Enstar Group Limited Reports Second Quarter 2024 Results
Enstar Group (Nasdaq: ESGR) reported its Q2 2024 results, revealing a net income of $126 million, up from $21 million in Q2 2023. The company achieved a 2.5% return on equity (ROE), driven by positive investment results. Year-to-date, Enstar's book value per ordinary share grew 4.5% to $358.74. Significant transactions include a $400 million Loss Portfolio Transfer with SiriusPoint and a $350 million reinsurance agreement in the Insurance-linked Securities market.
On July 29, 2024, Enstar announced its acquisition by a Sixth Street-led consortium for $5.1 billion or $338 per share. The press release also noted the departure of President Orla Gregory at year-end. Key metrics include a 5.2% annualized total investment return and a $62 million run-off liability earnings (RLE) for Q2 2024, compared to $10 million in Q2 2023.
Il gruppo Enstar (Nasdaq: ESGR) ha riportato i suoi risultati del secondo trimestre 2024, rivelando un reddito netto di 126 milioni di dollari, in aumento rispetto ai 21 milioni del secondo trimestre 2023. L'azienda ha raggiunto un ritorno sul capitale investito (ROE) del 2,5%, grazie ai risultati positivi degli investimenti. Fino ad oggi, il valore contabile per azione ordinaria di Enstar è cresciuto del 4,5%, arrivando a 358,74 dollari. Tra le transazioni significative si annoverano un trasferimento di portafoglio perdite di 400 milioni di dollari con SiriusPoint e un accordo di riassicurazione di 350 milioni di dollari nel mercato delle Securities collegate all'assicurazione.
Il 29 luglio 2024, Enstar ha annunciato la sua acquisizione da parte di un consorzio guidato da Sixth Street per 5,1 miliardi di dollari, ovvero 338 dollari per azione. Il comunicato stampa ha anche menzionato le dimissioni della presidente Orla Gregory al termine dell'anno. I principali indicatori includono un ritorno totale sugli investimenti annualizzato del 5,2% e un guadagno da responsabilità in run-off (RLE) di 62 milioni di dollari per il secondo trimestre 2024, rispetto ai 10 milioni del secondo trimestre 2023.
Enstar Group (Nasdaq: ESGR) reportó sus resultados del segundo trimestre de 2024, revelando un ingreso neto de 126 millones de dólares, un aumento en comparación con los 21 millones del segundo trimestre de 2023. La compañía logró un retorno sobre el capital (ROE) del 2.5%, impulsado por resultados de inversión positivos. Hasta la fecha, el valor contable por acción ordinaria de Enstar creció un 4.5%, alcanzando los 358.74 dólares. Las transacciones significativas incluyen una Transferencia de Portafolio de Pérdidas de 400 millones de dólares con SiriusPoint y un acuerdo de reaseguro de 350 millones de dólares en el mercado de Valores vinculados a seguros.
El 29 de julio de 2024, Enstar anunció su adquisición por un consorcio liderado por Sixth Street por 5.1 mil millones de dólares o 338 dólares por acción. El comunicado de prensa también mencionó la salida de la Presidenta Orla Gregory a finales de año. Las métricas clave incluyen un retorno total de inversión anualizado del 5.2% y ganancias de responsabilidad de run-off (RLE) de 62 millones de dólares para el segundo trimestre de 2024, en comparación con los 10 millones del segundo trimestre de 2023.
엔스타 그룹 (Nasdaq: ESGR)이 2024년 2분기 실적을 발표했으며, 순수익이 1억 2600만 달러로 2023년 2분기 2100만 달러에서 증가했다고 밝혔습니다. 이 회사는 긍정적인 투자 실적에 힘입어 2.5%의 자기자본 수익률(ROE)을 달성했습니다. 올해 지금까지 엔스타의 보통주당 장부 가치는 4.5% 증가해 358.74 달러에 도달했습니다. 주요 거래로는 시리우스포인트와의 4억 달러 손실 포트폴리오 이전과 보험 연계 증권 시장에서의 3억 5천만 달러 재보험 계약이 있습니다.
2024년 7월 29일, 엔스타는 식스 스트리트 주도로 구성된 컨소시엄에 51억 달러 또는 주당 338달러에 인수되었다고 발표했습니다. 보도 자료에는 연말에 오를 그레고리 회장 퇴임에 대한 언급도 있었습니다. 주요 지표로는 5.2%의 연환산 총 투자 수익률과 2024년 2분기 6200만 달러의 종료 책임 수익(RLE)이 있으며, 이는 2023년 2분기의 1000만 달러와 비교됩니다.
Le groupe Enstar (Nasdaq: ESGR) a annoncé ses résultats du deuxième trimestre 2024, faisant état d'un revenu net de 126 millions de dollars, en hausse par rapport à 21 millions de dollars au deuxième trimestre 2023. L'entreprise a atteint un retour sur fonds propres (ROE) de 2,5 %, soutenu par des résultats d'investissement positifs. À ce jour, la valeur comptable par action ordinaire d'Enstar a augmenté de 4,5 % pour atteindre 358,74 dollars. Parmi les transactions significatives, on trouve un transfert de portefeuille de pertes de 400 millions de dollars avec SiriusPoint et un accord de réassurance de 350 millions de dollars sur le marché des titres liés à l'assurance.
Le 29 juillet 2024, Enstar a annoncé son acquisition par un consortium dirigé par Sixth Street pour 5,1 milliards de dollars, soit 338 dollars par action. Le communiqué de presse a également mentionné le départ de la présidente Orla Gregory à la fin de l'année. Les indicateurs clés incluent un rendement total des investissements annualisé de 5,2 % et un bénéfice de 62 millions de dollars provenant des obligations de run-off (RLE) pour le 2e trimestre 2024, par rapport à 10 millions de dollars pour le 2e trimestre 2023.
Die Enstar Group (Nasdaq: ESGR) hat ihre Ergebnisse für das 2. Quartal 2024 veröffentlicht und dabei einen Nettogewinn von 126 Millionen Dollar erzielt, was einem Anstieg von 21 Millionen Dollar im 2. Quartal 2023 entspricht. Das Unternehmen erreichte eine Eigenkapitalrendite (ROE) von 2,5%, was auf positive Anlageergebnisse zurückzuführen ist. Im laufenden Jahr stieg der Buchwert pro Stammaktie von Enstar um 4,5% auf 358,74 Dollar. Zu den bedeutenden Transaktionen gehören ein Verlustportfoliotransfer über 400 Millionen Dollar mit SiriusPoint und eine Rückversicherungsvereinbarung über 350 Millionen Dollar im Bereich der versicherungsgebundenen Wertpapiere.
