Enstar Group Limited (NASDAQ:ESGR) Q4 2023 Earnings Call Transcript

It is important to note that our overall results can fluctuate by a material amount from year to year, which is why we focus on a longer-term time horizon. For instance, our investment portfolio can see marked shifts in unrealized gains and losses given our volume of investment holdings. However, if you view the long-term history of Enstar, there is a clear trajectory of profitable growth and expansion of book value. Our capital and liquidity position remains strong to support future transactions. We refinanced and upsized our revolving credit agreement from $600 million to $800 million and extended its term by five years through May 2028. The facility remains fully unutilized and available to us as of December 31st. We also maintain a solid group solvency ratio after allocating to recent transactions and our most recent share repurchase.

From a regulatory standpoint, the Government of Bermuda recently enacted the Corporate Income Tax Act of 2023, which will apply a 15% corporate income tax to certain Bermuda businesses, effective for tax years beginning on or after January 1st, 2025. Under U.S. GAAP, we are required to recognize the effects of changes in tax laws in the period the change is enacted, regardless of the effective date. The Act includes various tax elections, including an Economic Transition Adjustment, which is intended to support a fair and equitable transition into the Bermuda corporate income tax regime. As a result, we have recognized a $205 million deferred tax asset, with a corresponding income tax benefit. We produced strong performance in 2023, and we continue to consistently deliver our core strategy of providing innovative legacy solutions to high-quality partners throughout the world.

We maintain our disciplined approach to completing profitable legacy transactions and remain ideally placed to take advantage of a healthy pipeline and create additional long-term value for our shareholders. Finally, on behalf of myself, Dominic and the executive team, I want to thank our global employees for their expertise and hard work. They make Enstar the legacy leader. Thank you for your time and your continued interest in Enstar.

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