Enstar Group Limited · OTC:ESGOF
Enstar — Q2 2023 Earnings Presentation
27 slides from Enstar's earnings presentation, August 2023
Slide 1: Enstar Group Overview Q2 2023 Mid-Year Review
Enstar Group Overview Q2 2023 Mid-Year Review August 2023 Property of Enstar Group – Not for Distribution 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 Property of Enstar Group – Not for Distribution 3
Slide 4: YTD Highlights
YTD HIGHLIGHTS Six months ended June 30, 2023 Earnings $445 million and Return on Equity of 10% Strategy Completed Loss Portfolio Transfers with QBE and RACQ, assuming total net loss reserves of $2.2 billion Ratings Received upgrade from S&P to BBB+ on long-term issuer credit rating Share Repurchase
Slide 5: Business and Market
BUSINESS AND MARKET Property of Enstar Group – Not for Distribution 5
Slide 6: Leading Global Provider of Capital Relief Solutions
LEADING GLOBAL PROVIDER OF CAPITAL RELIEF SOLUTIONS Full suite of risk management solutions designed to create shareholder value What We Do How We Do It Deliver Capital Release and Risk Management Solutions to Insurance Market Industry founder and largest standalone provider Specialized Well Establi
Slide 7: 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 DARAG Compre Swiss Re NICO Int. Longevity (>20yrs in Operation) Presence in Global Run-off Markets Exp
Slide 8: 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 9: 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 216 opportunities reviewed ~$71.1bn of net reserves 1 17 deals completed $10.3bn1 of reserves Data from
Slide 10: Return on Equity (ROE) Components
RETURN ON EQUITY (“ROE”) COMPONENTS Generating attractive returns RUN-OFF LIABILITY EARNINGS (“RLE”) TOTAL INVESTMENT RETURN (“TIR”) Leverage Factor1: 2.8x 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 11: Performance
PERFORMANCE Property of Enstar Group – Not for Distribution 11
Slide 12: Financial Highlights
FINANCIAL HIGHLIGHTS Six months ended June 30, 2023 $445m Net Earnings $20m Run-off Liability Earnings Total $21.9bn Total Assets $4.9bn Shareholders' Equity Total Insurance Core Fixed $14.4bn Liabilities1 'A+' Income2 1. Includes losses and loss adjustment expenses and defendant A&E liabilities. 2.
Slide 13: A Growing Balance Sheet
A GROWING BALANCE SHEET A platform for delivering balanced and sustainable growth through investable assets and reserves Investable Assets1 ($bn) CAGR 7.2% $21.7 $19.5 $19.2 $17.3 $14.1 2019 2020 2021 2022 Q2 2023 Net Loss Reserves ($bn) CAGR 11.5% $12.9 $11.9 $12.0 $7.9 $8.8 2019 2020 2021 2022 Q2
Slide 14: The Enstar Effect
THE ENSTAR EFFECT For most insurance companies, claims experience is an expense item. For Enstar, driving superior claims outcomes is a major competitive advantage 01 DUE DILIGENCE • Claims unit integrated in M&A CLAIMS DIRECTLY and Pricing process CLAIMS INDIRECTLY • Independent view of claims and
Slide 15: Enstar Effect Enables Outperformance
ENSTAR EFFECT ENABLES OUTPERFORMANCE Enstar Loss Reserve Outperformance vs US P&C Industry Enstar Total Q223 Adjusted Net Loss Weighted Average of Latest Five Years Ended 2022 Reserves4 Enstar vs P&C Industry1 ($ in billions) 4.1% 3.3% Enstar delivered 3.3% favourable net loss 0.8% reserve outperfor
Slide 16: History of Enhancing Book Value
HISTORY OF ENHANCING BOOK VALUE 30 year history operating in run-off space 117 total acquisitive transactions completed to date Book value per common share in USD 329 294 285 262 209 170 165 153 131 120 106 94 85 73 59 46 32 38 15 27 18 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 201
Slide 17: Capacity for Growth
CAPACITY FOR GROWTH Well-funded as of June 30, 2023 Significant Liquidity to Support Growth • $1.2bn of cash, cash equivalents and restricted cash • $800m of unused revolving credit facility capacity Well-Capitalized with Moderate Leverage • 27.1% financial leverage, in line with 25% - 30% long-term
Slide 18: Appendix
APPENDIX enstargroup.com Property of Enstar Group – Not for Distribution 18
Slide 19: Investment Portfolio Composition
INVESTMENT PORTFOLIO COMPOSITION $19.2bn $1.2bn $14.5bn 3.76 yrs A+ 3.78% Total Investable Cash and Investment Portfolio 2 Average Duration 3 Average Investment Book Yield Assets1 restricted cash Portfolio Credit Rating 4 Investable Assets (As of June 30, 2023) - Composition by Asset Class Cash and
Slide 20: 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 Years at Enstar: 30 Years at Enstar: 19 Years at Enstar: 3 Industry Experience: 40+ years Industry E
Slide 21: Financial Data: Summary Income Statement
FINANCIAL DATA Summary Income Statement Three Months Ended Three Months Ended Six Months Ended Six Months Ended $ millions June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net premiums earned $ 7 $ 14 $ 15 $ 48 Net investment income and net realized and unrealized gains (losses) 145 (523) 489
Slide 22: Financial Data: Summary Balance Sheet
FINANCIAL DATA Summary Balance Sheet $ millions June 30, 2023 December 31, 2022 Assets Investable assets 19,219 19,540 Reinsurance balances recoverable 1,093 1,131 Net deferred charge assets 797 658 Other 752 825 Total Assets 21,861 22,154 Liabilities Losses and loss adjustment expenses 13,834 13,00
Slide 23: 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 24: Reconciliation to Adjusted Run-off Liability Earnings – YTD Q2 2023
RECONCILIATION TO ADJUSTED RUN-OFF LIABILITY EARNINGS – YTD Q2 2023 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 % Annualized RLE % (in millions of U.S. do
Slide 25: Reconciliation to Adjusted Run-off Liability Earnings – 2022 and 2021
RECONCILIATION TO ADJUSTED RUN-OFF LIABILITY EARNINGS – 2022 AND 2021 Year Ended As of Year Ended December 31, 2022 December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2022 PPD Net loss reserves Net loss reserves Average net loss reserves RLE % (in millions of U.S. dollars) PPD/net lo
Slide 26: Reconciliation to Adjusted Run-off Liability Earnings – 2020 and 2019
RECONCILIATION TO ADJUSTED RUN-OFF LIABILITY EARNINGS – 2020 AND 2019 Year Ended As of Year Ended December 31, 2020 December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2020 PPD Net loss reserves Net loss reserves Average net loss reserves RLE % (in millions of U.S. dollars) PPD/Net lo
Slide 27: Reconciliation to Adjusted Run-off Liability Earnings – 2018
RECONCILIATION TO ADJUSTED RUN-OFF LIABILITY EARNINGS – 2018 Year Ended As of Year Ended December 31, 2018 December 31, 2018 December 31, 2017 December 31, 2018 December 31, 2018 Average net (2) loss reserves PPD Net loss reserves (2) Net loss reserves (2) RLE % (in millions of U.S. dollars) PPD/Net