Am 29. Juli 2024 gab Enstar bekannt, dass es von einem von Sixth Street geführten Konsortium für 5,1 Milliarden Dollar oder 338 Dollar pro Aktie übernommen wird. Die Pressemitteilung erwähnte auch den Rücktritt von Präsidentin Orla Gregory zum Jahresende. Wichtige Kennzahlen sind eine annualisierte Gesamtrendite von 5,2% und ein Gewinn aus der Abwicklung von Verbindlichkeiten (RLE) von 62 Millionen Dollar für das 2. Quartal 2024, verglichen mit 10 Millionen Dollar im 2. Quartal 2023.
- Net income rose to $126 million from $21 million in Q2 2023.
- Book value per ordinary share increased by 4.5% to $358.74.
- Annualized total investment return of 5.2% for Q2 2024.
- Run-off liability earnings of $62 million compared to $10 million in Q2 2023.
- $400 million Loss Portfolio Transfer with SiriusPoint.
- $350 million reinsurance agreement in Insurance-linked Securities market.
- Net income for six months ended June 30, 2024, decreased to $245 million from $445 million in the same period in 2023.
- Return on equity for the first half of 2024 was 4.9%, down from 10.0% in the first half of 2023.
- Investment segment net income decreased to $438 million from $493 million in the first half of 2023.
Insights
As a financial analyst, I find Enstar's Q2 2024 results and announced acquisition to be noteworthy developments with significant implications for investors. The $5.1 billion acquisition by the Sixth Street-led consortium at $338 per share represents a major liquidity event for shareholders. This price implies a premium to Enstar's reported book value per share of
Financially, Enstar reported net income of
The announced transactions, particularly the
Overall, while Enstar's standalone results were decent but not exceptional, the announced acquisition provides an attractive exit for shareholders. The deal's completion will be the key event to watch in the coming months.
From an insurance industry perspective, Enstar's Q2 results and recent transactions highlight several important trends in the legacy insurance market. The company's ability to secure multiple large deals, including the
The ILS market deal is particularly noteworthy as it represents Enstar's first foray into this growing sector. This move signals Enstar's strategic expansion into new areas of the legacy market, potentially opening up additional growth avenues. The insurance industry is increasingly looking to alternative capital sources and Enstar's entry into ILS could position them well for future opportunities.
On the operational front, Enstar's run-off liability earnings (RLE) of
The announced acquisition by the Sixth Street-led consortium could potentially bring new capital and strategic direction to Enstar's operations. As the legacy market continues to evolve, this influx of private equity backing might enable Enstar to pursue larger, more complex deals and potentially expand into new geographic markets or lines of business.
In summary, Enstar's recent activities reflect the ongoing evolution and growth of the legacy insurance market, with opportunities emerging in new areas like ILS alongside traditional portfolio transfers and reinsurance deals.
- Enstar to be Acquired by Sixth Street-led Consortium for
$5.1 Billion - Net Income Attributable to Enstar Ordinary Shareholders of
$126 Million ; Return on Equity of2.5% Primarily Driven by Positive Investment Results - Year-to-Date Growth in Book Value per Ordinary Share of
4.5% to$358.74 (Fully Diluted*$350.74) - Announced
$400 Million Loss Portfolio Transfer with SiriusPoint - Signed
$350 Million Agreement to Provide Reinsurance Cover in Insurance-linked Securities (ILS) Market1 - Entered into
$200 Million Adverse Development Cover Agreement with Insurance Australia Group - Closed
$297 Million Transaction To Reinsure Legacy Business with Accredited
1This transaction closed on July 25.
* Non-GAAP measure; refer to "Non-GAAP Financial Measures" further below for explanatory notes and a reconciliation to the most directly comparable GAAP measure.
HAMILTON, Bermuda, July 29, 2024 (GLOBE NEWSWIRE) -- Enstar Group Limited (Nasdaq: ESGR) today announced financial results for the second quarter 2024.
Merger and Financial Results Audio Update:
As previously announced, Enstar has entered into a definitive merger agreement to be acquired by a consortium of institutional investors led by Sixth Street for
President’s Departure:
Enstar also announced today that President, Orla Gregory, will step down at the end of the year. Ms. Gregory has been a pivotal leader at Enstar, contributing significantly to the Company’s growth and success over her 21-year tenure, and serving in senior executive leadership roles since 2015. She will focus on leading the Company’s preparations for closing the merger and its transition to a privately held business, as well as continuing to serve as a director and executive leadership team member until December 31, 2024.
Mr. Silvester said: “Orla has spent her career in dedicated service to Enstar. She is a dynamic executive who has contributed massively to the strong leadership, culture, and brand built at Enstar. We are appreciative that she will be involved in transitioning us into our next chapter. We will miss Orla tremendously.”
Ms. Gregory said: “I am very proud of the achievements by so many during my time at Enstar. With great leadership in place, and significant opportunities in the legacy space, I have no doubt that Enstar will continue to excel. Today’s transaction is an exciting evolution, and I look forward to working with the team in preparation for closing. I thank Dominic for the great opportunities I’ve had and all of my colleagues for their dedication and support.”
Transactions:
During the second quarter 2024, we:
- Announced
$400 million Loss Portfolio Transfer (“LPT”) agreement with SiriusPoint to reinsure a portfolio of workers’ compensation business covering underwriting years 2018 to 2023. - Signed an agreement to reinsure certain 2019 and 2020 business written by a third-party capital platform for which Enstar will receive a premium of
$350m for the portfolio, which marks our first ever deal in ILS and the first solution of its type in this market. This deal closed on July 25, 2024. - Entered into an adverse development cover (“ADC”) agreement with Insurance Australia Group, where Enstar will provide approximately
$430 million of excess cover over approximately$1.7 billion of underlying reserves related to certain long-tail insurance business, including product & public liability, compulsory third-party motor, professional risks and workers’ compensation. - Completed a
$297 million transaction to reinsure legacy business with Accredited, in connection with Accredited’s acquisition by Onex Partners.
Three Months Ended June 30, 2024 Highlights:
- Net income attributable to Enstar ordinary shareholders of
$126 million , or$8.49 per diluted ordinary share, compared to$21 million , or$1.34 per diluted ordinary share, for the three months ended June 30, 2023. - Return on equity ("ROE") of
2.5% and Adjusted ROE* of2.9% for the quarter compared to ROE and Adjusted ROE* of0.5% and2.1% , respectively, in the second quarter of 2023. Quarter-over-quarter ROE performance was positively impacted by an increase in the gain from fair value changes in trading securities, funds held and other investments and favorable prior period loss development (“PPD”). Second quarter 2024 Adjusted ROE* excludes$35 million of net realized losses on our fixed maturities and fair value changes in trading securities and funds held. - Run-off liability earnings ("RLE") of
$62 million for the quarter relative to the comparative quarter RLE of$10 million was driven by favorable loss development on our construction defect line of business after assuming active claims management, as well as our professional indemnity/directors and officers line of business. - Annualized total investment return (“TIR”) of
5.2% and Annualized Adjusted TIR* of5.6% for the quarter compared to Annualized TIR and Annualized Adjusted TIR* of3.0% and5.1% , respectively, for the three months ended June 30, 2023. TIR in the second quarter of 2024 benefited from the fact that interest rates increased by less during the period relative to the second quarter of 2023, resulting in reduced losses from fair value changes in fixed income securities and funds held. Quarter-over-quarter TIR performance was also positively impacted by increased gains from fair value changes in other investments, including equities, partially offset by a loss from equity method investments.
