Enstar Group reported a net earnings of $424 million in the first-quarter of 2023, compared to net loss of $267 million in Q1 2022.
Return on equity (ROE) was 9.5% in Q1 of 2023, compared with (4.6)% the previous year, while adjusted ROE was 6.8% for the quarter compared to (1.1)% in Q1 2022.
ROE performance was driven by investment returns of $355 million and a one-time net gain recognized on the completion of the novation of the Enhanzed Re reinsurance closed block of life annuity policies of $194 million, the company reported.
Run-off liability earnings (RLE) of $10 million, driven by favorable development on our workers’ compensation line of business and partially offset by increases in the value of certain portfolios that are held at fair value.
Net loss from the firm’s Run-off segment was $5 million compared to net earnings of $19 million in the comparative quarter, primarily due to a $17 million decrease in the reduction in estimates of net ultimate losses in the current quarter, mainly driven by a $14 million decrease in favorable prior period development in comparison to the comparative quarter.
Net earnings from the Investments segment was $344 million for Q1 2023, compared to net losses of $314 million a year earlier. The favorable movement of $658 million was primarily due to net realized and unrealized gains on fixed income securities of $41 million, compared to net realized and unrealized losses of $328 million in the comparative period.
The favorable variance of $369 million was primarily driven by a decline in interest rates in the current period, in comparison to an increase in interest rates across U.S., U.K. and European markets and widening credit spreads in the prior period.
“We had a solid start to 2023, delivering strong net earnings largely driven by positive performance in our investment portfolio. We continued to build on our M&A successes from the prior year, entering into a $1.9 billion ground-up LPT with QBE, which we completed at the beginning of April, and a second USD $245 million transaction with RACQ, which we expect to close later this month,” Dominic Silvester, Enstar CEO, said.
“We also took the opportunity to simplify our capital structure through an accretive repurchase of all outstanding non-voting convertible ordinary shares. Looking ahead, strengthened by our scale, differentiated expertise, claims management function, and strong balance sheet, we remain well-positioned to provide long-term value to our shareholders.”
