UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 5, 2022
Enstar Group Limited
(Exact name of registrant as specified in its charter)
| Bermuda | N/A | |||||||||||||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (441 ) 292-3645
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | |||||||||
| LLC | |||||||||||
| LLC | |||||||||||
| Perpetual Non-Cumulative Preferred Share, Series D, Par Value $1.00 Per Share | |||||||||||
| LLC | |||||||||||
| in a 7.00% Perpetual Non-Cumulative Preferred Share, Series E, Par Value $1.00 Per Share | |||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 5, 2022, Enstar Group Limited (the "Company") issued a press release announcing its results for the quarter ended March 31, 2022 (the "Press Release"), a copy of which is furnished with this report as Exhibit 99.1 and incorporated herein by reference, and a Financial Supplement for the quarter ended March 31, 2022 (the "Financial Supplement"), a copy of which is furnished with this report as Exhibit 99.2 and incorporated herein by reference. The Financial Supplement will be available on the "Investor Relations" page of the Company's website located at www.enstargroup.com.
The information contained in the Press Release and the Financial Supplement is summary information that is intended to be considered in the context of the Company's Securities and Exchange Commission ("SEC") filings and other public announcements that the Company may make, by press release or otherwise, from time to time. The Company undertakes no duty or obligation to publicly update or revise the information contained in the Press Release and the Financial Supplement, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
The information presented in Item 2.02 of this Current Report on Form 8-K and Exhibits 99.1 and 99.2 shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the Company specifically states that the information is to be considered “filed” under the Exchange Act or specifically incorporates it by reference into a filing under the Securities Act of 1933, as amended.
Item 8.01 Other Events.
On May 5, 2022, the Company's board of directors authorized the repurchase of up to $200,000,000 of the Company's ordinary shares (the "Authorized Shares"), such authorization to be effective through May 5, 2023 (the "Repurchase Program").
Repurchases pursuant to the Repurchase Program are expected to be executed through open market transactions, privately negotiated transactions, or in such other manner as determined by the Company, including through plans complying with Rule 10b5-1 of the Exchange Act. Repurchases will be subject to SEC regulations as well as certain price, market volume and timing constraints specified in any Rule 10b5-1 plan. As a result of these constraints, execution of the Repurchase Program may not result in all or any of the Authorized Shares being repurchased by the Company. The Repurchase Program may be modified, extended, suspended or terminated by the Company at any time without notice.
Item 9.01. Financial Statements and Exhibits
Exhibits
Exhibit No. | Description | |||||||
| Press Release, dated May 5, 2022. | ||||||||
Financial Supplement for the quarter ended March 31, 2022. | ||||||||
| 101 | Pursuant to Rule 406 of Regulation S-T, the cover page information in formatted in Inline XBRL. | |||||||
| 104 | Cover page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101). | |||||||
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ENSTAR GROUP LIMITED | |||||||||||
| May 5, 2022 | By: | /s/ Orla Gregory | |||||||||
| Orla Gregory | |||||||||||
| Chief Operating Officer and Acting Chief Financial Officer | |||||||||||
Press Release 
Date: May 5, 2022 Contact: Enstar Communications
For Release: Immediately Telephone: +1 (441) 292-3645
Enstar Group Limited Reports First Quarter Results
•Net Loss of $282 million and Return on Equity of (5.0)% for the three months ended March 31, 2022, driven by unrealized losses on fixed income securities in the rising interest rate environment
•Book Value per Ordinary Share and Adjusted Book Value per Ordinary Share* of $286.51 and $282.10, respectively, as of March 31, 2022, a decline of 9.4% and 9.2%, respectively, from December 31, 2021
•Returned $42 million to shareholders through share repurchases at a weighted average discount to book value of 18.6%
Hamilton, Bermuda - May 5, 2022 - Enstar Group Limited (Nasdaq: ESGR) filed its quarterly report on Form 10-Q with the SEC earlier today, reporting a net loss of $282 million and return on equity of (5.0)% for the three months ended March 31, 2022.
Commenting on the Company’s results, Enstar CEO Dominic Silvester said:
"We started the year by signing one of our largest ever loss portfolio transactions and completing another successful debt raise at competitive rates, while our financial results in the first quarter reflect rising interest rates and economic uncertainty.
We remain focused on delivering long-term value and are well positioned to maintain our momentum during these volatile times."
First quarter results included:
•Net loss of $282 million, compared to net earnings of $183 million for first quarter 2021. Net loss of $16.04 per diluted ordinary share, compared to net earnings of $8.38 per diluted ordinary share for the comparative quarter.
•Return on equity ("ROE") of (5.0)% and Adjusted ROE* of (1.4)% compared to 3.0% and 5.4%, respectively, in the first quarter 2021. Our ROE was impacted by unrealized losses from the impact of interest rate increases on fixed maturity portfolios that we classify as trading combined with unrealized losses in our non-core portfolios.
•Annualized run-off liability earnings ("RLE") of 5.1% and Annualized Adjusted RLE* of 0.0%, compared to 5.0% and 1.2%, respectively, in the first quarter 2021. Our RLE benefited from reductions in the value of certain portfolios that we hold at fair value and favorable results on our inactive catastrophe programs held by Enhanzed Re.
•Annualized total investment return ("TIR") of (6.1)% and Annualized Adjusted TIR* of 0.5%, compared to 3.6% and 8.4%, respectively, in the first quarter 2021. Our recognized investment results were impacted by the combination of interest rate increases and equity market declines.
*Non-GAAP measure; refer to "Non-GAAP Financial Measures" further below for explanatory notes and a reconciliation to the most directly comparable GAAP measure.
Enstar Group Limited | First Quarter 2022 | Press Release 1
Operational Highlights
•On January 10, 2022 we entered into a transaction with Aspen Insurance Holdings Limited ("Aspen") to assume $3.1 billion of net loss reserves in a loss portfolio transfer ("LPT") transaction, subject to a limit of $3.6 billion. As a result of an existing ADC between Aspen and us that will be absorbed by this transaction, we will assume an incremental $2.4 billion of net loss reserves with a diverse mix of property, liability and specialty lines of business, in exchange for incremental premium of $2.4 billion,1 and assume claims control. This transaction is expected to close in the second quarter of 2022.
•Following the redemption and subsequent liquidation of the InRe Fund L.P. (the “InRe Fund”) in 2021, we have invested or committed the remaining proceeds into liquid and illiquid non-core assets in accordance with our strategic asset allocation.
For certain illiquid asset classes such as private equity, real estate equity and infrastructure equity, funds have been committed to the appointed manager. For these illiquid asset classes, our manager is deploying funds into liquid non-core asset classes while implementing a plan to rotate these investments into illiquid asset classes over time. We expect this rotation will be complete over the medium term.
•We took advantage of January's strong capital markets, raising $500 million of junior subordinated debt at 5.5% and used a portion of the net proceeds to repay the remaining $280 million aggregate principal amount of our 2022 senior notes at their March 2022 maturity. We also returned an additional $42 million to our shareholders through share repurchases in the first quarter of 2022.
•As part of our strategic review of Enhanzed Re, we evaluated the current marketplace offerings and the strategic position of Enhanzed Re to take advantage of future opportunities and have concluded that we will not be seeking new life business portfolios for the Enhanzed Re platform.
•We made progress on our environmental, social and governance ("ESG") strategy. In the first quarter of 2022, we published our inaugural Corporate Sustainability Report, a Sustainability Accounting Standards Board (“SASB”) Report and a Task Force on Climate-Related Financial Disclosures (“TCFD”) Report.
We also announced a partnership with two U.K.-based women’s sports teams as part of our commitment to championing diversity and equality for women. Our ESG strategy remains focused on addressing climate change, sustainable investing, and developing our human capital. We believe that our achievements to date, in addition to our ongoing and future priorities, will benefit the communities we have a presence in and are an investment in our long-term value.
•The Russian invasion of Ukraine has led to volatility in global commodity markets, most notably the energy market, as well as the loss of insured property in Ukraine and Russia. We have performed a review of potential exposures in our investment portfolio, our underwriting risks, and our acquisition pipeline, and considered operational disruption, and have concluded that there are no significant direct impacts from this event at this time. We continue to monitor for changes to sanctioned individuals and organizations and update our procedures accordingly.
•We have published the "First Quarter Earnings Review" audio presentation with our Acting Chief Financial Officer, Orla Gregory, which contains expanded commentary on first quarter results and other business updates, and is available to listen to on the Investor Relations section of Enstar's website.
1 The amount of net loss reserves assumed, as well as the premium and limit amounts provided in the LPT agreement, will be adjusted for claims paid between October 1, 2021 and the closing date of the transaction pursuant to terms of the contract.
