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): August 5, 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 8.01. Other Events.
On August 5, 2021, Enstar Group Limited issued a Financial Supplement for the quarter ended June 30, 2021 (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.
Item 9.01. Financial Statements and Exhibits
Exhibits
Exhibit No. | Description | |||||||
Financial Supplement for the quarter ended June 30, 2021. | ||||||||
| 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 | |||||||||||
| August 5, 2021 | By: | /s/ Zachary Wolf | |||||||||
| Zachary Wolf | |||||||||||
| Chief Financial Officer | |||||||||||
enstargroup.com ENSTAR GROUP LIMITED Investor Financial Supplement June 30, 2021
| enstargroup.com 2 Table of Contents Page Explanatory Notes 3 Financial Highlights 5 Recent Transactions 6 Book Value Per Share 7 Book Value & Share Price Performance 8 Summary Balance Sheets 9 Summary Earnings Statements 10 Earnings Per Share 11 Non-GAAP Operating Income 12 Reserve/Claims Savings 13 Investment Composition - GAAP 14 Investment Performance - GAAP 15 Investment Composition - Non-GAAP 16 Investment Composition - Non-GAAP Reconciliation 17 Capital Position & Credit Ratings 18 Consolidated Results by Segment 19
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. 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. Segment Change During the first quarter of 2021, we revised our segment structure to align with how our chief operating decision maker (“CODM”), who was determined to be our Chief Executive Officer, views our business, assesses performance and allocates resources to our business components. Effective January 1, 2021, our business is organized into three reportable segments: (i) Run-off: consists of our acquired property and casualty and other (re)insurance business and StarStone’s non-U.S. operations (“StarStone International”) (from January 1, 2021) following our decision to place it into an orderly run-off (the “StarStone International Run-off”). This segment also includes our consulting and management business, which manages the run-off portfolios of third parties through our service companies. Management’s primary objective with respect to the Run-off segment is to generate reserve/claims savings over time by settling claims in a timely, cost efficient manner using our internal claims management expertise, including settling claims for lower than outstanding ultimate loss estimates and implementing reinsurance and commutation strategies; (ii) Investments: consists of our investment activities and the performance of our investment portfolio, excluding those investable assets attributable to our Legacy Underwriting segment. Management’s primary objective of the Investments segment is to obtain the highest possible risk and capital adjusted returns while maintaining prudent diversification of assets and operating within the constraints on a global regulated (re)insurance company. We additionally consider the liquidity requirements and duration of our claims and contract liabilities; and (iii) Legacy Underwriting: consists of businesses that we have either, in the case of Atrium Underwriting Group Limited and its subsidiaries (“Atrium”), exited via the sale of the majority of our interest in or, in the case of StarStone International (included in the Legacy Underwriting Segment through December 31, 2020), placed into run-off. Prior to January 1, 2021, this segment comprised SGL No. 1 Limited’s (“SGL No.1’s”) 25% net share of Atrium's Syndicate 609 business at Lloyd’s and StarStone International (through December 31, 2020). From January 1, 2021, this segment comprises SGL No.1's 25% gross share of the 2020 and prior underwriting years of Atrium's Syndicate 609 at Lloyd's, offset by the contractual transfer of the results of that business to the Atrium entities that were divested. There is no net retention for Enstar on Atrium's 2020 and prior underwriting years. For further information regarding these activities, refer to Note 3 - "Divestitures, Held-for-Sale Businesses and Discontinued Operations" to our unaudited condensed consolidated financial statements included within Item 1 of our Quarterly Report on Form 10-Q for the period ended June 30, 2021. In addition, our corporate and other activities, which do not qualify as an operating segment, includes income and expense items that are not directly attributable to our reportable segments. These include (a) holding company income and expenses, (b) the amortization of deferred charge assets and deferred gain liabilities on retroactive reinsurance contracts, (c) the amortization of fair value adjustments associated with the acquisition of companies, (d) changes in the fair value of assets and liabilities related to our assumed retroactive reinsurance contracts for which we have elected the fair value option, (e) corporate expenses not allocated to our reportable segments, (f) debt servicing costs, (g) net foreign exchange (gains) losses, (h) gains (losses) arising on the sales of subsidiaries (if any), (i) income tax benefit (expense), (j) net earnings (losses) from discontinued operations, net of income tax (if any), (k) net (earnings) loss attributable to noncontrolling interest, and (l) preferred share dividends. Items (b), (c) and (d) highlighted above are included within corporate and other activities since the CODM evaluates the performance of the Run off and Legacy Underwriting segments without consideration of these amounts. Refer to “(p) Acquisitions, Goodwill and Intangible Assets” and “(q) Retroactive Reinsurance” within Note 2 - “Significant Accounting Policies” in the notes to our consolidated financial statements included within our Form 10-K for the year ended December 31, 2020 for further information on these items. Following the re-organization of our reportable segments during the first quarter of 2021 as described above, we restated the prior period comparatives to conform to the current period presentation. 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 sales of subsidiaries, if any, (iv) 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, included in net earnings (loss), 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).
