Enstar slips into red on big losses due to investment headwinds

Legacy specialist  Enstar Group attributed its big loss of last year largely to headwinds in the investment markets, despite it being a record year for the business for M&A.

The company posted a net loss of $906 million, compared with a profit of $502 million a year earlier. However, its CEO highlighted a turnaround in the fourth quarter, when it made a profit of $227 million.

In its investments segment, the net loss was $1.3 billion, compared with a net profit of $485 million in 2021. Its return on equity last year was a negative 15.6%.

Enstar completed some substantial deals last year including LPT agreements with Aspen Insurance Holdings and Argo totalling $2.7 billion of incremental acquired reserves.

It noted that its results for 2022 were driven by favourable development of $318 million on its workers’ compensation line of business as a result of favourable claim settlements, most notably in the 2017 to 2021 acquisition years. It also saw favourable development of $56 million on its marine, aviation and transit lines of business relating to the 2014, 2018 and 2019 acquisition years.

Dominic Silvester (pictured), CEO of Enstar, said: “We are pleased to report strong fourth quarter results as we grew book value by 8.4% providing us with a positive end to a challenging 2022. While our annual performance was impacted by headwinds in the investment markets, our claims management function continues to outperform the industry driving prior period reserve savings of $756 million for the year.

“2022 was another record M&A year as we acquired $2.7 billion of incremental reserves, including completing and integrating one of our largest-ever loss portfolio transfers with Aspen. That activity has continued into 2023, as we just announced a $1.9 billion ground up LPT with QBE, and a second AUD$360 million transaction with RACQ. We remain well-positioned to capitalize on our robust pipeline so long as opportunities align with our risk parameters and return hurdles.

“We expect to continue as the dominant player in the legacy market in 2023. Our balance sheet remains strong, and our scale, operational capabilities, and highly differentiated claims expertise will support accretive opportunities with new and long-standing partners while driving long-term value to our shareholders.”

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