Enstar Group Ltd (ESGR) 2023 Q2 法說會逐字稿

Hello, everyone. I'm Peter Kalaev, Group Treasurer. Thank you for listening to Enstar's Second 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 future and pending transactions, runoff 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 information regarding these statements and our non-GAAP financial measures is outlined in the text that appears below the link to this recording.

大家好。我是集團財務主管彼得‧卡拉耶夫。感謝您收聽 Enstar 執行長 Dominic Silvester 和財務長 Matt Kirk 的 2023 年第二季收益音訊評論。在開始之前，我想提醒大家，本簡報包含前瞻性陳述和非公認會計準則財務指標。本簡報中的前瞻性陳述包括但不限於有關 Enstar 對未來和未決交易的預期、徑流負債收益、其投資組合的業績以及利率上升對 Enstar 業務的影響的陳述。這些陳述本質上受到風險、不確定性和假設的影響，這些風險、不確定性和假設可能導致實際結果與截至本更新之日或未來的陳述有重大差異。有關這些報表和我們的非公認會計準則財務衡量標準的更多信息，請參見本記錄連結下方的文本。

With that, I'll turn it over to Dominic.

有了這個，我會把它交給多明尼克。

Thank you, Peter. It was another solid quarter for Enstar as we continue to generate positive results, grow our portfolio and strengthen our balance sheet, positioning us well for the second half of the year. A few notable highlights. We completed both our $2 billion LPT transaction with QBE and our $179 million LPT transaction with RACQ Insurance Limited. We generated strong net investment income of $172 million, largely driven by improved year-over-year performance in our investment portfolio, which was supported by the impact of rising interest rates on our floating rate assets and the investment of new assets from our transactions with QBE and RACQ at over 5% yields.

謝謝你，彼得。對於 Enstar 來說，這是另一個穩健的季度，我們繼續取得積極的業績，擴大我們的投資組合併加強我們的資產負債表，為我們下半年的發展奠定了良好的基礎。一些值得注意的亮點。我們完成了與 QBE 的 20 億美元 LPT 交易以及與 RACQ Insurance Limited 的 1.79 億美元 LPT 交易。我們產生了1.72 億美元的強勁淨投資收入，這主要是由於我們的投資組合業績同比表現有所改善，這得益於利率上升對我們的浮動利率資產的影響以及我們與交易的新資產的投資。QBE 和 RACQ 的收益率超過 5%。

We refinanced and upsized our revolving credit agreement from $600 million to $800 million and extended its term by 5 years through May 2028, thereby strengthening our balance sheet and further increasing our liquidity position.

我們對循環信貸協議進行了再融資並將其規模從6 億美元擴大到8 億美元，並將其期限延長5 年至2028 年5 月，從而加強了我們的資產負債表並進一步增加了我們的流動性狀況。

Our pipeline continues to be robust, and we remain disciplined in our search for appropriate opportunities that meet our internal hurdle for risk-adjusted returns.

我們的管道仍然強勁，我們在尋找適當的機會來滿足風險調整回報的內部障礙時仍然遵守紀律。

Finally, we were pleased to receive an upgrade from S&P on our long-term issuer credit rating to BBB+, which comes on the heels of last year's upgrade from Fitch. These actions by the rating agencies further validate the outstanding performance, leadership and strong capitalization, which we've consistently demonstrated over time.

最後，我們很高興收到標準普爾將我們的長期發行人信用評級提升至 BBB+ 的評級，這是去年惠譽評級上調後的結果。評級機構的這些行動進一步驗證了我們長期以來不斷證明的卓越績效、領導力和雄厚的資本實力。

As we look to the remainder of 2023, the overall macro environment continues to be challenging. However, we remain confident that our proven business model, operational excellence and strong capital position will support both our near-term and longer-term growth. We've built an incredible business over the past 30 years with sustainable competitive advantages. And through continual risk management and innovative capital release solutions, we expect to remain the leader in the runoff space for years to come.