4 Explanatory Notes (continued) 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 for our Run-off segment. 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 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. For a reconciliation showing the calculation of Reserve/Claims Savings using the applicable components of amounts determined in accordance with U.S. GAAP for our Run-off segment, refer to “Reserve/Claims Savings” on Page 13. 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. U.S. 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), public equity, private credit funds and real estate equity funds that are collectively held in limited partnerships. 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, public 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, CLO equity and Private debt. For management reporting purposes, we have classified these investments as “Bond/loan funds”, “CLO equities” and “Private debt” respectively. 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.” 6. Effective April 1, 2021, the InRe Fund was consolidated by Enstar and the variable interest entity assets and liabilities are presented separately on our balance sheet, which together comprise the the investable assets of the InRe Fund. For management reporting purposes, we have classified the investable assets of the InRe Fund as “Hedge funds.” Pro Forma Fully Diluted Book Value Per Ordinary Share - Non-GAAP In addition to presenting fully diluted book value per ordinary share calculated as of June 30, 2021, we have presented pro forma fully diluted book value per share, which reflects adjustments to fully diluted book value per share as of June 30, 2021 to give effect to share repurchases that were completed subsequent to June 30, 2021. On July 22, 2021, we completed a repurchase of 3,749,400 of our ordinary shares held by funds managed by Hillhouse Group for a price of $234.52 per share, totaling $879.3 million in aggregate. The shares represented these funds' entire interest in Enstar, which constituted 16.9% of total ordinary shares and 9.4% of voting ordinary shares. Subsequent to June 30, 2021, we have also repurchased 45,311 shares for $10.7 million as part of our ordinary share Repurchase Program before terminating the Repurchase Program on July 15, 2021. We believe that the presentation of pro forma fully diluted book value per share to give effect to these transactions provides readers of our financial statements with useful information regarding the impact of this significant strategic share repurchase that had a material impact on the number of our outstanding ordinary shares. We do not expect to present this measure in future periods. Pro forma fully diluted book value per share is calculated by adjusting the numerator and denominator of fully diluted book value per share to give effect to the completed share repurchase transactions described above. 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 our Form 10-Q for the period ended June 30, 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.
5 Three Months Ended Six Months Ended June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Key Earnings Metrics Net earnings attributable to Enstar ordinary shareholders $ 377,326 $ 798,553 $ 560,523 $ 281,732 Non-GAAP operating income attributable to Enstar ordinary shareholders (1) $ 290,540 $ 567,642 $ 574,271 $ 229,838 Basic net earnings per ordinary share $ 17.44 $ 37.03 $ 25.95 $ 13.07 Diluted net earnings per ordinary share $ 17.28 $ 36.65 $ 25.60 $ 12.93 Diluted non-GAAP operating income per ordinary share (1) $ 13.31 $ 26.05 $ 26.23 $ 10.55 Key Run-off Metrics Reduction in estimates of net ultimate losses - prior periods $ 41,696 $ 55,910 $ 67,063 $ 83,473 Reduction in estimates of net ultimate defendant A&E liabilities - prior periods 4,450 1,978 14,002 26,893 Total reserve / claims savings (1) $ 46,146 $ 57,888 $ 81,065 $ 110,366 Key Investment Return Metrics Net investment income $ 76,147 $ 94,443 $ 138,236 $ 169,157 Net realized gains 340,202 58,195 346,341 61,406 Net unrealized gains, trading 65,018 909,413 38,091 277,141 Total investment return included in net earnings $ 481,367 $ 1,062,051 $ 522,668 $ 507,704 Unrealized gains (losses), on fixed income securities, AFS, net of reclassification adjustments excluding foreign exchange 58,557 90,418 (46,901) 40,781 Total investment return $ 539,924 $ 1,152,469 $ 475,767 $ 548,485 Total investable assets $ 20,170,374 $ 15,584,281 $ 20,170,374 $ 15,584,281 Annualized investment book yield 2.75 % 3.26 % 2.30 % 2.88 % Investment return included in net earnings 2.64 % 7.39 % 2.95 % 3.58 % Total investment return 2.96 % 8.02 % 2.68 % 3.87 % Earnings (losses) from equity method investments $ (3,059) $ (8,790) $ 114,972 $ 3,660 Key Shareholder Metrics Ordinary shareholders’ equity $ 6,677,308 $ 4,676,913 $ 6,677,308 $ 4,676,913 Total Enstar shareholders’ equity $ 7,187,308 $ 5,186,913 $ 7,187,308 $ 5,186,913 Basic book value per ordinary share $ 309.07 $ 216.74 $ 309.07 $ 216.74 Fully diluted book value per ordinary share $ 304.59 $ 213.06 $ 304.59 $ 213.06 Change in fully diluted book value per ordinary share 7.0 % 23.3 % 8.3 % 7.6 % Annualized GAAP return on opening ordinary shareholders’ equity 24.1 % 84.8 % 18.2 % 13.0 % Ordinary shares repurchased under repurchase program: Shares 30,364 — 48,367 92,510 Cost $ 7,208 $ — $ 11,433 $ 12,526 Average price per share $ 237.39 $ — $ 236.39 $ 135.40 Total ordinary shares outstanding 21,604,803 21,578,769 21,604,803 21,578,769 Fully diluted ordinary shares outstanding 21,922,183 22,045,791 21,922,183 22,045,791 Key Balance Sheet Metrics Total assets $ 24,621,331 $ 21,293,915 $ 24,621,331 $ 21,293,915 Debt obligations $ 1,364,212 $ 1,542,022 $ 1,364,212 $ 1,542,022 Total liabilities $ 17,243,939 $ 15,726,916 $ 17,243,939 $ 15,726,916 Total investable assets to ordinary shareholders’ equity 3.02x 3.33x 3.02x 3.33x Debt to total capitalization attributable to Enstar 16.0 % 22.9 % 16.0 % 22.9 % Financial Highlights (1) Non-GAAP financial measure, refer to the explanatory notes on pages 3 and 4 for further details. See also pages 12 and 13 for a reconciliation of these measures to the most directly comparable GAAP measures.