Enstar Group Limited | First Quarter 2022 | Press Release 2
Key Financial and Operating Metrics
We use the following GAAP and Non-GAAP measures to monitor the performance of and manage the company:
| Three Months Ended | |||||||||||||||||||||||
| March 31, 2022 | March 31, 2021 | $ Change | % / pp / bp Change | ||||||||||||||||||||
| (in millions of U.S. dollars, except per share data) | |||||||||||||||||||||||
| Key Earnings Metrics | |||||||||||||||||||||||
| Net (loss) earnings attributable to Enstar ordinary shareholders | $ | (282) | $ | 183 | $ | (465) | (254) | % | |||||||||||||||
| Adjusted operating (loss) income attributable to Enstar ordinary shareholders* | $ | (75) | $ | 295 | (370) | (125) | % | ||||||||||||||||
| ROE | (5.0) | % | 3.0 | % | (8.0) | pp | |||||||||||||||||
| Annualized ROE | (20.2) | % | 11.9 | % | (32.1) | pp | |||||||||||||||||
| Adjusted ROE* | (1.4) | % | 5.4 | % | (6.8) | pp | |||||||||||||||||
| Annualized Adjusted ROE* | (5.7) | % | 21.7 | % | (27.4) | pp | |||||||||||||||||
| Key Run-off Metrics | |||||||||||||||||||||||
| Prior period development | $ | 143 | $ | 110 | 33 | 30 | % | ||||||||||||||||
| Adjusted prior period development* | $ | (1) | $ | 26 | (27) | (104) | % | ||||||||||||||||
| Annualized RLE | 5.1 | % | 5.0 | % | 0.1 | pp | |||||||||||||||||
| Annualized Adjusted RLE* | 0.0 | % | 1.2 | % | (1.2) | pp | |||||||||||||||||
| Key Investment Return Metrics | |||||||||||||||||||||||
| TIR | $ | (307) | $ | 159 | (466) | (293) | % | ||||||||||||||||
| Adjusted TIR* | $ | 27 | $ | 365 | (338) | (93) | % | ||||||||||||||||
| Total investable assets | $ | 20,618 | $ | 18,212 | 2,406 | 13 | % | ||||||||||||||||
| Adjusted total investable assets* | $ | 21,139 | $ | 17,983 | 3,156 | 18 | % | ||||||||||||||||
| Annualized investment book yield | 1.91 | % | 1.86 | % | 5 | bp | |||||||||||||||||
| Annualized TIR | (6.1) | % | 3.6 | % | (9.7) | pp | |||||||||||||||||
| Annualized Adjusted TIR* | 0.5 | % | 8.4 | % | (7.9) | pp | |||||||||||||||||
| As of | |||||||||||||||||||||||
| March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
| Key Shareholder Metrics | |||||||||||||||||||||||
| Book value per ordinary share | $ | 286.51 | $ | 316.34 | (29.83) | (9.4) | % | ||||||||||||||||
| Adjusted book value per ordinary share* | $ | 282.10 | $ | 310.80 | (28.70) | (9.2) | % | ||||||||||||||||
pp - Percentage point(s)
bp - Basis point(s)
*Non-GAAP measure; refer to "Non-GAAP Financial Measures" further below for reconciliations.
Enstar Group Limited | First Quarter 2022 | Press Release 3
Results of Operations by Segment - For the Three Months Ended March 31, 2022 and 2021
Run-off Segment
The following is a discussion and analysis of the results of operations for our Run-off segment.
| Three Months Ended | |||||||||||||||||||||||
| March 31, 2022 | March 31, 2021 | $ Change | % Change | ||||||||||||||||||||
| (in millions of U.S. dollars) | |||||||||||||||||||||||
| INCOME | |||||||||||||||||||||||
| Net premiums earned | $ | 17 | $ | 73 | $ | (56) | (77) | % | |||||||||||||||
| Other income: | |||||||||||||||||||||||
| Reduction in estimates of net ultimate defendant A&E liabilities - prior periods | 3 | 9 | (6) | (67) | % | ||||||||||||||||||
| Reduction in estimated future defendant A&E expenses | — | 3 | (3) | (100) | % | ||||||||||||||||||
| All other income | 7 | 10 | (3) | (30) | % | ||||||||||||||||||
| Total other income | 10 | 22 | (12) | (55) | % | ||||||||||||||||||
| Total income | 27 | 95 | (68) | (72) | % | ||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||
| Net incurred losses and LAE: | |||||||||||||||||||||||
| Current period | 11 | 44 | (33) | (75) | % | ||||||||||||||||||
| Prior periods: | |||||||||||||||||||||||
| Reduction in estimates of net ultimate losses | (29) | (25) | (4) | 16 | % | ||||||||||||||||||
| Reduction in provisions for ULAE | (21) | (14) | (7) | 50 | % | ||||||||||||||||||
| Total prior periods | (50) | (39) | (11) | 28 | % | ||||||||||||||||||
| Total net incurred losses and LAE | (39) | 5 | (44) | NM | |||||||||||||||||||
| Acquisition costs | 8 | 29 | (21) | (72) | % | ||||||||||||||||||
| General and administrative expenses | 39 | 28 | 11 | 39 | % | ||||||||||||||||||
| Total expenses | 8 | 62 | (54) | (87) | % | ||||||||||||||||||
| SEGMENT NET EARNINGS | $ | 19 | $ | 33 | $ | (14) | (42) | % | |||||||||||||||
NM - Not meaningful, we define NM as changes greater than or equal to +/- 300%.
Our Run-off segment net earnings decreased by $14 million, primarily due to:
•Decreases in net premiums earned of $56 million, which was largely offset by decreases in current period net incurred losses and LAE and acquisition costs of $33 million and $21 million, respectively. The reduction in each of these amounts was driven by reduced levels of activity arising from our exit of our StarStone International business beginning in 2020.
•A reduction in other income of $12 million primarily driven by lower favorable prior period development related to our defendant A&E liabilities in the current quarter; and
•An increase in general and administrative expenses of $11 million; partially offset by
•An $11 million increase in favorable prior period development in the current quarter driven by:
◦An increase in the reduction in provisions for ULAE of $7 million; and
◦A $4 million increase in favorable prior period development compared to the comparative quarter, driven by a $23 million increase in favorable development on the workers’ compensation line of business resulting from favorable actual claims experience compared to expected claims trends, partially offset by a $16 million increase in adverse development on our property line of business due to unfavorable loss emergence relating to construction risks.
Enstar Group Limited | First Quarter 2022 | Press Release 4
Investments Segment
The following is a discussion and analysis of the results of operations for our Investments segment.
| Three Months Ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
| (in millions of U.S. dollars) | |||||||||||||||||||||||
| INCOME | |||||||||||||||||||||||
| Net investment income: | |||||||||||||||||||||||
| Fixed income securities | $ | 68 | $ | 51 | $ | 17 | 33 | % | |||||||||||||||
| Other investments, including equities | 19 | 14 | 5 | 36 | % | ||||||||||||||||||
| Less: Investment expenses | (11) | (4) | (7) | 175 | % | ||||||||||||||||||
| Total net investment income | 76 | 61 | 15 | 25 | % | ||||||||||||||||||
| Net realized losses: | |||||||||||||||||||||||
| Fixed income securities | (35) | (11) | (24) | 218 | % | ||||||||||||||||||
| Other investments, including equities | (2) | 1 | (3) | NM | |||||||||||||||||||
| Net realized losses | (37) | (10) | (27) | 270 | % | ||||||||||||||||||
| Net unrealized losses: | |||||||||||||||||||||||
| Fixed income securities | (293) | (194) | (99) | 51 | % | ||||||||||||||||||
| Other investments, including equities | (82) | 184 | (266) | (145) | % | ||||||||||||||||||
| Total net unrealized losses | (375) | (10) | (365) | NM | |||||||||||||||||||
| Total income | (336) | 41 | (377) | NM | |||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||
| General and administrative expenses | 9 | 3 | 6 | 200 | % | ||||||||||||||||||
| Total expenses | 9 | 3 | 6 | 200 | % | ||||||||||||||||||
| Earnings from equity method investments | 31 | 118 | (87) | (74) | % | ||||||||||||||||||
| SEGMENT NET (LOSS) EARNINGS | $ | (314) | $ | 156 | $ | (470) | NM | ||||||||||||||||
NM - Not meaningful, we define NM as changes greater than or equal to +/- 300%.
Segment net loss from our Investments segment was $314 million for the three months ended March 31, 2022 compared to segment net earnings of $156 million for the same period in 2021, an unfavorable change of $470 million primarily due to:
•net realized and unrealized losses of $328 million on our fixed income securities, driven by rising interest rates and widening credit spreads, an increase of $123 million from the comparative period;
•net realized and unrealized losses of $84 million on our other investments, including equities, in comparison to net realized and unrealized gains of $185 million in the comparative period, primarily driven by underperformance of our fixed income funds, public equities, hedge funds and CLO equities as a result significant volatility in global equity markets and widening high yield credit spreads, partially offset by gains on our private equity funds, private credit funds and real estate funds, which are typically recorded on a one quarter lag; and
•an $87 million decrease in earnings from equity method investments largely due to our acquisition of the controlling interest in Enhanzed Re, effective September 1, 2021 (consolidated net earnings from Enhanzed Re business, inclusive of investment results, corporate allocations and the effect of noncontrolling interests were $15 million for the three months ended March 31, 2022). Prior to that date, the results of Enhanzed Re were recorded in earnings from equity method investments.
