Enstar(US:ESGR)2024-05-02 20:15Financial Performance - Net income attributable to Enstar ordinary shareholders for Q1 2024 was $119 million, down from $424 million in Q1 2023, reflecting a decrease of 71.9%[166]. - Comprehensive income attributable to Enstar for Q1 2024 was $100 million, compared to $239 million in Q1 2023, a decline of 58.2%[167]. - Return on equity (ROE) decreased to 2.4% in Q1 2024 from 9.5% in Q1 2023, a drop of 7.1 percentage points[166]. - Net income for the first quarter of 2024 was $119 million, resulting in an annualized ROE of 9.5%, consistent with the previous year[220]. - Adjusted net income for the first quarter of 2024 was $141 million, leading to an annualized adjusted ROE of 10.5%[221]. - Net loss attributable to Enstar ordinary shareholders was $94 million for Q1 2024, compared to $190 million in Q1 2023, primarily due to a decrease in net income attributable to noncontrolling interests[253]. Investment Performance - Total investment returns recognized in income for Q1 2024 were $234 million, down from $355 million in Q1 2023, a decrease of 34.1%[169]. - Net investment income for Q1 2024 was $160 million, slightly up from $156 million in Q1 2023, an increase of 2.6%[169]. - The annualized TIR % for Q1 2024 was 3.2%, compared to 7.6% in Q1 2023, reflecting a decrease in overall investment performance[195]. - The unfavorable movement in income from equity method investments was $16 million, primarily due to a $29 million increase in losses from Monument Re[200]. - Net investment income for the Investments segment increased to $160 million in Q1 2024 from $156 million in Q1 2023, representing a 2.6% increase[234]. - Total revenues for the Investments segment decreased to $239 million in Q1 2024 from $344 million in Q1 2023, a decline of 30.5%[234]. - The annualized TIR for the Investments segment was 4.9% in Q1 2024, down from 9.5% in Q1 2023[234]. Asset Management - Book value per share (BVPS) increased by 1.7% from $343.45 as of December 31, 2023, to $349.41 as of March 31, 2024[173]. - Cumulative unrealized loss and fair value changes in fixed maturities portfolio and funds held was $789 million as of March 31, 2024, impacting BVPS by $53.82 per share[170]. - Investable assets decreased by 3.1% to $9.733 billion from December 31, 2023, to March 31, 2024, while adjusted investable assets decreased by 2.6%[202]. - The average duration of fixed maturities decreased from 4.04 years as of December 31, 2023, to 3.91 years as of March 31, 2024[203]. - The total fixed maturities and cash equivalents decreased by $587 million, primarily driven by net paid losses[203]. - Other investments, including equities, increased by $165 million from $3,853 million on December 31, 2023, to $4,018 million on March 31, 2024, driven by fair value changes and funding of various asset strategies[238]. Operational Efficiency - General and administrative expenses decreased by $2 million in Q1 2024, primarily due to lower professional fees[207]. - Acquisition costs for Q1 2024 were $1 million, down from $2 million in Q1 2023, indicating improved cost management[180]. - The company utilizes non-GAAP financial measures to provide a more consistent view of operational performance, excluding certain items that may obscure trends[209]. - The company maintained effective disclosure controls and procedures as of March 31, 2024, ensuring timely reporting of required information[315]. Cash Flow and Liquidity - Cash and cash equivalents decreased by $70 million during Q1 2024, primarily due to cash used in operating activities of $168 million[288]. - Enstar's cash flows from operating activities were negative $168 million in Q1 2024, a significant decrease compared to positive cash flows of $70 million in Q1 2023[291]. - Cash used in operating activities for Q1 2024 was $168 million, compared to cash provided of $70 million in Q1 2023, primarily due to net paid losses of $670 million[292]. - Cash provided by investing activities increased to $102 million in Q1 2024 from $94 million in Q1 2023, driven by net sales of fixed maturities, AFS of $184 million[293]. - Cash used in financing activities decreased significantly to $8 million in Q1 2024 from $349 million in Q1 2023, mainly due to a reduction in share repurchases[294]. Regulatory and Market Environment - The Bermuda government enacted a 15% corporate income tax effective January 1, 2025, which is expected to impact a meaningful portion of Enstar's income[273]. - The company expects global financial markets to remain uncertain throughout 2024 due to various macroeconomic factors, including potential recession and geopolitical tensions[258]. - Enstar continues to monitor inflationary impacts and has not seen significant effects on net loss reserves despite rising inflation since 2021[265]. Segment Performance - The Run-off segment reported net premiums earned of $11 million in Q1 2024, up from $8 million in Q1 2023, reflecting a 37.5% increase[229]. - The Run-off segment incurred a net loss of $11 million in Q1 2024, compared to a net loss of $5 million in Q1 2023, indicating a worsening of 120%[230]. - The Run-off segment's total revenues increased to $14 million in Q1 2024 from $13 million in Q1 2023, a growth of 7.7%[229]. - The Run-off segment experienced a net favorable development of $29 million in Professional Indemnity/Directors and Officers line of business in Q1 2024[230]. Debt and Capital Management - As of March 31, 2024, total debt obligations were $1,832 million, slightly up from $1,831 million at the end of 2023[303]. - The company has unfunded investment commitments totaling $1,572 million, with $335 million due in the short term and $1,237 million in the long term[312]. - Credit ratings as of May 2, 2024, include a long-term issuer rating of BBB+ from both Standard and Poor's and Fitch Ratings[306]. - The company has not declared any dividends on ordinary shares to date, with a strategy to potentially return value to shareholders through share repurchases or dividends[308].