Enstar has released its full-year 2023 results, announcing net income of $1.1 billion compared to a net loss of $906 million for 2022. The firm’s return on equity (ROE) of 24.2% for the year improved significantly from the prior year.
The strong ROE performance was driven by investment returns of $1.1 billion, a tax benefit from the enactment of the Bermuda Corporate Income Tax Act 2023 of $205 million, and a year-to-date net gain recognized on the completion of the novation of the Enhanzed Re reinsurance of a closed block of life annuity policies of $196 million.
Reported run-off liability earnings (RLE) hit $131 million in 2023, compared with $756 million in 2022, driven by favourable development on workers’ compensation and property lines of business and a reduction in the provisions for ULAE. Enstar explained that this was partially offset by charges to increase the value of certain portfolios that are held at fair value and adverse development on the company’s general casualty line of business.
The annualized total investment return (TIR) for FY 2023 was 7.2% and adjusted TIR hit 5.3%, compared to (9.0)% and (0.2)%, respectively in 2022. The insurer states that recognized investment results benefited from net unrealized gains on other investments, including equities, of $397 million, net investment income of $647 million, and net realized and unrealized gains on fixed maturities, including OCI of $288 million.
The company has reported Q4 2023 net income of $599 million compared to a net loss of $227 million year over year. The Q4 2023 ROE hit 13.7% compared to 5.5% in Q4 2022. The ROE performance was driven by investment returns of $463 million and a tax benefit from the enactment of the Bermuda Corporate Income Tax Act 2023 in December 2023 of $205 million, says Enstar.
For the quarter, RLE reached $96 million compared with $280 million in Q4 2022, driven by favorable development in workers’ compensation and property lines of business and a reduction in the provisions for ULAE.
Meanwhile, the Q4 2023 TIR was 14.8% and annualized adjusted TIR hit 5.5%, compared to 3.5% and 1.9%, respectively, for Q4 2022.
Dominic Silvester, Enstar Chief Executive Officer, commented, “We finished 2023 strong off the back of an excellent fourth quarter, as we received sizeable contributions from our investment portfolio and generated solid run-off liability earnings, which resulted in ROE for the full year of 24.2%. In addition, we repurchased $532 million of shares during the year, which contributed to our total growth in book value.
“Turning to M&A, we maintained our leading market position through our completed loss portfolio transfer transactions with QBE and RACQ, as well as our bespoke agreement with AIG – all in acquiring $2.2 billion of liabilities. Looking ahead, we continue to see demand for our innovative legacy solutions and are confident that our strategy and robust business model will ensure we continue to meet our clients’ evolving needs as the dominant legacy player, while driving long-term shareholder value.”
