Enstar posts Q2 net loss of $493m

10-08-2022

Enstar posts Q2 net loss of $493m

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Bermuda-based insurer Enstar Group has reported a net loss of $493 million and of $775 million for the three and six months to 30 June, respectively. Those losses compare with a net profit of $378 million and of $561 million in Q2 and H1 2021.

“The market dislocation has resulted in material unrealised losses in our investment portfolio impacted by the combination of interest rate increases, widening credit spreads and equity market declines,” Enstar said. “While we recognised net investment losses of $522 million in the quarter, we are confident in our investment strategies for the long term.”

The company added that its solvency or economic balance sheet became stronger during the second quarter thanks to the fact its solvency ratio reflects not only losses on investments but also the impact of a higher discount rate on its reserves; and that its core fixed income securities are shorter in duration than its insurance liabilities.

Enstar CEO Dominic Silvester said: “We completed one of our largest-ever loss portfolio transactions in the quarter, assuming an incremental $1.9 billion of subject loss reserves from Aspen, an established business partner, and transitioned claims management authority to Enstar.

“We are seeing a robust market demand for our solutions,” he added, “and we maintain discipline with respect to acquiring new business and will only execute on transactions where we can generate appropriate risk-adjusted returns.”

On 8 August, Enstar announced a reinsurance agreement with Argo which will provide Enstar with the opportunity to bring its legacy expertise to the run-off of Argo’s US casualty book.

The Loss Portfolio Transfer agreement with a wholly owned subsidiary of Argo covers a number of its US casualty insurance portfolios, including construction, for accident years 2011 to 2019. Enstar will provide ground up cover of $746 million, and an additional $275 million of cover in excess of $821 million, up to a policy limit of $1.1 billion. Argo will retain a loss corridor of $75 million up to $821 million. The closing of the transaction is subject to regulatory approval and other closing conditions which Enstar expects to be completed in the second half of 2022.

Silvester said: “As this collaboration with Argo demonstrates, Enstar continues to be a market of choice for run-off solutions. We were pleased to be called upon to partner with the Argo team to design reinsurance that meets the company’s risk management objectives, while providing Enstar with an opportunity to contribute our legacy expertise to Argo’s US casualty book.”

Enstar, earnings

Bermuda Re