| enstargroup.com 6 Recent Transactions 2020 Completed Transactions Date Completed Total Assets Assumed Deferred Charge Asset (1) Total Assets from Transactions Total Liabilities Assumed Net Fair Value Adjustment (2) Total Liabilities from Transactions Primary Nature of Business (in thousands of U.S. dollars) Hannover Re August 6, 2020 $ 182,498 N/A $ 182,498 $ 209,713 $ (27,215) $ 182,498 Novation of U.S. asbestos, environmental and workers' compensation liabilities Munich Re July 1, 2020 100,956 N/A 100,956 100,956 N/A 100,956 Business Transfer of Australian public liability, professional liability and builders' warranty liabilities AXA Group (3) June 1, 2020 179,681 N/A 179,681 179,681 N/A 179,681 LPT of U.S. construction general liability Aspen June 1, 2020 770,000 11,746 781,746 781,746 N/A 781,746 ADC on a diversified mix of property, liability and specialty lines of business across the U.S., U.K. and Europe Lyft March 31, 2020 465,000 N/A 465,000 465,000 N/A 465,000 LPT of U.S. motor liabilities Total $ 1,698,135 $ 11,746 $ 1,709,881 $ 1,737,096 $ (27,215) $ 1,709,881 2021 Transactions Announced or Completed subsequent to June 30, 2021 Date Announced or Completed Initial Estimate of Liabilities Assumed Primary Nature of Business (in thousands of U.S. dollars) ProSight Completed on August 4, 2021 $ 500,000 LPT of U.S. discontinued workers' compensation and excess workers' compensation lines of business and ADC on a diversified mix of general liability classes of business RSA Announced on July 27, 2021 97,222 ADC on a diversified mix of commercial and personal insurance lines across the U.K. and Ireland $ 597,222 (1) Where the estimated ultimate losses payable exceed the premium consideration received at the inception of the agreement, a deferred charge asset is recorded. (2) When the fair value option is elected for any retroactive reinsurance agreement, an initial net fair value adjustment is recorded at the inception of the agreement. (3) We have ceded 10% of these transactions to Enhanzed Reinsurance Ltd. (“Enhanzed Re”), in which we have an investment, on the same terms and conditions as those received by us. Refer to Note 20 - "Related Party Transactions" to our unaudited condensed consolidated financial statements included within Item 1 of our Quarterly Report on Form 10-Q for the period ended June 30, 2021 for additional information. 2021 Transactions Completed Between January 1, 2021 and June 30, 2021 Date Completed Total Assets Assumed Deferred Charge Asset (1) Total Assets from Transactions Total Liabilities Assumed Net Fair Value Adjustment (2) Total Liabilities from Transactions Primary Nature of Business (in thousands of U.S. dollars) Hiscox June 3, 2021 $ 532,394 N/A $ 532,394 $ 532,394 N/A $ 532,394 LPT of diversified legacy insurance business, including surplus lines broker business Coca-Cola May 24, 2021 41,928 6,143 48,071 48,071 N/A 48,071 LPT of U.S. workers' compensation liability AXA Group May 3, 2021 1,395,000 91,988 1,486,988 1,486,988 N/A 1,486,988 ADC on a diversified mix of global casualty and professional lines CNA February 5, 2021 651,736 105,479 757,215 757,215 N/A 757,215 LPT of U.S. excess workers' compensation liabilities Liberty Mutual (3) January 8, 2021 363,159 25,402 388,561 388,561 N/A 388,561 LPT of U.S. energy liability, construction liability and homebuilders liability Total $ 2,984,217 $ 229,012 $ 3,213,229 $ 3,213,229 $ — $ 3,213,229
| enstargroup.com 7 Book Value Per Share June 30, 2021 December 31, 2020 Numerator: Total Enstar shareholder's equity $ 7,187,308 $ 6,674,395 Less: Series D and E preferred shares 510,000 510,000 Total Enstar ordinary shareholders' equity (A) 6,677,308 6,164,395 Proceeds from assumed conversion of warrants(1) — 20,229 Numerator for fully diluted book value per ordinary share calculations (B) $ 6,677,308 $ 6,184,624 July Share Repurchases (2) (890,023) — Numerator for pro forma fully diluted book value per ordinary share calculations (C) 5,787,285 — Denominator: Ordinary shares outstanding (D) (3) 21,604,803 21,519,602 Effect of dilutive securities: Share-based compensation plans (4) 317,380 298,095 Warrants(1) — 175,901 Fully diluted ordinary shares outstanding (E) 21,922,183 21,993,598 July Share Repurchases (2) (3,794,711) — Pro forma fully diluted ordinary shares outstanding (F) 18,127,472 — Book value per ordinary share: Basic book value per ordinary share = (A) / (D) $ 309.07 $ 286.45 Fully diluted book value per ordinary share = (B) / (E) $ 304.59 $ 281.20 Pro forma fully diluted book value per ordinary share = (C) / (F) $ 319.25 — 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 $319.25 $304.59 Fully Diluted Book Value per Share Pro Forma Fully Diluted Book Value per Share 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD 2021 $0 $50 $100 $150 $200 $250 $300 $350 (1) Warrants to acquire 175,901 Series C Non-Voting Ordinary Shares for an exercise price of $115.00 per share were exercised on a non-cash basis during the six months ended June 30, 2021, which resulted in a total of 89,590 Series C Non-Voting Ordinary Shares being issued in the period. (2) Represents shares repurchased in transactions described within the explanatory notes on page 4. (3) 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"). (4) 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 June 30, 2021.
