Enstar reports $2 billion turnaround for year
Leading Bermuda-based legacy re/insurer Enstar reported a $2 billion turnaround as it posted a $1.1 billion profit for the year.
The result was fuelled by a $599 million fourth quarter profit compared to a $227 million loss in the same period in 2022.
The company attributed the turnaround from a $906 million annual loss in 2022 to strong investment returns, favourable development on its workers compensation and property lines of business and a $200 million tax benefit related to the Bermuda corporate income tax.
““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%,” said CEO and founder Dominic Silvester. “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.”
Fourth quarter returns were driven by an investment return of $463 million and the tax benefit $205 million. Adjusted return on equity excluded $194 million of net realized and unrealized gains on Enstar’s directly managed fixed maturities and funds held.
“Run-off liability earnings (RLE) of $96 million for the quarter was driven by favourable 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, favourable 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.”
The company also acquired a remaining 41% equity interest in StarStone Specialty Holdings Limited in exchange for total consideration of $182 million. Following the completion of the transaction, SSHL became a wholly-owned subsidiary.
For the year, the company enjoyed investment returns of $1.1 billion, the tax benefit from the Bermuda Corporate Income Tax Act 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.
It said RLE of $131 million was driven by favourable 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 held at fair value and adverse development on its general casualty line of business. In 2022, the company recorded an RLE of $756 million.
The company 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.
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