Enstar Group Ltd (ESGR) 2023 Q3 法說會逐字稿

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

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 年第三季收益音訊評論。

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 text that appears below the link to this recording.

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指標的更多資訊在本記錄連結下方的文本中概述。

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. In the third quarter, we continued to execute on value-accretive transactions for our shareholders while delivering year-to-date growth in book value per share. A few notable highlights. We announced a new agreement with AIG, which completed recently to provide up to $400 million of protection against adverse developments on the carried loss reserves underwritten by Validus Re. This transaction is further validation of our leading ability to structure and execute innovative bespoke capital release solutions for our partners worldwide.

謝謝你，彼得。第三季度，我們持續為股東執行加值交易，同時實現年初至今每股帳面價值的成長。一些值得注意的亮點。我們宣布與 AIG 達成一項新協議，該協議於近期完成，將為 Validus Re 承保的附帶損失準備金提供高達 4 億美元的保護，以應對不利的發展。此次交易進一步驗證了我們為全球合作夥伴建立和執行創新客製化資本釋放解決方案的領先能力。

We generated strong net investment income of $143 million, largely driven by improved year-over-year performance in our investment portfolio, supported by higher interest rates on our floating rate assets and the investment of new assets from our second quarter transactions with QBE and RACQ at over 5% yields. Finally, subsequent to the end of the quarter, we agreed to repurchase ordinary shares from CPP Investments and its affiliates. We are pleased to execute this accretive buyback of shares while retaining ample capital resources to seamlessly continue our long-term operational strategy. Matt will cover these transactions in more detail later.

我們產生了 1.43 億美元的強勁淨投資收入，這主要是由於我們的投資組合同比業績改善，以及浮動利率資產利率上升以及第二季度與 QBE 和 RACQ 交易的新資產投資的支持收益率超過5% 。最後，在本季末後，我們同意從 CPP Investments 及其附屬公司回購普通股。我們很高興執行這次增量股票回購，同時保留充足的資本資源，以無縫地繼續我們的長期營運策略。馬特稍後將更詳細地介紹這些交易。

As we look to the end of 2023, we continue to diligently watch the ongoing uncertain macro and geopolitical environments, taking them into account as we consider how best to grow our business. With that said, given our proven business model, operational excellence and strong capital position, Enstar is well placed to continue to lead the runoff market, while creating significant value for our shareholders in the years ahead.

展望 2023 年底，我們將繼續密切關注當前不確定的宏觀和地緣政治環境，並在考慮如何最好地發展業務時將其考慮在內。話雖如此，鑑於我們經過驗證的商業模式、卓越的營運和強大的資本實力，Enstar 完全有能力繼續引領決選市場，同時在未來幾年為我們的股東創造巨大的價值。

Over to you, Matt.

交給你了，馬特。

Thanks, Dominic. During the quarter, we recorded net earnings of $38 million compared to a net loss of $432 million in the third quarter of 2022. We generated a return on equity or ROE of 0.9% and adjusted ROE of 2.5%. As a reminder, adjusted ROE is a performance measure that excludes the 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。本季度，我們錄得淨利潤 3,800 萬美元，而 2022 年第三季的淨虧損為 4.32 億美元。我們的股本回報率或 ROE 為 0.9%，調整後的 ROE 為 2.5%。需要提醒的是，調整後的股本回報率是績效衡量指標，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。

Third quarter results were once again largely driven by positive investment performance of $146 million. Breaking down our results further, we generated $143 million of net investment income or NII due to the investment return on consideration received from new business, reinvestment of fixed income maturities and interest income on our floating rate assets with term SOFR rates above 5%, which comprise approximately 18% of our total investable assets.

第三季業績再次主要受到 1.46 億美元的積極投資績效推動。進一步細分我們的業績，我們產生了1.43 億美元的淨投資收入或NII，這是由於新業務收到的對價投資回報、固定收益期限的再投資以及我們的浮動利率資產（期限SOFR 利率高於5%）的利息收入，其中約占我們可投資資產總額的18%。

We also experienced favorable returns on our non-core equity investments of $83 million, primarily driven by the impact of second quarter 2023 global equity market performance and tightening of high-yield credit spreads on our non-core equity investments recorded on a 1 quarter lag. The positive non-core returns and NII were partially offset by net realized and unrealized losses on our fixed income portfolio of $80 million, driven primarily by interest rate increases. We recorded runoff liability earnings or RLE of $15 million and adjusted RLE of $32 million, driven by favorable development across multiple acquisition years. This was primarily from favorable claims experience in our workers' compensation and property lines of business as well as reductions in our provisions for ULAE. Partially offsetting this was adverse development in our general casualty line of business driven by a small number of larger losses on excess policies across multiple portfolios.

我們的非核心股權投資也獲得了8,300 萬美元的良好回報，這主要是受到2023 年第二季度全球股票市場表現的影響以及我們非核心股權投資的高收益信用利差收緊（滯後一季度）的推動。 。正的非核心回報和NII被我們固定收益投資組合的8000萬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。在多個收購年度的良好發展的推動下，我們記錄的徑流負債收益或 RLE 為 1500 萬美元，調整後的 RLE 為 3200 萬美元。這主要得益於我們在工人賠償和財產業務方面良好的索賠經驗以及我們對 ULAE 準備金的減少。部分抵銷了這項影響的是我們的一般意外險業務的不利發展，這是由於多個投資組合中少數超額保單造成的較大損失所致。

We completed approximately 18% of the value of our planned annual reserve reviews in the third quarter. Consistent with prior years, most of our annual reserve reviews occur in the fourth quarter, and this is where we have historically seen the largest movements in our RLE and adjusted RLE metrics. As of September 30, we delivered a year-to-date growth in book value per share of 7.7% and 7.0% on an adjusted basis. As we previously noted, growth in our book value has been negatively impacted year-to-date by the adoption of new accounting standards relating 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 effect of these items is book value neutral. However, the restatement of opening equity reduced our year-to-date growth in book value per share, both on an adjusted and unadjusted basis.