| enstargroup.com 8 Book Value & Share Price Performance (1) Source: S&P Market Intelligence (2) Refer to the explanatory notes on page 4 for further details. See also page 7 for a reconciliation of fully diluted book value per share to pro forma fully diluted book value per share. 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) Enstar Pro Forma Fully Diluted BVPS (2) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD 2021 (50)% —% 50% 100% 150% 200% 250% 300% 350%
| enstargroup.com 9 Summary Balance Sheets June 30, 2021 December 31, 2020 ASSETS Short-term and fixed maturity investments, trading $ 4,108,190 $ 4,600,021 Short-term and fixed maturity investments, AFS 5,576,511 3,658,895 Funds held - directly managed 1,028,503 1,074,890 Other investments, including equities 2,972,812 5,090,829 Equity method investments 936,430 832,295 Total investments 14,622,446 15,256,930 Cash and restricted cash 1,126,258 1,373,116 Premiums receivable 379,981 405,793 Reinsurance balances recoverable 1,976,727 2,089,163 Insurance balances recoverable 245,979 249,652 Funds held by reinsured companies 2,201,958 635,819 Variable interest entity assets of the InRe Fund 2,913,522 — Other assets 1,154,460 925,533 Assets held for sale — 711,278 TOTAL ASSETS $ 24,621,331 $ 21,647,284 LIABILITIES Losses and loss adjustment expenses $ 13,037,858 $ 10,593,282 Defendant asbestos and environmental liabilities 677,919 706,329 Insurance and reinsurance balances payable 584,084 494,412 Debt obligations 1,364,212 1,373,259 Variable interest entity liabilities of the InRe Fund 693,810 — Other liabilities 886,056 942,905 Liabilities held for sale — 483,657 TOTAL LIABILITIES 17,243,939 14,593,844 COMMITMENTS AND CONTINGENCIES REDEEMABLE NONCONTROLLING INTEREST 177,449 365,436 SHAREHOLDERS’ EQUITY Ordinary shareholders’ equity (1) 6,677,308 6,164,395 Series D & E preferred shares 510,000 510,000 Total Enstar shareholders’ equity 7,187,308 6,674,395 Noncontrolling interest 12,635 13,609 TOTAL SHAREHOLDERS’ EQUITY 7,199,943 6,688,004 TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY $ 24,621,331 $ 21,647,284 (1) Ordinary shareholders’ equity includes voting ordinary shares, non-voting convertible ordinary Series C and Series E shares, Series C preferred shares, treasury shares, JSOP voting ordinary shares, additional paid-in capital, accumulated other comprehensive income and retained earnings.
| enstargroup.com 10 Summary Earnings Statements Three Months Ended Six Months Ended June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 INCOME Net premiums earned $ 59,644 $ 142,871 $ 152,520 $ 302,222 Fees and commission income 8,274 10,010 17,872 17,538 Net investment income (1) 76,147 94,443 138,236 169,157 Net realized and unrealized gains (1) 405,220 967,608 384,432 338,547 Other income (expense) (3,359) (1,087) (2,808) 19,357 Net gain on sales of subsidiaries — — 14,894 — 545,926 1,213,845 705,146 846,821 EXPENSES Net incurred losses and LAE 39,304 186,692 (16,203) 229,992 Acquisition costs 4,956 49,067 38,970 95,110 General and administrative expenses 92,717 144,830 175,717 243,258 Interest expense 16,301 14,018 32,480 27,433 Net foreign exchange (gains) losses (9,139) 5,158 (6,505) (6,781) 144,139 399,765 224,459 589,012 EARNINGS BEFORE INCOME TAXES 401,787 814,080 480,687 257,809 Income tax expense (9,422) (16,652) (3,440) (11,380) Earnings (loss) from equity method investments (3,059) (8,790) 114,972 3,660 NET EARNINGS FROM CONTINUING OPERATIONS 389,306 788,638 592,219 250,089 Net loss from discontinued operations, net of income taxes — (1,152) — (3,221) NET EARNINGS 389,306 787,486 592,219 246,868 Net (earnings) loss attributable to noncontrolling interest (3,055) 19,992 (13,846) 52,714 NET EARNINGS ATTRIBUTABLE TO ENSTAR 386,251 807,478 578,373 299,582 Dividends on preferred shares (8,925) (8,925) (17,850) (17,850) NET EARNINGS ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ 377,326 $ 798,553 $ 560,523 $ 281,732 COMPREHENSIVE INCOME (LOSS) NET EARNINGS $ 389,306 $ 787,486 $ 592,219 $ 246,868 Other comprehensive income (loss), net of income taxes: Unrealized gains (losses) arising during the period, net of reclassification adjustments 51,397 97,522 (47,971) 52,211 Cumulative currency translation adjustment (399) (1,205) 1,019 (1,891) Total other comprehensive income (loss) 50,998 96,317 (46,952) 50,320 Comprehensive income 440,304 883,803 545,267 297,188 Comprehensive (income) loss attributable to noncontrolling interest (3,260) 9,616 (14,476) 46,508 COMPREHENSIVE INCOME ATTRIBUTABLE TO ENSTAR $ 437,044 $ 893,419 $ 530,791 $ 343,696 (1) Includes amounts attributed to the InRe Fund. Refer to Note 11 - "Variable Interest Entities" to our unaudited condensed consolidated financial statements included within Item 1 of our Quarterly Report on Form 10-Q for the period ended June 30, 2021 for additional information.
