
|
|
(21 |
) |
|
|
— |
|
|
|
Adjusted net income
(loss)/Adjusted opening equity/Adjusted ROE* |
$ |
468 |
|
|
$ |
5,185 |
|
|
9.0 |
% |
|
$ |
224 |
|
|
$ |
5,625 |
|
|
4.0 |
% |
(1) Net income (loss) comprises net income
(loss) attributable to Enstar ordinary shareholders, prior to any
non-GAAP adjustments. Opening equity comprises Enstar ordinary
shareholders' equity, which is calculated as opening Enstar
shareholders' equity less preferred shares ($510 million as of each
of September 30, 2023 and 2022), prior to any non-GAAP
adjustments.
(2) Net realized gains (losses) on fixed
maturities, AFS are included in net realized gains (losses) in our
consolidated statements of operations. Net unrealized gains
(losses) on fixed maturities, trading and funds held - directly
managed are included in net unrealized gains (losses) in our
consolidated statements of operations.
(3) Our fixed maturities are held directly on
our balance sheet and also within the "Funds held" balance.
(4) Comprises the discount rate and risk margin
components.
(5) Represents an aggregation of the tax expense
or benefit associated with the specific country to which the
pre-tax adjustment relates, calculated at the applicable
jurisdictional tax rate.
(6) Represents the impact of the adjustments on
the net income (loss) attributable to noncontrolling interest
associated with the specific subsidiaries to which the adjustments
relate.
(7) Enstar ordinary shareholders’ equity as of
September 30, 2022 has been retrospectively adjusted by $236
million for the impact of adopting ASU 2018-12.
*Non-GAAP measure.
|
Year Ended |
|
|
December 31, 2023 |
|
December 31, 2022 |
|
|
December 31, 2021 |
|
Net income (loss)(1) |
|
Opening equity (1)(2) |
|
(Adj) ROE |
|
Net income (loss) (1) |
|
Opening equity (1) |
|
(Adj) ROE |
|
|
Net income (loss) (1) |
|
Opening equity (1) |
|
(Adj) ROE |
|
(in millions of U.S. dollars) |
|
Net income (loss)/Opening equity/ROE
(1) |
$ |
1,082 |
|
|
$ |
4,464 |
|
|
24.2 |
% |
|
$ |
(906 |
) |
|
$ |
5,813 |
|
|
(15.6 |
)% |
|
$ |
502 |
|
|
$ |
6,326 |
|
|
7.9 |
% |
Non-GAAP adjustments for loss
(gains): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized losses (gains) on fixed maturities, AFS (3) / Net
unrealized losses (gains) on fixed maturities, AFS (4) |
|
65 |
|
|
|
647 |
|
|
|
|
|
111 |
|
|
|
36 |
|
|
|
|
|
|
4 |
|
|
|
(82 |
) |
|
|
Net unrealized (gains) losses on fixed maturities, trading (3) /
Net unrealized losses (gains) on fixed maturities, trading (4) |
|
(84 |
) |
|
|
400 |
|
|
|
|
|
503 |
|
|
|
(134 |
) |
|
|
|
|
|
144 |
|
|
|
(384 |
) |
|
|
Net unrealized (gains) losses on funds held - directly managed (3)
/ Net unrealized losses (gains) on funds held - directly managed
(4) |
|
(47 |
) |
|
|
780 |
|
|
|
|
|
567 |
|
|
|
9 |
|
|
|
|
|
|
62 |
|
|
|
(94 |
) |
|
|
Change in fair value of insurance contracts for which we have
elected the fair value option / Fair value of insurance contracts
for which we have elected the fair value option (5) |
|
78 |
|
|
|
(294 |
) |
|
|
|
|
(200 |
) |
|
|
(107 |
) |
|
|
|
|
|
(75 |
) |
|
|
(33 |
) |
|
|
Amortization of fair value adjustments / Fair value
adjustments |
|
17 |
|
|
|
(124 |
) |
|
|
|
|
(18 |
) |
|
|
(106 |
) |
|
|
|
|
|
16 |
|
|
|
(128 |
) |
|
|
Net gain on purchase and sales of subsidiaries |
|
— |
|
|
|
— |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
(73 |
) |
|
|
— |
|
|
|
Tax effects of adjustments (6) |
|
(7 |
) |
|
|
— |
|
|
|
|
|
(7 |
) |
|
|
— |
|
|
|
|
|
|
(21 |
) |
|
|
— |
|
|
|
Adjustments attributable to noncontrolling interests (7) |
|
(2 |
) |
|
|
— |
|
|
|
|
|
(111 |
) |
|
|
— |
|
|
|
|
|
|
6 |
|
|
|
— |
|
|
|
Adjusted net income
(loss)/Adjusted opening equity/Adjusted ROE* |
$ |
1,102 |
|
|
$ |
5,873 |
|
|
18.8 |
% |
|
$ |
(61 |
) |
|
$ |
5,511 |
|
|
(1.1 |
)% |
|
$ |
565 |
|
|
$ |
5,605 |
|
|
10.1 |
% |
(1) Net income (loss) comprises net income
(loss) attributable to Enstar ordinary shareholders, prior to any
non-GAAP adjustments. Opening equity comprises Enstar ordinary
shareholders' equity, which is calculated as opening Enstar
shareholders' equity less preferred shares ($510 million as of each
of December 31, 2022, 2021 and 2020), prior to any non-GAAP
adjustments.
