Enstar Group Limited (ESGR) Q1 2023 Earnings Conference Call May 4, 2023 7:00 AM ET

Corporate Participants

Peter Kalaev - Group Treasurer

Matthew Kirk - CFO

Dominic Silvester - CEO

Conference Call Participants

Peter Kalaev

Hello everyone, I’m Peter Kalaev, Group Treasurer. Thank you for listening to Enstar’s First Quarter 2023 Earnings Audio Review with CEO Dominic Silvester and CFO Matt Kirk.

Before we begin, I’d like to remind everyone that this presentation contains forward looking statements and non-GAAP financial measures. Forward-looking statements in this presentation include, but are not limited to, statements about Enstar’s expectations for pending and future transactions, run-off liability earnings, the performance of its investment portfolio and the impact of rising interest rates on Enstar’s business. These statements are inherently subject to risks, uncertainties and assumptions that may cause actual results to differ materially from the statements being made as of the date of this update or in the future. Additional important information regarding these statements and measures is outlined in the text that appears below the link to this recording. With that, I will turn it over to Dominic.

Dominic Silvester

Thank you, Peter. After a positive end to 2022, we have maintained the momentum into the first quarter. A few notable highlights: We delivered strong net earnings through improved performance in our investment portfolio, as well as the non-recurring gain from the unwind of Enhanzed Re, from which we earned an inception to date return in excess of 23% per annum. Run-off Liability Earnings, or RLE, was in-line with our expectations.

We announced our $1.9 billion-dollar ground-up LPT transaction with QBE, which following regulatory approval, we completed in April. This transaction differs from other LPTs we have undertaken in the past and opens more opportunities for us. Not only are we providing our usual cover for discontinued lines, but we are also delivering our expertise on seasoned liabilities within active lines of business. This innovative structure is clear testimony to our ability applying our creative and entrepreneurial spirit to the ever-changing needs of our partners.

We also announced an approximate $245 million dollar LPT with RACQ Insurance Limited, which we expect to close shortly. We have ample capacity to execute on additional M&A opportunities beyond these two transactions, provided of course they meet our internal hurdle for risk-adjusted returns.

Lastly, we repurchased the remaining $341 million dollars of non-voting convertible ordinary shares at a 13% discount to year-end 2022 book value as presented in our 2022 10-K, creating value to our shareholders and simplifying our capital structure. Prudent capital management is critical to Enstar, and we remain focused on deploying capital to the most value-accretive opportunities.