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): February 25, 2021
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 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Chief Financial Officer
On February 25, 2021, the Board of Directors of Enstar Group Limited (the "Company") approved the appointment of Zachary Wolf to the role of Chief Financial Officer of the Company ("CFO"), with effect from March 2, 2021. Upon assuming the role of Chief Financial Officer, Mr. Wolf will also become the Company's designated principal financial officer.
As described in the Company's Form 8-K filed on August 21, 2020, Mr. Wolf, age 40, joined the Company as its Deputy Chief Financial Officer on September 21, 2020. He previously served as Executive Vice President, Strategic Development of AmTrust Financial Services, Inc. (“AmTrust”) from January 2020. From 2017 to 2020, he served as Deputy CFO and Senior Vice President of AmTrust, and prior to that he was Vice President of Strategic Development from 2013 to 2017. Before joining AmTrust, Mr. Wolf worked in the financial services industry, including for six years at Standard & Poor’s as a senior director. Mr. Wolf's assumption of the role of CFO will follow the end of Guy Bowker's service as CFO. Mr. Bowker notified the Company of his intent to resign on April 6, 2020 and agreed to remain with the Company through March 1, 2021 pursuant to the terms of a transition agreement.
Mr. Wolf’s employment agreement with Enstar (US), Inc., a wholly-owned subsidiary of the Company, provides for base salary, eligibility to participate in the Company’s Annual Incentive Program beginning with the 2020 calendar year, eligibility to participate annually in the Company’s Equity Incentive Plan, and sign-on equity incentive awards. He is eligible to participate in the Enstar (US), Inc. benefit and 401(k) plans generally available to all employees in the United States and to receive severance payments upon termination without cause or resignation for good reason.
Appointment of Principal Accounting Officer
On February 25, 2021, Kathleen Carbone, the Company's Chief Accounting Officer, was designated as the principal accounting officer of the Company, effective March 2, 2021. Mr. Bowker continued to serve as the Company’s principal accounting officer through March 1, 2021.
Ms. Carbone, age 49, joined the Company on December 14, 2020. She previously served as Group Controller of American International Group, Inc. ("AIG") from October 2018. From September 2016 to October 2018, she served as Corporate Controller of AIG, and prior to that she held various senior roles within the Controllership function of AIG from 2012 to 2016. Before joining AIG, Ms. Carbone spent twelve years as an auditor in PwC’s NY Metro Insurance practice. Ms. Carbone is a licensed certified public accountant in the state of New York.
Item 7.01. Regulation FD Disclosure
On March 1, 2021, the Company issued a Financial Supplement for the year ended December 31, 2020 (the “Financial Supplement”), a copy of which is attached hereto as Exhibit 99.1 and is 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 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 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 7.01 of this Current Report on Form 8-K and Exhibit 99.1 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
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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 February 25, 2021 the Company's board of directors approved an extension of the duration of the Company's previously announced ordinary share repurchase program (the “Repurchase Program”) through March 1, 2022. The Repurchase Program was previously set to expire on March 1, 2021.
Pursuant to the Repurchase Program, the Company may repurchase a limited number of its ordinary shares, not to exceed $150 million in aggregate (the “Authorized Shares”) including shares repurchased prior to the extension of the Repurchase Program. Prior to its extension, the Company had repurchased 178,280 ordinary shares for an aggregate amount of $26.0 million under the Repurchase Program. The remaining capacity under the Repurchase Program is $124.0 million.
Repurchases under the Repurchase Program will be administered through an independent broker in accordance with guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934. Repurchases will be subject to SEC regulations as well as certain price, market volume and timing constraints specified in the plan. As a result of these constraints, execution of the plan may not result in all or any of the remaining Authorized Shares being repurchased by the Company. The Repurchase Program may be modified, extended or terminated by the Company's board of directors at any time.
Item 9.01. Financial Statements and Exhibits
Exhibits
Exhibit No. | Description | |||||||
| Financial Supplement for the year ended December 31, 2020. | ||||||||
| 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) | |||||||
* * *
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K 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 Enstar’s Form 10-K for the year ended December 31, 2020 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.
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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 | |||||||||||
| March 1, 2021 | By: | /s/ Paul J. O'Shea | |||||||||
| Paul J. O'Shea | |||||||||||
| President | |||||||||||
enstargroup.com ENSTAR GROUP LIMITED Investor Financial Supplement December 31, 2020
| enstargroup.com 2 Page Explanatory Notes 3 Financial Highlights 5 Book Value Per Share 6 Book Value & Share Price Performance 7 Summary Balance Sheets 8 Summary Earnings Statements 9 Earnings Per Share 10 Non-GAAP Operating Income 11 Non-life Run-off Reserve / Claims Savings 12 Investment Composition - GAAP 13 Investment Performance - GAAP 14 Investment Composition - Non-GAAP 15 Investment Composition - Non-GAAP Reconciliation 16 Capital Position & Credit Ratings 17 Results by Segment 18 Table of Contents
