Enstar Group Limited · OTC:ESGOF
Enstar — FY2023 Earnings Presentation
36 slides from Enstar's earnings presentation, February 2024
Slide 1: Enstar Group Overview Q4 2023 Year-End Review
Enstar Group Overview Q4 2023 Year-End Review February 2024 enstargroup.com
Slide 2: Disclaimer: Information Regarding Forward-Looking Statements
DISCLAIMER INFORMATION REGARDING FORWARD-LOOKING STATEMENTS This presentation, and oral statements made with respect to information contained in this presentation, may include certain forward-looking statements regarding our views with respect to our business, operations, loss reserves, strategy, in
Slide 3: Key Messages
KEY MESSAGES
Slide 4: Dominant Global Provider of Innovative Legacy Solutions
DOMINANT GLOBAL PROVIDER OF INNOVATIVE LEGACY SOLUTIONS $20.9bn $12.9bn $5.5bn 117 Total Assets Total Gross Shareholders’ Equity Deals Completed Reserves1 Since Inception Enstar is the largest standalone provider with a 30-year record of successfully acquiring and managing run-off while creating sha
Slide 5: Generating Shareholder Value
GENERATING SHAREHOLDER VALUE Durable business model designed to succeed across multiple insurance cycles Dominant Unparalleled Highly Best-in-class Balance Legacy Competitive Disciplined Claims Sheet Provider Advantages Approach Management Strength Leading suite of Best positioned to Consistent fina
Slide 6: Another Year of Strategic Delivery
ANOTHER YEAR OF STRATEGIC DELIVERY Year ended December 31, 2023 STRONG FY23 M&A PERFORMANCE Completed loss portfolio transfers with QBE, RACQ and a bespoke transaction with AIG, assuming total $1.1bn net loss reserves of $2.2 billion RATINGS Net Income Received upgrade from S&P to BBB+ on long- term
Slide 7: Creating Shareholder Value Since Inception
CREATING SHAREHOLDER VALUE SINCE INCEPTION 30+ year history operating in run-off space 117 total acquisitive transactions completed to date 343 329 294 262 209 170 165 153 131 120 106 94 85 73 59 46 32 38 15 18 27 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2
Slide 8: Well-Positioned for Long-Term Value Creation
WELL-POSITIONED FOR LONG-TERM VALUE CREATION Building blocks to total value Franchise Value M&A Pipeline and best-in-class Claims Management Economic Value Fixed Income Pull to Par and GAAP Accounting Impacts Current Book Value $343/per share as of December 31, 2023 Property of Enstar Group – Not fo
Slide 9: Management Well-Aligned with Shareholders
MANAGEMENT WELL-ALIGNED WITH SHAREHOLDERS Seasoned leadership with exceptional track record of value creation Dominic Silvester Orla Gregory David Ni CEO & Co-founder President Chief Strategy Officer Management and Years at Enstar: 30 Years at Enstar: 20 Years at Enstar: 4 Board Representation Indus
Slide 10: Key Messages
KEY MESSAGES Strong competitive Dominant innovative legacy advantage ideally 1 solutions provider and largest run- off dedicated firm places us to create Time-tested business model significant value for shareholders in the 2 positions us as the clear market leader in a large and growing sector years
Slide 11: Business and Market
BUSINESS AND MARKET
Slide 12: Full Suite of Market-Leading Risk Management Solutions