(2) Enstar ordinary shareholders’ equity as of
December 31, 2022 has been retrospectively adjusted by $273 million
for the impact of adopting ASU 2018-12.
(3) Net realized gains (losses) on fixed
maturities, AFS and funds held - directly managed are included in
net realized gains (losses) in our consolidated statements of
operations. Net unrealized gains (losses) on fixed maturities,
trading and funds held - directly managed are included in net
unrealized gains (losses) in our consolidated statements of
operations.
(4) Our fixed maturities are held directly on
our balance sheet and also within the "Funds held" balance.
(5) Comprises the discount rate and risk margin
components.
(6) Represents an aggregation of the tax expense
or benefit associated with the specific country to which the
pre-tax adjustment relates, calculated at the applicable
jurisdictional tax rate.
(7) Represents the impact of the adjustments on
the net income (loss) attributable to noncontrolling interest
associated with the specific subsidiaries to which the adjustments
relate.
*Non-GAAP measure.
The tables below present a reconciliation of PPD to Adjusted
PPD* and RLE to Adjusted RLE*:
|
|
Year Ended |
|
As of |
|
Year Ended |
|
|
December 31, 2023 |
|
December 31, 2023 |
|
December 31, 2022 |
|
December 31, 2023 |
|
December 31, 2023 |
|
|
RLE/PPD |
|
Net loss reserves |
|
Net loss reserves |
|
Average net loss reserves |
|
RLE % |
|
|
(in millions of U.S. dollars) |
PPD/net loss reserves/RLE % |
|
$ |
131 |
|
|
$ |
11,585 |
|
|
$ |
12,011 |
|
|
$ |
11,798 |
|
|
1.1 |
% |
Non-GAAP adjustments for
expenses (income): |
|
|
|
|
|
|
|
|
|
|
Legacy Underwriting |
|
|
— |
|
|
|
— |
|
|
|
(139 |
) |
|
|
(69 |
) |
|
|
Net loss reserves incurred in the current period |
|
|
— |
|
|
|
(30 |
) |
|
|
— |
|
|
|
(15 |
) |
|
|
Amortization of fair value adjustments / Net fair value adjustments
associated with the acquisition of companies |
|
|
17 |
|
|
|
107 |
|
|
|
124 |
|
|
|
116 |
|
|
|
Changes in fair value - fair value option / Net fair value
adjustments for contracts for which we have elected the fair value
option (1) |
|
|
78 |
|
|
|
246 |
|
|
|
294 |
|
|
|
270 |
|
|
|
Change in estimate of net ultimate liabilities - defendant A&E
/ Net nominal defendant A&E liabilities |
|
|
(1 |
) |
|
|
527 |
|
|
|
572 |
|
|
|
550 |
|
|
|
Reduction in estimated future expenses - defendant A&E /
Estimated future expenses - defendant A&E |
|
|
2 |
|
|
|
33 |
|
|
|
35 |
|
|
|
34 |
|
|
|
Adjusted PPD/Adjusted
net loss reserves/Adjusted RLE %* |
|
$ |
227 |
|
|
$ |
12,468 |
|
|
$ |
12,897 |
|
|
$ |
12,684 |
|
|
1.8 |
% |
*Non-GAAP measure.
