Enstar Group Limited · OTC:ESGOF
Enstar — FY2023 Earnings Presentation
36 slides from Enstar's earnings presentation, Feb 20, 2024
Slide 1: Q4 2023 Year-End Review
enstargroup.com Q4 2023 Year-End Review February 2024 Enstar Group Overview
Slide 2: Information Regarding Forward-Looking Statements
Property of Enstar Group – Not for Distribution 2 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,
Slide 3: Key Messages
KEY MESSAGES
Slide 4: Dominant Global Provider of Innovative Legacy Solutions
Property of Enstar Group – Not for Distribution 4 $20.9bn $12.9bn $5.5bn Total Assets Total Gross Reserves1 Shareholders’ Equity Enstar is the largest standalone provider with a 30-year record of successfully acquiring and managing run-off while creating shareholder value Deals Completed Since Incep
Slide 5: Leading suite of innovative risk transfer solutions in a large and growing legacy market
Property of Enstar Group – Not for Distribution 5 Leading suite of innovative risk transfer solutions in a large and growing legacy market Dominant Legacy Provider Unparalleled Competitive Advantages Best positioned to execute on both large and bespoke value additive transactions due to size, scale
Slide 6: Another Year of Strategic Delivery
Property of Enstar Group – Not for Distribution 6 ANOTHER YEAR OF STRATEGIC DELIVERY Year ended December 31, 2023 $1.1bn Net Income 24.2% Return on Equity 31.0% Growth in Book Value Per Share STRONG FY23 PERFORMANCE RATINGS Received upgrade from S&P to BBB+ on long- term issuer credit rating SHARE R
Slide 7: Creating Shareholder Value Since Inception
Property of Enstar Group – Not for Distribution 7 30+ year history operating in run-off space 117 total acquisitive transactions completed to date 15 18 27 32 38 46 59 73 85 94 106 120 131 153 170 165 209 294 329 262 343 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 8: Well-Positioned for Long-Term Value Creation
Property of Enstar Group – Not for Distribution 8 WELL-POSITIONED FOR LONG-TERM VALUE CREATION Current Book Value $343/per share as of December 31, 2023 Economic Value Fixed Income Pull to Par and GAAP Accounting Impacts Franchise Value M&A Pipeline and best-in-class Claims Management Building block
Slide 9: Management Well-Aligned with Shareholders
Property of Enstar Group – Not for Distribution 9 MANAGEMENT WELL-ALIGNED WITH SHAREHOLDERS Seasoned leadership with exceptional track record of value creation Orla Gregory President Years at Enstar: 20 Industry Experience: 30+ years Age: 49 David Ni Chief Strategy Officer Years at Enstar: 4 Industr
Slide 10: Key Messages
Property of Enstar Group – Not for Distribution 10 3 2 KEY MESSAGES 1Strong competitive advantage ideally places us to create significant value for shareholders in the years ahead. Dominant innovative legacy solutions provider and largest run- off dedicated firm Time-tested business model positions
Slide 11: Business and Market
BUSINESS AND MARKET
Slide 12: Full Suite of Market-Leading Risk Management Solutions
Property of Enstar Group – Not for Distribution 12 Deliver Innovative Legacy and Risk Management Solutions to Insurance Market Industry founder and largest standalone provider Generate Positive Claims Outcomes Best-in-class claims function or "Enstar Effect” drives decades of Run-off Liability Earni
Slide 13: Consistent Economic Model
Property of Enstar Group – Not for Distribution 13 Prudent Return of Capital to Shareholders Excess capital not required for M&A pipeline returned to shareholders Enstar Run-off Business Model Leverage our industry relationships and position to source new business opportunities Fully-integrated M&A
Slide 14: Return on Equity Components
Property of Enstar Group – Not for Distribution 14 1. TIR and RLE leverage factors are calculated as average investable assets and average net loss reserves, respectively, for the year ended December 31, 2023, divided by opening equity as of December 31, 2022. 2. Non-cash items include amortization
Slide 15: Profitability View by Deal Type
Property of Enstar Group – Not for Distribution 15 Same return across all 3 transaction types TIR Leverage factor1: 4.2x RLE Leverage factor1: 2.6x 1. TIR and RLE leverage factors are calculated as average investable assets and average net loss reserves, respectively, for the year ended December 31,
Slide 16: Significant Growing Run-off Market
Property of Enstar Group – Not for Distribution 16 Balance Sheet and Capital Relief Key Market Drivers Source: PwC Global Insurance Run-off Survey 2022. North America $464bn UK & Continental Europe $319bn Rest of World $177bn SIGNIFICANT GROWING RUN-OFF MARKET $960bn opportunity, propelled by favour
Slide 17: Robust Transaction Pipeline
Property of Enstar Group – Not for Distribution 17 Data from January 2020 – January 2024 1. Excludes Enhanzed Re and transaction with AIG. 261 opportunities reviewed ~$85.7bn of net reserves 17 1 deals completed $10.3bn1 of reserves Executing on opportunities that meet our risk parameters and profit
Slide 18: Competitive Landscape
Property of Enstar Group – Not for Distribution 18 `` Run-off Focused Diversified Business Riverstone Int. DARAG Marco Compre Swiss Re NICO Longevity (>20yrs in Operation) Presence in Global Run- off Markets Experience in All Types of Run-off Transactions Transaction above $1.5bn acquired reserves N