FULL SUITE OF MARKET-LEADING RISK MANAGEMENT SOLUTIONS DESIGNED TO CREATE SHAREHOLDER VALUE What We Do How We Do It Deliver Innovative Legacy and Risk Management Solutions to Insurance Market Industry founder and largest standalone provider Specialized Well Established Leadership, M&A Expertise Cult
Slide 13: Consistent Economic Model
CONSISTENT ECONOMIC MODEL Strong source of book value growth and internal financing Source, Diligence and Manage Liabilities and Acquire New Portfolios Investments Apply claims management strategies Leverage our industry to generate Run-off Liability relationships and position to Earnings and manage
Slide 14: Return on Equity Components
RETURN ON EQUITY (“ROE”) COMPONENTS Generating attractive returns RUN-OFF LIABILITY EARNINGS (“RLE”) TOTAL INVESTMENT RETURN (“TIR”) Leverage Factor1: 2.6x Leverage Factor1: 4.2x EXPENSES & OTHER (INC. NON-CASH2) Return On Equity 1. TIR and RLE leverage factors are calculated as average investable a
Slide 15: Profitability View by Deal Type
PROFITABILITY VIEW BY DEAL TYPE Well-positioned to deliver sustainable returns from evolving legacy solutions market Hypothetical Deal Returns Historical deals with claims control generate RLE via “Enstar Effect” Same return Offer clients bespoke solutions across all TIR 3 transaction which result i
Slide 16: Significant Growing Run-Off Market
SIGNIFICANT GROWING RUN-OFF MARKET $960bn opportunity, propelled by favourable global tailwinds Key Market Drivers Risk Management North America UK & $464bn Continental Europe Eliminate Rest of World Remove Resolve Administration $319bn Balance Sheet Concentration and Management $177bn Uncertainty R
Slide 17: Robust Transaction Pipeline
ROBUST TRANSACTION PIPELINE Consistent financial and operational discipline applied to pipeline to drive returns Executing on opportunities that meet our risk parameters and profitability hurdles 261 opportunities reviewed ~$85.7bn of net reserves 1 17 deals completed $10.3bn1 of reserves Data from
Slide 18: Competitive Landscape
COMPETITIVE LANDSCAPE Unparalleled leadership in global run-off market, built on scale, flexibility, and track record of claims management excellence `` Run-off Focused Diversified Business Riverstone Int. DARAG Marco Compre Swiss Re NICO Longevity (>20yrs in Operation) Presence in Global Run- off M
Slide 19: Performance
PERFORMANCE
Slide 20: Financial Highlights Full Year 2023
FINANCIAL HIGHLIGHTS Full Year 2023 ROE TIR RLE 24.2% 7.2% 1.1% 18.8% 5.3% 1.8% Adjusted ROE* Adjusted TIR* Adjusted RLE* Net Loss Reserves Capital Returned to Book Value Growth Assumed Common Shareholders $2.2bn 31.0% $532m *Non-GAAP financial measure. Refer to "Non-GAAP Financial Measures" in the
Slide 21: 5-Year ROE and Adjusted ROE
5-YEAR ROE AND ADJUSTED ROE* Return on Equity and Adjusted Return on Equity * 41.9% 38.4% 25.5% 24.2% 18.8% 18.8% 17.7% 16.1% 10.1% 7.9% -1.1% Targeting long- term Adjusted ROE low to -15.6% mid-teens** 2019 2020 2021 2022 2023 Average 2019 - 2023 Return on Equity Adjusted Return on Equity* * Non-GA
Slide 22: Strong Balance Sheet Growth with Prudent Capital Management
STRONG BALANCE SHEET GROWTH WITH PRUDENT CAPITAL MANAGEMENT A platform for delivering balanced and sustainable growth through investable assets and reserves Investable Assets1 ($bn) Net Loss Reserves ($bn) Capital Returns ($m) CAGR $942.0 CAGR 5.3% 7.8% $21.7 $19.5 $11.9 $12.0 $11.6 $18.2 $17.3 $14.