| enstargroup.com 3 Explanatory Notes About Enstar Enstar is a NASDAQ-listed leading global 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 100 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 thousands of U.S. Dollars, except for share and per share amounts and ratio information. 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 Operating Income (Loss) Attributable to Enstar Ordinary Shareholders In addition to presenting net earnings (loss) attributable to Enstar ordinary shareholders and diluted earnings (loss) per ordinary share determined in accordance with U.S. GAAP, we believe that presenting non-GAAP operating income (loss) attributable to Enstar ordinary shareholders and diluted non-GAAP operating income (loss) per ordinary share, both of which are non- GAAP financial measures as defined in SEC Regulation G, provides investors with valuable measures of our performance. Non-GAAP operating income (loss) is net earnings attributable to Enstar ordinary shareholders excluding: (i) net realized and unrealized (gains) losses on fixed maturity investments and funds held - directly managed included in net earnings (loss), (ii) change in fair value of insurance contracts for which we have elected the fair value option, (iii) gain (loss) on sale of subsidiaries, if any, (vi) net earnings (loss) from discontinued operations, if any, (v) tax effect of these adjustments where applicable, and (vi) attribution of share of adjustments to noncontrolling interest where applicable. We eliminate the impact of net realized and unrealized (gains) losses on fixed maturity investments and funds held - directly managed and change in fair value of insurance contracts for which we have elected the fair value option because these items are subject to significant fluctuations in fair value from period to period, driven primarily by market conditions and general economic conditions, and therefore their impact on our earnings is not reflective of the performance of our core operations. We eliminate the impact of gain (loss) on sale of subsidiaries and net earnings (loss) from discontinued operations because these are also not reflective of the performance of our core operations. Diluted Non-GAAP operating income (loss) per ordinary share is diluted net earnings per ordinary share excluding the per diluted share amounts of each of the adjustments used to calculate non-GAAP operating income (loss). We believe these non-GAAP measures enable readers of our consolidated financial statements to analyze our results in a way that is more aligned with the manner in which our management measures our underlying performance. We believe that presenting these non-GAAP financial measures, which may be defined and calculated differently by other companies, improves the understanding of our consolidated results of operations. These measures should not be viewed as substitutes for those calculated in accordance with U.S. GAAP. Reserve / Claims Savings - Non-GAAP Reserve / Claims Savings is a non-GAAP measure calculated using components of amounts determined in accordance with U.S. GAAP and disclosed in our quarterly and annual U.S. GAAP consolidated financial statements. Reserve / Claims Savings is calculated by adding (i) the reduction (increase) in estimates of net ultimate losses relating to prior periods, included in net incurred losses and LAE, and (ii) the reduction (increase) in estimates of ultimate net defendant asbestos and environmental (“Defendant A&E”) liabilities relating to prior periods, included in other income (expense). Because the reduction (increase) in estimates of ultimate Defendant A&E liabilities for prior periods is presented as a component of other income (expense) in our consolidated statement of earnings, there is not a U.S. GAAP measure that is directly comparable to Reserve/Claims Savings presented on a non-GAAP basis. However, we believe Reserve / Claims Savings provides investors with a meaningful measure of claims management performance within our Non-life Run-off segment that is consistent with management’s view of the business because it combines the reduction (increase) in estimates of net ultimate losses related to our direct exposure to certain acquired asbestos and environmental liabilities with the reduction (increase) in estimates of net ultimate losses related to liabilities that we have insured. See “Non-life Run-off Reserve / Claim Savings” on page 12 for further information.
| enstargroup.com 4 Explanatory Notes (continued) Investment Composition - Non-GAAP In certain instances, U.S. GAAP requirements result in classifications of our investment assets that may not correspond to management’s view of the underlying economic exposure of a particular investment. As such, we have prepared a non-GAAP view of our invested assets based on our assessment of the underlying economic exposure of each investment, which is consistent with the manner in which management views our investment portfolio composition. GAAP requires, in part, that invested assets be classified based upon the legal form of the investment without regard to the underlying economic exposure. Management’s view “looks through” the legal form of an investment and aggregates the classification based upon the underlying economic exposure of each investment. For example: 1. Enstar has certain private equity funds, privately held equity (which are direct investments in companies), private credit funds and real estate equity funds that are collectively held in a limited partnership. U.S. GAAP requires that the investment be classified as “Private equity funds” within “Other Investments.” For management reporting purposes, we disaggregate private equity funds, privately held equity, private credit funds and real estate equity funds and present them separately based on the underlying investment. 2. Enstar has certain public equity investments that are held directly on its balance sheet and some that are held in a fund. U.S. GAAP requires that the investment on our balance sheet be classified as “Equities” in our financial statements. Public equity held in fund format is classified as “Equity funds” within “Other Investments”. For management reporting purposes, we have aggregated all directly held public equity and public equity funds into one line item “Equities.” 3. Enstar has certain investments in public shares of exchange traded funds (“ETF”) where the underlying exposure of the ETF is an investment in investment grade fixed income securities. U.S. GAAP requires that the investment be classified as “Equities”. For management reporting, we have classified the investment as “Bond/loan funds.” 4. Enstar has certain investments in public equity investments where the underlying investments are CLO mezzanine debt. For management reporting purposes, we have classified these investments as “Bond/loan funds.” 