* Non-GAAP measure; refer to "Non-GAAP Financial Measures" further below for explanatory notes and a reconciliation to the most directly comparable GAAP measure.
Six Months Ended June 30, 2024 Highlights:
- Net income attributable to Enstar ordinary shareholders of
$245 million , or$16.49 per diluted ordinary share. In comparison, net income attributable to Enstar ordinary shareholders of$445 million , or$27.19 per diluted ordinary share, for the six months ended June 30, 2023, which includes the one-time Enstar's share of gain on novation of$194 million of our closed block reinsurance of life annuity policies in Enhanzed Re. - ROE of
4.9% and Adjusted ROE* of5.6% , compared to10.0% and8.6% , respectively, for the six months ended June 30, 2023. The prior-year period’s ROE and Adjusted ROE* included a$194 million net gain recognized on the novation of Enhanzed Re reinsurance closed block of life annuity policies. Period-over-period ROE performance was also impacted by a decline in the gain from fair value changes in trading securities, funds held and other investments and losses from equity method investments. This is partially offset by an increase in favorable prior period loss development. Year-to-date second quarter 2024 Adjusted ROE* also excludes$60 million of net realized losses on our fixed maturities and fair value changes in trading securities and funds held. - RLE of
$86 million was driven by favorable loss development on our construction defect line of business after assuming active claims management, as well as our asbestos and professional indemnity/directors and officers lines of business, partially offset by adverse loss development on our environmental and general casualty lines of business. For the six months ended June 30, 2023, RLE of$20 million was positively impacted by favorable loss development in our workers’ compensation and general casualty line of business. The favorable results in 2023 were partially offset by an increase in the fair value of liabilities for which we have elected the fair value option and an increase in the unallocated loss adjustment expenses (“ULAE”) provision as a result of assuming active claims management control. - Annualized TIR of
5.0% and Adjusted Annualized TIR* of5.6% , compared to6.1% and5.6% , respectively, for the six months ended June 30, 2023. TIR was negatively impacted by increased losses from fair value changes on trading securities and funds held as a result of comparatively more significant increases in interest rates in the U.S. in the first half of 2024 than in the prior period. Period-over-period TIR was also impacted by losses from equity method investments, partially offset by increases in the fair value of other investments. - In March 2024, Enstar’s Bermuda-based wholly-owned subsidiary Cavello Bay Reinsurance Limited was assigned an Insurer Financial Strength Rating of ‘A’ with stable outlook by S&P Global Ratings.
* 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:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| June 30, | $ / pp / bp Change | June 30, | $ / pp / bp Change | |||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||
| (in millions of U.S. dollars, except per share data) | ||||||||||||||||||||||||||
| Key Earnings Metrics | ||||||||||||||||||||||||||
| Net income attributable to Enstar ordinary shareholders | $ | 126 | $ | 21 | $ | 105 | $ | 245 | $ | 445 | $ | (200 | ) | |||||||||||||
| Adjusted operating income attributable to Enstar ordinary shareholders* | $ | 160 | $ | 105 | $ | 55 | $ | 301 | $ | 506 | $ | (205 | ) | |||||||||||||
| ROE | 2.5 | % | 0.5 | % | 2.0 pp | 4.9 | % | 10.0 | % | (5.1 | ) pp | |||||||||||||||
| Adjusted ROE* | 2.9 | % | 2.1 | % | 0.8 pp | 5.6 | % | 8.6 | % | (3.0 | ) pp | |||||||||||||||
| Key Run-off Metrics | ||||||||||||||||||||||||||
| Prior period loss development | $ | 62 | $ | 10 | $ | 52 | $ | 86 | $ | 20 | $ | 66 | ||||||||||||||
| Adjusted prior period loss development* | $ | 65 | $ | 8 | $ | 57 | $ | 89 | $ | 44 | $ | 45 | ||||||||||||||
| RLE | 0.6 | % | 0.1 | % | 0.5 pp | 0.8 | % | 0.2 | % | 0.6 | pp | |||||||||||||||
| Adjusted RLE* | 0.6 | % | 0.1 | % | 0.5 pp | 0.7 | % | 0.3 | % | 0.4 | pp | |||||||||||||||
| Key Investment Return Metrics | ||||||||||||||||||||||||||
| Total investable assets | $ | 17,375 | $ | 19,219 | $ | (1,844 | ) | $ | 17,375 | $ | 19,219 | $ | (1,844 | ) | ||||||||||||
| Adjusted total investable assets* | $ | 18,178 | $ | 20,272 | $ | (2,094 | ) | $ | 18,178 | $ | 20,272 | $ | (2,094 | ) | ||||||||||||
| Annualized investment book yield | 4.35 | % | 4.47 | % | (12) bp | 4.35 | % | 3.78 | % | 57 | bp | |||||||||||||||
| Annualized TIR | 5.2 | % | 3.0 | % | 2.2 pp | 5.0 | % | 6.1 | % | (1.1 | ) pp | |||||||||||||||
| Adjusted Annualized TIR* | 5.6 | % | 5.1 | % | 0.5 pp | 5.6 | % | 5.6 | % | — | pp | |||||||||||||||
| As of | ||||||||||||||||||||||||||
| Key Shareholder Metrics | June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||
| Book value per ordinary share | $ | 358.74 | $ | 343.45 | $ | 15.29 | ||||||||||||||||||||
| Fully diluted book value per ordinary share* | $ | 350.74 | $ | 336.72 | $ | 14.02 | ||||||||||||||||||||
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 Three and Six Months Ended June 30, 2024 and 2023
Run-off Segment
The following is a discussion and analysis of the results of operations for our Run-off segment.