我們在第三季完成了計劃年度儲備審查價值的約 18%。與往年一樣，我們的大部分年度儲備審查發生在第四季度，這是我們歷來看到 RLE 和調整後的 RLE 指標變動最大的地方。截至 9 月 30 日，年初至今，調整後每股帳面價值分別成長 7.7% 及 7.0%。正如我們之前指出的，今年迄今為止，我們的帳面價值成長受到了與長期合約或 LDTI 有關的新會計準則的採用，這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的成長，無論是在調整後或未經調整的基礎上。

Excluding the impact of LDTI, growth in year-to-date book value per share on an unadjusted basis would have been 14.7% and 14% on an adjusted basis. Due primarily to the rapid increase in interest rates over the past 2 years, we've incurred a cumulative $1.2 billion of unrealized losses on our fixed maturities and funds held directly managed as of our balance sheet date. This has adversely impacted book value per share by approximately $79 and adjusted book value per share by approximately $78. These assets provide liquidity to our policyholder liabilities as they come due. As such, we generally hold these investments to maturity with the view that unrealized losses will naturally reverse as the securities approach maturity.

排除 LDTI 的影響，年初至今每股帳面價值在未經調整的基礎上成長將分別為 14.7% 和調整後的 14%。主要由於過去兩年利率的快速上漲，截至資產負債表日，我們的固定期限和直接管理的基金累積產生了 12 億美元的未實現損失。這對每股帳面價值產生約 79 美元的不利影響，調整後每股帳面價值約 78 美元。這些資產為我們的保單持有人到期負債提供流動性。因此，我們通常持有這些投資至到期日，並認為隨著證券接近到期日，未實現的損失將自然逆轉。

Our capital and liquidity position remains strong to support future transactions. Our revolving credit facility remains fully unutilized and available to us as of September 30. We ended 2022 with a group solvency ratio of 210%, and we continue to maintain a solid group solvency ratio after allocating to recent transactions and our most recent share repurchase. As Dominic noted, subsequent to the end of the quarter, we agreed to repurchase $191 million worth of ordinary shares from CPP Investments and its affiliate and from the Trident V funds managed by Stone Point Capital LLC at a price per share of $227.18, which represents a 5% discount to the trailing 10-day weighted average price of our shares as of November 3, 2023.

我們的資本和流動性狀況仍然強勁，可以支持未來的交易。截至9 月30 日，我們的循環信貸額度仍未完全使用，可供我們使用。截至2022 年，我們的集團償付能力比率為210%，在分配給最近的交易和最近的股票回購後，我們繼續維持穩健的集團償付能力比率。正如多明尼克所指出的那樣，在本季末之後，我們同意以每股227.18 美元的價格從CPP Investments 及其附屬公司以及Stone Point Capital LLC 管理的Trident V 基金回購價值1.91 億美元的普通股，這意味著截至 2023 年 11 月 3 日，我們股票的過去 10 天加權平均價格有 5% 的折扣。

In addition, Dominic will purchase $10 million of shares from the Trident V funds at the same price. This transaction further aligns his interest with our new and current shareholders. Following these transactions, CPP Investments and the Trident V funds will hold 4.3% and 9.6% of Enstar's outstanding ordinary shares, respectively.

此外，多明尼克將以相同的價格向Trident V基金購買1,000萬美元的股票。這項交易進一步使他的利益與我們的新股東和現有股東保持一致。這些交易完成後，CPP Investments 和 Trident V 基金將分別持有 Enstar 已發行普通股的 4.3% 和 9.6%。

From a regulatory standpoint, we continue to monitor the active landscape, including any upcoming enhancements to the Bermuda Monetary Authority supervision of insurance groups and the proposal of global minimum tax rate. We understand that regulations are not static, and we are committed to adapting to them while ensuring we continue to create shareholder value.

從監管的角度來看，我們將繼續關注動態，包括百慕達金融管理局對保險集團監管的任何即將加強以及全球最低稅率的提議。我們知道法規不是一成不變的，我們致力於適應法規，同時確保我們繼續創造股東價值。

In conclusion, we continue to solidly execute on our core strategy of delivering attractive capital release solutions despite the ongoing market and geopolitical conditions. We maintain our disciplined approach towards buying new business, and our best-in-class team of experts remain well positioned to take advantage of a healthy pipeline and create additional long-term value for our shareholders.

總之，儘管市場和地緣政治條件持續存在，我們仍繼續堅定地執行我們的核心策略，即提供有吸引力的資本釋放解決方案。我們在收購新業務方面保持嚴格的態度，我們一流的專家團隊仍然處於有利地位，可以利用健康的管道並為股東創造額外的長期價值。

Thank you for your time and your continued interest in Enstar.

感謝您抽出時間以及對 Enstar 的持續關注。