Press release·02/27/2025 23:15:29

Overview of Financial Performance

Enstar Group Limited, a leading provider of capital release solutions, reported its financial results for the year ended December 31, 2024. The company’s consolidated results reflect its continued progress in acquiring and managing run-off insurance portfolios for its clients.

In 2024, Enstar entered into a merger agreement to be acquired for $5.1 billion. The merger is expected to close in mid-2025, subject to regulatory approvals. As a result of the merger agreement, Enstar recognized a $63 million goodwill impairment charge.

Despite the goodwill impairment, Enstar had a strong financial performance in 2024. Net income attributable to Enstar ordinary shareholders was $540 million, down from $1.1 billion in 2023. The decrease was primarily due to a current year tax expense of $62 million, compared to a tax benefit of $250 million in the prior year. Enstar’s return on equity (ROE) was 10.7% in 2024, down from 24.2% in 2023.

Comprehensive income attributable to Enstar was $571 million in 2024, compared to $1.1 billion in 2023. Book value per share (BVPS) and fully diluted book value per share (FDBVPS) increased by 10.7% and 9.4%, respectively, from the end of 2023 to the end of 2024.

Revenue and Profit Trends

Enstar’s revenue and profit trends were mixed in 2024 compared to the prior year:

Revenues

• Net premiums earned decreased by $3 million to $40 million in 2024.
• Other income decreased by $221 million to $67 million, primarily due to a prior year gain of $275 million from the novation of a closed block of life annuity policies.
• Net investment income increased by $4 million to $651 million, driven by higher yields on fixed maturities.
• Net realized losses on investments decreased by $56 million to $9 million.
• Fair value changes in trading securities and other investments decreased by $72 million to $456 million.

Expenses

• Net incurred losses and loss adjustment expenses (LAE) increased by $25 million to $126 million, primarily due to a $18 million increase in favorable prior period development.
• Defendant asbestos and environmental expenses increased by $28 million to $40 million.
• Amortization of net deferred charge assets increased by $11 million to $117 million.
• General and administrative expenses increased by $22 million to $391 million, primarily due to higher salaries and benefits.
• Goodwill impairment of $63 million was recognized in 2024.

Strengths and Weaknesses

Strengths

• Strong performance in the Investments segment, with net income of $1.0 billion in 2024.
• Continued favorable prior period development in the Run-off segment, with $149 million of net favorable development in 2024.
• Increase in BVPS and FDBVPS, reflecting the company’s profitability and growth.
• Successful completion of several reinsurance transactions, including an ADC agreement with Accredited Surety and Casualty Company and an LPT agreement with SiriusPoint.

Weaknesses

• Goodwill impairment charge of $63 million due to the merger agreement.
• Decrease in net income attributable to Enstar ordinary shareholders, driven by a current year tax expense compared to a tax benefit in the prior year.
• Decrease in ROE from 24.2% in 2023 to 10.7% in 2024.
• Increase in defendant asbestos and environmental expenses, which negatively impacted profitability.

Outlook and Future Prospects

Enstar’s future prospects remain positive, despite the goodwill impairment and the decrease in net income and ROE in 2024. The company’s successful completion of several reinsurance transactions during the year demonstrates its ability to continue acquiring and managing run-off insurance portfolios.

The pending merger agreement with Sixth Street is a significant event that, if completed, will provide Enstar’s shareholders with a substantial return on their investment. The merger is expected to close in mid-2025, subject to regulatory approvals.

Enstar’s Investments segment, which generated $1.0 billion in net income in 2024, is expected to continue contributing to the company’s overall profitability. The segment’s strong performance in managing the company’s investment portfolio, including fixed maturities, equities, and other investments, is a key strength.

The Run-off segment’s continued favorable prior period development, despite the increase in defendant asbestos and environmental expenses, suggests that Enstar’s claims management strategies are effective in managing its acquired insurance portfolios. This segment’s performance will be crucial in maintaining the company’s profitability and growth.

Overall, Enstar’s financial performance in 2024, coupled with the pending merger agreement and the strength of its Investments and Run-off segments, position the company for continued success in the future.