Enstar Group Limited has disclosed Q2 net earnings of $21 million, up substantially compared to a net loss of $434 million in the same period last year.
Combined with Q1, net earnings for the first half a year now stand at $445 million, much improved compared to a net loss of $701 million for the six months ended June 30, 2022.
Enstar also reported a Q2 return on equity (ROE) of 0.5% and Adjusted ROE of 2.1% compared to (8.2)% and (1.6)%, respectively, in Q2 of 2022.
The firm said ROE performance was driven by investment returns of $159 million. “Adjusted ROE excludes $89 million of net realized and unrealized losses on our fixed maturities,” Enstar added.
Meanwhile, run-off liability earnings (RLE) in Q2 2023 were $10 million, driven by favourable development on Enstar’s workers’ compensation line of business.
In comparison, RLE of $159 million in the prior year quarter benefited from favourable development on the firm’s professional indemnity/directors and officers and workers’ compensation lines of business and reductions in the value of certain portfolio liabilities that are held at fair value due to increases in interest rates.
Enstar also recorded a Q2 annualised total investment return (TIR) of 3.0% and annualised adjusted TIR of 5.1%, compared to (15.2)% and (2.2)%, respectively, for Q2 2022.
The firm explained that recognised investment results benefited from net realised and unrealised gains on its other investments, including equities, of $62 million and net investment income of $172 million, partially offset by net realised and unrealised losses on its fixed maturities, including other comprehensive income of $111 million.
Enstar also boasted of completing a $1.9 billion LPT agreement with certain subsidiaries of QBE Insurance Group and AUD 360 million (USD 245 million) LPT with RACQ Insurance in Q2.
The firm said, “At closing, we assumed net loss reserves of $2.0 billion from QBE and $179 million from RACQ, respectively.
“Amended and restated our existing revolving credit agreement, increasing commitments from $600 million to $800 million and increasing the term by five years.”
Dominic Silvester, Enstar CEO, commented, “Our momentum from the beginning of the year continued into the second quarter, as we delivered solid net earnings through improved year-over-year performance in our investment portfolio and positive RLE.
“Operationally, we completed both our $2.0 billion LPT transaction with QBE, and our $179 million LPT transaction with RACQ.
“The strength of our balance sheet and continued performance was recognized by S&P who recently upgraded our long-term credit rating to BBB+.
“We continue to maintain a robust pipeline of opportunities and will remain selective in adding only those that can offer compelling risk-adjusted returns.
“With our scale, differentiated expertise, claims management function and strong balance sheet, we remain well-positioned to provide long-term value to our shareholders.”