5. Enstar has certain investments in direct CLO equities and some in fund format. For management reporting purposes, we have aggregated all CLO equities into one line item of “CLO equities.” Underwriting Ratios In presenting our results for the Atrium and StarStone segments, we discuss the loss ratio, acquisition expense ratio, operating expense ratio, and the combined ratio of our active underwriting operations within these segments. Management believes that these ratios provide the most meaningful measure for understanding our underwriting profitability. These measures are calculated using U.S. GAAP figures presented on the statements of earnings for both Atrium and StarStone. The loss ratio is calculated by dividing net incurred losses and LAE by net premiums earned. The acquisition expense ratio is calculated by dividing acquisition costs by net premiums earned. The operating expense ratio is calculated by dividing operating expenses by net premiums earned. The combined ratio is the sum of the loss ratio, the acquisition expense ratio and the operating expense ratio. 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, including the ongoing COVID-19 pandemic and the related uncertainty and volatility in the financial markets. Important risk factors regarding Enstar can be found under the heading "Risk Factors" in our Form 10-K for the year ended December 31, 2020 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 5 Three Months Ended Twelve Months Ended December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Key Earnings Metrics Net earnings attributable to Enstar ordinary shareholders $ 822,599 $ 193,839 $ 1,719,344 $ 902,175 Non-GAAP operating income attributable to Enstar ordinary shareholders (1) $ 747,881 $ 216,813 $ 1,552,101 $ 557,968 Basic net earnings per ordinary share $ 38.24 $ 9.02 $ 79.78 $ 42.00 Diluted net earnings per ordinary share $ 37.79 $ 8.89 $ 78.80 $ 41.43 Diluted non-GAAP operating income per ordinary share (1) $ 34.36 $ 9.94 $ 71.14 $ 25.62 Key Non-life Run-off Metric Reduction in estimates of net ultimate losses - prior periods $ 46,661 $ 88,604 $ 127,116 $ 219,085 Reduction in estimates of ultimate net defendant A&E liabilities - prior periods 27,834 4 103,166 4,263 Total Non-life Run-off reserve / claims savings (1) $ 74,495 $ 88,608 $ 230,282 $ 223,348 Key Investment Return Metrics Net investment income $ 61,530 $ 76,847 $ 302,817 $ 308,271 Net realized gains 63,957 36,828 178,851 86,071 Net unrealized gains, trading 739,510 116,649 1,463,168 925,895 Total investment return included in net earnings $ 864,997 $ 230,324 $ 1,944,836 $ 1,320,237 Unrealized gains (losses), on fixed income securities, AFS, net of reclassification adjustments excluding FX 25,276 (2,603) 69,005 (1,872) Total investment return $ 890,273 $ 227,721 $ 2,013,841 $ 1,318,365 Total investable assets $ 17,265,865 $ 14,066,874 $ 17,265,865 $ 14,066,874 Annualized investment book yield 2.00 % 2.83 % 2.53 % 2.80 % Investment return included in net earnings 5.36 % 1.69 % 12.99 % 9.78 % Total investment return 5.51 % 1.67 % 13.45 % 9.77 % Earnings from equity method investments $ 85,844 $ 11,722 $ 238,569 $ 55,910 Key Shareholder Metrics Ordinary shareholders’ equity $ 6,164,395 $ 4,332,183 $ 6,164,395 $ 4,332,183 Total Enstar shareholders’ equity $ 6,674,395 $ 4,842,183 $ 6,674,395 $ 4,842,183 Basic book value per ordinary share $ 286.45 $ 201.39 $ 286.45 $ 201.39 Fully diluted book value per ordinary share $ 281.20 $ 197.93 $ 281.20 $ 197.93 Change in fully diluted book value per ordinary share 16.0 % 4.8 % 42.1 % 26.9 % Annualized GAAP return on opening ordinary shareholder equity 62.0 % 18.8 % 39.7 % 26.6 % Ordinary shares repurchased under repurchase program: Shares 3,816 — 178,280 — Cost $ 617 $ — $ 26,006 $ — Average price per share $ 161.64 $ — $ 145.87 $ — Total ordinary shares outstanding 21,519,602 21,511,505 21,519,602 21,511,505 Fully diluted ordinary shares outstanding 21,993,598 21,989,971 21,993,598 21,989,971 Key Balance Sheet Metrics Total assets $ 21,647,284 $ 19,826,099 $ 21,647,284 $ 19,826,099 Debt obligations $ 1,373,259 $ 1,191,207 $ 1,373,259 $ 1,191,207 Total liabilities $ 14,593,844 $ 14,530,957 $ 14,593,844 $ 14,530,957 Total investable assets to ordinary shareholders’ equity 2.80x 3.25x 2.80x 3.25x Debt to total capitalization attributable to Enstar 17.1 % 19.7 % 17.1 % 19.7 % Financial Highlights (1) Non-GAAP financial measure, refer to the explanatory notes on Page 3 for further details.
| enstargroup.com 6 Book Value Per Share December 31, 2020 December 31, 2019 Numerator: Total Enstar shareholder's equity $ 6,674,395 $ 4,842,183 Less: Series D and E preferred shares 510,000 510,000 Total Enstar ordinary shareholders' equity (A) 6,164,395 4,332,183 Proceeds from assumed conversion of warrants(1) 20,229 20,229 Numerator for fully diluted book value per ordinary share calculations (B) $ 6,184,624 $ 4,352,412 Denominator: Ordinary shares outstanding (C) (2) 21,519,602 21,511,505 Effect of dilutive securities: Share-based compensation plans (3) 298,095 302,565 Warrants(1) 175,901 175,901 Fully diluted ordinary shares outstanding (D) 21,993,598 21,989,971 Book value per ordinary share: Basic book value per ordinary share = (A) / (C) $ 286.45 $ 201.39 Fully diluted book value per ordinary share = (B) / (D) $ 281.20 $ 197.93 Growth in Fully Diluted Book Value Per Share $71.68 $82.97 $93.30 $105.20 $119.22 $129.65 $143.68 $159.19 $155.94 $197.93 $281.20 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 $0 $50 $100 $150 $200 $250 $300 (1) There are warrants outstanding to acquire 175,901 Series C Non-Voting Ordinary Shares for an exercise price of $115.00 per share, subject to certain adjustments (the "Warrants"). The Warrants were issued in April 2011 and expire in April 2021. The Warrant holder may, at its election, satisfy the exercise price of the Warrants on a cashless basis by surrender of shares otherwise issuable upon exercise of the Warrants in accordance with a formula set forth in the Warrants. (2) Ordinary shares outstanding includes voting and non-voting shares but excludes ordinary shares held in the Enstar Group Limited Employee Benefit Trust (the "EB Trust") in respect of awards made under our Joint Share Ownership Plan, a sub-plan to our Amended and Restated 2016 Equity Incentive Plan (the "JSOP"). (3) Share-based dilutive securities include restricted shares, restricted share units, and performance share units ("PSUs"). The amounts for PSUs, and for ordinary shares held in the EB Trust in respect of the JSOP, are adjusted at the end of each period end to reflect the latest estimated performance multipliers for the respective awards. The JSOP shares did not have a dilutive effect as at December 31, 2020.