| enstargroup.com 11 Earnings Per Share Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Numerator: Earnings attributable to Enstar ordinary shareholders: Net earnings from continuing operations (1) $ 377,326 $ 799,232 $ 560,523 $ 283,632 Net loss from discontinued operations (2) — (679) — (1,900) Net earnings attributable to Enstar ordinary shareholders: 377,326 798,553 560,523 281,732 Denominator: Weighted-average ordinary shares outstanding — basic (3) 21,631,749 21,565,240 21,597,236 21,557,542 Effect of dilutive securities: Share equivalents: Share-based compensation plans (4) 200,469 185,300 214,849 177,264 Warrants (5) — 38,702 80,659 53,525 Weighted-average ordinary shares outstanding — diluted 21,832,218 21,789,242 21,892,744 21,788,331 Earnings per share attributable to Enstar ordinary shareholders: Basic: Net earnings from continuing operations $ 17.44 $ 37.06 $ 25.95 $ 13.16 Net loss from discontinued operations — (0.03) — (0.09) Net earnings per ordinary share $ 17.44 $ 37.03 $ 25.95 $ 13.07 Diluted: Net earnings from continuing operations $ 17.28 $ 36.68 $ 25.60 $ 13.02 Net loss from discontinued operations — (0.03) — (0.09) Net earnings per ordinary share $ 17.28 $ 36.65 $ 25.60 $ 12.93 (1) Net earnings from continuing operations attributable to Enstar ordinary shareholders equals net earnings from continuing operations, plus net loss (earnings) from continuing operations attributable to noncontrolling interest, less dividends on preferred shares. (2) Net loss from discontinued operations attributable to Enstar ordinary shareholders equals net loss from discontinued operations, net of income tax benefit (expense), plus net loss from discontinued operations attributable to noncontrolling interest; refer to Note 3 - "Divestitures, Held-for-Sale Businesses and Discontinued Operations" to our unaudited condensed consolidated financial statements included within Item 1 of our Quarterly Report on Form 10-Q for the period ended June 30, 2021 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 six months ended June 30, 2021 and 2020 because they were anti-dilutive. (5) Warrants to acquire 175,901 Series C Non-Voting Ordinary Shares for an exercise price of $115.00 per share were exercised on a non-cash basis during the six months ended June 30, 2021, which resulted in a total of 89,590 Series C Non-Voting Ordinary Shares being issued in the period. As of June 30, 2021, there were no warrants outstanding following the exercise described. The warrants presented in the table above are a weighted-average of the warrants outstanding for the period.
| enstargroup.com 12 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 4 - "Investments" to our unaudited condensed consolidated financial statements included within Item 1 of our Quarterly Report on Form 10-Q for the period ended June 30, 2021 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 Six Months Ended June 30, June 30, 2021 2020 2021 2020 Net earnings attributable to Enstar ordinary shareholders (A) $ 377,326 $ 798,553 $ 560,523 $ 281,732 Adjustments: Net realized and unrealized (gains) losses on fixed maturity investments and funds held - directly managed (1) (110,145) (417,364) 96,039 (139,803) Change in fair value of insurance contracts for which we have elected the fair value option 17,713 134,043 (57,759) 75,806 Net gain on sales of subsidiaries — — (14,894) — Net loss from discontinued operations — 1,152 — 3,221 Tax effects of adjustments (2) 4,869 39,264 (11,279) 13,299 Adjustments attributable to noncontrolling interest (3) 777 11,994 1,641 (4,417) Non-GAAP operating income attributable to Enstar ordinary shareholders (B) (4) $ 290,540 $ 567,642 $ 574,271 $ 229,838 Diluted net earnings per ordinary share $ 17.28 $ 36.65 $ 25.60 $ 12.93 Adjustments: Net realized and unrealized (gains) losses on fixed maturity investments and funds held - directly managed (1) (5.04) (19.15) 4.40 (6.42) Change in fair value of insurance contracts for which we have elected the fair value option 0.81 6.15 (2.64) 3.48 Net gain on sales of subsidiaries — — (0.68) — Net loss from discontinued operations — 0.05 — 0.15 Tax effects of adjustments (2) 0.22 1.80 (0.52) 0.61 Adjustments attributable to noncontrolling interest (3) 0.04 0.55 0.07 (0.20) Diluted non-GAAP operating income per ordinary share (4) $ 13.31 $ 26.05 $ 26.23 $ 10.55 Weighted average ordinary shares outstanding: Basic 21,631,749 21,565,240 21,597,236 21,557,542 Diluted 21,832,218 21,789,242 21,892,744 21,788,331 Opening ordinary shareholders’ equity (C) $ 6,250,776 $ 3,766,599 $ 6,164,395 $ 4,332,183 Annualized GAAP return on opening ordinary shareholders’ equity = (A * (4 / # of Quarters) / (C) 24.1 % 84.8 % 18.2 % 13.0 %
| enstargroup.com 13 Reserve/Claims Savings (1) Refer to the corresponding note to our consolidated financial statements included within Item 1 of our Quarterly Report on Form 10-Q for the period ended June 30, 2021 for further details. (2) Non-GAAP financial measure, refer to the explanatory notes on page 4 for further details. Three Months Ended Six Months Ended June 30, June 30, FS Reference (1) 2021 2020 2021 2020 Reconciliation of reserve/claims savings to GAAP line items in the Run-off segment: Net incurred losses and LAE: Reduction in estimates of net ultimate losses - prior periods (A) Note 8 $ 41,696 $ 55,910 $ 67,063 $ 83,473 Increase in estimates of net ultimate losses - current period Note 8 (40,445) (8,086) (83,135) (15,935) Reduction in provisions for unallocated LAE Note 8 15,746 12,425 28,444 19,904 Net incurred losses and LAE - Run-off Note 8 $ 16,997 $ 60,249 $ 12,372 $ 87,442 Other income: Reduction in estimates of net ultimate defendant A&E liabilities - prior periods (B) Note 9 $ 4,450 $ 1,978 $ 14,002 $ 26,893 Reduction in estimated future defendant A&E expenses Note 9 745 975 3,508 3,003 All other income - Run-off 1 (2,054) 1 (1,234) Other income - Run-off Note 22 $ 5,196 $ 899 $ 17,511 $ 28,662 Reserve/claims savings: total reduction in net ultimate losses (2) = (A) + (B) $ 46,146 $ 57,888 $ 81,065 $ 110,366