Enstar Group Limited | First Quarter 2022 | Press Release 5
Income and Earnings by Segment - For the Three Months Ended March 31, 2022, and 2021
| Three Months Ended | |||||||||||||||||||||||
| March 31, 2022 | March 31, 2021 | $ Change | % Change | ||||||||||||||||||||
| (in millions of U.S. dollars) | |||||||||||||||||||||||
| INCOME | |||||||||||||||||||||||
| Run-off | $ | 27 | $ | 95 | $ | (68) | (72) | % | |||||||||||||||
| Enhanzed Re | 14 | — | 14 | NM | |||||||||||||||||||
| Investments | (336) | 41 | (377) | NM | |||||||||||||||||||
| Legacy Underwriting | 2 | 13 | (11) | (85) | % | ||||||||||||||||||
| Subtotal | (293) | 149 | (442) | (297) | % | ||||||||||||||||||
| Corporate and other | 3 | 10 | (7) | (70) | % | ||||||||||||||||||
| Total income | $ | (290) | $ | 159 | $ | (449) | (282) | % | |||||||||||||||
| SEGMENT NET (LOSS) EARNINGS | |||||||||||||||||||||||
| Run-off | $ | 19 | $ | 33 | $ | (14) | (42) | % | |||||||||||||||
| Enhanzed Re | 29 | — | 29 | NM | |||||||||||||||||||
| Investments | (314) | 156 | (470) | NM | |||||||||||||||||||
| Legacy Underwriting | — | 2 | (2) | (100) | % | ||||||||||||||||||
| Total segment net (loss) earnings | (266) | 191 | (457) | (239) | % | ||||||||||||||||||
Corporate and other (1)(2) | (16) | (8) | (8) | 100 | % | ||||||||||||||||||
| NET (LOSS) EARNINGS ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS | $ | (282) | $ | 183 | $ | (465) | (254) | % | |||||||||||||||
(1) Other income (expense) for corporate and other activities includes the amortization of fair value adjustments associated with the acquisition of DCo LLC and Morse TEC LLC.
(2) Net incurred losses and LAE for corporate and other activities includes the amortization of deferred charge assets (“DCAs”) on retroactive reinsurance contracts, fair value adjustments associated with the acquisition of companies and the changes in the discount rate and risk margin components of the fair value of assets and liabilities related to our assumed retroactive reinsurance contracts for which we have elected the fair value option. The three months ended March 31, 2022 included accelerated amortization of $24 million corresponding to increased favorable prior period development on net ultimate liabilities recorded in our Run-off segment. There was no accelerated amortization for the three months ended March 31, 2021.
NM - Not meaningful, we define NM as changes greater than or equal to +/- 300%.
For additional detail on the Enhanzed Re segment, the Legacy Underwriting segment and corporate and other activities, please refer to the Form 10-Q.
Enstar Group Limited | First Quarter 2022 | Press Release 6
Cautionary Statement
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include statements regarding the intent, belief or current expectations of Enstar and its management team. Investors are cautioned that any such forward-looking statements speak only as of the date they are made, are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Important risk factors regarding Enstar can be found under the heading "Risk Factors" in our Form 10-K for the year ended December 31, 2021 and are incorporated herein by reference. Furthermore, Enstar undertakes no obligation to update any written or oral forward-looking statements or publicly announce any updates or revisions to any of the forward-looking statements contained herein, to reflect any change in its expectations with regard thereto or any change in events, conditions, circumstances or assumptions underlying such statements, except as required by law.
About Enstar
Enstar is a NASDAQ-listed leading global (re)insurance group that offers capital release solutions through its network of group companies in Bermuda, the United States, the United Kingdom, Continental Europe, Australia, and other international locations. A market leader in completing legacy acquisitions, Enstar has acquired over 110 companies and portfolios since its formation in 2001. For further information about Enstar, see www.enstargroup.com.
Contacts
For Investors: Matthew Kirk (investor.relations@enstargroup.com)
For Media: Jenna Kerr (communications@enstargroup.com)
Enstar Group Limited | First Quarter 2022 | Press Release 7
ENSTAR GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
For the Three Months Ended March 31, 2022 and 2021
| Three Months Ended | |||||||||||
| March 31, 2022 | March 31, 2021 | ||||||||||
| (in millions of U.S. dollars, except share and per share data) | |||||||||||
| INCOME | |||||||||||
| Net premiums earned | $ | 34 | $ | 93 | |||||||
| Net investment income | 80 | 62 | |||||||||
| Net realized losses | (37) | (11) | |||||||||
| Net unrealized losses | (381) | (10) | |||||||||
| Other income | 14 | 10 | |||||||||
| Net gain on sales of subsidiaries | — | 15 | |||||||||
| Total income | (290) | 159 | |||||||||
| EXPENSES | |||||||||||
| Net incurred losses and loss adjustment expenses | |||||||||||
| Current period | 13 | 54 | |||||||||
| Prior periods | (143) | (110) | |||||||||
| Total net incurred losses and loss adjustment expenses | (130) | (56) | |||||||||
| Policyholder benefit expenses | 12 | — | |||||||||
| Acquisition costs | 8 | 34 | |||||||||
| General and administrative expenses | 85 | 83 | |||||||||
| Interest expense | 25 | 16 | |||||||||
| Net foreign exchange losses | 3 | 3 | |||||||||
| Total expenses | 3 | 80 | |||||||||
| (LOSS) EARNINGS BEFORE INCOME TAXES | (293) | 79 | |||||||||
| Income tax benefit | — | 6 | |||||||||
| Earnings from equity method investments | 31 | 118 | |||||||||
| NET (LOSS) EARNINGS | (262) | 203 | |||||||||
| Net earnings attributable to noncontrolling interest | (11) | (11) | |||||||||
| NET (LOSS) EARNINGS ATTRIBUTABLE TO ENSTAR | (273) | 192 | |||||||||
| Dividends on preferred shares | (9) | (9) | |||||||||
| NET (LOSS) EARNINGS ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS | $ | (282) | $ | 183 | |||||||
| (Loss) earnings per ordinary share attributable to Enstar: | |||||||||||
| Basic | $ | (16.04) | $ | 8.50 | |||||||
| Diluted | $ | (16.04) | $ | 8.38 | |||||||
| Weighted average ordinary shares outstanding: | |||||||||||
| Basic | 17,578,019 | 21,562,341 | |||||||||
| Diluted | 17,785,121 | 21,852,324 | |||||||||
Enstar Group Limited | First Quarter 2022 | Press Release 8
ENSTAR GROUP LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
As of March 31, 2022 and December 31, 2021
| March 31, 2022 | December 31, 2021 | ||||||||||
| (in millions of U.S. dollars, except share data) | |||||||||||
| ASSETS | |||||||||||
| Short-term investments, trading, at fair value | $ | 7 | $ | 6 | |||||||
Short-term investments, available-for-sale, at fair value (amortized cost: 2022 — $59; 2021 — $34; net of allowance: 2022 and 2021 — $0) | 59 | 34 | |||||||||
| Fixed maturities, trading, at fair value | 3,247 | 3,756 | |||||||||
Fixed maturities, available-for-sale, at fair value (amortized cost: 2022 — $5,575; 2021 — $5,689; net of allowance: 2022 — $29; 2021 — $10) | 5,268 | 5,652 | |||||||||
| Funds held - directly managed | 2,835 | 3,007 | |||||||||
Equities, at fair value (cost: 2022 — $2,325; 2021 — $1,831) | 2,444 | 1,995 | |||||||||
| Other investments, at fair value | 2,863 | 2,333 | |||||||||
| Equity method investments | 519 | 493 | |||||||||
| Total investments | 17,242 | 17,276 | |||||||||
| Cash and cash equivalents | 763 | 1,646 | |||||||||
| Restricted cash and cash equivalents | 372 | 446 | |||||||||
Reinsurance balances recoverable on paid and unpaid losses (net of allowance: 2022 — $135; 2021 — $136) | 983 | 1,085 | |||||||||
| Reinsurance balances recoverable on paid and unpaid losses, at fair value | 388 | 432 | |||||||||
Insurance balances recoverable (net of allowance: 2022 and 2021 — $5) | 192 | 213 | |||||||||
| Funds held by reinsured companies | 2,241 | 2,340 | |||||||||
| Deferred charge assets | 338 | 371 | |||||||||
| Other assets | 721 | 620 | |||||||||
| TOTAL ASSETS | $ | 23,240 | $ | 24,429 | |||||||
| LIABILITIES | |||||||||||
| Losses and loss adjustment expenses | $ | 10,744 | $ | 11,269 | |||||||
| Losses and loss adjustment expenses, at fair value | 1,764 | 1,989 | |||||||||
| Future policyholder benefits | 1,436 | 1,502 | |||||||||
| Defendant asbestos and environmental liabilities | 631 | 638 | |||||||||
| Insurance and reinsurance balances payable | 267 | 254 | |||||||||
| Debt obligations | 1,904 | 1,691 | |||||||||
| Other liabilities | 546 | 581 | |||||||||
| TOTAL LIABILITIES | 17,292 | 17,924 | |||||||||
| COMMITMENTS AND CONTINGENCIES | |||||||||||
REDEEMABLE NONCONTROLLING INTEREST | 181 | 179 | |||||||||
| SHAREHOLDERS’ EQUITY | |||||||||||
Ordinary Shares (par value $1 each, issued and outstanding 2022: 18,101,037; 2021: 18,223,574): | |||||||||||
Voting Ordinary Shares (issued and outstanding 2022: 16,503,325; 2021: 16,625,862) | 17 | 17 | |||||||||
Non-voting convertible ordinary Series C Shares (issued and outstanding 2022 and 2021: 1,192,941) | 1 | 1 | |||||||||
Non-voting convertible ordinary Series E Shares (issued and outstanding 2022 and 2021: 404,771) | — | — | |||||||||
| Preferred Shares: | |||||||||||
Series C Preferred Shares (issued and held in treasury 2022 and 2021: 388,571) | — | — | |||||||||
Series D Preferred Shares (issued and outstanding 2022 and 2021: 16,000; liquidation preference $400) | 400 | 400 | |||||||||
Series E Preferred Shares (issued and outstanding 2022 and 2021: 4,400; liquidation preference $110) | 110 | 110 | |||||||||
Treasury shares, at cost (Series C Preferred Shares 2022 and 2021: 388,571) | (422) | (422) | |||||||||
Joint Share Ownership Plan (voting ordinary shares, held in trust 2022 and 2021: 565,630) | (1) | (1) | |||||||||
| Additional paid-in capital | 883 | 922 | |||||||||
| Accumulated other comprehensive loss | (257) | (16) | |||||||||
| Retained earnings | 4,803 | 5,085 | |||||||||
| Total Enstar Shareholders’ Equity | 5,534 | 6,096 | |||||||||
| Noncontrolling interest | 233 | 230 | |||||||||
| TOTAL SHAREHOLDERS’ EQUITY | 5,767 | 6,326 | |||||||||
| TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY | $ | 23,240 | $ | 24,429 | |||||||
Enstar Group Limited | First Quarter 2022 | Press Release 9
Non-GAAP Financial Measures
In addition to our key financial measures presented in accordance with GAAP, we present other non-GAAP financial measures that we use to manage our business, compare our performance against prior periods and against our peers, and as performance measures in our annual incentive compensation program.
