Investment returns drive Enstar to $126m profit

Bermuda-based Enstar, which has announced that it is to be acquired by private equity firm Sxth Street for $5.1 billion, has announced that it earned  $126 million in the second quarter compared to $21 million a year earlier. 

The legacy insurer also said its president, Orla Gregory, will step down at the end of the year and will focus on preparations for closing the merger before stepping down.

AM Best has also stated it does not expect the buyout to affect the financial strength ratings of Enster subsidiaries StarStone Insurance Bermuda Limited and its subsidiary, StarStone Insurance. 

Enstar said it had return on equity of 2.5% for the quarter compared to ROE of 0.5% in the second quarter of 2023, largely driven by an increase in the gain from fair value changes in trading securities, funds held and other investments and favorable prior period loss development.  

It said it had run-off liability earnings of $62 million for the quarter compared to $10 million in 2023, driven by favourable loss development on its construction defect line of business after assuming active claims management, as well as its professional indemnity/directors and officers line of business.

Total investment returns jumped to 5.2% compared to 3.0% in 2023 as a result of a slowdown in interest rate increases. 

Enstar said Gregory had 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. 

Enstar chief executive officer Dominic 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.”

. 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.”

In addition to the buyout, which will see Enstar go private, the company had a busy quarter, including a $400 million Loss Portfolio Transfer agreement with SiriusPoint to reinsure a portfolio of workers’ compensation business covering underwriting years 2018 to 2023 and 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 was its first ever insurance linked securities deal. 

Enstar also entered into an adverse development cover 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 long-tail insurance business and completed a $297 million transaction to reinsure legacy business with Accredited, in connection with Accredited’s acquisition by Onex Partners.

Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.