| enstargroup.com 14 June 30, 2021 December 31, 2020 Short-term and fixed maturity investments, trading and AFS and funds held - directly managed U.S. government & agency $ 789,439 3.9 % $ 951,048 5.5 % U.K. government 41,696 0.2 % 51,082 0.3 % Other government 480,279 2.4 % 502,153 2.9 % Corporate 6,652,998 33.0 % 5,686,732 33.0 % Municipal 244,459 1.2 % 162,669 0.9 % Residential mortgage-backed 572,239 2.9 % 553,945 3.2 % Commercial mortgage-backed 987,254 4.9 % 854,090 4.9 % Asset-backed 935,593 4.6 % 557,460 3.2 % Total 10,703,957 53.1 % 9,319,179 53.9 % Other assets included within funds held - directly managed 9,247 — % 14,627 0.1 % Equities Publicly traded equities 304,701 1.5 % 260,767 1.5 % Exchange-traded funds 504,793 2.5 % 311,287 1.8 % Privately held equities 348,725 1.7 % 274,741 1.6 % Total 1,158,219 5.7 % 846,795 4.9 % Other investments Hedge funds (1) 73,130 0.4 % 2,638,339 15.3 % Fixed income funds 603,889 3.0 % 552,541 3.2 % Private equity funds 536,368 2.7 % 363,103 2.1 % Private credit funds 242,359 1.2 % 192,319 1.1 % Equity funds 5,617 — % 190,767 1.1 % CLO equity funds 190,158 0.9 % 166,523 1.0 % CLO equities 145,103 0.7 % 128,083 0.7 % Other 17,969 0.1 % 12,359 0.1 % Total 1,814,593 9.0 % 4,244,034 24.6 % Equity method investments 936,430 4.7 % 832,295 4.8 % Total investments 14,622,446 72.5 % 15,256,930 88.3 % Cash and cash equivalents (including restricted cash) 1,126,258 5.6 % 1,373,116 8.0 % Funds held by reinsured companies 2,201,958 10.9 % 635,819 3.7 % Investable assets of the InRe Fund (2) 2,219,712 11.0 % — — % Total investable assets $ 20,170,374 100.0 % $ 17,265,865 100.0 % Duration (in years) (3) 4.69 4.82 Average Credit Rating (3) A+ A+ Investment Composition - GAAP (1) As of December 31, 2020, includes our investment in the InRe Fund of $2.4 billion. (2) As of June 30, 2021, includes amounts of the InRe Fund as described in Note 11 - "Variable Interest Entities" to our unaudited condensed consolidated financial statements included within Item 1 of our Quarterly Report on Form 10-Q for the period ended June 30, 2021. (2) Calculation includes cash and cash equivalents, short-term investments, fixed maturities and the fixed maturities within our funds held - directly managed portfolios at June 30, 2021 and December 31, 2020.
| enstargroup.com 15 Investment Performance - GAAP Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Net investment income: Fixed income securities (1) $ 86,501 $ 87,656 $ 138,701 $ 150,659 Cash and restricted cash (379) 717 (467) 2,867 Other investments, including equities 13,463 9,053 27,055 23,109 Less: Investment expenses (3,267) (2,983) (6,882) (7,478) Net investment expenses of the InRe Fund (2) (20,171) — (20,171) — Total net investment income $ 76,147 $ 94,443 $ 138,236 $ 169,157 Net realized gains (losses): Fixed income securities (1) $ 17,723 $ 56,309 $ 24,653 $ 60,527 Other investments, including equities 774 1,886 (17) 879 Net realized gains of the InRe Fund (2) 321,705 — 321,705 — Total net realized gains $ 340,202 $ 58,195 $ 346,341 $ 61,406 Net unrealized gains (losses): Fixed income securities, trading (1) $ 57,541 $ 361,055 $ (155,572) $ 79,276 Other investments, including equities 112,452 183,304 222,031 (122,331) Net unrealized gains (losses) of the InRe Fund (2) (104,975) 365,054 (28,368) 320,196 Total net unrealized losses $ 65,018 $ 909,413 $ 38,091 $ 277,141 Total investment return included in earnings (A) $ 481,367 $ 1,062,051 $ 522,668 $ 507,704 Other comprehensive income (loss): Unrealized gains (losses), on fixed income securities, AFS, net of reclassification adjustments excluding foreign exchange (B) (1) $ 58,557 $ 90,418 $ (46,901) $ 40,781 Total investment return = (A) + (B) $ 539,924 $ 1,152,469 $ 475,767 $ 548,485 Annualized income from fixed income assets (3) $ 344,488 $ 353,492 $ 276,468 $ 307,052 Average aggregate fixed income assets, at cost (3) (4) 12,539,108 10,832,768 12,025,875 10,648,355 Annualized investment book yield 2.75 % 3.26 % 2.30 % 2.88 % Average aggregate invested assets, at fair value (4) $ 18,238,026 $ 14,373,697 $ 17,733,688 $ 14,181,080 Investment return included in net earnings 2.64 % 7.39 % 2.95 % 3.58 % Total investment return 2.96 % 8.02 % 2.68 % 3.87 % (1) Fixed income securities includes both trading and available-for-sale (“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 securities, AFS excludes trading investments. (2) Prior to the consolidation of the InRe Fund on April 1, 2021, all income or loss from the InRe Fund was determined by the change in net asset value (NAV) of our holdings in the fund, which was included within net unrealized gains (losses) from other investments, including equities. Prior period amounts have been reclassified to net unrealized gains of the InRe Fund to conform to current period presentation. Refer to Note 11 - "Variable Interest Entities" to our unaudited condensed consolidated financial statements included within Item 1 of our Quarterly Report on Form 10-Q for the period ended June 30, 2021 for further information. (3) Fixed income assets includes fixed income securities and cash and restricted cash. (4) These amounts are an average of the amounts disclosed in our quarterly and annual U.S. GAAP consolidated financial statements.