These non-GAAP financial measures provide an additional view of our operational performance over the long-term and provide the opportunity to analyze our results in a way that is more aligned with the manner in which our management measures our underlying performance.
The presentation of these non-GAAP financial measures, which may be defined and calculated differently by other companies, is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.
We have presented the results and GAAP reconciliations for these measures further below. The following tables present more information on each non-GAAP measure.
| Non-GAAP Measure | Definition | Purpose of Non-GAAP Measure over GAAP Measure | ||||||||||||
| Adjusted book value per ordinary share | Total Enstar ordinary shareholders' equity Divided by Number of ordinary shares outstanding, adjusted for: -the ultimate effect of any dilutive securities on the number of ordinary shares outstanding | Increases the number of ordinary shares to reflect equity awards granted but not yet vested as, over the long term, this presents a prudent view of our book value per share. We use this non-GAAP measure in our annual incentive compensation program. | ||||||||||||
| Adjusted return on equity | Adjusted operating income (loss) attributable to Enstar ordinary shareholders divided by adjusted opening Enstar ordinary shareholder's equity | Calculating the operating income (loss) as a percentage of our adjusted opening Enstar ordinary shareholders' equity provides a more valuable and consistent measure of the performance of our business, and enhances comparisons to prior periods: •by adjusting investment returns for the temporary impact of the change in fair value of fixed maturity securities (both credit spreads and interest rates) which we hold until the earlier of maturity or used to fund any settlement of related liabilities which are generally recorded at cost; •by removing the impact of non-cash charges that obscure our trends on a consistent basis; and •by removing items that are not indicative of our ongoing operations; We use this non-GAAP measure in our annual incentive compensation program. We include the amortization of fair value adjustments as a non-GAAP adjustment to the adjusted operating income (loss) attributable to Enstar ordinary shareholders as it is considered to be a non-cash charge and not indicative of our operating results. | ||||||||||||
Adjusted operating income (loss) attributable to Enstar ordinary shareholders (numerator) | Net earnings (loss) attributable to Enstar ordinary shareholders, adjusted for: -net realized and unrealized (gains) losses on fixed maturity investments and funds held-directly managed -change in fair value of insurance contracts for which we have elected the fair value option (1) -amortization of fair value adjustments -net gain/loss on purchase and sales of subsidiaries (if any) -net earnings from discontinued operations (if any) -tax effects of adjustments -adjustments attributable to noncontrolling interest | |||||||||||||
Adjusted opening Enstar ordinary shareholders' equity (denominator) | Opening Enstar ordinary shareholders' equity, less: -net unrealized gains (losses) on fixed maturity investments and funds held-directly managed, -fair value of insurance contracts for which we have elected the fair value option (1), -fair value adjustments, and -net assets of held for sale or disposed subsidiaries classified as discontinued operations (if any) | |||||||||||||
Enstar Group Limited | First Quarter 2022 | Press Release 10
| Adjusted total investment return (%) | Adjusted total investment return (dollars) recognized in earnings for the applicable period divided by period average adjusted total investable assets. | Provides a key measure of the return generated on the capital held in the business and is reflective of our investment strategy. Provides a consistent measure of investment returns as a percentage of all assets generating investment returns. Adjusts investment returns for the temporary impact of the change in fair value of fixed maturity securities (both credit spreads and interest rates) which we hold until the earlier of maturity or used to fund any settlement of related liabilities which are generally recorded at cost. | ||||||||||||
Adjusted total investment return ($) (numerator) | Total investment return (dollars), adjusted for: -net realized and unrealized (gains) losses on fixed maturity investments and funds held-directly managed | |||||||||||||
Adjusted average aggregate total investable assets (denominator) | Total average investable assets, adjusted for: -net unrealized (gains) losses on fixed maturities, AFS investments included within AOCI -net unrealized (gains) losses on fixed maturities, trading instruments | |||||||||||||
| Adjusted run-off liability earnings (%) | Adjusted PPD divided by average adjusted net loss reserves | Calculating the RLE as a percentage of our adjusted average net loss reserves provides a more meaningful measurement of our claims management performance. We use this measure to evaluate our ability to settle our obligations for amounts less than our initial estimate at the point of acquiring the obligations. In order to provide a complete and consistent picture of our claims performance, we combine the reduction (increase) in estimates of prior period net ultimate losses relating to our Run-off segment with the amortization of deferred charge assets, both of which are included in net incurred losses and LAE and have an inverse effect on our results. We also include our performance in managing our defendant A&E liabilities, that do not form part of loss reserves. The remaining components of net incurred losses and LAE and net loss reserves are not considered key components of our claims performance as they are either not non-life run-off in nature, or are considered to be non-cash charges that obscure our trends on a consistent basis. We use this measure to assess the performance of our claim strategies and part of the performance assessment of our past acquisitions. | ||||||||||||
Adjusted prior period development (numerator) | Prior period net incurred losses and LAE, adjusted to: Remove: -Legacy Underwriting and Enhanzed Re operations -the reduction/(increase) in provisions for unallocated LAE (ULAE) -amortization of fair value adjustments, -change in fair value of insurance contracts for which we have elected the fair value option (1), and Add: -the reduction/(increase) in estimates of our defendant A&E ultimate net liabilities. | |||||||||||||
Adjusted net loss reserves (denominator) | Net losses and LAE, adjusted to: Remove: -Legacy Underwriting and Enhanzed Re net loss reserves -current period net loss reserves -the net ULAE provision -net fair value adjustments associated with the acquisition of companies, -the fair value adjustments for contracts for which we have elected the fair value option (1) and Add: -net nominal defendant asbestos and environmental exposures. | |||||||||||||
(1) Comprises the discount rate and risk margin components.
Enstar Group Limited | First Quarter 2022 | Press Release 11
Reconciliation of GAAP to Non-GAAP Measures
The table below presents a reconciliation of BVPS to Adjusted BVPS*:
| March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||
Equity (1) | Ordinary Shares | Per Share Amount | Equity (1) | Ordinary Shares | Per Share Amount | |||||||||||||||||||||||||||||||||
| (in millions of U.S. dollars, except share and per share data) | ||||||||||||||||||||||||||||||||||||||
| Book value per ordinary share | $ | 5,024 | 17,535,407 | $ | 286.51 | $ | 5,586 | 17,657,944 | $ | 316.34 | ||||||||||||||||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||||||||
| Share-based compensation plans | 274,080 | 315,205 | ||||||||||||||||||||||||||||||||||||
| Adjusted book value per ordinary share* | $ | 5,024 | 17,809,487 | $ | 282.10 | $ | 5,586 | 17,973,149 | $ | 310.80 | ||||||||||||||||||||||||||||
(1) Equity comprises Enstar ordinary shareholders' equity, which is calculated as Enstar shareholders' equity less preferred shares ($510 million) prior to any non-GAAP adjustments.
