Bermudian-based insurer Enstar Group Ltd has reported a loss of $906 million in 2022 driven by headwinds in the investments market.

The loss compared with a 2021 profit of $502 million. The downturn was largely due to a $1.27 billion loss, much of its unrealised, in its investment segment compared with a $485 million gain a year earlier.

Enstar’s return on equity was negative 15.6 per cent for 2022, compared with 7.9 per cent the previous year. This was attributed to unrealised losses arising from interest-rate increases on fixed-maturity portfolios that are classified as trading combined with unrealised losses in Enstar’s non-core portfolios.

But there was also more positive news showing that the firm reported fourth-quarter net earning of $227 million and return on equity of 5.9 per cent. This was driven by solid investment income and favourable reserve development of $280 million.

Enstar’s fourth-quarter economic balance sheet strengthening was partly attributed to the impact of a higher discount rate on their reserves, and their core fixed-income securities being shorter in duration than their insurance liabilities.

Enstar chief executive Dominic Silvester called it a “positive end to a challenging 2022”.

He said while their annual performance was impacted by headwinds in the investment markets, their claims management function continues to “outperform” the industry, driving prior-period reserve savings of $756 million for the year.

“Last year was another record mergers and acquisitions year as we acquired $2.7 billion of incremental reserves, including completing and integrating one of our largest-ever loss portfolio transfers with Aspen,” Mr Silvester said.

“That activity has continued into 2023 as we just announced a $1.9 billion group up loss portfolio transfer with QBE, and a second $360 million transaction with Royal Automobile Club of Queensland.

“We remain well positioned to capitalise on our robust pipeline so long as opportunities align with our risk parameters and return hurdles.”

He said he expected to continue as the dominant player in the legacy market in 2023.

Mr Silvester said: “Our balance sheet remains strong, and our scale operational capabilities and highly differential claims expertise will support accretive opportunities with new and longstanding partners while driving long-term value to our shareholders.”

Last year, Enstar completed loss portfolio transfer agreements with Aspen Insurance Holdings Limited and Argo totalling $2.7 billion of incremental acquired reserves, and also the commutation of Enhanzed Re’s catastrophe book and novated Enhanzed Re’s portfolio of deferred annuities and whole life policies.