Enstar Group Limited (ESGR) Q4 2022 Earnings Conference Call March 1, 2023 7:00 AM ET

Corporate Participants

Matthew Kirk - Group Treasurer and Head of IR

Dominic Silvester – CEO

Orla Gregory - CFO

Conference Call Participants

Matthew Kirk

Hello everyone, I’m Matthew Kirk, Group Treasurer and Head of Investor Relations. Thank you for listening to Enstar’s Fourth Quarter and Full Year 2022 Earnings Audio Review with CEO Dominic Silvester and CFO Orla Gregory. 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, Matt and to you all for listening today. We are pleased to report strong fourth quarter results as we grew book value by 8%, providing us with a positive end to a challenging 2022. We remain confident that our operational excellence and balance sheet strength will support long-term growth, specifically: - We recorded run-off liability earnings or RLE of $756 million for the year, $353 million more than last year. We’ve now recorded favorable RLE every year since going public in 2007 – an impressive track record and further validation of our ability to prudently price and efficiently service claims. I will also touch on our claims management process and what we refer to as the “Enstar Effect,” which sets us apart from the US P&C industry. - Our investment portfolio is well positioned and will benefit from the higher interest rate environment. We were also opportunistic in rebalancing certain portfolios during the year to take advantage of market dislocations.

2022 was another record year for acquisitions, namely we completed the industry’s third-largest ever loss portfolio transaction, or LPT, with Aspen. This was a $3.1 billion transaction that included onboarding approximately 38,000 claims, or an overall 40% claims count increase; a remarkable operating achievement. Our existing ADC with Aspen, which had assumed reserves of $782 million, was absorbed into this LPT. We announced an LPT with Argo, and assumed net loss reserves of $718 million upon completion. And we completed a reinsurance to close transaction with Probitas, demonstrating our commitment to servicing the Lloyd’s market.