*Non-GAAP measure.
The table below presents a reconciliation of Annualized ROE to Annualized Adjusted ROE*:
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2022 | March 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Net (loss) earnings (1) | Opening equity (1) | (Adj) ROE | Annualized (Adj) ROE | Net (loss) earnings (1) | Opening equity (1) | (Adj) ROE | Annualized (Adj) ROE | ||||||||||||||||||||||||||||||||||||||||
| (in millions of U.S. dollars) | |||||||||||||||||||||||||||||||||||||||||||||||
Net (loss) earnings/Opening equity/ROE/Annualized ROE (1) | $ | (282) | $ | 5,586 | (5.0) | % | (20.2) | % | $ | 183 | $ | 6,164 | 3.0 | % | 11.9 | % | |||||||||||||||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized losses on fixed maturity investments and funds held - directly managed / Net unrealized gains on fixed maturity investments and funds held - directly managed (2) | 334 | (89) | 206 | (560) | |||||||||||||||||||||||||||||||||||||||||||
Change in fair value of insurance contracts for which we have elected the fair value option / Fair value of insurance contracts for which we have elected the fair value option (3) | (98) | (107) | (75) | (33) | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of fair value adjustments / Fair value adjustments | 2 | (106) | 2 | (128) | |||||||||||||||||||||||||||||||||||||||||||
| Net gain on purchase and sales of subsidiaries | — | (15) | |||||||||||||||||||||||||||||||||||||||||||||
Tax effects of adjustments (4) | (26) | (17) | |||||||||||||||||||||||||||||||||||||||||||||
Adjustments attributable to noncontrolling interest (5) | (5) | 11 | |||||||||||||||||||||||||||||||||||||||||||||
| Adjusted operating (loss) income/Adjusted opening equity/Adjusted ROE/Annualized adjusted ROE* | $ | (75) | $ | 5,284 | (1.4) | % | (5.7) | % | $ | 295 | $ | 5,443 | 5.4 | % | 21.7 | % | |||||||||||||||||||||||||||||||
(1) Net (loss) earnings comprises net (loss) earnings attributable to Enstar ordinary shareholders, prior to any non-GAAP adjustments. Opening equity comprises Enstar ordinary shareholders' equity, which is calculated as opening Enstar shareholders' equity less preferred shares ($510 million), prior to any non-GAAP adjustments.
(2) Represents the net realized and unrealized losses related to fixed maturity securities. Our fixed maturity securities are held directly on our balance sheet and also within the "Funds held - directly managed" balance.
(3) Comprises the discount rate and risk margin components.
(4) Represents an aggregation of the tax expense or benefit associated with the specific country to which the pre-tax adjustment relates, calculated at the applicable jurisdictional tax rate.
(5) Represents the impact of the adjustments on the net earnings (loss) attributable to noncontrolling interest associated with the specific subsidiaries to which the adjustments relate.
*Non-GAAP measure.
Enstar Group Limited | First Quarter 2022 | Press Release 12
The table below presents a reconciliation of PPD to Adjusted PPD* and Annualized RLE to Annualized Adjusted RLE*:
| Three Months Ended | As of | Three Months Ended | ||||||||||||||||||||||||||||||
| March 31, 2022 | March 31, 2022 | December 31, 2021 | March 31, 2022 | March 31, 2022 | ||||||||||||||||||||||||||||
| PPD | Net loss reserves | Net loss reserves | Average net loss reserves | Annualized RLE % | ||||||||||||||||||||||||||||
| (in millions of U.S. dollars) | ||||||||||||||||||||||||||||||||
| PPD/net loss reserves/Annualized RLE | $ | 143 | $ | 10,962 | $ | 11,555 | $ | 11,259 | 5.1 | % | ||||||||||||||||||||||
| Non-GAAP Adjustments: | ||||||||||||||||||||||||||||||||
| Enhanzed Re | (28) | (150) | (181) | (166) | ||||||||||||||||||||||||||||
| Legacy Underwriting | (1) | (142) | (153) | (147) | ||||||||||||||||||||||||||||
| Net loss reserves - current period | — | (13) | — | (7) | ||||||||||||||||||||||||||||
| Reduction in provisions for ULAE / Net ULAE provisions | (22) | (394) | (416) | (405) | ||||||||||||||||||||||||||||
| Amortization of fair value adjustments / Net fair value adjustments associated with the acquisition of companies | 2 | 104 | 106 | 105 | ||||||||||||||||||||||||||||
Changes in fair value - fair value option / Net fair value adjustments for contracts for which we have elected the fair value option (1) | (98) | 201 | 107 | 154 | ||||||||||||||||||||||||||||
| Change in estimate of net ultimate liabilities - defendant A&E / Net nominal defendant A&E liabilities | 3 | 586 | 574 | 580 | ||||||||||||||||||||||||||||
| Adjusted PPD/Adjusted net loss reserves/Annualized Adjusted RLE* | $ | (1) | $ | 11,154 | $ | 11,592 | $ | 11,373 | 0.0 | % | ||||||||||||||||||||||
| Three Months Ended | As of | Three Months Ended | ||||||||||||||||||||||||||||||
| March 31, 2021 | March 31, 2021 | December 31, 2020 | March 31, 2021 | March 31, 2021 | ||||||||||||||||||||||||||||
| PPD | Net loss reserves | Net loss reserves | Average net loss reserves | Annualized RLE % | ||||||||||||||||||||||||||||
| (in millions of U.S. dollars) | ||||||||||||||||||||||||||||||||
| PPD/net loss reserves/Annualized RLE | $ | 110 | $ | 9,215 | $ | 8,544 | $ | 8,880 | 5.0 | % | ||||||||||||||||||||||
| Non-GAAP Adjustments: | ||||||||||||||||||||||||||||||||
| Legacy Underwriting | (6) | (153) | (955) | (555) | ||||||||||||||||||||||||||||
| Net loss reserves - current period | — | (48) | — | (24) | ||||||||||||||||||||||||||||
| Reduction in provisions for ULAE / Net ULAE provisions | (14) | (396) | (334) | (365) | ||||||||||||||||||||||||||||
| Amortization of fair value adjustments / Net fair value adjustments associated with the acquisition of companies | 2 | 125 | 128 | 127 | ||||||||||||||||||||||||||||
Changes in fair value - fair value option / Net fair value adjustments for contracts for which we have elected the fair value option (1) | (75) | 109 | 33 | 71 | ||||||||||||||||||||||||||||
| Change in estimate of net ultimate liabilities - defendant A&E / Net nominal defendant A&E liabilities | 9 | 599 | 615 | 607 | ||||||||||||||||||||||||||||
| Adjusted PPD/Adjusted net loss reserves/Annualized Adjusted RLE* | $ | 26 | $ | 9,451 | $ | 8,031 | $ | 8,741 | 1.2 | % | ||||||||||||||||||||||
(1) Comprises the discount rate and risk margin components.
*Non-GAAP measure.
Enstar Group Limited | First Quarter 2022 | Press Release 13
The table below presents a reconciliation of our Annualized TIR to our Annualized Adjusted TIR*:
| Three Months Ended | |||||||||||
| March 31, 2022 | March 31, 2021 | ||||||||||
| (in millions of U.S. dollars) | |||||||||||
| Net investment income | $ | 80 | $ | 62 | |||||||
| Net realized losses | (37) | (11) | |||||||||
| Net unrealized losses | (381) | (10) | |||||||||
| Earnings from equity method investments | 31 | 118 | |||||||||
| TIR ($) | $ | (307) | $ | 159 | |||||||
| Non-GAAP adjustment: | |||||||||||
| Net realized and unrealized losses on fixed maturity investments and funds held-directly managed | 334 | 206 | |||||||||
| Adjusted TIR ($)* | $ | 27 | $ | 365 | |||||||
| Total investments | $ | 17,242 | $ | 16,553 | |||||||
| Cash and cash equivalents, including restricted cash and cash equivalents | 1,135 | 996 | |||||||||
| Funds held by reinsured companies | 2,241 | 663 | |||||||||
| Total investable assets | $ | 20,618 | $ | 18,212 | |||||||
Average aggregate invested assets, at fair value (1) | 20,243 | 17,863 | |||||||||
Annualized TIR % (2) | (6.1) | % | 3.6 | % | |||||||
| Non-GAAP adjustment: | |||||||||||
| Net unrealized losses (gains) on fixed maturities, AFS investments included within AOCI and net unrealized losses (gains) on fixed maturities, trading instruments | 521 | (229) | |||||||||
| Adjusted investable assets* | $ | 21,139 | $ | 17,983 | |||||||
Adjusted average aggregate invested assets, at fair value* (3) | 20,459 | 17,468 | |||||||||
Annualized adjusted TIR %* (4) | 0.5 | % | 8.4 | % | |||||||
(1) This amount is a two period average of the total investable assets, as presented above, and is comprised of amounts disclosed in our quarterly and annual U.S. GAAP consolidated financial statements.