| enstargroup.com 16 Composition of investable assets June 30, 2021 December 31, 2020 Fixed maturities $ 10,703,957 53.1 % $ 9,319,179 54.0 % Equities 885,478 4.4 % 830,600 4.8 % Bond/loan funds 846,442 4.2 % 763,140 4.4 % Hedge funds 2,292,842 11.4 % 2,638,339 15.3 % Private equities 387,284 1.9 % 225,921 1.3 % CLO equities 367,190 1.8 % 294,606 1.7 % Private credit 365,464 1.8 % 298,597 1.7 % Real estate 47,346 0.2 % 39,161 0.2 % Other 478 — % 465 — % Cash and cash equivalents (including restricted cash) 1,126,258 5.6 % 1,373,116 8.0 % Funds held 2,211,205 11.0 % 650,446 3.8 % Total managed cash and investments 19,233,944 95.4 % 16,433,570 95.2 % Equity method investments 936,430 4.6 % 832,295 4.8 % Total investable assets (2) $ 20,170,374 100.0 % $ 17,265,865 100.0 % (1) Non-GAAP financial measures, refer to the explanatory notes on page 4 for further details. See also Page 17 for a reconciliation to the most directly comparable GAAP measures. (2) Agrees to the total investable assets per GAAP on page 14. Investment Composition - Non-GAAP (1)
17 June 30, 2021 December 31, 2020 Equities - GAAP $ 1,158,219 $ 846,795 Less: Exchange traded funds backed by fixed income securities (181,642) (156,362) Less: Bond fund held in equity format (60,911) (54,248) Less: CLO equity in equity format (31,929) — Less: Private debt in equity format (11,975) — Plus: Equities held in fund format 5,617 190,767 Plus: Privately held equity in fund format 3,625 3,648 Plus: LP structure with underlying public equities 4,474 — Equities - Non-GAAP 885,478 830,600 Hedge funds - GAAP 73,130 2,638,339 Plus: Net assets of consolidated VIE 2,219,712 — Hedge funds - Non-GAAP 2,292,842 2,638,339 Fixed income funds - GAAP 603,889 552,541 Plus: Exchange traded funds backed by fixed income securities 181,642 156,362 Plus: Bond fund held in equity format 60,911 54,237 Bond/loan funds - Non-GAAP 846,442 763,140 Private equity funds - GAAP 536,368 363,103 Less: Private credit held in fund format (111,130) (106,278) Less: Real estate held in fund format (29,855) (27,256) Less: Privately held equity in fund format (3,625) (3,648) Less: LP Structure with underlying public equities (4,474) — Private equities - Non-GAAP 387,284 225,921 CLO equities - GAAP 145,103 128,083 Plus: CLO equity funds 190,158 166,523 Plus: Equities in CLO equity format 31,929 — CLO equities - Non-GAAP 367,190 294,606 Private credit funds - GAAP 242,359 192,319 Plus: Private credit held in fund format 111,130 106,278 Plus: Private debt in equity format 11,975 — Private credit - Non-GAAP 365,464 298,597 Funds held by reinsured companies - GAAP 2,201,958 635,819 Plus: Other assets and liabilities in funds held format 9,247 14,627 Funds held - Non-GAAP 2,211,205 650,446 Real estate - GAAP — — Plus: Real estate held in fund format 29,855 27,256 Plus: Real estate held in other 17,491 11,905 Real estate - Non-GAAP 47,346 39,161 Short-term and fixed maturity investments, trading and AFS and funds held - directly managed (2) 10,703,957 9,319,179 Other 478 465 Cash and cash equivalents (including restricted cash) 1,126,258 1,373,116 Total managed cash and investments 19,233,944 16,433,570 Equity method investments 936,430 832,295 Total investable assets $ 20,170,374 $ 17,265,865 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 16.
| enstargroup.com 18 Capital position June 30, 2021 December 31, 2020 Change Ordinary shareholders' equity $ 6,677,308 $ 6,164,395 $ 512,913 Series D and E preferred shares 510,000 510,000 — Total Enstar shareholders' equity (A) 7,187,308 6,674,395 512,913 Noncontrolling interest 12,635 13,609 (974) Total shareholders' equity (B) 7,199,943 6,688,004 511,939 Senior notes 844,269 843,447 822 Junior subordinated notes 344,943 344,812 131 Revolving credit facility 175,000 185,000 (10,000) Total debt (C) 1,364,212 1,373,259 (9,047) Redeemable noncontrolling interest (D) 177,449 365,436 (187,987) Total capitalization = (B) + (C) + (D) $ 8,741,604 $ 8,426,699 $ 314,905 Total capitalization attributable to Enstar = (A) + (C) $ 8,551,520 $ 8,047,654 $ 503,866 Debt to total capitalization 15.6 % 16.3 % (0.7) % Debt and Series D and E Preferred Shares to total capitalization 21.4 % 22.3 % (0.9) % Debt to total capitalization attributable to Enstar 16.0 % 17.1 % (1.1) % Debt and Series D and E Preferred Shares to total capitalization available to Enstar 21.9 % 23.4 % (1.5) % Capital Position & Credit Ratings Credit ratings (1) Standard and Poor’s Fitch Ratings Long-term issuer BBB (Outlook: Positive) BBB (Outlook: Positive) 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.