| enstargroup.com 7 Book Value & Share Price Performance (1) Source: S&P Market Intelligence Comparison of 10 Year Cumulative Total Return & Fully Diluted BVPS Enstar Fully Diluted BVPS ESGR Share Price (1) S&P 500 (1) S&P Insurance Index (1) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (50)% —% 50% 100% 150% 200% 250% 300% 350%
| enstargroup.com 8 Summary Balance Sheets December 31, 2020 September 30, 2020 December 31, 2019 ASSETS Short-term and fixed maturity investments, trading $ 4,600,021 $ 5,006,775 $ 6,194,825 Short-term and fixed maturity investments, AFS 3,658,895 3,161,647 1,666,387 Funds held - directly managed 1,074,890 1,066,639 1,187,552 Other investments, including equities 5,090,829 4,358,029 3,244,752 Equity method investments 832,295 516,795 326,277 Total investments 15,256,930 14,109,885 12,619,793 Cash and restricted cash 1,373,116 1,197,322 971,349 Premiums receivable 405,793 450,977 491,511 Reinsurance balances recoverable 2,089,163 1,881,656 2,181,134 Insurance balances recoverable 249,652 365,288 448,855 Funds held by reinsured companies 635,819 657,490 475,732 Other assets 925,533 951,482 1,162,955 Assets held for sale 711,278 2,156,488 1,474,770 TOTAL ASSETS $ 21,647,284 $ 21,770,588 $ 19,826,099 LIABILITIES Losses and loss adjustment expenses $ 10,593,282 $ 10,300,884 $ 9,868,404 Defendant asbestos and environmental liabilities 706,329 754,037 847,685 Insurance and reinsurance balances payable 494,412 581,615 420,546 Debt obligations 1,373,259 1,447,908 1,191,207 Other liabilities 942,905 820,717 994,584 Liabilities held for sale 483,657 1,653,343 1,208,531 TOTAL LIABILITIES 14,593,844 15,558,504 14,530,957 COMMITMENTS AND CONTINGENCIES REDEEMABLE NONCONTROLLING INTEREST 365,436 376,731 438,791 SHAREHOLDERS’ EQUITY Ordinary shareholders’ equity (1) 6,164,395 5,310,885 4,332,183 Series D & E preferred shares 510,000 510,000 510,000 Total Enstar shareholders’ equity 6,674,395 5,820,885 4,842,183 Noncontrolling interest 13,609 14,468 14,168 TOTAL SHAREHOLDERS’ EQUITY 6,688,004 5,835,353 4,856,351 TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY $ 21,647,284 $ 21,770,588 $ 19,826,099 (1) Ordinary shareholders’ equity includes voting ordinary shares, non-voting convertible ordinary Series C and Series E shares, Series C preferred shares, treasury shares, joint share ownership plan voting ordinary shares, additional paid-in capital, accumulated other comprehensive income and retained earnings.
| enstargroup.com 9 Summary Earnings Statements Three Months Ended Twelve Months Ended December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 INCOME Net premiums earned $ 108,146 $ 185,336 $ 572,092 $ 804,047 Fees and commission income 14,121 9,522 42,446 28,453 Net investment income 61,530 76,847 302,817 308,271 Net realized and unrealized gains 803,467 153,477 1,642,019 1,011,966 Other income 33,371 21,702 101,132 37,070 1,020,635 446,884 2,660,506 2,189,807 EXPENSES Net incurred losses and LAE 76,248 48,068 415,926 614,179 Acquisition costs 38,202 78,417 171,020 240,609 General and administrative expenses 142,393 116,780 501,479 413,084 Interest expense 16,872 13,519 59,308 52,541 Net foreign exchange (gains) losses 15,018 12,185 16,393 (7,912) EARNINGS BEFORE INCOME TAXES 731,902 177,915 1,496,380 877,306 Income tax benefit (expense) 1,468 12,893 (23,827) (12,372) Earnings from equity method investments 85,844 11,722 238,569 55,910 NET EARNINGS FROM CONTINUING OPERATIONS 819,214 202,530 1,711,122 920,844 Net earnings (loss) from discontinued operations, net of income taxes 15,441 (4,666) 16,251 7,375 NET EARNINGS 834,655 197,864 1,727,373 928,219 Net (earnings) loss attributable to noncontrolling interest (3,131) 4,900 27,671 9,870 NET EARNINGS ATTRIBUTABLE TO ENSTAR 831,524 202,764 1,755,044 938,089 Dividends on preferred shares (8,925) (8,925) (35,700) (35,914) NET EARNINGS ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ 822,599 $ 193,839 $ 1,719,344 $ 902,175 COMPREHENSIVE INCOME NET EARNINGS $ 834,655 $ 197,864 $ 1,727,373 $ 928,219 Other comprehensive income (loss), net of income taxes: Unrealized gains (losses) arising during the period, net of reclassification adjustments 12,984 (1,447) 74,526 (998) Cumulative currency translation adjustment, net of reclassification adjustment (2,069) 1,962 (2,069) (2,428) Decrease in defined benefit pension liability 1,152 994 1,152 42 Total other comprehensive income (loss) 12,067 1,509 73,609 (3,384) Comprehensive income 846,722 199,373 1,800,982 924,835 Comprehensive loss attributable to noncontrolling interest 3,588 5,073 27,550 9,985 COMPREHENSIVE INCOME ATTRIBUTABLE TO ENSTAR $ 850,310 $ 204,446 $ 1,828,532 $ 934,820
| enstargroup.com 10 Earnings Per Share Three Months Ended Twelve Months Ended December 31, December 31, 2020 2019 2020 2019 Numerator: Earnings attributable to Enstar ordinary shareholders: Net earnings from continuing operations (1) $ 815,543 $ 196,591 $ 1,711,810 $ 897,825 Net earnings (loss) from discontinued operations (2) 7,056 (2,752) 7,534 4,350 Net earnings attributable to Enstar ordinary shareholders: 822,599 193,839 1,719,344 902,175 Denominator: Weighted-average ordinary shares outstanding — basic (3) 21,512,574 21,500,512 21,551,408 21,482,617 Effect of dilutive securities: Share equivalents: Share-based compensation plans (4) 185,993 233,542 208,293 227,878 Warrants 68,667 74,738 58,593 64,571 Weighted-average ordinary shares outstanding — diluted 21,767,234 21,808,792 21,818,294 21,775,066 Earnings (loss) per ordinary share attributable to Enstar: Basic: Net earnings from continuing operations $ 37.91 $ 9.15 $ 79.43 $ 41.80 Net earnings (loss) from discontinued operations 0.33 (0.13) 0.35 0.20 Net earnings per ordinary share $ 38.24 $ 9.02 $ 79.78 $ 42.00 Diluted: Net earnings from continuing operations $ 37.47 $ 9.02 $ 78.45 $ 41.23 Net earnings (loss) from discontinued operations 0.32 (0.13) 0.35 0.20 Net earnings per ordinary share $ 37.79 $ 8.89 $ 78.80 $ 41.43 (1) Net earnings (loss) from continuing operations attributable to Enstar ordinary shareholders equals net earnings (loss) from continuing operations, plus net loss (earnings) from continuing operations attributable to noncontrolling interest, less dividends on preferred shares. (2) Net earnings (loss) from discontinued operations attributable to Enstar ordinary shareholders equals net earnings (loss) from discontinued operations, net of income taxes, plus net loss (earnings) from discontinued operations attributable to noncontrolling interest; refer to Note 5 - "Divestitures, Held-for-Sale Businesses and Discontinued Operations" to our consolidated financial statements included within Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020 for a breakdown by period. (3) Weighted-average ordinary shares for basic earnings per share includes ordinary shares (voting and non-voting) but excludes ordinary shares held in the EB Trust in respect of JSOP awards. (4) Share-based dilutive securities include restricted shares, restricted share units, and performance share units. Certain share-based compensation awards, including the ordinary shares held in the EB Trust in respect of JSOP awards, were excluded from the calculation for the three and twelve months ended December 31, 2020 because they were anti-dilutive.
