Enstar Group Limited · OTC:ESGOF
Enstar — Q4 2022 Earnings Presentation
24 slides from Enstar's earnings presentation, March 2023
Slide 1: Enstar Group Overview Q4 2022 Review
Enstar Group Overview Q4 2022 Review March 2023 Enstargroup.com Realising Value
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: Value Proposition
VALUE PROPOSITION Leading global insurance group with a proven, 29-year record of successfully acquiring and managing run-off business while creating value for our shareholders Market leader in run-off liability management Competitive advantage created by size, scale and depth of our experience “Ens
Slide 4: 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 5: 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 Catalina DARAG Compre Swiss Re NICO Int. Longevity (>20yrs in Operation) Presence in Global Run-off Ma
Slide 6: Significant Growing Run-off Market
SIGNIFICANT GROWING RUN-OFF MARKET $960bn opportunity, propelled by favorable global tailwinds North America Key Market Drivers UK & $464bn Continental Europe Rest of World $319bn $177bn P&C Rates Continue Major Loss Events Solvency II & to Strengthen for Including Recent Capital Efficiency Primary
Slide 7: Financial Highlights
FINANCIAL HIGHLIGHTS Full Year 2022 $(906)m Net Loss (results driven by $756m Run-off Liability Earnings unrealized losses) Q4: $227m Net Income Total $22.2bn Total Assets $4.8bn Shareholders' Equity Total Insurance Core Fixed $14.8bn Liabilities1 'A+' Income2 1. Includes losses and loss adjustment
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 186 opportunities reviewed $64.9bn of net reserves 1 15 deals completed $8.1bn1 of reserves Data from Ja
Slide 10: Return on Equity (ROE) Components
RETURN ON EQUITY (“ROE”) COMPONENTS Generating attractive returns RUN-OFF LIABILITY EARNINGS (“RLE”) TOTAL INVESTMENT RETURN (“TIR”) Leverage Factor1: 2.1x Leverage Factor1: 3.5x EXPENSES & OTHER (INC. NON-CASH2) Return On Equity 1. TIR and RLE leverage factors are calculated as average investable a
Slide 11: A Growing Balance Sheet
A GROWING BALANCE SHEET A platform for delivering balanced and sustainable growth through investable assets and reserves Investable Assets1 ($bn) CAGR 14.1% Net Loss Reserves ($bn) CAGR 16.9% 1. Investable Assets is the sum of total investments, cash and cash equivalents, restricted cash and cash eq
Slide 12: The Enstar Effect
THE ENSTAR EFFECT For most insurance companies, claims experience is an expense item. For Enstar, driving superior claims outcomes is a major competitive advantage 01 DUE DILIGENCE • Claims unit integrated in M&A CLAIMS DIRECTLY and Pricing process CLAIMS INDIRECTLY • Independent view of claims and
Slide 13: Loss Reserve Outperformance
LOSS RESERVE OUTPERFORMANCE Enstar Loss Reserve Outperformance vs US P&C Industry1,2 Enstar 2022 Year-End Loss Reserves3 Five Years Ended 2021 ($ in billions) 8.4% 5.9% All Other General $3.5 Casualty $4.3 Total 2.7% 2.4% $12bn Asbestos & Environmental General Casualty Workers' Compensation Asbestos
Slide 14: History of Enhancing Book Value
HISTORY OF ENHANCING BOOK VALUE 29 year history operating in run-off space 115 total acquisitive transactions completed to date Book value per common share in USD 329 294 246 209 170 165 153 131 120 106 94 85 73 59 46 32 38 15 27 18 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20
Slide 15: 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 % 18.8 % 14.4 % Targeting 10.1 % 10.2 % long-term 7.9 % Adjusted 2.4 % ROE low to mid-teens** (1.1)% (5.0)% (15.6)% 2018 2019 2020 2021 2022 Average 2018- Return on Equity Adjusted Return on Equity* 2022
Slide 16: Capacity for Growth
CAPACITY FOR GROWTH Well-funded as of 31 December 2022 Significant Liquidity to Support Growth • $1.3bn of cash and cash equivalents • $600m of unused revolving credit facility capacity Well-Capitalized with Moderate Leverage • 28.0% financial leverage, in line with 25% - 30% long-term target • Leve
Slide 17: Management Well-Aligned with Shareholders
MANAGEMENT WELL-ALIGNED WITH SHAREHOLDERS Seasoned leadership with exceptional track record of value creation Dominic Silvester Paul O’Shea Orla Gregory CEO & Co-founder President, Co-founder Chief Financial Officer Years at Enstar: 29 Years at Enstar: 28 Years at Enstar: 19 Industry Experience: Ind
Slide 18: Appendix
APPENDIX enstargroup.com Property of Enstar Group – Not for Distribution 18
Slide 19: Investment Portfolio Composition
INVESTMENT PORTFOLIO COMPOSITION $19.5bn $1.3bn $14.2bn 4.40 yrs A+ 2.47% Average Investment Total Investable Cash and Investment Portfolio 2 Average Duration 3 Book Yield Portfolio Credit Assets 1 restricted cash Rating 4 Investable Assets (As of December 31, 2022) - Composition by Asset Class Cash
Slide 20: Financial Data: Summary Income Statement
FINANCIAL DATA Summary Income Statement $ millions Three Months Ended Three Months Ended Year Ended Year Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Net premiums earned $ 14 $ 41 $ 66 $ 245 Net investment income and net realized and 168 87 (1,159) 429 unrealized gai
Slide 21: Financial Data: Summary Balance Sheet
FINANCIAL DATA Summary Balance Sheet $ millions December 31, 2022 December 31, 2021 Assets Investable assets $ 19,540 $ 21,708 Reinsurance balances recoverable 1,131 1,517 Net deferred charge assets 658 598 Other 825 833 Total Assets $ 22,154 $ 24,656 Liabilities Losses and loss adjustment expenses
Slide 22: Non-GAAP Measures
NON-GAAP MEASURES Non-GAAP Measure Definition Purpose of Non-GAAP Measure over GAAP Measure Adjusted return on Adjusted operating income (loss) attributable to Enstar ordinary shareholders divided by Calculating the operating income (loss) as a percentage of our adjusted equity (%) adjusted opening
Slide 23: Reconciliation to Adjusted Return on Equity 2020-2022
RECONCILIATION TO ADJUSTED RETURN ON EQUITY 2022, 2021 and 2020 For the Year Ended December 31, 2022 2021 2020 Net (loss) Opening Net earnings Opening Net earnings Opening earnings (1) Equity (1) (Adj) ROE (1) Equity (1) (Adj) ROE (1) Equity (1) (Adj) ROE Net (loss) earnings/Opening equity/ROE (1) $
Slide 24: Reconciliation to Adjusted Return on Equity 2018-2019
RECONCILIATION TO ADJUSTED RETURN ON EQUITY 2018 and 2019 For the Year Ended December 31, 2019 2018 Net (loss) Net earnings (1) Opening Equity (1) (6) (Adj) ROE earnings (1) Opening Equity (1) (6) (Adj) ROE (in millions of U.S. dollars) Net (loss) earnings/Opening equity/ROE (1) $ 906 $ 3,546 25.5 %