展望 2023 年剩餘時間，整體宏觀環境仍充滿挑戰。然而，我們仍然相信，我們經過驗證的商業模式、卓越的營運和強大的資本狀況將支持我們的短期和長期成長。過去 30 年來，我們建立了令人難以置信的業務，並具有可持續的競爭優勢。透過持續的風險管理和創新的資本釋放解決方案，我們預計在未來幾年仍將在徑流領域保持領先地位。

Thank you again to our employees for their commitment, our partners, regulators and advisers for their trust and our shareholders for their loyalty.

再次感謝我們員工的奉獻，感謝我們的合作夥伴、監管機構和顧問的信任，感謝我們股東的忠誠。

Over to you, Matt.

交給你了，馬特。

Thanks, Dominic. Our positive momentum for the first quarter of this year continued into the second quarter as we recorded net earnings of $21 million compared to a net loss of $434 million in the second quarter of 2022. We generated a return on equity or ROE of 0.5% and adjusted ROE of 2.1%. Adjusted ROE is a performance measure that excludes net realized and unrealized gains and losses on fixed maturity investments and funds held directly managed as well as other adjustments as detailed in our 10-Q.

謝謝，多米尼克。我們今年第一季的積極勢頭延續到了第二季度，淨利潤為 2,100 萬美元，而 2022 年第二季度的淨虧損為 4.34 億美元。我們的股本回報率或 ROE 為 0.5%，調整後淨資產收益率為2.1%。調整後的股本回報率是一項績效衡量指標，不包括固定期限投資和直接管理的基金的已實現和未實現淨損益以及我們 10-Q 中詳述的其他調整。

Second quarter results were once again largely driven by positive investment performance of $159 million. Breaking down our results further, we generated $172 million of net investment income or NII due to the investment of consideration received from new business, reinvestment of fixed income maturities and interest income on our approximate $3.1 billion of floating rate assets with [SOFA] rates now above 5%. We also experienced favorable returns on our noncore equity investments of $77 million, driven by global equity market performance. The positive noncore returns and NII were partially offset by net realized and unrealized losses on our fixed income portfolio of $90 million, driven primarily by interest rate increases. We recorded runoff liability earnings or RLE of $10 million and adjusted RLE of $8 million, driven by favorable development in the 2021 acquisition year primarily from the claims experience in our workers' compensation book.

第二季業績再次主要受到 1.59 億美元的積極投資績效所推動。進一步細分我們的業績，我們產生了1.72 億美元的淨投資收入或NII，這是由於從新業務收到的對價投資、固定收益期限的再投資以及我們目前採用[SOFA] 利率的約31 億美元浮動利率資產的利息收入5%以上。在全球股票市場表現的推動下，我們的非核心股權投資也獲得了 7,700 萬美元的良好回報。正的非核心回報和NII被我們固定收益投資組合的9000萬美元的已實現和未實現淨損失部分抵消，這主要是由利率上升推動的。我們記錄的徑流負債收益或 RLE 為 1000 萬美元，調整後的 RLE 為 800 萬美元，這主要得益於 2021 年收購年度的良好發展，主要來自我們工人賠償賬簿中的索賠經驗。

As a reminder, we complete most of our annual loss reserve studies in the second half of each year and as a result, tend to record the largest movements during that period. This quarter, we assumed claims management control on our 2022 LPT agreement with Argo in accordance with our terms and conditions. As a result, we increased [ULA] reserves by $21 million to account for the anticipated costs associated with the active claims management of this business.

提醒一下，我們在每年下半年完成大部分年度損失準備金研究，因此，往往會記錄該時期的最大變動。本季度，我們根據條款和條件承擔了與 Argo 的 2022 年 LPT 協議的索賠管理控制權。因此，我們將 [ULA] 準備金增加了 2,100 萬美元，以考慮與該業務主動索賠管理相關的預期成本。

As part of gaining claims control, we believe we will benefit from improved RLE results over the remaining settlement period given our track record of best-in-class claims management and the benefits of the Enstar effect. We have consistently delivered book value growth over our 30-year history, and that has continued in 2023 as we delivered growth in book value per share year-to-date as of June 30 of 8.6% and 7.9% on an adjusted basis.