| enstargroup.com 11 Non-GAAP Operating Income (1) Represents the net realized and unrealized gains and losses related to fixed maturity securities included in net earnings (loss). Our fixed maturity securities are held directly on our balance sheet and also within the "Funds held - directly managed" balance. Refer to Note 6 - "Investments" to our consolidated financial statements included within Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020 for further details on our net realized and unrealized gains and losses. (2) 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. (3) 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. (4) Non-GAAP financial measure, refer to the explanatory notes on page 3 for further details. Three Months Ended Twelve Months Ended December 31, December 31, 2020 2019 2020 2019 Net earnings attributable to Enstar ordinary shareholders (A) $ 822,599 $ 193,839 $ 1,719,344 $ 902,175 Adjustments: Net realized and unrealized (gains) losses on fixed maturity investments and funds held - directly managed (1) (99,187) 43,127 (306,284) (515,628) Change in fair value of insurance contracts for which we have elected the fair value option 22,198 (18,196) 119,046 117,181 Gain on sale of subsidiary (3,375) — (3,375) — Net (earnings) loss from discontinued operations (15,441) 4,666 (16,251) (7,375) Tax effects of adjustments (2) 8,464 (3,750) 27,534 47,091 Adjustments attributable to noncontrolling interest (3) 12,623 (2,873) 12,087 14,524 Non-GAAP operating income attributable to Enstar ordinary shareholders (B) (4) $ 747,881 $ 216,813 $ 1,552,101 $ 557,968 Diluted net earnings per ordinary share $ 37.79 $ 8.89 $ 78.80 $ 41.43 Adjustments: Net realized and unrealized (gains) on fixed maturity investments and funds held - directly managed (1) (4.55) 1.97 (14.04) (23.68) Change in fair value of insurance contracts for which we have elected the fair value option 1.02 (0.83) 5.46 5.38 Gain on sale of subsidiary (0.16) — (0.15) — Net (earnings) loss from discontinued operations (0.71) 0.21 (0.74) (0.34) Tax effects of adjustments (2) 0.39 (0.17) 1.26 2.16 Adjustments attributable to noncontrolling interest (3) 0.58 (0.13) 0.55 0.67 Diluted non-GAAP operating income per ordinary share (4) $ 34.36 $ 9.94 $ 71.14 $ 25.62 Weighted average ordinary shares outstanding: Basic 21,512,574 21,500,512 21,551,408 21,482,617 Diluted 21,767,234 21,808,792 21,818,294 21,775,066 Opening ordinary shareholders’ equity (C) $ 5,310,885 $ 4,127,800 $ 4,332,183 $ 3,391,933 Annualized GAAP return on opening ordinary shareholders’ equity = ((A) / # of Quarters * 4) / (C) 62.0 % 18.8 % 39.7 % 26.6 %
| enstargroup.com 12 Non-life Run-off Reserve / Claims Savings (1) Refer to the corresponding note to our consolidated financial statements included within Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020 for further details. (2) Non-GAAP financial measure, refer to the explanatory notes on page 3 for further details. Three Months Ended Twelve Months Ended December 31, December 31, FS Reference (1) 2020 2019 2020 2019 Reconciliation of reserve / claims savings to GAAP line items in the Non-life Run-off segment: Net incurred losses and LAE: Reduction in estimates of net ultimate losses - prior periods (A) Note 10 $ 46,661 $ 88,604 $ 127,116 $ 219,085 Increase in estimates of net ultimate losses - current period Note 10 (6,370) (16,308) (30,523) (123,119) Reduction in provisions for unallocated LAE Note 10 14,256 19,175 48,765 57,404 Amortization of deferred charge assets and gain liabilities Note 10 (6,632) (9,738) (42,640) (37,744) Amortization of fair value adjustments Note 10 (7,014) (16,037) (28,667) (50,070) Changes in fair value - fair value option Note 10 (22,198) 18,196 (119,046) (117,181) Net incurred losses and LAE - Non-life Run-off Note 10 $ 18,703 $ 83,892 $ (44,995) $ (51,625) Other income (expense): Change in estimate of net ultimate defendant A&E liabilities - prior periods (B) Note 11 $ 27,834 $ 4 $ 103,166 $ 4,263 Reduction in estimated future defendant A&E expenses Note 11 2,999 170 9,126 3,274 Amortization of fair value defendant A&E adjustments Note 11 3,226 (13,197) (13,008) (13,500) All other income (expense) - Non-life Run-off (2,206) 32,696 656 40,772 Other income - Non-life Run-off Note 24 $ 31,853 $ 19,673 $ 99,940 $ 34,809 Non-life Run-off reserve / claims savings: Reduction in estimates of net ultimate losses - prior periods = (A) Note 10 $ 46,661 $ 88,604 $ 127,116 $ 219,085 Reduction in estimates of ultimate net defendant A&E liabilities - prior periods = (B) Note 11 27,834 4 103,166 4,263 Reserve / claims savings: total reduction in net ultimate losses (2) = (A) + (B) $ 74,495 $ 88,608 $ 230,282 $ 223,348