(2) Annualized TIR % is calculated by dividing the annualized TIR ($) by average aggregate invested assets, at fair value.
(3) This amount is a two period average of the adjusted investable assets*, as presented above.
(4) Annualized adjusted TIR %* is calculated by dividing the annualized adjusted TIR* ($) by adjusted average aggregate invested assets, at fair value*.
*Non-GAAP measure.
Enstar Group Limited | First Quarter 2022 | Press Release 14
enstargroup.com ENSTAR GROUP LIMITED Investor Financial Supplement March 31, 2022
| enstargroup.com 2 Table of Contents Page Explanatory Notes 3 Financial Highlights 4 Consolidated Results by Segment 5 Capital Position & Credit Ratings 7 Non-GAAP Measures 8 Reconciliation to Adjusted Book Value per Share 10 Reconciliation to Adjusted Return on Equity 11 Reconciliation to Adjusted Run-off Liabilities Earnings 12 Reconciliation to Adjusted Total Investment Return 13 Investable Assets - Management’s View 14
| enstargroup.com 3 Explanatory Notes About Enstar Enstar is a NASDAQ-listed leading global (re)insurance group that offers innovative capital release solutions through its network of group companies in Bermuda, the United States, the United Kingdom, Continental Europe, Australia, and other international locations. A market leader in completing legacy acquisitions, Enstar has acquired over 110 companies and portfolios since its formation in 2001. For further information about Enstar, see www.enstargroup.com. Basis of Presentation In this Investor Financial Supplement, the terms "we," "us," "our," "Enstar," or "the Company" refer to Enstar Group Limited and its consolidated subsidiaries. All information contained herein is unaudited. Unless otherwise noted, amounts are in millions of U.S. Dollars, except for share and per share amounts. Certain prior period comparatives have been reclassified to conform to the current presentation. This Investor Financial Supplement is being provided for informational purposes only. It should be read in conjunction with documents filed by Enstar with the U.S. Securities and Exchange Commission, including its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q. Non-GAAP Financial Measures In addition to our key financial measures presented in accordance with GAAP, we present other non-GAAP financial measures that we use to manage our business, compare our performance against prior periods and against our peers, and as performance measures in our annual incentive compensation program. These non-GAAP financial measures provide an additional view of our operational performance over the long-term and provide the opportunity to analyze our results in a way that is more aligned with the manner in which our management measures our underlying performance. The presentation of these non-GAAP financial measures, which may be defined and calculated differently by other companies, is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. We have presented the results and GAAP reconciliations for these measures for the quarters ended March 31, 2022 and 2021. Refer to pages 8 to 15 for further details. Cautionary Statement This Investor Financial Supplement contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include statements regarding the intent, belief or current expectations of Enstar and its management team. Investors are cautioned that any such forward- looking statements speak only as of the date they are made, are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Important risk factors regarding Enstar can be found under the heading "Risk Factors" in our Form 10-K for the year ended December 31, 2021 and are incorporated herein by reference. Furthermore, Enstar undertakes no obligation to update any written or oral forward-looking statements or publicly announce any updates or revisions to any of the forward-looking statements contained herein, to reflect any change in its expectations with regard thereto or any change in events, conditions, circumstances or assumptions underlying such statements, except as required by law.
| enstargroup.com 4 Three Months Ended March 31, 2022 March 31, 2021 Key Earnings Metrics Return on equity (“ROE”) (5.0) % 3.0 % Annualized ROE (20.2) % 11.9 % Adjusted ROE (1) (1.4) % 5.4 % Annualized adjusted ROE (1) (5.7) % 21.7 % Basic net (loss) earnings per share $ (16.04) $ 8.50 Diluted net (loss) earnings per share $ (16.04) $ 8.38 Key Run-off Metrics Average net loss reserves $ 11,259 $ 8,880 Annualized Run-off liability earnings (“RLE”) 5.1 % 5.0 % Average adjusted net loss reserves (1) $ 11,373 $ 8,741 Annualized adjusted RLE (1) — % 1.2 % Key Investment Return Metrics Average investable assets $ 20,243 $ 17,863 Annualized total investment return (“TIR”) (6.1) % 3.6 % Annualized investment book yield 1.91 % 1.86 % Earnings from equity method investments $ 31 $ 118 Average adjusted investable assets (1) $ 20,459 $ 17,468 Annualized adjusted TIR (1) 0.5 % 8.4 % Key Shareholder Metrics Ordinary shares repurchased: Shares 162,134 18,003 Cost $ 42 $ 4 Average price per share $ 257.49 $ 234.70 As of March 31, 2022 December 31, 2021 Key Shareholder Metrics Ordinary shareholders’ equity $ 5,024 $ 5,586 Total Enstar shareholders’ equity $ 5,534 $ 6,096 Book value per ordinary share (“BVPS”) $ 286.51 $ 316.34 Adjusted BVPS (1) $ 282.10 $ 310.80 Change in adjusted BVPS (9.2) % 10.5 % Total ordinary shares outstanding 17,535,407 17,657,944 Adjusted ordinary shares outstanding 17,809,487 17,973,149 Key Balance Sheet Metrics Total assets $ 23,240 $ 24,429 Debt obligations $ 1,904 $ 1,691 Total liabilities $ 17,292 $ 17,924 Total investable assets to ordinary shareholders’ equity 4.10x 3.89x Total net loss reserves to ordinary shareholders’ equity 2.18x 2.07x Debt to total capitalization attributable to Enstar 25.6 % 21.7 % Financial Highlights (1) Non-GAAP financial measure, refer to pages 8 to 15 for explanatory notes and a reconciliation to the most directly comparable GAAP measure.
| enstargroup.com 5 Consolidated Results by Segment - Q1 2022 Three Months Ended March 31, 2022 Run-off Enhanzed Re Investments Legacy Underwriting Corporate & Other (1) Total INCOME Net premiums earned $ 17 $ 14 $ — $ 3 $ — $ 34 Net investment income — — 76 4 — 80 Net realized losses — — (37) — — (37) Net unrealized losses — — (375) (6) — (381) Other income 10 — — 1 3 14 Total Income (Loss) 27 14 (336) 2 3 (290) EXPENSES Net incurred losses and loss adjustment expenses Current period 11 — — 2 — 13 Prior period (50) (29) — (1) (63) (143) Total net incurred losses and loss adjustment expenses (39) (29) — 1 (63) (130) Policyholder benefit expenses — 12 — — — 12 Acquisition costs 8 — — — — 8 General and administrative expenses 39 2 9 1 34 85 Total Expenses 8 (15) 9 2 (29) (25) EARNINGS (LOSS) BEFORE INTEREST EXPENSE, FOREIGN EXCHANGE AND INCOME TAXES 19 29 (345) — 32 (265) Earnings from equity method investments — — 31 — — 31 SEGMENT EARNINGS (LOSS) $ 19 $ 29 $ (314) $ — 32 (234) Interest expense (25) (25) Net foreign exchange losses (3) (3) NET LOSS (262) Net earnings attributable to noncontrolling interest (11) (11) NET LOSS ATTRIBUTABLE TO ENSTAR (273) Dividends on preferred shares (9) (9) NET LOSS ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ (16) $ (282) (1) Other income (expense) for corporate and other activities includes the amortization of fair value adjustments associated with the acquisition of DCo, LLC (“DCo”) and Morse TEC LLC (“Morse TEC”). Net incurred losses and loss adjustment expenses for corporate and other activities includes amortization of deferred charge assets (“DCAs”) on retroactive reinsurance contracts and fair value adjustments associated with the acquisition of companies and the changes in the discount rate and risk margin components of the fair value of liabilities related to our assumed retroactive reinsurance agreements for which we have elected the fair value option. The three months ended March 31, 2022 included accelerated amortization of $24 million corresponding to increased favorable prior period development (“PPD”) on net ultimate liabilities recorded in our Run-off segment.
| enstargroup.com 6 Consolidated Results by Segment - Q1 2021 Three Months Ended March 31, 2021 Run-off Investments Legacy Underwriting Corporate & Other (1) Total INCOME Net premiums earned $ 73 $ — $ 20 $ — $ 93 Net investment income — 61 1 — 62 Net realized losses — (10) (1) — (11) Net unrealized losses — (10) — — (10) Other income (expense) 22 — (7) (5) 10 Net gain of sale of subsidiaries — — — 15 15 Total Income 95 41 13 10 159 EXPENSES Net incurred losses and loss adjustment expenses Current period 44 — 10 — 54 Prior period (39) — (6) (65) (110) Total net incurred losses and loss adjustment expenses 5 — 4 (65) (56) Acquisition costs 29 — 5 — 34 General and administrative expenses (2) 28 3 2 50 83 Total Expenses 62 3 11 (15) 61 EARNINGS BEFORE INTEREST EXPENSE, FOREIGN EXCHANGE AND INCOME TAXES 33 38 2 25 98 Earnings from equity method investments — 118 — — 118 SEGMENT EARNINGS $ 33 $ 156 $ 2 25 216 Interest expense (16) (16) Net foreign exchange losses (3) (3) Income tax benefit 6 6 NET EARNINGS 203 Net earnings attributable to noncontrolling interest (11) (11) NET EARNINGS ATTRIBUTABLE TO ENSTAR 192 Dividends on preferred shares (9) (9) NET (LOSS) EARNINGS ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ (8) $ 183 (1) Other income (expense) for corporate and other activities includes the amortization of fair value adjustments associated with the acquisition of DCo and Morse TEC. Net incurred losses and loss adjustment expenses for corporate and other activities includes amortization of DCAs on retroactive reinsurance contracts and fair value adjustments associated with the acquisition of companies and the changes in the discount rate and risk margin components of the fair value of liabilities related to our assumed retroactive reinsurance agreements for which we have elected the fair value option. (2) We refined our approach to our general and administrative expense allocations in the second quarter of 2021. Under the revised methodology, our first quarter 2021 general and administrative expenses for the Run-off and Investments segments would have increased by $16 million and $3 million, respectively, and our corporate and other activities would have decreased by $19 million.
