S&P Assigns 'BBB-' Rating to Enstar Group (ESGR)

Standard & Poor's Ratings Services said today that it has assigned its 'BBB-' long-term issuer credit rating to Enstar Group (Nasdaq: ESGR) and its preliminary 'BBB-' rating to Enstar's proposed senior unsecured debt registered under the company's shelf filing. The outlook is positive.

"The ratings reflect our view of Enstar's strong business risk and financial risk profiles based on its strong competitive position and very strong capital and earnings, offset by a high risk profile," said Standard & Poor's credit analyst Jason Porter. "The ratings also reflect the holding company's structural subordination to its regulated operating subsidiaries."

Enstar has a strong competitive position as one of the leading run-off capacity providers. Although it is a leading run-off consolidator, Enstar faces competition from larger and more well-known companies, such as Berkshire Hathaway and Fairfax Financial. Unlike some competitors, Enstar proactively manages its claims and recoverables to drive profitability rather than focus on investment strategies. The company has a strong track record of favorable reserve development due, in part, to expeditious claim settlements, commutations, and policy buybacks.

The outlook is positive. If Enstar successfully executes and integrates its life and live business strategies while continuing a sustainable run-off operation, we could raise our ratings in the next 12-24 months. Enstar has demonstrated successful management of its P/C run-off operations and would need to show its competence in managing the recent strategic expansion. The Pavonia (life) and Torus (live) acquisitions will require additional managerial resources and skills, as well as enterprise risk management capabilities. An upgrade would require evidence that management and risk functions are evolving commensurately with Enstar's risk profile.

"We could revise the outlook to stable or lower the ratings if Enstar encounters significant problems integrating the new operations, especially if those problems result in a significant loss of capital or damage to the company's reputation," Mr. Porter continued. "Other factors that could hurt the outlook or ratings include adverse reserve development, unexpected underwriting losses, a riskier investment strategy, or unsustainability of the run-off business model."

You May Also Be Interested In

• Gilead Sciences (GILD) Misses Q1 EPS by 288c
• World Kinect Corporation (WKC) Misses Q1 EPS by 2c, Misses on Revenue
• L3Harris Technologies (LHX) Tops Q1 EPS by 15c; raises guidance