Enstar warns that deteriorating rates may force it to cut back

Enstar Group enjoyed a profitable 2016 and also solid growth. But it also warned that if pricing in many lines of business continues to deteriorate, its underwriting margins may suffer and it may need to write less premium in certain lines of business.

“In general, our expectation for 2017 is that underwriting margins will be flat or lower than in 2016, with premium rates expected to be impacted by both market and general economic conditions. We continue to see overcapacity in many markets for insurable risks, resulting in continued pressure on premium rates and terms and conditions,” the company said.

The company reported net earnings of $264.8 million for full year 2016, up 20 percent on the $220.3 million it made in 2015.

Enstar’s net premiums earned for the year totalled $823.5 million, up from the $753.7 million it earned in 2015. Its net investment income was also up, rising from $122.6 million in 2015 to $185.5 million in 2016.

Enstar’s two active underwriting subsidiaries, Starstone and Atrium reported respective combined ratios of 98.6 percent and 94 percent.

Enstar also announced that its non-life run-off segment also had a good year, with net earnings of $206.7 million in 2016, an increase on the $173.2 million it made in net earnings in 2015.

“If general economic conditions worsen, a decrease in the level of economic activity may impact insurable risks and our ability to write premium that is acceptable to us. We may adjust our level of reinsurance to maintain an amount of net exposure that is aligned with our risk tolerance,” the company said.

“Our strategy is to maintain our disciplined underwriting approach and strong risk management practices, which may result in us writing less premium in certain lines of business than we wrote in 2016. However, we will seek to mitigate these challenging conditions through our diversified book of business, established distribution channels and geographic reach. We will continue to seek growth in certain areas where we have identified opportunities for expansion and the opportunity for increases in premium rates.”

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