| enstargroup.com 7 Capital position March 31, 2022 December 31, 2021 Change Ordinary shareholders' equity $ 5,024 $ 5,586 $ (562) Series D and E preferred shares 510 510 — Total Enstar shareholders' equity 5,534 6,096 (562) Noncontrolling interest 233 230 3 Total shareholders' equity 5,767 6,326 (559) Senior notes 990 1,270 (280) Subordinated notes 914 421 493 Revolving credit facility — — — Total debt obligations 1,904 1,691 213 Redeemable noncontrolling interest 181 179 2 Total capitalization $ 7,852 $ 8,196 $ (344) Total capitalization attributable to Enstar $ 7,438 $ 7,787 $ (349) Debt to total capitalization 24.2 % 20.6 % 3.6 pp Debt and Series D and E Preferred Shares to total capitalization 30.7 % 26.9 % 3.8 pp Debt to total capitalization attributable to Enstar 25.6 % 21.7 % 3.9 pp Debt and Series D and E Preferred Shares to total capitalization attributable to Enstar 32.5 % 28.3 % 4.2 pp Capital Position & Credit Ratings Credit ratings (1) Standard and Poor’s Fitch Ratings Long-term issuer BBB (Outlook: Positive) BBB (Outlook: Positive) 2029 Senior Notes BBB BBB- 2031 Senior Notes BBB- BBB- 2040 and 2042 Junior Subordinated Notes BB+ BB+ 2031 Subordinated Notes Not Rated Not Rated Series D and E Preferred Shares BB+ BB+ (1) Credit ratings are provided by third parties, Standard & Poor’s and Fitch Ratings, and are subject to certain limitations and disclaimers. For information on these ratings, refer to the rating agencies’ websites and other publications. pp - Percentage point(s)
| enstargroup.com 8 Non-GAAP Measures Non-GAAP Measure Definition Purpose of Non-GAAP Measure over GAAP Measure Adjusted book value per ordinary share Total Enstar ordinary shareholders' equity Divided by Number of ordinary shares outstanding, adjusted for: -the ultimate effect of any dilutive securities on the number of ordinary shares outstanding Increases the number of ordinary shares to reflect equity awards granted but not yet vested as, over the long term, this presents a prudent view of our book value per share. We use this non-GAAP measure in our annual incentive compensation program. Adjusted return on equity Adjusted operating income (loss) attributable to Enstar ordinary shareholders divided by adjusted opening Enstar ordinary shareholder's equity Calculating the operating income (loss) as a percentage of our adjusted opening Enstar ordinary shareholders' equity provides a more valuable and consistent measure of the performance of our business, and enhances comparisons to prior periods: • by adjusting investment returns for the temporary impact of the change in fair value of fixed maturity securities (both credit spreads and interest rates) which we hold until the earlier of maturity or used to fund any settlement of related liabilities which are generally recorded at cost; • by removing the impact of non-cash charges that obscure our trends on a consistent basis; and • by removing items that are not indicative of our ongoing operations; We use this non-GAAP measure in our annual incentive compensation program. We include the amortization of fair value adjustments as a non- GAAP adjustment to the adjusted operating income (loss) attributable to Enstar ordinary shareholders as it is considered to be a non-cash charge and not indicative of our operating results. Adjusted operating income (loss) attributable to Enstar ordinary shareholders (numerator) Net earnings (loss) attributable to Enstar ordinary shareholders, adjusted for: -net realized and unrealized (gains) losses on fixed maturity investments and funds held- directly managed -change in fair value of insurance contracts for which we have elected the fair value option (1) -amortization of fair value adjustments -net gain/loss on purchase and sales of subsidiaries (if any) -net earnings from discontinued operations (if any) -tax effects of adjustments -adjustments attributable to noncontrolling interest Adjusted opening Enstar ordinary shareholders' equity (denominator) Opening Enstar ordinary shareholders' equity, less: -net unrealized gains (losses) on fixed maturity investments and funds held-directly managed, -fair value of insurance contracts for which we have elected the fair value option (1), -fair value adjustments, and -net assets of held for sale or disposed subsidiaries classified as discontinued operations (if any) Adjusted total investment return (%) Adjusted total investment return (dollars) recognized in earnings for the applicable period divided by period average adjusted total investable assets. Provides a key measure of the return generated on the capital held in the business and is reflective of our investment strategy. Provides a consistent measure of investment returns as a percentage of all assets generating investment returns. Adjusts investment returns for the temporary impact of the change in fair value of fixed maturity securities (both credit spreads and interest rates) which we hold until the earlier of maturity or used to fund any settlement of related liabilities which are generally recorded at cost. Adjusted total investment return ($) (numerator) Total investment return (dollars), adjusted for: -net realized and unrealized (gains) losses on fixed maturity investments and funds held- directly managed Adjusted average aggregate total investable assets (denominator) Total average investable assets, adjusted for: -net unrealized (gains) losses on fixed maturities, AFS investments included within AOCI -net unrealized (gains) losses on fixed maturities, trading instruments (1) Comprises the discount rate and risk margin components. (1) Comprises the discount rate and risk margin components.
| enstargroup.com 9 Non-GAAP Measures (continued) Non-GAAP Measure Definition Purpose of Non-GAAP Measure over GAAP Measure Adjusted run-off liability earnings (%) Adjusted PPD divided by average adjusted net loss reserves Calculating the RLE as a percentage of our adjusted average net loss reserves provides a more meaningful measurement of our claims management performance. We use this measure to evaluate our ability to settle our obligations for amounts less than our initial estimate at the point of acquiring the obligations. In order to provide a complete and consistent picture of our claims performance, we combine the reduction (increase) in estimates of prior period net ultimate losses relating to our Run-off segment with the amortization of deferred charge assets, both of which are included in net incurred losses and LAE and have an inverse effect on our results. We also include our performance in managing our defendant A&E liabilities, that do not form part of loss reserves. The remaining components of net incurred losses and LAE and net loss reserves are not considered key components of our claims performance as they are either not non-life run-off in nature, or are considered to be non-cash charges that obscure our trends on a consistent basis. We use this measure to assess the performance of our claim strategies and part of the performance assessment of our past acquisitions. Adjusted prior period development (numerator) Prior period net incurred losses and LAE, adjusted to: Remove: -Legacy Underwriting and Enhanzed Re operations -the reduction/(increase) in provisions for unallocated LAE (ULAE) -amortization of fair value adjustments, -change in fair value of insurance contracts for which we have elected the fair value option (1), and Add: -the reduction/(increase) in estimates of our defendant A&E ultimate net liabilities. Adjusted net loss reserves (denominator) Net losses and LAE, adjusted to: Remove: -Legacy Underwriting and Enhanzed Re net loss reserves -current period net loss reserves -the net ULAE provision -net fair value adjustments associated with the acquisition of companies, -the fair value adjustments for contracts for which we have elected the fair value option (1) and Add: -net nominal defendant asbestos and environmental exposures. Investable assets - management's view Investable assets, adjusted to reallocate certain categories of investments based on management's view of the underlying economic exposure of a particular investment. Refer to the reconciliation for further details. Management’s view “looks through” the legal form of an investment and aggregates the classification based upon the underlying economic exposure of each investment, which is consistent with the manner in which management views our investment portfolio composition. (1) Comprises the discount rate and risk margin components.
| enstargroup.com 10 Reconciliation to Adjusted Book Value Per Share As of March 31, 2022 December 31, 2021 Equity (1) Ordinary Shares Per Share Amount Equity (1) Ordinary Shares Per Share Amount Book value per ordinary share $ 5,024 17,535,407 $ 286.51 $ 5,586 17,657,944 $ 316.34 Non-GAAP adjustments: Share-based compensation plans — 274,080 — 315,205 Adjusted book value per ordinary share* $ 5,024 17,809,487 $ 282.10 $ 5,586 17,973,149 $ 310.80 (1) Equity comprises Enstar ordinary shareholders' equity, which is calculated as Enstar shareholders' equity less preferred shares ($510 million), prior to any non-GAAP adjustments. * Non-GAAP financial measure.
