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): November 4, 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 November 4, 2021, Enstar Group Limited issued a Financial Supplement for the quarter ended September 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 September 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 | |||||||||||
| November 4, 2021 | By: | /s/ Orla Gregory | |||||||||
| Orla Gregory | |||||||||||
| Chief Operating Officer and Acting Chief Financial Officer | |||||||||||
enstargroup.com ENSTAR GROUP LIMITED Investor Financial Supplement September 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 110 companies and portfolios since its formation in 2001. For further information about Enstar, see www.enstargroup.com. Basis of Presentation In this Investor Financial Supplement, the terms "we," "us," "our," "Enstar," or "the Company" refer to Enstar Group Limited and its consolidated subsidiaries. All information contained herein is unaudited. Unless otherwise noted, amounts are in 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. Acquisition of Enhanzed Re On September 1, 2021, we completed the purchase of the entire 27.7% interest in Enhanzed Reinsurance Ltd. (“Enhanzed Re”) held by an affiliate of Hillhouse Group for cash consideration of $217.1 million and assumed Hillhouse Group's affiliate's remaining outstanding capital commitment of $40.2 million (the "Step Acquisition"). Following the completion of the Step Acquisition, our equity interests in Enhanzed Re increased from 47.4% to 75.1% with joint venture partner Allianz SE ("Allianz") continuing to own the remaining 24.9%. Effective September 1, 2021, we consolidated Enhanzed Re (previously accounted for as an equity method investment) and eliminated any intercompany transactions and balances between us and Enhanzed Re. For further information regarding this transaction, refer to Note 2 - "Business Acquisitions" to our unaudited condensed consolidated financial statements included within Item 1 of our Quarterly Report on Form 10-Q for the period ended September 30, 2021. 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. Following the acquisition of Enhanzed Re on September 1, 2021, our business is organized into four 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. Our 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 claims management expertise, including settling claims for lower than outstanding ultimate loss estimates and implementing reinsurance and commutation strategies; (ii) Enhanzed Re: consists of life and catastrophe business that we have assumed via the acquisition of the controlling interest in Enhanzed Re. Our primary objective of the Enhanzed Re segment is to reinsure products that focus on longevity and investment risks. We seek to deliver high risk-adjusted returns by taking advantage of our composite capital structure and product expertise; (iii) Investments: consists of our investment activities and the performance of our investment portfolio, excluding those investable assets attributable to our Legacy Underwriting segment. Our 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, policyholder benefits and contract liabilities; and (iv) 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 4 - "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 September 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 purchases and 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.
4 Explanatory Notes (continued) 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 provides investors with valuable measures of our performance. Non-GAAP operating income (loss) is net earnings (loss) 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 purchases and 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 purchases and sales 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). 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.” 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 September 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 Nine Months Ended September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020 Key Earnings Metrics Net earnings (loss) attributable to Enstar ordinary shareholders $ (195,958) $ 615,013 $ 364,565 $ 896,745 Non-GAAP operating income (loss) attributable to Enstar ordinary shareholders (1) $ (176,037) $ 574,382 $ 398,234 $ 804,220 Basic net earnings (loss) per ordinary share $ (10.68) $ 28.50 $ 17.78 $ 41.58 Diluted net earnings (loss) per ordinary share $ (10.68) $ 28.24 $ 17.53 $ 41.14 Diluted non-GAAP operating income (loss) per ordinary share (1) $ (9.59) $ 26.37 $ 19.15 $ 36.89 Key Run-off Metrics Reduction in estimates of net ultimate losses - prior periods $ 72,302 $ (4,411) $ 139,365 $ 79,062 Reduction in estimates of net ultimate defendant A&E liabilities - prior periods 4,983 48,439 18,985 75,332 Total reserve / claims savings (1) $ 77,285 $ 44,028 $ 158,350 $ 154,394 Key Investment Return Metrics Net investment income $ 92,725 $ 72,130 $ 230,961 $ 241,287 Net realized gains 315,770 53,488 662,111 114,894 Net unrealized gains (losses), trading (589,035) 446,517 (550,944) 723,658 Total investment return included in net earnings $ (180,540) $ 572,135 $ 342,128 $ 1,079,839 Unrealized gains (losses), on fixed income securities, AFS, net of reclassification adjustments excluding foreign exchange (26,277) 2,948 (73,178) 43,729 Total investment return $ (206,817) $ 575,083 $ 268,950 $ 1,123,568 Total investable assets $ 21,854,977 $ 15,964,697 $ 21,854,977 $ 15,964,697 Annualized investment book yield 1.75 % 2.34 % 1.92 % 2.70 % Investment return included in net earnings (0.86) % 3.68 % 1.73 % 7.40 % Total investment return (0.99) % 3.70 % 1.36 % 7.70 % Earnings (losses) from equity method investments $ (14,147) $ 149,065 $ 100,825 $ 152,725 Key Shareholder Metrics Ordinary shareholders’ equity $ 5,569,865 $ 5,310,885 $ 5,569,865 $ 5,310,885 Total Enstar shareholders’ equity $ 