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 30, | $ Change | June 30, | $ Change | ||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||
| (in millions of U.S. dollars) | |||||||||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||||||||
| Net premiums earned | $ | 5 | $ | 7 | $ | (2 | ) | $ | 16 | $ | 15 | $ | 1 | ||||||||||||||||
| Other income: | |||||||||||||||||||||||||||||
| Reduction in estimates of net ultimate defendant A&E liabilities - prior periods | — | — | — | — | 2 | (2 | ) | ||||||||||||||||||||||
| Reduction in estimated future defendant A&E expenses | 1 | — | 1 | 2 | 1 | 1 | |||||||||||||||||||||||
| All other income | 2 | 5 | (3 | ) | 4 | 7 | (3 | ) | |||||||||||||||||||||
| Total other income | 3 | 5 | (2 | ) | 6 | 10 | (4 | ) | |||||||||||||||||||||
| Total revenues | 8 | 12 | (4 | ) | 22 | 25 | (3 | ) | |||||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||||||||
| Net incurred losses and LAE: | |||||||||||||||||||||||||||||
| Current period | 4 | 3 | 1 | 9 | 13 | (4 | ) | ||||||||||||||||||||||
| Prior periods: | |||||||||||||||||||||||||||||
| Reduction in estimates of net ultimate losses | (42 | ) | (8 | ) | (34 | ) | (48 | ) | (23 | ) | (25 | ) | |||||||||||||||||
| Reduction in provisions for ULAE | (22 | ) | — | (22 | ) | (39 | ) | (18 | ) | (21 | ) | ||||||||||||||||||
| Total prior periods | (64 | ) | (8 | ) | (56 | ) | (87 | ) | (41 | ) | (46 | ) | |||||||||||||||||
| Total net incurred losses and LAE | (60 | ) | (5 | ) | (55 | ) | (78 | ) | (28 | ) | (50 | ) | |||||||||||||||||
| Acquisition costs | 1 | 4 | (3 | ) | 2 | 6 | (4 | ) | |||||||||||||||||||||
| General and administrative expenses | 48 | 47 | 1 | 90 | 86 | 4 | |||||||||||||||||||||||
| Total expenses | (11 | ) | 46 | (57 | ) | 14 | 64 | (50 | ) | ||||||||||||||||||||
| SEGMENT NET INCOME (LOSS) | $ | 19 | $ | (34 | ) | $ | 53 | $ | 8 | $ | (39 | ) | $ | 47 | |||||||||||||||
Overall Results
Three Months Ended June 30, 2024 versus 2023: Net income from our Run-off segment was
- A
$56 million increase in favorable PPD in the current quarter, mainly driven by a$34 million increase in the reduction in estimates of net ultimate losses and a$22 million release of ULAE provisions.- During the second quarter of 2024, we recognized favorable loss development on our construction defect and professional indemnity/directors and officers lines of business of
$24 million and$12 million , respectively, driven by favorable claims experience.
- In comparison, during the second quarter of 2023 we recognized favorable loss development of
$9 million on our workers’ compensation line of business as a result of favorable claims experience, most notably in the 2021 acquisition year. We also increased our ULAE provision by$21 million as a result of assuming active claims control on the 2022 LPT agreement with Argo, which offset other ULAE reserve adjustments from our run-off operations.
- During the second quarter of 2024, we recognized favorable loss development on our construction defect and professional indemnity/directors and officers lines of business of
Six Months Ended June 30, 2024 versus 2023: Net income from our Run-off segment was
- A
$46 million increase in favorable PPD, mainly driven by a$25 million increase in the reduction in estimates of net ultimate losses and a$21 million increase in the release of ULAE provisions relative to the comparative period.- During the first half of 2024, PPD was driven by favorable loss development across multiple lines of business. We recognized
$41 million and$22 million of favorable loss development on our professional indemnity/directors and officers and construction defect line of business, respectively, as a result of favorable claims experience, as well as$25 million of favorable loss development on our asbestos line of business resulting from actuarial analysis. This was partially offset by adverse loss development on our general casualty line of business of$17 million , driven by adverse claims experience and adverse loss development on our environmental line of business of$25 million due to results from actuarial reviews during the period. - In comparison, in the first half of 2023, we recognized favorable loss development of
$20 million on our workers’ compensation line of business as a result of continued favorable claims experience, most notably in the 2021 acquisition year.
- During the first half of 2024, PPD was driven by favorable loss development across multiple lines of business. We recognized
Investments Segment
The following is a discussion and analysis of the results of operations for our Investments segment.
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 30, | $ Change | June 30, | $ Change | ||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||
| (in millions of U.S. dollars) | |||||||||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||||||||
| Net investment income: | |||||||||||||||||||||||||||||
| Fixed maturities | $ | 137 | $ | 145 | $ | (8 | ) | $ | 279 | $ | 276 | $ | 3 | ||||||||||||||||
| Cash and restricted cash | 7 | 8 | (1 | ) | 15 | 13 | 2 | ||||||||||||||||||||||
| Other investments, including equities | 19 | 23 | (4 | ) | 39 | 47 | (8 | ) | |||||||||||||||||||||
| Less: Investment expenses | (8 | ) | (4 | ) | (4 | ) | (18 | ) | (8 | ) | (10 | ) | |||||||||||||||||
| Total net investment income | 155 | 172 | (17 | ) | 315 | 328 | (13 | ) | |||||||||||||||||||||
| Net realized losses: | |||||||||||||||||||||||||||||
| Fixed maturities | (9 | ) | (25 | ) | 16 | (15 | ) | (43 | ) | 28 | |||||||||||||||||||
| Total net realized losses | (9 | ) | (25 | ) | 16 | (15 | ) | (43 | ) | 28 | |||||||||||||||||||
| Fair value changes in: | |||||||||||||||||||||||||||||
| Fixed maturities, trading | (26 | ) | (64 | ) | 38 | (45 | ) | (5 | ) | (40 | ) | ||||||||||||||||||
| Other investments, including equities | 112 | 62 | 50 | 216 | 209 | 7 | |||||||||||||||||||||||
| Total fair value changes in trading securities and other investments | 86 | (2 | ) | 88 | 171 | 204 | (33 | ) | |||||||||||||||||||||
| Total revenues | 232 | 145 | 87 | 471 | 489 | (18 | ) | ||||||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||||||||
| General and administrative expenses | 10 | 10 | — | 20 | 21 | (1 | ) | ||||||||||||||||||||||
| Total expenses | 10 | 10 | — | 20 | 21 | (1 | ) | ||||||||||||||||||||||
| (Loss) income from equity method investments | (8 | ) | 14 | (22 | ) | (13 | ) | 25 | (38 | ) | |||||||||||||||||||
| SEGMENT NET INCOME | $ | 214 | $ | 149 | $ | 65 | $ | 438 | $ | 493 | $ | (55 | ) | ||||||||||||||||
Overall Results
Three Months Ended June 30, 2024 versus 2023: Net income from our Investments segment was
- an increase in the gain from fair value changes in other investments, including equities of
$50 million , primarily driven by a favorable variance in relation to an embedded derivative related to the assets supporting one of our LPTs and increases in the gains for our CLO equities, hedge funds, private equity funds, privately held equities and infrastructure. This is partially offset by decreases in the gain from publicly traded equities, fixed income funds, and real estate; and - a decrease in the aggregate of net realized losses and losses from fair value changes in trading securities and funds held of
$54 million , primarily as a result of moderating increases in interest rates across U.S., U.K. and European markets in the current period, relative to the comparative quarter. This is partially offset by; - a decrease in our net investment income of
$17 million due to an overall reduction in investments and funds held assets as a result of claims payments which outpaced new business relative to the periods and an increase in investment expenses primarily due to increased performance fees; and - a loss from equity method investments of
$8 million for the current quarter compared to$14 million income in the comparative quarter as a result of increased losses on our investment in Monument Re.