| enstargroup.com 11 Reconciliation to Adjusted Return on Equity - Q1 2022 and 2021 Three Months Ended March 31, 2022 2021 Net (loss) earnings (1) Opening equity (1) (Adj) ROE Annualized (Adj) ROE Net (loss) earnings (1) Opening equity (1) (Adj) ROE Annualized (Adj) ROE Net (loss) earnings/Opening equity/ROE/Annualized ROE (1) $ (282) $ 5,586 (5.0) % (20.2) % $ 183 $ 6,164 3.0 % 11.9 % Non-GAAP adjustments: Net realized and unrealized losses on fixed maturity investments and funds held - directly managed / Net unrealized gains on fixed maturity investments and funds held - directly managed (2) 334 (89) 206 (560) Change in fair value of insurance contracts for which we have elected the fair value option / Fair value of insurance contracts for which we have elected the fair value option (3) (98) (107) (75) (33) Amortization of fair value adjustments / Fair value adjustments 2 (106) 2 (128) Net gain on sales of subsidiaries — (15) Tax effects of adjustments (4) (26) (17) Adjustments attributable to noncontrolling interest (5) (5) 11 Adjusted operating (loss) income/Adjusted opening equity/Adjusted ROE/ Annualized adjusted ROE* $ (75) $ 5,284 (1.4) % (5.7) % $ 295 $ 5,443 5.4 % 21.7 % (1) Net (loss) earnings comprises net (loss) earnings attributable to Enstar ordinary shareholders, prior to any non-GAAP adjustments. Opening equity comprises Enstar ordinary shareholders' equity, which is calculated as opening Enstar shareholders' equity less preferred shares ($510 million), prior to any non-GAAP adjustments. (2) Represents the net realized and unrealized losses related to fixed maturity securities. Our fixed maturity securities are held directly on our balance sheet and also within the "Funds held - directly managed" balance. (3) Comprises the discount rate and risk margin components. (4) Represents an aggregation of the tax expense or benefit associated with the specific country to which the pre-tax adjustment relates, calculated at the applicable jurisdictional tax rate. (5) Represents the impact of the adjustments on the net earnings (loss) attributable to noncontrolling interest associated with the specific subsidiaries to which the adjustments relate. * Non-GAAP financial measure.
| enstargroup.com 12 Reconciliation to Adjusted Run-off Liability Earnings Three Months Ended As of Three Months Ended March 31, 2022 March 31, 2022 December 31, 2021 March 31, 2022 March 31, 2022 PPD Net loss reserves Net loss reserves Average net loss reserves Annualized RLE % PPD/net loss reserves/Annualized RLE $ 143 $ 10,962 $ 11,555 $ 11,259 5.1 % Non-GAAP Adjustments: Enhanzed Re (28) (150) (181) (166) Legacy Underwriting (1) (142) (153) (147) Net loss reserves - current period — (13) — (7) Reduction in provisions for ULAE / Net ULAE provisions (22) (394) (416) (405) Amortization of fair value adjustments / Net fair value adjustments associated with the acquisition of companies 2 104 106 105 Changes in fair value - fair value option / Net fair value adjustments for contracts for which we have elected the fair value option (1) (98) 201 107 154 Change in estimate of net ultimate liabilities - defendant A&E / Net nominal defendant A&E liabilities 3 586 574 580 Adjusted PPD/Adjusted net loss reserves/Annualized Adjusted RLE* $ (1) $ 11,154 $ 11,592 $ 11,373 0.0 % (1) Comprises the discount rate and risk margin components. * Non-GAAP financial measure. Three Months Ended As of Three Months Ended March 31, 2021 March 31, 2021 December 31, 2020 March 31, 2021 March 31, 2021 PPD Net loss reserves Net loss reserves Average net loss reserves Annualized RLE % PPD/net loss reserves/Annualized RLE $ 110 $ 9,215 $ 8,544 $ 8,880 5.0 % Non-GAAP Adjustments: Legacy Underwriting (6) (153) (955) (555) Net loss reserves - current period — (48) — (24) Reduction in provisions for ULAE / Net ULAE provisions (14) (396) (334) (365) Amortization of fair value adjustments / Net fair value adjustments associated with the acquisition of companies 2 125 128 127 Changes in fair value - fair value option / Net fair value adjustments for contracts for which we have elected the fair value option (1) (75) 109 33 71 Change in estimate of net ultimate liabilities - defendant A&E / Net nominal defendant A&E liabilities 9 599 615 607 Adjusted PPD/Adjusted net loss reserves/Annualized Adjusted RLE* $ 26 $ 9,451 $ 8,031 $ 8,741 1.2 %
| enstargroup.com 13 Reconciliation to Adjusted Total Investment Return Three Months Ended March 31, 2022 2021 Investment results Net investment income $ 80 $ 62 Net realized losses (37) (11) Net unrealized losses (381) (10) Earnings from equity method investments 31 118 TIR ($) $ (307) $ 159 Non-GAAP adjustment: Net realized and unrealized losses on fixed maturity investments and funds held-directly managed 334 206 Adjusted TIR ($)* $ 27 $ 365 Total investments 17,242 16,553 Cash and cash equivalents, including restricted cash and cash equivalents 1,135 996 Funds held by reinsured companies 2,241 663 Total investable assets $ 20,618 $ 18,212 Average aggregate invested assets, at fair value (1) $ 20,243 $ 17,863 Annualized TIR % (2) (6.1) % 3.6 % Non-GAAP adjustment: Net unrealized losses (gains) on fixed maturities, AFS investments included within AOCI and net unrealized losses (gains) on fixed maturities, trading instruments 521 (229) Adjusted investable assets* $ 21,139 $ 17,983 Adjusted average aggregate invested assets, at fair value (3) $ 20,459 $ 17,468 Annualized adjusted TIR %* (4) 0.5 % 8.4 % (1) This amount is a two period average of the total investable assets, as presented above, and is comprised of amounts disclosed in our quarterly and annual U.S. GAAP consolidated financial statements. (2) Annualized TIR % is calculated by dividing the annualized TIR ($) by average aggregate invested assets, at fair value. (3) This amount is a two period average of the adjusted investable assets*, as presented above. (4) Annualized adjusted TIR %* is calculated by dividing the annualized adjusted TIR* ($) by adjusted average aggregate invested assets, at fair value*. *Non-GAAP measure.
| enstargroup.com 14 Investable Assets - Management’s View* - March 31, 2022 * Non-GAAP financial measure. Consolidated Balance Sheet View March 31, 2022 Exchange traded funds backed by fixed income securities Bonds, CLO equities and private debt held in equity format Equities, privately held equity, private credit and real estate held in fund format CLO equity funds Other assets and liabilities in funds held format March 31, 2022 Management's View of Underlying Economic Exposure Short-term and fixed maturity investments, trading and AFS and funds held - directly managed, excluding other assets $ 11,195 $ 11,195 Fixed maturities Other assets included within funds held - directly managed 221 (221) — Equities 2,444 (1,227) (125) (1) 1,091 Equities* Other Investments: Hedge funds 315 315 Hedge funds Fixed income funds 656 1,227 63 1,946 Bond/loan funds* Equity funds 4 (4) — Private equity funds 1,068 (107) 961 Private equity funds* CLO equities 156 32 234 422 CLO equities* CLO equity funds 234 (234) — Private credit funds 296 30 77 403 Private credit* Real estate debt fund 134 35 169 Real estate* Total 2,863 4,216 Equity method investments 519 519 Equity method investments Total investments 17,242 17,021 Cash and cash equivalents (including restricted cash) 1,135 1,135 Cash and cash equivalents (including restricted cash) Funds held by reinsured companies 2,241 221 2,462 Funds held* Total investable assets $ 20,618 $ 20,618 Total investable assets
| enstargroup.com 15 Investable Assets - Management’s View* - December 31, 2021 * Non-GAAP financial measure. Consolidated Balance Sheet View December 31, 2021 Exchange traded funds backed by fixed income securities Bonds, CLO equities and private debt held in equity format Equities, privately held equity, private credit and real estate held in fund format CLO equity funds Other assets and liabilities in funds held format December 31, 2021 Management's View of Underlying Economic Exposure Short-term and fixed maturity investments, trading and AFS and funds held - directly managed, excluding other assets $ 12,254 $ 12,254 Fixed maturities Other assets included within funds held - directly managed 201 (201) — Equities 1,995 (969) (121) (3) 902 Equities* Other Investments: Hedge funds 291 291 Hedge funds Fixed income funds 573 969 64 1,606 Bond/loan funds* Equity funds 5 (5) — Private equity funds 752 (110) 642 Private equity funds* CLO equities 161 32 207 400 CLO equities* CLO equity funds 207 (207) — Private credit funds 275 25 85 385 Private credit* Real estate debt fund 69 33 102 Real estate* Total 2,333 3,426 Equity method investments 493 493 Equity method investments Total investments 17,276 17,075 Cash and cash equivalents (including restricted cash) 2,092 2,092 Cash and cash equivalents (including restricted cash) Funds held by reinsured companies 2,340 201 2,541 Funds held* Total investable assets $ 21,708 $ 21,708 Total investable assets