|
|
Year Ended |
|
As of |
|
Year Ended |
|
|
December 31, 2022 |
|
December 31, 2022 |
|
December 31, 2021 |
|
December 31, 2022 |
|
December 31, 2022 |
|
|
PPD |
|
Net loss reserves |
|
Net loss reserves |
|
Average net loss reserves |
|
RLE % |
|
|
(in millions of U.S. dollars) |
PPD/net loss reserves/RLE % |
|
$ |
756 |
|
|
$ |
12,011 |
|
|
$ |
11,926 |
|
|
$ |
11,969 |
|
|
6.3 |
% |
Non-GAAP adjustments for
expenses (income): |
|
|
|
|
|
|
|
|
|
|
Assumed Life |
|
|
(55 |
) |
|
|
— |
|
|
|
(181 |
) |
|
|
(91 |
) |
|
|
Legacy Underwriting |
|
|
3 |
|
|
|
(135 |
) |
|
|
(153 |
) |
|
|
(144 |
) |
|
|
Net loss reserves incurred in the current period |
|
|
— |
|
|
|
(45 |
) |
|
|
— |
|
|
|
(23 |
) |
|
|
Amortization of fair value adjustments / Net fair value adjustments
associated with the acquisition of companies |
|
|
(18 |
) |
|
|
124 |
|
|
|
106 |
|
|
|
115 |
|
|
|
Changes in fair value - fair value option / Net fair value
adjustments for contracts for which we have elected the fair value
option (1) |
|
|
(200 |
) |
|
|
294 |
|
|
|
107 |
|
|
|
201 |
|
|
|
Change in estimate of net ultimate liabilities - defendant A&E
/ Net nominal defendant A&E liabilities |
|
|
2 |
|
|
|
572 |
|
|
|
573 |
|
|
|
573 |
|
|
|
Reduction in estimated future expenses - defendant A&E /
Estimated future expenses - defendant A&E |
|
|
1 |
|
|
|
35 |
|
|
|
37 |
|
|
|
37 |
|
|
|
Adjusted PPD/Adjusted
net loss reserves/Adjusted RLE %* |
|
$ |
489 |
|
|
$ |
12,856 |
|
|
$ |
12,415 |
|
|
$ |
12,637 |
|
|
3.9 |
% |
*Non-GAAP measure.
|
|
Year Ended |
|
As of |
|
Year Ended |
|
|
December 31, 2021 |
|
December 31, 2021 |
|
December 31, 2020 |
|
December 31, 2021 |
|
December 31, 2021 |
|
|
PPD |
|
Net loss reserves |
|
Net loss reserves |
|
Average net loss reserves |
|
RLE % |
|
|
(in millions of U.S. dollars) |
PPD/Net loss reserves/RLE % |
|
$ |
403 |
|
|
$ |
11,926 |
|
|
$ |
8,763 |
|
|
$ |
10,344 |
|
|
3.9 |
% |
Non-GAAP adjustments for
expenses (income): |
|
|
|
|
|
|
|
|
|
|
Net loss reserves incurred in the current period |
|
|
— |
|
|
|
(143 |
) |
|
|
— |
|
|
|
(72 |
) |
|
|
Legacy Underwriting |
|
|
(6 |
) |
|
|
(140 |
) |
|
|
(955 |
) |
|
|
(548 |
) |
|
|
Assumed Life |
|
|
— |
|
|
|
(179 |
) |
|
|
— |
|
|
|
(90 |
) |
|
|
Amortization of fair value adjustments / Net fair value adjustments
associated with the acquisition of companies |
|
|
16 |
|
|
|
106 |
|
|
|
128 |
|
|
|
117 |
|
|
|
Changes in fair value - fair value option / Net fair value
adjustments for contracts for which we have elected the fair value
option (1) |
|
|
(75 |
) |
|
|
107 |
|
|
|
33 |
|
|
|
70 |
|
|
|
Change in estimate of net ultimate liabilities - defendant A&E
/ Net nominal defendant A&E liabilities |
|
|
38 |
|
|
|
573 |
|
|
|
615 |
|
|
|
594 |
|
|
|
Reduction in estimated future expenses - defendant A&E /
Estimated future expenses - defendant A&E |
|
|
5 |
|
|
|
37 |
|
|
|
43 |
|
|
|
40 |
|
|
|
Adjusted PPD/Adjusted
net loss reserves/Adjusted RLE %* |
|
$ |
381 |
|
|
$ |
12,287 |
|
|
$ |
8,627 |
|
|
$ |
10,455 |
|
|
3.6 |
% |
(1) Comprises the discount rate and risk margin components.
*Non-GAAP measure.