Slide 23: The Enstar Effect
THE ENSTAR EFFECT For most insurance companies, claims experience is an expense item For Enstar, driving superior claims outcomes is a major competitive advantage 01 DUE DILIGENCE • Claims unit integrated in M&A CLAIMS CONTROL and Pricing process CLAIMS OVERSIGHT (Directly Managed) • In-house indepe
Slide 24: Enstar Effect Drives Outperformance
ENSTAR EFFECT DRIVES OUTPERFORMANCE Enstar Loss Reserve Outperformance vs US P&C Industry1,2 Enstar Total 4Q23 Net Loss Reserves Five Years Ended 2022 ($ in billions) 8.6% 6.5% All Other 2.9% $4.0 General Casualty $4.1 General Casualty Workers' Compensation Asbestos & Environmental Asbestos & Worker
Slide 25: Appendix
APPENDIX enstargroup.com
Slide 26: Investment Portfolio Composition
INVESTMENT PORTFOLIO COMPOSITION $18.2bn $0.8bn $17.1bn 4.04 yrs A+ 3.86% Total Investable Cash and Investment Average Average Investment Book Assets1 restricted cash Portfolio 2 Duration 3 Portfolio Credit Rating 4 Yield Investable Assets (as of December 31, 2023) Composition by Asset Class Cash an
Slide 27: Financial Data: Summary Income Statement
FINANCIAL DATA Summary Income Statement Three Months Ended Three Months Ended Year Ended Year Ended $ millions December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Net premiums earned $ 14 $ 14 $ 43 $ 66 Net investment income and net realized and unrealized gains (losses) 472 168
Slide 28: Financial Data: Summary Balance Sheet
FINANCIAL DATA Summary Balance Sheet $ millions December 31, 2023 December 31, 2022 Assets Investable assets 18,243 19,540 Reinsurance balances recoverable 957 1,131 Net deferred charge assets 731 658 Other 982 825 Total Assets 20,913 22,154 Liabilities Losses and loss adjustment expenses 12,359 13,
Slide 29: Non-GAAP Measure
NON-GAAP MEASURE Non-GAAP Measure Definition Purpose of Non-GAAP Measure over GAAP Measure Adjusted run-off liability 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 earnings (%) meaningful and
Slide 30: Non-GAAP Measure
NON-GAAP MEASURE Non-GAAP Measure Definition Purpose of Non-GAAP Measure over GAAP Measure Adjusted return on equity Adjusted operating income (loss) attributable to Enstar ordinary shareholders divided by adjusted opening Enstar Calculating the operating income (loss) as a percentage of our adjuste
Slide 31: Reconciliation to Adjusted Run-Off Liability Earnings 2023 and 2022
RECONCILIATION TO ADJUSTED RUN-OFF LIABILITY EARNINGS – 2023 AND 2022 Year Ended As of Year Ended December 31, 2023 December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2023 Average net loss RLE / PPD Net loss reserves Net loss reserves reserves RLE % PPD/net loss reserves/RLE % $ 131
Slide 32: Reconciliation to Adjusted Run-Off Liability Earnings 2021 and 2020
RECONCILIATION TO ADJUSTED RUN-OFF LIABILITY EARNINGS – 2021 AND 2020 Year Ended As of Year Ended December 31, 2021 December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2021 Average net loss RLE / PPD Net loss reserves Net loss reserves reserves Annualized RLE % (in millions of U.S. do
Slide 33: Reconciliation to Adjusted Run-Off Liability Earnings 2019
RECONCILIATION TO ADJUSTED RUN-OFF LIABILITY EARNINGS – 2019 Year Ended As of Year Ended December 31, 2019 December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2019 Average net loss RLE / PPD Net loss reserves Net loss reserves (2) reserves (2) RLE % (in millions of U.S. dollars) PPD/n
Slide 34: Reconciliation to Adjusted Return on Equity 2023, 2022 and 2021
RECONCILIATION TO ADJUSTED RETURN ON EQUITY– 2023, 2022 AND 2021 Year Ended December 31, 2023 December 31, 2022 December 31, 2021 Net income Opening Net income Opening Net earnings Opening (loss) (1) equity (1)(2) (Adj) ROE (loss) (1) equity (1) (Adj) ROE (loss) (1) equity (1) (Adj) ROE Net income (
Slide 35: Reconciliation to Adjusted Return on Equity 2020 and 2019
RECONCILIATION TO ADJUSTED RETURN ON EQUITY - 2020 AND 2019 Year Ended December 31, 2020 December 31, 2019 Net income Opening Equity Net income Opening Equity (loss) (1) (1) (Adj) ROE (loss) (1) (1) (7) (Adj) ROE Net income (loss)/Opening equity/ROE (1) $ 1,723 $ 4,490 38.4 % $ 906 $ 3,546 25.5 % No
Slide 36: Reconciliation to Adjusted Total Investment Return
RECONCILIATION TO ADJUSTED TOTAL INVESTMENT RETURN Year Ended December 31, 2023 Net investment income $ 647 Net realized (losses) gains (65) Net unrealized gains (losses) 528 (Losses) income from equity method investments 13 Other comprehensive income: Unrealized gains (losses) on fixed maturities,