| enstargroup.com 13 December 31, 2020 December 31, 2019 Short-term and fixed maturity investments, trading and AFS and funds held - directly managed U.S. government & agency $ 951,048 5.5 % $ 696,077 4.9 % U.K. government 51,082 0.3 % 161,772 1.2 % Other government 502,153 2.9 % 702,856 5.0 % Corporate 5,686,732 33.0 % 5,448,270 38.7 % Municipal 162,669 0.9 % 140,687 1.0 % Residential mortgage-backed 553,945 3.2 % 400,914 2.9 % Commercial mortgage-backed 854,090 4.9 % 813,746 5.8 % Asset-backed 557,460 3.2 % 670,235 4.8 % Total 9,319,179 53.9 % 9,034,557 64.3 % Other assets included within funds held - directly managed 14,627 0.1 % 14,207 0.1 % Equities Publicly traded equities 260,767 1.5 % 327,875 2.3 % Exchange-traded funds 311,287 1.8 % 133,047 0.9 % Privately held equities 274,741 1.6 % 265,799 1.9 % Total 846,795 4.9 % 726,721 5.1 % Other investments Hedge funds 2,638,339 15.3 % 1,121,904 8.0 % Fixed income funds 552,541 3.2 % 481,039 3.4 % Private equity funds 363,103 2.1 % 323,496 2.3 % Private credit funds 192,319 1.1 % — — % Equity funds 190,767 1.1 % 410,149 2.9 % CLO equity funds 166,523 1.0 % 87,509 0.6 % CLO equities 128,083 0.7 % 87,555 0.6 % Other 12,359 0.1 % 6,379 0.1 % Total 4,244,034 24.6 % 2,518,031 17.9 % Equity method investments 832,295 4.8 % 326,277 2.3 % Total investments 15,256,930 88.3 % 12,619,793 89.7 % Cash and cash equivalents (including restricted cash) 1,373,116 8.0 % 971,349 6.9 % Funds held by reinsured companies 635,819 3.7 % 475,732 3.4 % Total investable assets $ 17,265,865 100.0 % $ 14,066,874 100.0 % Duration (in years) (1) 4.82 4.86 Average Credit Rating (1) A+ A+ Investment Composition - GAAP (1) Calculation includes cash and cash equivalents, short-term investments, fixed maturities and the fixed maturities within our funds held - directly managed portfolios at December 31, 2020 and December 31, 2019.
| enstargroup.com 14 Investment Performance - GAAP Three Months Ended Twelve Months Ended December 31, December 31, 2020 2019 2020 2019 Net investment income: Fixed income securities (1) $ 54,613 $ 69,967 $ 268,743 $ 280,245 Cash and restricted cash 25 1,962 3,571 14,003 Other investments, including equities 12,513 9,986 46,393 28,463 Less: Investment expenses (5,621) (5,068) (15,890) (14,440) Total net investment income $ 61,530 $ 76,847 $ 302,817 $ 308,271 Net realized gains (losses): Fixed income securities (1) $ 48,742 $ 35,989 $ 154,425 $ 86,445 Other investments, including equities 15,215 839 24,426 (374) Total net realized gains $ 63,957 $ 36,828 $ 178,851 $ 86,071 Net unrealized gains (losses): Fixed income securities, trading (1) $ 50,445 $ (79,116) $ 151,859 $ 429,183 Other investments, including equities 689,065 195,765 1,311,309 496,712 Total net unrealized gains $ 739,510 $ 116,649 $ 1,463,168 $ 925,895 Total investment return included in earnings (A) $ 864,997 $ 230,324 $ 1,944,836 $ 1,320,237 Other comprehensive income (loss): Unrealized gains (losses), on fixed income securities, AFS, net of reclassification adjustments excluding foreign exchange (B) (1) $ 25,276 $ (2,603) $ 69,005 $ (1,872) Total investment return = (A) + (B) $ 890,273 $ 227,721 $ 2,013,841 $ 1,318,365 Annualized income from fixed income assets (2) $ 218,552 $ 287,716 $ 272,314 $ 294,248 Average aggregate fixed income assets, at cost (2)(3) 10,912,046 10,161,436 10,753,832 10,518,099 Annualized investment book yield 2.00 % 2.83 % 2.53 % 2.80 % Average aggregate invested assets, at fair value (3) $ 16,149,462 $ 13,609,157 $ 14,968,433 $ 13,496,547 Investment return included in net earnings 5.36 % 1.69 % 12.99 % 9.78 % Total investment return 5.51 % 1.67 % 13.45 % 9.77 % (1) Fixed income securities includes both trading and AFS short-term and fixed maturity investments as well as funds held - directly managed whereas, fixed income securities, trading excludes AFS investments and fixed income, AFS excludes trading investments. (2) Fixed income assets includes fixed income securities and cash and restricted cash. (3) These amounts are an average of the amounts disclosed in our quarterly and annual U.S. GAAP consolidated financial statements.