Six Months Ended June 30, 2024 versus 2023: Net income from our Investments segment was
- an increase in the aggregate of net realized losses and losses from fair value changes in trading securities and funds held of
$12 million , primarily as a result of comparatively more significant increase in interest rates in the U.S., as well as comparatively less significant tightening credit spreads; - a loss from equity method investments of
$13 million for the current period compared to$25 million income in the comparative period as a result of increased losses on our investment in Monument Re, partially offset by an increase in income on our investment in Core Specialty; and - a decrease in our net investment income of
$13 million , which is primarily due reductions in our investments and funds held assets as a result of claims payments which outpaced new business, less dividend income earned on our publicly traded equities and increased investment expenses primarily due to increased performance fees; partially offset by; - an increase in the gain on fair value changes from other investments, including equities, of
$7 million , primarily driven by our privately held equities, CLO equities, hedge funds, and private equity funds relative to the comparative period, partially offset by decreased gains on publicly traded equities, private debt, and real estate, and an unfavorable variance in relation to an embedded derivative related to the assets supporting one of our LPTs.
Income and (Loss) by Segment - For the Three and Six Months Ended June 30, 2024 and 2023
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | $ Change | June 30, | $ Change | ||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| (in millions of U.S. dollars) | |||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Run-off | $ | 8 | $ | 12 | $ | (4 | ) | $ | 22 | $ | 25 | $ | (3 | ) | |||||||||
| Investments | 232 | 145 | 87 | 471 | 489 | (18 | ) | ||||||||||||||||
| Assumed Life (1) | — | — | — | — | 275 | (275 | ) | ||||||||||||||||
| Subtotal | 240 | 157 | 83 | 493 | 789 | (296 | ) | ||||||||||||||||
| Corporate and other (1) | (4 | ) | (3 | ) | (1 | ) | (7 | ) | (3 | ) | (4 | ) | |||||||||||
| Total revenues | $ | 236 | $ | 154 | $ | 82 | $ | 486 | $ | 786 | $ | (300 | ) | ||||||||||
| SEGMENT NET INCOME (LOSS) | |||||||||||||||||||||||
| Run-off | $ | 19 | $ | (34 | ) | $ | 53 | $ | 8 | $ | (39 | ) | $ | 47 | |||||||||
| Investments | 214 | 149 | 65 | 438 | 493 | (55 | ) | ||||||||||||||||
| Assumed Life (1) | — | — | — | — | 275 | (275 | ) | ||||||||||||||||
| Total segment net income | 233 | 115 | 118 | 446 | 729 | (283 | ) | ||||||||||||||||
| Corporate and other (1) | (107 | ) | (94 | ) | (13 | ) | (201 | ) | (284 | ) | 83 | ||||||||||||
| NET INCOME ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS | $ | 126 | $ | 21 | $ | 105 | $ | 245 | $ | 445 | $ | (200 | ) | ||||||||||
(1) Effective January 1, 2024, Assumed Life and Legacy Underwriting were determined to no longer meet the definition of reportable segments and their residual income and loss activities were prospectively included in Corporate and other activities. Activities prior to January 1, 2024 are recorded in their respective segments. In addition, Legacy Underwriting had no revenue or income activity for the three or six months ended June 30, 2024 and 2023 and therefore is excluded from the table above.
Cautionary Statement
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 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.
About Enstar
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.
Contacts
For Investors: Matthew Kirk (investor.relations@enstargroup.com)
For Media: Jenna Kerr (communications@enstargroup.com)
ENSTAR GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended June 30, 2024 and 2023
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (expressed in millions of U.S. dollars, except share and per share data) | |||||||||||||||
| REVENUES | |||||||||||||||
| Net premiums earned | $ | 5 | $ | 7 | $ | 16 | $ | 15 | |||||||
| Net investment income | 155 | 172 | 315 | 328 | |||||||||||
| Net realized losses | (9 | ) | (25 | ) | (15 | ) | (43 | ) | |||||||
| Fair value changes in trading securities, funds held and other investments | 86 | (2 | ) | 171 | 204 | ||||||||||
| Other (loss) income | (1 | ) | 2 | (1 | ) | 282 | |||||||||
| Total revenues | 236 | 154 | 486 | 786 | |||||||||||
| EXPENSES | |||||||||||||||
| Net incurred losses and loss adjustment expenses | |||||||||||||||
| Current period | 4 | 3 | 9 | 13 | |||||||||||
| Prior periods | (62 | ) | (10 | ) | (86 | ) | (20 | ) | |||||||
| Total net incurred losses and loss adjustment expenses | (58 | ) | (7 | ) | (77 | ) | (7 | ) | |||||||
| Amortization of net deferred charge assets | 29 | 24 | 59 | 41 | |||||||||||
| Acquisition costs | 1 | 4 | 2 | 6 | |||||||||||
| General and administrative expenses | 98 | 85 | 185 | 174 | |||||||||||
| Interest expense | 23 | 22 | 45 | 45 | |||||||||||
| Net foreign exchange losses (gains) | 1 | 5 | (8 | ) | (1 | ) | |||||||||
| Total expenses | 94 | 133 | 206 | 258 | |||||||||||
| INCOME BEFORE INCOME TAXES | 142 | 21 | 280 | 528 | |||||||||||
| Income tax benefit (expense) | 2 | 4 | (3 | ) | 5 | ||||||||||
| (Loss) income from equity method investments | (8 | ) | 14 | (13 | ) | 25 | |||||||||
| NET INCOME | 136 | 39 | 264 | 558 | |||||||||||
| Less: Net income attributable to noncontrolling interest | (1 | ) | (9 | ) | (1 | ) | (95 | ) | |||||||
| NET INCOME ATTRIBUTABLE TO ENSTAR GROUP LIMITED | 135 | 30 | 263 | 463 | |||||||||||
| Dividends on preferred shares | (9 | ) | (9 | ) | (18 | ) | (18 | ) | |||||||
| NET INCOME ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | 126 | $ | 21 | $ | 245 | $ | 445 | |||||||
| Earnings per ordinary share attributable to Enstar: | |||||||||||||||
| Basic | $ | 8.59 | $ | 1.36 | $ | 16.72 | $ | 27.44 | |||||||
| Diluted | $ | 8.49 | $ | 1.34 | $ | 16.49 | $ | 27.19 | |||||||
| Weighted average ordinary shares outstanding: | |||||||||||||||
| Basic | 14,664,767 | 15,460,318 | 14,652,962 | 16,216,080 | |||||||||||
| Diluted | 14,846,505 | 15,660,981 | 14,854,673 | 16,366,517 | |||||||||||
ENSTAR GROUP LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2024 and 2023
| June 30, 2024 | December 31, 2023 | ||||||
| (in millions of U.S. dollars, except share data) | |||||||
| ASSETS | |||||||
| Short-term investments, trading, at fair value | $ | 9 | $ | 2 | |||
| Short-term investments, available-for-sale, at fair value (amortized cost: 2024 — | 45 | 62 | |||||
| Fixed maturities, trading, at fair value | 1,698 | 1,949 | |||||
| Fixed maturities, available-for-sale, at fair value (amortized cost: 2024 — | 4,971 | 5,261 | |||||
| Funds held | 4,730 | 5,251 | |||||
| Equities, at fair value (cost: 2024 — | 761 | 701 | |||||
| Other investments, at fair value (includes consolidated variable interest entity: 2024 - | 4,091 | 3,853 | |||||
| Equity method investments | 318 | 334 | |||||
| Total investments | 16,623 | 17,413 | |||||