Slide 19: Performance
PERFORMANCE
Slide 20: Financial Highlights Full Year 2023
Property of Enstar Group – Not for Distribution 20 *Non-GAAP financial measure. Refer to "Non-GAAP Financial Measures" in the Appendix for explanatory notes and a reconciliation to the most directly comparable GAAP measure. 24.2% 18.8% Adjusted ROE* 7.2% 5.3% Adjusted TIR* 31.0% $532m Capital Return
Slide 21: 5-Year ROE and Adjusted ROE
Property of Enstar Group – Not for Distribution 21 5-YEAR ROE AND ADJUSTED ROE* * Non-GAAP measure; refer to slides 29 to 36 for reconciliation to the applicable GAAP financial measure. ** Adjusted ROE is a Non-GAAP measure. Due to trading accounting elections on certain of our investment assets, RO
Slide 22: Strong Balance Sheet Growth with Prudent Capital Management
Property of Enstar Group – Not for Distribution 22 $14.1 $17.3 $21.7 $19.5 $18.2 2019 2020 2021 2022 2023 $7.9 $8.8 $11.9 $12.0 $11.6 2019 2020 2021 2022 2023 Investable Assets1 ($bn) Net Loss Reserves ($bn) 1. Investable assets is the sum of total investments, cash and cash equivalents and restrict
Slide 23: The Enstar Effect
Property of Enstar Group – Not for Distribution 23 THE ENSTAR EFFECT CLAIMS CONTROL (Directly Managed) EARLY TRIAGE OF CLAIMS PORTFOLIO • Detailed on a claim-by-claim basis BESPOKE SETTLEMENT STRATEGY FOR EVERY CLAIM • Data-driven approach provides comprehensive top-down, bottom-up view WORK CLAIMS
Slide 24: Enstar Loss Reserve Outperformance vs US P&C Industry
Property of Enstar Group – Not for Distribution 24 Enstar Loss Reserve Outperformance vs US P&C Industry1,2 Five Years Ended 2022 Enstar delivered better net loss reserve outcomes 2.9% 6.5% 8.6% General Casualty Workers' Compensation Asbestos & Environmental 1. We calculated the change in estimates
Slide 25: Appendix
APPENDIX enstargroup.com
Slide 26: Investment Portfolio Composition
Property of Enstar Group – Not for Distribution 26 INVESTMENT PORTFOLIO COMPOSITION $18.2bn Total Investable Assets1 $17.1bn Investment Portfolio 2 $0.8bn Cash and restricted cash 4.04 yrs Average Duration 3 3.86% Book Yield A+ Average Investment Portfolio Credit Rating 4 Funds Held5 Other Investmen
Slide 27: Financial Data: Summary Income Statement
Property of Enstar Group – Not for Distribution 27 FINANCIAL DATA Summary Income Statement $ millions Three Months Ended December 31, 2023 Three Months Ended December 31, 2022 Year Ended December 31, 2023 Year Ended December 31, 2022 Net premiums earned $ 14 $ 14 $ 43 $ 66 Net investment income and
Slide 28: Financial Data: Summary Balance Sheet
Property of Enstar Group – Not for Distribution 28 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 Liabili
Slide 29: Non-GAAP Measure Definitions
Property of Enstar Group – Not for Distribution 29 Non-GAAP Measure Definition Purpose of Non-GAAP Measure over GAAP Measure Adjusted run-off liability earnings (%) Adjusted PPD divided by average adjusted net loss reserves. Calculating the RLE as a percentage of our adjusted average net loss reserv
Slide 30: Non-GAAP Measure: Adjusted Return on Equity
Property of Enstar Group – Not for Distribution 30 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 ordinary shareh
Slide 31: Reconciliation to Adjusted Run-off Liability Earnings – 2023 and 2022
Property of Enstar Group – Not for Distribution 31 RECONCILIATION TO ADJUSTED RUN-OFF LIABILITY EARNINGS – 2023 AND 2022 Year Ended As of Year Ended December 31, 2022 December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2022 RLE / PPD Net loss reserves Net loss reserves Average net los
Slide 32: Reconciliation to Adjusted Run-off Liability Earnings – 2021 and 2020
Property of Enstar Group – Not for Distribution 32 RECONCILIATION TO ADJUSTED RUN-OFF LIABILITY EARNINGS – 2021 AND 2020 (1) Comprises the discount rate and risk margin components. * Non-GAAP financial measure. Year Ended As of Year Ended December 31, 2021 December 31, 2021 December 31, 2020 Decembe
Slide 33: Reconciliation to Adjusted Run-off Liability Earnings – 2019
Property of Enstar Group – Not for Distribution 33 RECONCILIATION TO ADJUSTED RUN-OFF LIABILITY EARNINGS – 2019 (1) Comprises the discount rate and risk margin components. (2) The 2018 balance sheet has not been restated to reflect the impact of the 2020 StarStone U.S. discontinued operations classi
Slide 34: Reconciliation to Adjusted Return on Equity – 2023, 2022 and 2021
Property of Enstar Group – Not for Distribution 34 RECONCILIATION TO ADJUSTED RETURN ON EQUITY– 2023, 2022 AND 2021 Year Ended December 31, 2023 December 31, 2022 December 31, 2021 Net income (loss) (1) Opening equity (1)(2) (Adj) ROE Net income (loss) (1) Opening equity (1) (Adj) ROE Net earnings (
Slide 35: Reconciliation to Adjusted Return on Equity – 2020 and 2019
Property of Enstar Group – Not for Distribution 35 RECONCILIATION TO ADJUSTED RETURN ON EQUITY - 2020 AND 2019 Year Ended December 31, 2020 December 31, 2019 Net income (loss) (1) Opening Equity (1) (Adj) ROE Net income (loss) (1) Opening Equity (1) (7) (Adj) ROE Net income (loss)/Opening equity/ROE
Slide 36: Reconciliation to Adjusted Total Investment Return
Property of Enstar Group – Not for Distribution 36 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 inco