19 Consolidated Results by Segment - Quarter to Date Three Months Ended June 30, 2021 June 30, 2020 Run-off Investments Legacy Underwriting Corporate & Other (1) Total Run-off Investments Legacy Underwriting Corporate & Other (1) Total INCOME Net premiums earned $ 42,404 $ — $ 17,240 $ — $ 59,644 $ 10,517 $ — $ 132,354 $ — $ 142,871 Fees and commission income 8,274 — — — 8,274 3,966 — 6,044 — 10,010 Net investment income — 75,859 288 — 76,147 — 86,263 8,180 — 94,443 Net realized and unrealized gains — 405,010 210 — 405,220 — 926,494 41,114 — 967,608 Other income (expense) 5,196 — (2,549) (6,006) (3,359) 899 — 30 (2,016) (1,087) 55,874 480,869 15,189 (6,006) 545,926 15,382 1,012,757 187,722 (2,016) 1,213,845 EXPENSES Net incurred losses and loss adjustment expenses (16,997) — 10,281 46,020 39,304 (60,249) — 95,382 151,559 186,692 Acquisition costs 34 — 4,922 — 4,956 3,589 — 45,478 — 49,067 General and administrative expenses (2) 64,138 12,303 1,418 14,858 92,717 52,466 10,704 70,062 11,598 144,830 47,175 12,303 16,621 60,878 136,977 (4,194) 10,704 210,922 163,157 380,589 EARNINGS (LOSS) BEFORE INTEREST EXPENSE, FOREIGN EXCHANGE AND INCOME TAXES 8,699 468,566 (1,432) (66,884) 408,949 19,576 1,002,053 (23,200) (165,173) 833,256 Loss from equity method investments — (3,059) — — (3,059) — (8,790) — — (8,790) SEGMENT INCOME (LOSS) 8,699 465,507 (1,432) (66,884) 405,890 19,576 993,263 (23,200) (165,173) 824,466 Interest expense (16,301) (16,301) (14,018) (14,018) Net foreign exchange gains (losses) 9,139 9,139 (5,158) (5,158) Income tax expense (9,422) (9,422) (16,652) (16,652) NET EARNINGS FROM CONTINUING OPERATIONS 389,306 788,638 Net loss from discontinued operations, net of income taxes — — (1,152) (1,152) NET EARNINGS 389,306 787,486 Net (earnings) loss attributable to noncontrolling interest (3,055) (3,055) 19,992 19,992 NET EARNINGS ATTRIBUTABLE TO ENSTAR 386,251 807,478 Dividends on preferred shares (8,925) (8,925) (8,925) (8,925) NET EARNINGS ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS (95,448) 377,326 (191,086) 798,553 (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 deferred charge assets and deferred gain liabilities on retroactive reinsurance contracts and fair value adjustments associated with the acquisition of companies and the changes in the fair value of liabilities related to our assumed retroactive reinsurance agreements for which we have elected the fair value option. (2) Includes refinement of first quarter 2021 and 2020 general and administrative expense allocations which increased general and administrative expenses of the Run-off and Investments segments by $16.3 million and $13.6 million, respectively, and $2.6 million and $2.5 million, respectively, and decreased general and administrative expenses for corporate and other activities by $18.9 million and $16.1 million, respectively.
20 Consolidated Results by Segment - Year to Date Six Months Ended June 30, 2021 June 30, 2020 Run-off Investments Legacy Underwriting Corporate & Other (1) Total Run-off Investments Legacy Underwriting Corporate & Other (1) Total INCOME Net premiums earned $ 115,240 $ — $ 37,280 $ — $ 152,520 $ 26,547 $ — $ 275,675 $ — $ 302,222 Fees and commission income 17,872 — — — 17,872 8,951 — 8,587 — 17,538 Net investment income — 137,190 1,046 — 138,236 — 151,226 17,931 — 169,157 Net realized and unrealized gains (losses) — 385,531 (1,099) — 384,432 — 351,812 (13,265) — 338,547 Other income (expense) 17,511 — (9,067) (11,252) (2,808) 28,662 — 150 (9,455) 19,357 Net gain of sale of subsidiaries — — — 14,894 14,894 — — — — — 150,623 522,721 28,160 3,642 705,146 64,160 503,038 289,078 (9,455) 846,821 EXPENSES Net incurred losses and loss adjustment expenses (12,372) — 14,759 (18,590) (16,203) (87,442) — 200,913 116,521 229,992 Acquisition costs 29,071 — 9,899 — 38,970 10,496 — 84,614 — 95,110 General and administrative expenses 91,729 15,843 3,502 64,643 175,717 75,853 14,268 96,120 57,017 243,258 108,428 15,843 28,160 46,053 198,484 (1,093) 14,268 381,647 173,538 568,360 EARNINGS (LOSS) BEFORE INTEREST EXPENSE, FOREIGN EXCHANGE AND INCOME TAXES 42,195 506,878 — (42,411) 506,662 65,253 488,770 (92,569) (182,993) 278,461 Earnings from equity method investments — 114,972 — — 114,972 — 3,660 — — 3,660 SEGMENT INCOME (LOSS) 42,195 621,850 — (42,411) 621,634 65,253 492,430 (92,569) (182,993) 282,121 Interest expense (32,480) (32,480) (27,433) (27,433) Net foreign exchange gains 6,505 6,505 6,781 6,781 Income tax expense (3,440) (3,440) (11,380) (11,380) NET EARNINGS FROM CONTINUING OPERATIONS 592,219 250,089 Net loss from discontinued operations, net of income taxes — — (3,221) (3,221) NET EARNINGS 592,219 246,868 Net (earnings) loss attributable to noncontrolling interest (13,846) (13,846) 52,714 52,714 NET EARNINGS ATTRIBUTABLE TO ENSTAR 578,373 299,582 Dividends on preferred shares (17,850) (17,850) (17,850) (17,850) NET EARNINGS ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS (103,522) 560,523 (183,382) 281,732 (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 deferred charge assets and deferred gain liabilities on retroactive reinsurance contracts and fair value adjustments associated with the acquisition of companies and the changes in the fair value of liabilities related to our assumed retroactive reinsurance agreements for which we have elected the fair value option.