| Cash and cash equivalents (includes consolidated variable interest entity: 2023 — | 469 | 564 | |||||
| Restricted cash and cash equivalents | 283 | 266 | |||||
| Accrued interest receivable | 63 | 71 | |||||
| Reinsurance balances recoverable on paid and unpaid losses (net of allowance: 2024 — | 582 | 740 | |||||
| Reinsurance balances recoverable on paid and unpaid losses, at fair value | 199 | 217 | |||||
| Insurance balances recoverable (net of allowance: 2024 — | 169 | 172 | |||||
| Net deferred charge assets | 687 | 731 | |||||
| Other assets | 821 | 739 | |||||
| TOTAL ASSETS | $ | 19,896 | $ | 20,913 | |||
| LIABILITIES | |||||||
| Losses and loss adjustment expenses | $ | 10,148 | $ | 11,196 | |||
| Losses and loss adjustment expenses, at fair value | 1,056 | 1,163 | |||||
| Defendant asbestos and environmental liabilities | 540 | 567 | |||||
| Insurance and reinsurance balances payable | 32 | 43 | |||||
| Debt obligations | 1,832 | 1,831 | |||||
| Other liabilities (includes consolidated variable interest entity: 2024 and 2023 — | 408 | 465 | |||||
| TOTAL LIABILITIES | 14,016 | 15,265 | |||||
| COMMITMENTS AND CONTINGENCIES | |||||||
| SHAREHOLDERS’ EQUITY | |||||||
| Voting ordinary Shares (par value | 15 | 15 | |||||
| Preferred Shares: | |||||||
| Series C Preferred Shares (issued and held in treasury 2024 and 2023: 388,571) | — | — | |||||
| Series D Preferred Shares (issued and outstanding 2024 and 2023: 16,000; liquidation preference | 400 | 400 | |||||
| Series E Preferred Shares (issued and outstanding 2024 and 2023: 4,400; liquidation preference | 110 | 110 | |||||
| Treasury Shares, at cost: | |||||||
| Series C Preferred shares (2024 and 2023: 388,571) | (422 | ) | (422 | ) | |||
| Joint Share Ownership Plan (voting ordinary shares, held in trust 2024 and 2023: 565,630) | (1 | ) | (1 | ) | |||
| Additional paid-in capital | 591 | 579 | |||||
| Accumulated other comprehensive loss | (357 | ) | (336 | ) | |||
| Retained earnings | 5,435 | 5,190 | |||||
| Total Enstar Shareholders’ Equity | 5,771 | 5,535 | |||||
| Noncontrolling interests | 109 | 113 | |||||
| TOTAL SHAREHOLDERS’ EQUITY | 5,880 | 5,648 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 19,896 | $ | 20,913 | |||
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 (gains)/losses and fair value changes on fixed maturity investments recognized in our statements of operations, 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' equity Divided by Number of ordinary shares outstanding, adjusted for: -the ultimate effect of any dilutive securities (which include restricted shares, restricted share units, directors’ restricted share units and performance share units) 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 (numerator) | Adjusted operating income (loss) attributable to Enstar ordinary shareholders divided by adjusted opening Enstar ordinary shareholder's equity Net income (loss) attributable to Enstar ordinary shareholders, adjusted for: -fair value changes and net realized (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 | 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 fair value changes and net realized (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:
| ||
| Adjusted opening Enstar ordinary shareholders' equity (denominator) | Opening Enstar ordinary shareholders' equity, less: -fair value changes 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) | 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 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:
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(2) 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(2) 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) and Add: -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: -fair value changes in fixed maturities, trading 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 -fair value changes in fixed maturities, trading and funds held-directly managed |
(1) Comprises the discount rate and risk margin components.
(2) As of January 1, 2024, Legacy Underwriting is no longer a reportable segment as it no longer engages in any active business.
(3) The reinsurance contractual arrangements (including the Capacity Lease Agreement) were settled during the second quarter of 2023. Other than the settlement of these arrangements, we did not record any other 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*:
| June 30, 2024 | December 31, 2023 | |||||||||||||||
| Equity (1) | 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 | $ | 5,261 | 14,665,281 | $ | 358.74 | $ | 5,025 | 14,631,055 | $ | 343.45 | ||||||
| Non-GAAP adjustment: | ||||||||||||||||
| Share-based compensation plans | 334,625 | 292,190 | ||||||||||||||
| Fully diluted book value per ordinary share* | $ | 5,261 | 14,999,906 | $ | 350.74 | $ | 5,025 | 14,923,245 | $ | 336.72 | ||||||
(1) Equity comprises Enstar ordinary shareholders' equity, which is calculated as Enstar shareholders' equity less preferred shares (
The table below presents a reconciliation of ROE to Adjusted ROE* and Annualized ROE to Annualized Adjusted ROE*:
| Three Months Ended | |||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||||||||||||
| Net income (loss)(1) | Opening equity(1) | ROE | Annualized ROE | Net income (loss)(1) | Opening equity(1) | ROE | Annualized ROE | ||||||||||||||||||||
| (in millions of U.S. dollars) | |||||||||||||||||||||||||||
| Net income (loss)/Opening equity/ROE/Annualized ROE (1) | $ | 126 | $ | 5,122 | 2.5 | % | 9.8 | % | $ | 21 | $ | 4,367 | 0.5 | % | 1.9 | % | |||||||||||
| Non-GAAP adjustments for loss (gains): | |||||||||||||||||||||||||||
| Net realized losses on fixed maturities, AFS (2) / Cumulative fair value changes to fixed maturities, AFS (3) | 9 | 416 | 25 | 531 | |||||||||||||||||||||||
| Fair value changes on fixed maturities, trading (2) / Fair value changes on fixed maturities, trading (3) | 16 | 251 | 42 | 316 | |||||||||||||||||||||||
| Fair value changes in funds held - directly managed (2) / Fair values changes on funds held - directly managed (3) | 10 | 122 | 22 | 147 | |||||||||||||||||||||||
| 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) | (4 | ) | (249 | ) | (8 | ) | (278 | ) | |||||||||||||||||||
| Amortization of fair value adjustments / Fair value adjustments | 6 | (103 | ) | 6 | (121 | ) | |||||||||||||||||||||
| Tax effects of adjustments (5) | (3 | ) | — | (3 | ) | — | |||||||||||||||||||||
| Adjusted net income (loss)/Adjusted opening equity/Adjusted ROE/Annualized adjusted ROE* | $ | 160 | $ | 5,559 | 2.9 | % | 11.5 | % | $ | 105 | $ | 4,962 | 2.1 | % | 8.5 | % | |||||||||||
(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 (
(2) Net realized gains (losses) on fixed maturities, AFS are included in net realized gains (losses) in our unaudited condensed consolidated statements of operations. Fair value changes in our fixed maturities, trading and funds held - directly managed are included in fair value changes in trading securities, funds held and other investments in our unaudited condensed 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.
