Enstar(ESGR) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net earnings of $21 million for Q2 2023, a significant recovery from a net loss of $434 million in Q2 2022 [15] - Net investment income (NII) was strong at $172 million, driven by improved investment performance and rising interest rates [7][12] - Book value per share grew by 8.6% year-to-date as of June 30, 2023, and 7.9% on an adjusted basis [17] - The company experienced a return on equity (ROE) of 0.5% and adjusted ROE of 2.1% [15] Business Line Data and Key Metrics Changes - The company completed significant LPT transactions, including a $2.0 billion transaction with QBE and a $179 million transaction with RACQ Insurance Limited, enhancing its portfolio [3][20] - Run-off Liability Earnings (RLE) were recorded at $10 million, with adjusted RLE at $8 million, primarily due to favorable claims experience [8] Market Data and Key Metrics Changes - The company maintained a strong capital and liquidity position, with a group solvency ratio of 210% at the end of 2022, which remained solid after recent transactions [18] - The investment portfolio benefited from rising interest rates, particularly on approximately $3.1 billion of floating rate assets [7][12] Company Strategy and Development Direction - The company aims to remain a leader in the run-off space through continual risk management and innovative capital release solutions [14] - The management expressed confidence in the business model and operational excellence to support growth despite a challenging macro environment [5][10] Management Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macro environment but remained optimistic about the company's ability to generate long-term value for shareholders [5][10] - The company received an upgrade from S&P to a BBB+ long-term issuer credit rating, validating its strong performance and capitalization [13] Other Important Information - The company refinanced and upsized its revolving credit agreement from $600 million to $800 million, extending its term by five years [4] - The adoption of new accounting standards related to Long-Duration Contracts (LDTI) impacted the growth in book value per share, requiring a retrospective increase in opening equity by $273 million [17] Q&A Session Summary - No specific questions or answers were provided in the transcript, indicating the end of the Q&A session [21]