Enstar Group Limited · OTC:ESGOF
Enstar — Investor Day (June 2017)
42 slides from Enstar's investor day presentation, Jun 29, 2017
Slide 1: Realising Value: 2017 Investor Day Meeting
Realising Value Enstar Group Limited 2017 Investor Day Meeting June 29, 2017 ENSTARGROUP.COM
Slide 2: Opening Remarks
ROBERT CAMPBELL CHAIRMAN OF THE BOARD Opening Remarks 2
Slide 3: Disclaimer
Disclaimer IMPORTANT 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, st
Slide 4: Our Executive Management Team
Our Executive Management Team Dominic Silvester Chief Executive Officer Paul O’Shea President Orla Gregory Chief Operating Officer Mark Smith Chief Financial Officer Investor Day June 2017 | enstargroup.com 4
Slide 5: Today's Agenda
Today’s Agenda 1 Opening Remarks Bob Campbell 2 Company Overview and Strategic Initiatives Dominic Silvester 3 Mergers & Acquisitions Paul O’Shea 4 Active Underwriting Paul O’Shea 5 Operations Orla Gregory 6 Financial Overview Mark Smith 7 Q&A and Closing Remarks Bob Campbell Investor Day June 2017
Slide 6: Concluding Thoughts: Creating long-term value
Concluding Thoughts Creating long-term value We entered 2017 with significant momentum Delivering long- Record-high net earnings term value and Robust business model shareholder Investable assets now constitute over $400 per share return remains Successful growth through acquisitions our Board’s top
Slide 7: Company Overview and Strategic Initiatives
DOMINIC SILVESTER CHIEF EXECUTIVE OFFICER Company Overview and Strategic Initiatives 7
Slide 8: A Multifaceted Insurance Group
A Multifaceted Insurance Group Solid Financial Performance Enduring Business Model Continuous Achievement Investor Day June 2017 | enstargroup.com 8
Slide 9: 2016 Group Performance
2016 Group Performance GROWING NET EARNINGS Up more $264.8m than 20% Net earnings from 2015 $54.7m 1st Quarter 2017 Net Earnings Investor Day June 2017 | enstargroup.com 9
Slide 10: Positive Segment Results
Positive Segment Results 2016 Net Earnings ($ millions) $300 Life NON-LIFE RUN- $250 26.5 StarStone* OFF PRIMARY 25.2 6.4 Atrium* DRIVER OF $200 Non-life run-off EARNINGS $150 *Contribution to Enstar Group $100 206.7 $206.7m $50 Net Earnings $264.8m Up 19% from 2015 $0 Investor Day June 2017 | ensta
Slide 11: Growing Book Value Per Share
Growing Book Value Per Share $143.68 $129.65 $119.22 $143.68 $93.30 $105.20 Book value per share $82.97 December 31, 2016 $71.68 $58.06 $45.18 $36.92 $31.85 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Investor Day June 2017 | enstargroup.com 11
Slide 12: Financial Strength
Financial Strength Balance sheet growth 16,000 14,000 12,000 10,000 (in $ millions) 8,000 6,000 4,000 2,000 0 2012 2013 2014 2015 2016 Q1 2017 Total Assets Cash & Investments Loss Reserves Net Book Value Investor Day June 2017 | enstargroup.com 12
Slide 13: Acquisitions Make Us Stronger
Acquisitions Make Us Stronger Recent transactions with world-class partners ALLIANZ $1.1bn gross reserves $4.0bn QBE $1bn gross reserves RSA 2016 – Q1 2017 $1.3bn gross reserves Total acquired reserves DANA $240m gross reserves OTHER $314m gross reserves Investor Day June 2017 | enstargroup.com 13
Slide 14: Introducing KaylaRe
Introducing KaylaRe Enstar Group Limited Trident Through its subsidiary Cavello Bay Hillhouse 8.1% (Bermuda) 43.5% 48.4% Enstar Limited Hillhouse Provides Services KaylaRe Holdings Ltd. Provides Investment (Bermuda) Management Services through Service Agreement KaylaRe Ltd. (Bermuda) KaylaRe Managem
Slide 15: Principal Shareholders
Principal Shareholders CPP Investment Board and CPPIB Epsilon LP Hillhouse Capital Management We consider our Akre Capital Management, LLC Stone Point Capital LLC strategic investors, Beck, Mack & Oliver LLC like our clients, as Corsair Capital LLC true partners in our The Vanguard Group, Inc. busin