*Non-GAAP measure.
| Six Months Ended | |||||||||||||||||||||||||||
| June 30, 2024 | June 30, 2023 | ||||||||||||||||||||||||||
| Net income (loss) (1) | Opening equity (1) | ROE | Annualized ROE | Net income (loss) (1) | Opening equity (1)(2) | ROE | Annualized ROE | ||||||||||||||||||||
| (in millions of U.S. dollars) | |||||||||||||||||||||||||||
| Net income/Opening equity/ROE (1) | $ | 245 | $ | 5,025 | 4.9 | % | 9.8 | % | $ | 445 | $ | 4,464 | 10.0 | % | 19.9 | % | |||||||||||
| Non-GAAP adjustments for loss (gains): | |||||||||||||||||||||||||||
| Net realized losses on fixed maturities, AFS (2) / Cumulative fair value changes to fixed maturities, AFS (3) | 15 | 380 | 43 | 647 | |||||||||||||||||||||||
| Fair value changes on fixed maturities, trading (3) / Fair value changes on fixed maturities, trading (4) | 30 | 234 | 2 | 400 | |||||||||||||||||||||||
| Fair value changes on funds held - directly managed (3) / Fair value changes on funds held - directly managed (4) | 15 | 111 | 3 | 780 | |||||||||||||||||||||||
| 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) | (8 | ) | (246 | ) | 12 | (294 | ) | ||||||||||||||||||||
| Amortization of fair value adjustments / Fair value adjustments | 9 | (107 | ) | 9 | (124 | ) | |||||||||||||||||||||
| Tax effects of adjustments (6) | (5 | ) | — | (6 | ) | — | |||||||||||||||||||||
| Adjustments attributable to noncontrolling interests (7) | — | — | (2 | ) | — | ||||||||||||||||||||||
| Adjusted net income /Adjusted opening equity/Adjusted ROE* | $ | 301 | $ | 5,397 | 5.6 | % | 11.2 | % | $ | 506 | $ | 5,873 | 8.6 | % | 17.2 | % | |||||||||||
(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 (
(2) Enstar ordinary shareholders’ equity as of December 31, 2022 has been retrospectively adjusted for the impact of adopting ASU 2018-12. Refer to Note 12 of our condensed consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023 for further information.
(3) Net realized gains (losses) on fixed maturities, AFS are included in net realized gains (losses) in our unaudited condensed consolidated statements of operations. Fair value changes in our fixed maturities, trading and funds held - directly managed are included in fair value changes in trading securities, funds held and other investments in our unaudited condensed 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 interests associated with the specific subsidiaries to which the adjustments relate.
*Non-GAAP measure.
The tables below present a reconciliation of RLE to Adjusted RLE*:
| Three Months Ended | As of | Three Months Ended | |||||||||||||||||
| June 30, 2024 | June 30, 2024 | March 31, 2024 | June 30, 2024 | June 30, 2024 | |||||||||||||||
| RLE / PPD | Net loss reserves | Net loss reserves | Average net loss reserves | RLE % | |||||||||||||||
| (in millions of U.S. dollars) | |||||||||||||||||||
| PPD/net loss reserves/RLE % | $ | 62 | $ | 10,518 | $ | 10,827 | $ | 10,673 | 0.6 | % | |||||||||
| Non-GAAP adjustments for expenses (income): | |||||||||||||||||||
| Net loss reserves - current period | — | (9 | ) | (5 | ) | (7 | ) | ||||||||||||
| Amortization of fair value adjustments / Net fair value adjustments associated with the acquisition of companies | 6 | 98 | 103 | 101 | |||||||||||||||
| Changes in fair value - fair value option / Net fair value adjustments for contracts for which we have elected the fair value option (1) | (4 | ) | 253 | 249 | 251 | ||||||||||||||
| Change in estimate of net ultimate liabilities - defendant A&E / Net nominal defendant A&E liabilities | — | 497 | 516 | 506 | |||||||||||||||
| Reduction in estimated future expenses - defendant A&E / Estimated future expenses - defendant A&E | 1 | 31 | 32 | 31 | |||||||||||||||
| Adjusted PPD/Adjusted net loss reserves/Adjusted RLE %* | $ | 65 | $ | 11,388 | $ | 11,722 | $ | 11,555 | 0.6 | % | |||||||||
| Three Months Ended | As of | Three Months Ended | |||||||||||||||||
| June 30, 2023 | June 30, 2023 | March 31, 2023 | June 30, 2023 | June 30, 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 % | $ | 10 | $ | 12,939 | $ | 11,226 | $ | 12,082 | 0.1 | % | |||||||||
| Non-GAAP adjustments for expenses (income): | |||||||||||||||||||
| Net loss reserves - current period | — | (11 | ) | (9 | ) | (10 | ) | ||||||||||||
| Amortization of fair value adjustments / Net fair value adjustments associated with the acquisition of companies | 6 | 116 | 121 | 119 | |||||||||||||||
| Changes in fair value - fair value option / Net fair value adjustments for contracts for which we have elected the fair value option (1) | (8 | ) | 312 | 278 | 295 | ||||||||||||||
| Change in estimate of net ultimate liabilities - defendant A&E / Net nominal defendant A&E liabilities | — | 550 | 560 | 555 | |||||||||||||||
| Reduction in estimated future expenses - defendant A&E / Estimated future expenses - defendant A&E | — | 34 | 34 | 34 | |||||||||||||||
| Adjusted PPD/Adjusted net loss reserves/Adjusted RLE %* | $ | 8 | $ | 13,940 | $ | 12,210 | $ | 13,075 | 0.1 | % | |||||||||
(1) Comprises the discount rate and risk margin components.