| enstargroup.com 15 Composition of investable assets December 31, 2020 December 31, 2019 Fixed maturities $ 9,319,179 54.0 % $ 9,034,557 64.2 % Equities 830,600 4.8 % 936,876 6.7 % Bond/loan funds 763,140 4.4 % 684,691 4.9 % Hedge funds 2,638,339 15.3 % 1,121,904 8.0 % Private equities 225,921 1.3 % 222,515 1.6 % CLO equities 294,606 1.7 % 175,064 1.2 % Private credit 298,597 1.7 % 79,248 0.5 % Real estate 39,161 0.2 % 23,906 0.2 % Other 465 — % 548 — % Cash and cash equivalents (including restricted cash) 1,373,116 8.0 % 971,349 6.9 % Funds held 650,446 3.8 % 489,939 3.5 % Total managed cash and investments 16,433,570 95.2 % 13,740,597 97.7 % Equity method investments 832,295 4.8 % 326,277 2.3 % Total investable assets (2) $ 17,265,865 100.0 % $ 14,066,874 100.0 % (1) Non-GAAP financial measures, refer to the explanatory notes on page 4 for further details. (2) Agrees to the total investable assets per GAAP on page 13. Investment Composition - Non-GAAP (1)
| enstargroup.com 16 December 31, 2020 December 31, 2019 Equities - GAAP $ 846,795 $ 726,721 Less: Exchange traded funds backed by fixed income securities (156,362) (133,047) Less: Bond fund held in equity format (54,248) (70,605) Plus: Equities held in fund format 190,767 410,149 Plus: Privately held equity in fund format 3,648 3,658 Equities - Non-GAAP 830,600 936,876 Fixed income funds - GAAP 552,541 481,039 Plus: Exchange traded funds backed by fixed income securities 156,362 133,047 Plus: Bond fund held in equity format 54,237 70,605 Bond/loan funds - Non-GAAP 763,140 684,691 Private equity funds - GAAP 363,103 323,496 Less: Private credit held in fund format (106,278) (79,248) Less: Real estate held in fund format (27,256) (18,106) Less: Privately held equity in fund format (3,648) (3,658) Plus: Other — 31 Private equities - Non-GAAP 225,921 222,515 CLO equities - GAAP 128,083 87,555 Plus: CLO equity funds 166,523 87,509 CLO equities - Non-GAAP 294,606 175,064 Private credit funds - GAAP 192,319 — Plus: Private credit held in fund format 106,278 79,248 Private credit - Non-GAAP 298,597 79,248 Funds held by reinsured companies - GAAP 635,819 475,732 Plus: Other assets and liabilities in funds held format 14,627 14,207 Funds held - Non-GAAP 650,446 489,939 Real estate - GAAP — — Plus: Real estate held in fund format 27,256 18,106 Plus: Real estate held in other 11,905 5,800 Real estate - Non-GAAP 39,161 23,906 Short-term and fixed maturity investments, trading and AFS and funds held - directly managed (2) 9,319,179 9,034,557 Other 465 548 Cash and cash equivalents (including restricted cash) 1,373,116 971,349 Hedge Funds 2,638,339 1,121,904 Total managed cash and investments 16,433,570 13,740,597 Equity method investments 832,295 326,277 Total investable assets $ 17,265,865 $ 14,066,874 Investment Composition - Non-GAAP Reconciliation (1) (1) Non-GAAP financial measures, refer to the explanatory notes on page 4 for further details. (2) Agrees to fixed maturities - non-GAAP on page 15.
| enstargroup.com 17 Capital position December 31, 2020 December 31, 2019 Change Ordinary shareholders' equity $ 6,164,395 $ 4,332,183 $ 1,832,212 Series D and E preferred shares 510,000 510,000 — Total Enstar shareholders' equity (A) 6,674,395 4,842,183 1,832,212 Noncontrolling interest 13,609 14,168 (559) Total shareholders' equity (B) 6,688,004 4,856,351 1,831,653 Senior notes 843,447 842,216 1,231 Junior subordinated notes 344,812 — 344,812 Revolving credit facility 185,000 — 185,000 Term loan facility — 348,991 (348,991) Total debt (C) 1,373,259 1,191,207 182,052 Redeemable noncontrolling interest (D) 365,436 438,791 (73,355) Total capitalization = (B) + (C) + (D) $ 8,426,699 $ 6,486,349 $ 1,940,350 Total capitalization attributable to Enstar = (A) + (C) $ 8,047,654 $ 6,033,390 $ 2,014,264 Debt to total capitalization 16.3 % 18.4 % (2.1) % Debt and Series D and E Preferred Shares to total capitalization 22.3 % 26.2 % (3.9) % Debt to total capitalization attributable to Enstar 17.1 % 19.7 % (2.6) % Debt and Series D and E Preferred Shares to total capitalization available to Enstar 23.4 % 28.2 % (4.8) % Capital Position & Credit Ratings Credit ratings (1) Standard and Poor’s Fitch Ratings Long-term issuer BBB (Outlook: Stable) BBB (Outlook: Stable) Senior notes BBB BBB- Junior subordinated notes BB+ BB+ Series D preferred shares BB+ BB+ Series E preferred shares BB+ BB+ (1) Credit ratings are provided by third parties, Standard and 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.