作為獲得索賠控制的一部分，鑑於我們一流的索賠管理記錄和 Enstar 效應的優勢，我們相信我們將受益於剩餘結算期內 RLE 結果的改善。在 30 年的歷史中，我們的帳面價值始終保持成長，而這種情況在 2023 年依然持續成長，截至 6 月 30 日，我們的每股帳面價值在調整後分別成長了 8.6% 和 7.9%。

As we noted last quarter, growth in our book value was negatively impacted year-to-date by the adoption of new accounting standards related to long-duration contracts or LDTI, which required us to retrospectively increase opening equity by $273 million. The impact to our closing equity was offset with the novation of the affected liabilities and therefore, the combined impact of these items is book value neutral. However, the restatement of opening equity reduced our year-to-date growth in book value per share and adjusted book value per share. Excluding the impact of LDTI, growth in year-to-date book value per share and adjusted book value per share would have been 15.7% and 14.9%, respectively.

正如我們上季度指出的那樣，由於採用與長期合約或 LDTI 相關的新會計準則，我們的帳面價值增長受到了年初至今的負面影響，該準則要求我們追溯性地增加期初股本 2.73 億美元。對我們期末股本的影響被受影響負債的更新所抵消，因此，這些項目的綜合影響是帳面價值中立的。然而，期初股本的重述降低了我們年初至今每股帳面價值和調整後每股帳面價值的成長。排除LDTI的影響，年初至今每股帳面價值和調整後每股帳面價值的成長將分別為15.7%和14.9%。

Turning to other strategic highlights. We are pleased to have completed our LPT transactions with QBE and RACQ during the quarter. To provide a bit more color in the QBE transaction, we assumed net loss reserves of approximately $2 billion while receiving consideration of $1.9 billion and recording a deferred charge asset of $179 million. For the RACQ transaction, after adjusting for claims paid as of the closing date, we assume net loss reserves of $179 million in exchange for consideration of $179 million. These transactions are further testament to our depth of experience and our ability to structure and execute innovative solutions for our partners across jurisdictions worldwide.

轉向其他戰略亮點。我們很高興在本季度完成了與 QBE 和 RACQ 的 LPT 交易。為了讓 QBE 交易更加生動，我們假設淨虧損準備金約為 20 億美元，同時收到的對價為 19 億美元，並記錄了 1.79 億美元的遞延費用資產。對於 RACQ 交易，在對截止日期已支付的索賠進行調整後，我們假設淨損失準備金為 1.79 億美元，以換取 1.79 億美元的對價。這些交易進一步證明了我們豐富的經驗以及為全球各個司法管轄區的合作夥伴建立和執行創新解決方案的能力。

Our capital and liquidity position remains strong to support future transactions. As Dominic mentioned, we refinanced and upsized our revolving credit facility this past May, which remains fully unutilized and available to us at June 30. We ended 2022 with a group solvency ratio of 210% and we continue to maintain a solid group solvency ratio after allocating capital to QBE and RACQ transactions.

我們的資本和流動性狀況仍然強勁，可以支持未來的交易。正如多明尼克所提到的，我們在今年5 月對循環信貸額度進行了再融資並擴大了其規模，該額度截至6 月30 日仍未完全使用，可供我們使用。截至2022 年，我們的集團償付能力比率為210%，並且在2022 年後我們繼續保持穩健的集團償付能力比率。將資金分配給 QBE 和 RACQ 交易。

In conclusion, it was a strong first half of 2023 for Enstar in the face of challenging market conditions, and we remain optimistic for the second half of 2023 and beyond. As we continue to execute our strategy and build on our success as the dominant legacy player, our strong balance sheet, highly disciplined approach and best-in-class team of experts will continue to ensure that we are on the right path towards generating additional long-term value for our shareholders. Thank you for your time and your continued interest in Enstar.

總而言之，面對充滿挑戰的市場條件，2023 年上半年對 Enstar 來說是強勁的，我們對 2023 年下半年及以後保持樂觀。隨著我們繼續執行我們的策略並鞏固我們作為主導的傳統參與者的成功，我們強大的資產負債表、高度紀律的方法和一流的專家團隊將繼續確保我們走在正確的道路上，創造更多的長期收益。- 我們股東的長期價值。感謝您抽出時間以及對 Enstar 的持續關注。