*Non-GAAP measure.
| Six Months Ended | As of | Six Months Ended | ||||||||||||||||
| June 30, 2024 | June 30, 2024 | December 31, 2023 | June 30, 2024 | June 30, 2024 | ||||||||||||||
| RLE / PPD | Net loss reserves | Net loss reserves | Average net loss reserves | RLE % | ||||||||||||||
| (in millions of U.S. dollars) | ||||||||||||||||||
| PPD/net loss reserves/RLE/Annualized RLE | $ | 86 | $ | 10,518 | $ | 11,585 | $ | 11,052 | 0.8 | % | ||||||||
| Non-GAAP Adjustments: | ||||||||||||||||||
| Net loss reserves - current period | — | (9 | ) | — | (5 | ) | ||||||||||||
| Amortization of fair value adjustments / Net fair value adjustments associated with the acquisition of companies | 9 | 98 | 107 | 103 | ||||||||||||||
| Changes in fair value - fair value option / Net fair value adjustments for contracts for which we have elected the fair value option (1) | (8 | ) | 253 | 246 | 250 | |||||||||||||
| Change in estimate of net ultimate liabilities - defendant A&E / Net nominal defendant A&E liabilities | — | 497 | 527 | 512 | ||||||||||||||
| Reduction in estimated future expenses - defendant A&E / Estimated future expenses - defendant A&E | 2 | 31 | 33 | 32 | ||||||||||||||
| Adjusted PPD/Adjusted net loss reserves/Adjusted RLE/Annualized Adjusted RLE* | $ | 89 | $ | 11,388 | $ | 12,498 | $ | 11,944 | 0.7 | % | ||||||||
| Six Months Ended | As of | Six Months Ended | ||||||||||||||||
| June 30, 2023 | June 30, 2023 | December 31, 2022 | June 30, 2023 | June 30, 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/Annualized RLE | $ | 20 | $ | 12,939 | $ | 12,011 | $ | 12,475 | 0.2 | % | ||||||||
| Non-GAAP Adjustments: | ||||||||||||||||||
| Net loss reserves - current period | — | (11 | ) | — | (6 | ) | ||||||||||||
| Legacy Underwriting | — | — | (139 | ) | (70 | ) | ||||||||||||
| Amortization of fair value adjustments / Net fair value adjustments associated with the acquisition of companies | 9 | 116 | 124 | 120 | ||||||||||||||
| Changes in fair value - fair value option / Net fair value adjustments for contracts for which we have elected the fair value option (1) | 12 | 312 | 294 | 303 | ||||||||||||||
| Change in estimate of net ultimate liabilities - defendant A&E / Net nominal defendant A&E liabilities | 2 | 550 | 572 | 561 | ||||||||||||||
| Reduction in estimated future expenses - defendant A&E / Estimated future expenses - defendant A&E | 1 | 34 | 35 | 35 | ||||||||||||||
| Adjusted PPD/Adjusted net loss reserves/Adjusted RLE/Annualized Adjusted RLE* | $ | 44 | $ | 13,940 | $ | 12,897 | $ | 13,418 | 0.3 | % | ||||||||
(1) Comprises the discount rate and risk margin components.
*Non-GAAP measure.
The tables below present a reconciliation of our Annualized TIR to our Annualized Adjusted TIR*:
| Three Months Ended | Six months ended | ||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||||||||||||
| (in millions of U.S. dollars) | |||||||||||||||
| Net investment income | $ | 155 | $ | 172 | $ | 315 | $ | 328 | |||||||
| Net realized losses | |||||||||||||||
| Fixed maturities, AFS | (9 | ) | (25 | ) | (15 | ) | (43 | ) | |||||||
| Net realized losses | (9 | ) | (25 | ) | (15 | ) | (43 | ) | |||||||
| Fair value changes | |||||||||||||||
| Fixed maturities, trading | (16 | ) | (42 | ) | (30 | ) | (2 | ) | |||||||
| Funds held | (10 | ) | (22 | ) | (15 | ) | (3 | ) | |||||||
| Equity securities | 35 | 39 | 72 | 92 | |||||||||||
| Other investments | 78 | 27 | 145 | 112 | |||||||||||
| Investment derivatives | (1 | ) | (4 | ) | (1 | ) | 5 | ||||||||
| Fair value changes | 86 | (2 | ) | 171 | 204 | ||||||||||
| (Loss) income from equity method investments | (8 | ) | 14 | (13 | ) | 25 | |||||||||
| Other comprehensive income: | |||||||||||||||
| Unrealized (losses) gains on fixed maturities, AFS, net of reclassification adjustments excluding foreign exchange | 3 | (22 | ) | (9 | ) | 65 | |||||||||
| TIR ($) | $ | 227 | $ | 137 | $ | 449 | $ | 579 | |||||||
| Non-GAAP adjustment: | |||||||||||||||
| Net realized and unrealized losses on fixed maturities, AFS and trading, and funds held-directly managed | 35 | 90 | 60 | 49 | |||||||||||
| Unrealized (gains) losses on fixed maturities, AFS, net of reclassification adjustments excluding foreign exchange | (3 | ) | 22 | $ | 9 | $ | (65 | ) | |||||||
| Adjusted TIR ($)* | $ | 259 | $ | 249 | $ | 518 | $ | 563 | |||||||
| Total investments | $ | 16,623 | $ | 18,033 | $ | 16,623 | $ | 18,033 | |||||||
| Cash and cash equivalents, including restricted cash and cash equivalents | 752 | 1,186 | 752 | 1,186 | |||||||||||
| Total investable assets | $ | 17,375 | $ | 19,219 | $ | 17,375 | $ | 19,219 | |||||||
| Average aggregate invested assets, at fair value (1) | 17,587 | 18,548 | 17,825 | 18,831 | |||||||||||
| Annualized TIR % (2) | 5.2 | % | 3.0 | % | 5.0 | % | 6.1 | % | |||||||
| Non-GAAP adjustment: | |||||||||||||||
| Net unrealized losses on fixed maturities, AFS included within AOCI and net unrealized losses on fixed maturities, trading and funds held - directly managed | 803 | 1,053 | 803 | 1,053 | |||||||||||
| Adjusted investable assets* | $ | 18,178 | $ | 20,272 | $ | 18,178 | $ | 20,272 | |||||||
| Adjusted average aggregate invested assets, at fair value* (3) | $ | 18,383 | $ | 19,572 | $ | 18,597 | $ | 20,218 | |||||||
| Annualized adjusted TIR %* (4) | 5.6 | % | 5.1 | % | 5.6 | % | 5.6 | % | |||||||
(1) This amount is a two and three period average of the total investable assets for the three and six months ended June 30, 2024 and 2023, 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 ($) by average aggregate invested assets, at fair value.
(3) This amount is a two and three period average of the adjusted investable assets* for the three and six months ended June 30, 2024 and 2023, respectively, as presented above.
(4) Annualized adjusted TIR %* is calculated by dividing the annualized adjusted TIR* ($) by adjusted average aggregate invested assets, at fair value*.
*Non-GAAP measure.
FAQ
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