| enstargroup.com 18 Results by Segment - Quarter to Date Three Months Ended December 31, 2020 Three Months Ended December 31, 2019 Non-life Run-off Atrium StarStone Other Total Non-life Run-off Atrium StarStone Other Total Gross premiums written $ 3,484 $ 51,105 $ 26,560 $ 10,204 $ 91,353 $ (284) $ 45,854 $ 109,463 $ 19,708 $ 174,741 Net premiums written $ 590 $ 47,101 $ 6,136 $ 10,203 $ 64,030 $ 1,057 $ 45,110 $ 88,440 $ 19,709 $ 154,316 Net premiums earned $ 14,672 $ 47,210 $ 41,549 $ 4,715 $ 108,146 $ 26,515 $ 44,194 $ 111,119 $ 3,508 $ 185,336 Net incurred losses and LAE 18,703 (21,223) (69,479) (4,249) (76,248) 83,892 (18,614) (110,376) (2,970) (48,068) Acquisition costs (6,951) (16,376) (14,771) (104) (38,202) (33,609) (15,933) (28,787) (88) (78,417) Operating expenses (53,873) (4,321) (15,468) — (73,662) (60,161) (4,484) (7,410) — (72,055) Underwriting income (loss) (27,449) 5,290 (58,169) 362 (79,966) 16,637 5,163 (35,454) 450 (13,204) Net investment income (loss) 58,623 1,160 5,818 (4,071) 61,530 68,899 1,549 8,531 (2,132) 76,847 Net realized and unrealized gains 789,043 773 13,651 — 803,467 152,448 731 298 — 153,477 Fees and commission income 6,874 7,247 — — 14,121 4,620 4,387 515 — 9,522 Other income (loss) 31,853 26 3,518 (2,026) 33,371 19,673 34 (116) 2,111 21,702 Corporate expenses (49,713) (7,028) (2,858) (9,132) (68,731) (23,402) (3,639) (7,790) (9,894) (44,725) Interest income (expense) (18,410) — (499) 2,037 (16,872) (16,356) — — 2,837 (13,519) Net foreign exchange gains (losses) (13,599) 3,212 (4,631) — (15,018) (10,508) (503) (1,179) 5 (12,185) EARNINGS (LOSS) BEFORE INCOME TAXES 777,222 10,680 (43,170) (12,830) 731,902 212,011 7,722 (35,195) (6,623) 177,915 Income tax benefit (expense) 864 (819) 1,423 — 1,468 16,251 (2,103) (1,255) — 12,893 Earnings from equity method investments 85,844 — — — 85,844 11,722 — — — 11,722 NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS 863,930 9,861 (41,747) (12,830) 819,214 239,984 5,619 (36,450) (6,623) 202,530 NET EARNING (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES — — 15,441 — 15,441 — — (4,666) — (4,666) NET EARNINGS (LOSS) 863,930 9,861 (26,306) (12,830) 834,655 239,984 5,619 (41,116) (6,623) 197,864 Net (earnings) loss attributable to noncontrolling interest 1,093 (4,035) (189) — (3,131) (58) (2,305) 7,263 — 4,900 NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR 865,023 5,826 (26,495) (12,830) 831,524 239,926 3,314 (33,853) (6,623) 202,764 Dividends on preferred shares — — — (8,925) (8,925) — — — (8,925) (8,925) NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ 865,023 $ 5,826 $ (26,495) $ (21,755) $ 822,599 $ 239,926 $ 3,314 $ (33,853) $ (15,548) $ 193,839 Underwriting ratios: Loss ratio 45.0 % 167.2 % 42.1 % 99.3 % Acquisition expense ratio 34.7 % 35.6 % 36.1 % 25.9 % Operating expense ratio 9.1 % 37.2 % 10.1 % 6.7 % Combined ratio 88.8 % 240.0 % 88.3 % 131.9 %
| enstargroup.com 19 Results by Segment - Year to Date Twelve Months Ended December 31, 2020 Twelve Months Ended December 31, 2019 Non-life Run-Off Atrium StarStone Other Total Non-life Run-Off Atrium StarStone Other Total Gross premiums written $ 5,191 $ 206,656 $ 326,695 $ 13,441 $ 551,983 $ (25,069) $ 192,373 $ 472,815 $ 18,534 $ 658,653 Net premiums written $ 2,987 $ 183,194 $ 233,202 $ 13,441 $ 432,824 $ (25,338) $ 172,356 $ 379,523 $ 18,512 $ 545,053 Net premiums earned $ 58,695 $ 175,393 $ 318,115 $ 19,889 $ 572,092 $ 168,496 $ 164,059 $ 451,112 $ 20,380 $ 804,047 Net incurred losses and LAE (44,995) (87,226) (266,738) (16,967) (415,926) (51,625) (77,276) (469,240) (16,038) (614,179) Acquisition costs (20,177) (59,611) (90,797) (435) (171,020) (73,642) (56,956) (109,369) (642) (240,609) Operating expenses (200,990) (13,078) (81,853) — (295,921) (199,756) (14,452) (60,627) — (274,835) Underwriting income (loss) (207,467) 15,478 (121,273) 2,487 (310,775) (156,527) 15,375 (188,124) 3,700 (325,576) Net investment income (loss) 282,048 5,542 27,443 (12,216) 302,817 275,236 7,049 34,396 (8,410) 308,271 Net realized and unrealized gains 1,627,526 4,165 10,328 — 1,642,019 968,350 6,195 31,572 5,849 1,011,966 Fees and commission income 19,462 22,984 — — 42,446 18,293 10,160 — — 28,453 Other income (expense) 99,940 131 3,734 (2,673) 101,132 34,809 140 329 1,792 37,070 Corporate expenses (97,727) (21,522) (42,011) (44,298) (205,558) (70,689) (13,825) (7,790) (45,945) (138,249) Interest income (expense) (67,195) — (2,110) 9,997 (59,308) (62,055) — (475) 9,989 (52,541) Net foreign exchange gains (losses) (13,214) 4,327 (10,140) 2,634 (16,393) 9,918 (504) (1,505) 3 7,912 EARNINGS (LOSS) BEFORE INCOME TAXES 1,643,373 31,105 (134,029) (44,069) 1,496,380 1,017,335 24,590 (131,597) (33,022) 877,306 Income tax expense (17,412) (4,122) (902) (1,391) (23,827) (7,250) (4,033) (1,004) (85) (12,372) Earnings (loss) from equity method investments 238,569 — — — 238,569 56,128 — (218) — 55,910 NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS 1,864,530 26,983 (134,931) (45,460) 1,711,122 1,066,213 20,557 (132,819) (33,107) 920,844 NET EARNINGS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES — — 16,251 — 16,251 — — 7,375 — 7,375 NET EARNINGS (LOSS) 1,864,530 26,983 (118,680) (45,460) 1,727,373 1,066,213 20,557 (125,444) (33,107) 928,219 Net (earnings) loss attributable to noncontrolling interest 1,597 (11,059) 37,133 — 27,671 (6,409) (8,432) 24,711 — 9,870 NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR 1,866,127 15,924 (81,547) (45,460) 1,755,044 1,059,804 12,125 (100,733) (33,107) 938,089 Dividends on preferred shares — — — (35,700) (35,700) — — — (35,914) (35,914) NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ 1,866,127 $ 15,924 $ (81,547) $ (81,160) $ 1,719,344 $ 1,059,804 $ 12,125 $ (100,733) $ (69,021) $ 902,175 Underwriting ratios: Loss ratio 49.7 % 83.8 % 47.1 % 104.0 % Acquisition expense ratio 34.0 % 28.5 % 34.7 % 24.2 % Operating expense ratio 7.5 % 25.8 % 8.8 % 13.5 % Combined ratio 91.2 % 138.1 % 90.6 % 141.7 %