Slide 16: Addressing the Industry Challenges
Addressing the Industry Challenges Focused and driven for continued success Innovation Disciplined Enhancing our Preparing for Underwriting Operating the Future Platform Investor Day June 2017 | enstargroup.com 16
Slide 17: Mergers & Acquisitions; Active Underwriting
PAUL O’SHEA PRESIDENT Mergers & Acquisitions Active Underwriting 17
Slide 18: Proven Record of Acquiring Liabilities
Proven Record of Acquiring Liabilities Acquired Total Assets and Gross Reserves by Year Assets Gross Reserves Acquired $m $m 2007 and prior 2,892 2,324 2008 3,578 2,349 2009 251 194 2010 1,577 1,358 2011 2,098 1,966 2012 411 411 2013 3,660 2,635 2014 2,534 1,292 2015 2,692 2,361 2016 1,846 1,636 YTD
Slide 19: Recent Transactions
Recent Transactions QBE RSA Dana $1,019m £1,046m $320m Gross total reserves Gross total reserves Gross undiscounted reserves $447m £928m $101m Net reserves Net reserves Net discounted reserves 19 Investor Day June 2017 | enstargroup.com
Slide 20: Pipeline, Competition and Outlook
Pipeline, Competition and Outlook Pipeline remains strong with a number of targets under review Prolonged low P&C rates remain Increased interest rate Competition under pressure regulation environment Pricing drivers: Expertise and Strong regulatory Secure business Economics & capabilities across re
Slide 21: Active Underwriting
Active Underwriting Global specialty insurer One of the most successful agencies in Lloyd’s Led by Demian Smith Led by Richard Harries Geographic Split of Insured: Provides diverse speciality insurance offerings 60% US and 40% ROW Gross Written Premiums by Gross Written Premiums by Products 2016 Pro
Slide 22: Why have we been successful?
Why have we been successful? Operations, claims and acquisition teams are The success key to the acquisition process Cranmore and Paladin provide significant of Enstar is a additional expertise product of Active underwriting business provides greater transaction flexibility the entire Strong relatio
Slide 23: Operations
ORLA GREGORY CHIEF OPERATING OFFICER Operations 23
Slide 24: Global Vision & Strategy
Executing our strategy Global Vision Improved resource allocation & Strategy Strategic alignment Manage growth effectively Innovate, motivate and inspire Investor Day June 2017 | enstargroup.com 24
Slide 25: Significant operational changes
Significant operational changes Investments Identifying and implementing Actuarial Process Modernization areas of improvement and Change Management cost efficiency Talent Management Investor Day June 2017 | enstargroup.com 25
Slide 26: Investments
Investments Restructure Investment Management structure On-shoring the management team Welcomed new Chief Investment Officer Consolidated investment managers East Coast operational efficiencies Investor Day June 2017 | enstargroup.com 26
Slide 27: Actuarial
Actuarial Review of our global Actuarial function Welcomed new Group Chief Actuary Implemented Target Operating Model Developing in-house reserving capability Investor Day June 2017 | enstargroup.com 27
Slide 28: Process Modernisation
Process Modernisation Significant Large scale project for investment in Enstar our process Touches many areas of designs and business including Finance, technology Claims, Underwriting, Actuarial platforms Now placed to transition new business more quickly and effectively Investor Day June 2017 | en
Slide 29: Change Management
Change Management Change is the nature of our business New Governance Continued Supports strong Structure in place to improvement in collaboration across address change internal our group communications Investor Day June 2017 | enstargroup.com 29