The tables below present a reconciliation of our TIR to our
Adjusted TIR*:
|
For the Three Months Ended December 31, |
|
For the Year EndedDecember
31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2021 |
|
Investment
results |
|
|
|
|
|
|
|
|
|
Net investment income |
$ |
176 |
|
|
$ |
153 |
|
|
$ |
647 |
|
|
$ |
455 |
|
|
$ |
312 |
|
Net realized (losses)
gains |
|
(10 |
) |
|
|
(23 |
) |
|
|
(65 |
) |
|
|
(111 |
) |
|
|
(61 |
) |
Net unrealized gains
(losses) |
|
306 |
|
|
|
38 |
|
|
|
528 |
|
|
|
(1,503 |
) |
|
|
178 |
|
(Losses) income from equity
method investments |
|
(9 |
) |
|
|
(86 |
) |
|
|
13 |
|
|
|
(74 |
) |
|
|
93 |
|
Other comprehensive
income: |
|
|
|
|
|
|
|
|
|
Unrealized gains (losses) on
fixed maturities, AFS, net of reclassification adjustments
excluding foreign exchange |
|
220 |
|
|
|
87 |
|
|
|
222 |
|
|
|
(570 |
) |
|
|
(100 |
) |
TIR ($) |
$ |
683 |
|
|
$ |
169 |
|
|
$ |
1,345 |
|
|
$ |
(1,803 |
) |
|
$ |
422 |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
Net realized and unrealized
(gains) losses on fixed maturities, AFS and trading and funds
held-directly managed |
|
(194 |
) |
|
|
20 |
|
|
|
(66 |
) |
|
|
1,181 |
|
|
|
210 |
|
Unrealized (gains) losses on
fixed maturities, AFS, net of reclassification adjustments
excluding foreign exchange |
|
(220 |
) |
|
|
(87 |
) |
|
|
(222 |
) |
|
|
570 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted TIR
($)* |
$ |
269 |
|
|
$ |
102 |
|
|
$ |
1,057 |
|
|
$ |
(52 |
) |
|
$ |
732 |
|
|
|
|
|
|
|
|
|
|
|
Total
investments |
|
17,413 |
|
|
|
18,210 |
|
|
|
17,413 |
|
|
|
18,210 |
|
|
$ |
19,616 |
|
Cash and cash equivalents,
including restricted cash and cash equivalents |
|
830 |
|
|
|
1,330 |
|
|
|
830 |
|
|
|
1,330 |
|
|
|
2,092 |
|
Total investable
assets |
$ |
18,243 |
|
|
$ |
19,540 |
|
|
$ |
18,243 |
|
|
$ |
19,540 |
|
|
$ |
21,708 |
|
|
|
|
|
|
|
|
|
|
|
Average aggregate invested
assets, at fair value (1) |
$ |
18,472 |
|
|
$ |
19,503 |
|
|
$ |
18,607 |
|
|
$ |
20,079 |
|
|
$ |
20,840 |
|
Annualized TIR
% (2) |
|
14.8 |
% |
|
|
3.5 |
% |
|
|
7.2 |
% |
|
(9.0 |
)% |
|
|
2.0 |
% |
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustment: |
|
|
|
|
|
|
|
|
|
Net unrealized losses (gains)
on fixed maturities, AFS investments included within AOCI and net
unrealized losses (gains) on fixed maturities, trading
instruments |
|
725 |
|
|
|
1,827 |
|
|
|
725 |
|
|
|
1,827 |
|
|
|
(89 |
) |
Adjusted investable
assets* |
$ |
18,968 |
|
|
$ |
21,367 |
|
|
$ |
18,968 |
|
|
$ |
21,367 |
|
|
$ |
21,619 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted average aggregate
invested assets, at fair value (3) |
$ |
19,445 |
|
|
$ |
21,380 |
|
|
$ |
19,769 |
|
|
$ |
21,165 |
|
|
$ |
20,561 |
|
Annualized adjusted
TIR %* (4) |
|
5.5 |
% |
|
|
1.9 |
% |
|
|
5.3 |
% |
|
(0.2 |
)% |
|
|
3.6 |
% |
(1) This amount is a two period average of the
total investable assets for the three months ended December 31,
2023 and 2022, respectively, and a five period average for the
years ended December 31, 2023, 2022 and 2021, respectively, as
presented above, and is comprised of amounts disclosed in our
quarterly and annual U.S. GAAP consolidated financial
statements.
(2) Annualized TIR % is calculated by dividing
the annualized TIR ($) by average aggregate invested assets, at
fair value.
(3) This amount is a two period average of the
adjusted investable assets* for the three months ended December 31,
2023 and 2022, respectively, and a five period average for the
years ended December 31, 2023, 2022 and 2021, respectively, as
presented above.
(4) Annualized adjusted TIR %* is calculated by
dividing annualized adjusted TIR* ($) by adjusted average aggregate
invested assets, at fair value*.
*Non-GAAP measure.
Contact: Enstar
CommunicationsTelephone: +1 (441) 292-3645
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