Slide 30: Talent Management
Talent Management Talent development and succession Attracting and planning high priority developing Nick Packer now CEO of KaylaRe Orla Gregory now Chief Operating Officer future talent David Atkins, Enstar EU CEO and Paul Brockman, Enstar US CEO stepped into leadership roles Mark Smith to transiti
Slide 31: Claims Management, Consultancy & Advisory
Claims Management, Consultancy & Advisory INSURANCE & REINSURANCE PROACTIVE MANAGEMENT MANAGED CARE AUDIT & CONSULTANCY STRATEGIES SERVICES Provider of medical bill review, Specialist insurance and reinsurance Disciplined and Professional utilization review, physician case consultancy group Claims M
Slide 32: Financial Overview
MARK SMITH CHIEF FINANCIAL OFFICER Financial Overview 32
Slide 33: Finance
Finance Drivers of Income Investments Loss Reserves Financial Resources Capital Requirements Investor Day June 2017 | enstargroup.com 33
Slide 34: Key Drivers of the Income Statement
Key Drivers of the Income Statement * 2016 2015 Movement ($ thousands) ($ thousands) Underwriting Income Run-Off 310,826 330,560 (19,734) Underwriting Income Live 182,829 207,189 (24,360) G & A Expenses 459,656 426,307 33,349 Investment Income 305,684 116,716 188,968 *The information on this slide i
Slide 35: Investment Portfolio
Investment Portfolio Total Investment Portfolio Q1 2017 2016 2015 ($ thousands) (1) Fixed Maturities 7,301,704 86% 5,873,592 83% 5,115,926 81% Risk Assets 1,171,619 14% 1,163,745 17% 1,224,855 19% (1) Total Investments 8,473,323 100% 7,037,337 100% 6,337,978 100% Shareholders’ Equity / Risk Assets 2
Slide 36: Investment Portfolio (cont'd)
Investment Portfolio (cont’d) Risk Assets Q1 2017 2016 2015 ($ thousands) Equities 106,337 95,047 111,495 Private Equities and Private Equity Funds 284,385 300,529 232,372 Fixed Income Funds 253,499 249,023 280,749 Fixed Income Hedge Funds 78,537 85,976 89,154 Equity Funds 244,488 223,571 147,390 Mu
Slide 37: Loss Reserves
Loss Reserves Gross Reserves Q1 2017 2016 2015 Non‐Life Run‐Off (NLRO) 6,478,150 83% 4,716,363 79% 4,585,454 80% Atrium 212,123 3% 212,122 4% 201, 017 4% StarStone 1,070,314 14% 1,059,382 18% 933,678 16% Total Loss Reserves 7,760,587 100% 5,987,867 100% 5,720,149 100% Significant 83% increase in Con
Slide 38: Capital, Liquidity & Leverage
Capital, Liquidity & Leverage Enstar Group debt (millions) / capital ratio 20%-30% 35% 20.3% target debt to capital range $730.8 19.3% $700 31.0% 30% $673.6 19.2% $600 Enstar has long-term $599.8 25% issuer investment grade 18.6% $500 credit ratings: 20% 19.2% $400 16.8% $391.5 • S&P (BBB-) stable o
Slide 39: Capital Requirements / Regulatory Matters
Capital Requirements / Regulatory Matters Group Statutory Capital Ratings & Surplus Debt / Credit Supervisory Agencies & (Regulated insurance Lloyd’s Covenants Capital operations) MAJOR JURISDICTIONS Bermuda CAPITAL EFFICIENCY INITIATIVES Total subsidiary distributions in 2016 of $517m United States
Slide 40: Closing Remarks / Q&A
Closing Remarks / Q&A 40
Slide 41: Appendix A – Non-GAAP Financial Measures
Appendix A – Non-GAAP Financial Measures IMPORTANT INFORMATION ABOUT NON-GAAP FINANCIAL MEASURES In presenting our results for the Atrium and StarStone segments, we discuss the loss ratio, acquisition cost ratio, other operating expense ratio, and the combined ratio of our active underwriting operat
Slide 42: Appendix B – Reconciliation of the Key Components of the Income Statement
Appendix B – Reconciliation of the Key Components of the Income Statement GAAP Earnings Summary Non-GAAP amounts: 2016 2015 2016 2015 Gross-up of Gross-up of Discontinued Discontinued Per GAAP operations Total Per GAAP operations Total Underwriting income - Runoff $310,826 $330,560 INCOME Underwriti