6,079,865 $ 5,820,885 $ 6,079,865 $ 5,820,885 Basic book value per ordinary share $ 312.60 $ 246.97 $ 312.60 $ 246.97 Fully diluted book value per ordinary share $ 307.09 $ 242.36 $ 307.09 $ 242.36 Change in fully diluted book value per ordinary share 0.8 % 13.8 % 9.2 % 22.4 % Annualized GAAP return on opening ordinary shareholders’ equity (11.7) % 52.6 % 7.9 % 27.6 % Ordinary shares repurchased: Shares 3,794,711 81,954 3,843,078 174,464 Cost $ 890,014 $ 12,864 $ 901,448 $ 25,390 Average price per share $ 234.54 $ 156.96 $ 234.56 $ 145.53 Total ordinary shares outstanding 17,817,704 21,503,814 17,817,704 21,503,814 Fully diluted ordinary shares outstanding 18,137,559 21,996,788 18,137,559 21,996,788 Key Balance Sheet Metrics Total assets $ 26,053,448 $ 21,770,588 $ 26,053,448 $ 21,770,588 Debt obligations $ 1,690,738 $ 1,447,908 $ 1,690,738 $ 1,447,908 Total liabilities $ 19,565,094 $ 15,558,504 $ 19,565,094 $ 15,558,504 Total investable assets to ordinary shareholders’ equity 3.92x 3.01x 3.92x 3.01x Debt to total capitalization attributable to Enstar 21.8 % 19.9 % 21.8 % 19.9 % Financial Highlights (1) Non-GAAP financial measure, refer to the explanatory notes on page 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 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 Completed Subsequent to September 30, 2021 Date Announced or Completed Initial Estimate of Liabilities Assumed Primary Nature of Business RSA Completed on October 1, 2021 $ 94,225 ADC on a diversified mix of commercial and personal insurance lines across the U.K. and Ireland (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 Re on the same terms and conditions as those received by us. Effective September 1, 2021 Enhanzed Re was consolidated by us (previously accounted for as an equity method investment) and all intercompany transactions and balances between Enhanzed Re and Enstar were eliminated upon consolidation. 2021 Transactions Completed Between January 1, 2021 and September 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 ProSight August 4, 2021 $ 478,293 $24,013 $ 502,306 $ 502,306 N/A $ 502,306 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 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 (3) 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 $ 3,462,510 $ 253,025 $ 3,715,535 $ 3,715,535 $ — $ 3,715,535
| enstargroup.com 7 Book Value Per Share September 30, 2021 December 31, 2020 Numerator: Total Enstar shareholder's equity $ 6,079,865 $ 6,674,395 Less: Series D and E preferred shares 510,000 510,000 Total Enstar ordinary shareholders' equity (A) 5,569,865 6,164,395 Proceeds from assumed conversion of warrants(1) — 20,229 Numerator for fully diluted book value per ordinary share calculations (B) $ 5,569,865 $ 6,184,624 Denominator: Ordinary shares outstanding (C) (2) 17,817,704 21,519,602 Effect of dilutive securities: Share-based compensation plans (3) 319,855 298,095 Warrants(1) — 175,901 Fully diluted ordinary shares outstanding (D) 18,137,559 21,993,598 Book value per ordinary share: Basic book value per ordinary share = (A) / (C) $ 312.60 $ 286.45 Fully diluted book value per ordinary share = (B) / (D) $ 307.09 $ 281.20 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 $307.09 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 nine months ended September 30, 2021, which resulted in a total of 89,590 Series C Non-Voting Ordinary Shares being issued in the period. (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 September 30, 2021.
| enstargroup.com 8 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 YTD 2021 (50)% —% 50% 100% 150% 200% 250% 300% 350%
| enstargroup.com 9 Summary Balance Sheets September 30, 2021 December 31, 2020 ASSETS Short-term and fixed maturity investments, trading $ 3,935,779 $ 4,600,021 Short-term and fixed maturity investments, AFS 5,460,737 3,658,895 Funds held - directly managed 3,056,392 1,074,890 Other investments, including equities 4,004,143 5,090,829 Equity method investments 505,488 832,295 Total investments 16,962,539 15,256,930 Cash and restricted cash 2,034,691 1,373,116 Premiums receivable 332,052 405,793 Reinsurance balances recoverable 1,676,607 2,089,163 Insurance balances recoverable 213,419 249,652 Funds held by reinsured companies 2,410,021 635,819 Variable interest entity assets of the InRe Fund 1,130,274 — Other assets 1,293,845 925,533 Assets held for sale — 711,278 TOTAL ASSETS $ 26,053,448 $ 21,647,284 LIABILITIES Losses and loss adjustment expenses $ 13,877,785 $ 10,593,282 Future policyholder benefits 1,498,210 — Defendant asbestos and environmental liabilities 659,921 706,329 Insurance and reinsurance balances payable 554,837 494,412 Debt obligations 1,690,738 1,373,259 Variable interest entity liabilities of the InRe Fund 682,548 — Other liabilities 601,055 942,905 Liabilities held for sale — 483,657 TOTAL LIABILITIES 19,565,094 14,593,844 COMMITMENTS AND CONTINGENCIES REDEEMABLE NONCONTROLLING INTEREST 181,417 365,436 SHAREHOLDERS’ EQUITY Ordinary shareholders’ equity (1) 5,569,865 6,164,395 Series D & E preferred shares 510,000 510,000 Total Enstar shareholders’ equity 6,079,865 6,674,395 Noncontrolling interest 227,072 13,609 TOTAL SHAREHOLDERS’ EQUITY 6,306,937 6,688,004 TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY $ 26,053,448 $ 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 Nine Months Ended September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020 INCOME Net premiums earned $ 51,594 $ 161,724 $ 204,114 $ 463,946 Fees and commission income 6,653 10,787 24,525 28,325 Net investment income (1) 92,725 72,130 230,961 241,287 Net realized and unrealized gains (losses) (1) (273,265) 500,005 111,167 838,552 Other income 5,278 48,404 2,470 67,761 Net gain on purchase and sales of subsidiaries 46,688 — 61,582 — (70,327) 793,050 634,819 1,639,871 EXPENSES Net incurred losses and LAE (26,711) 109,686 (42,914) 339,678 Acquisition costs 10,947 37,708 37,708 49,917 132,818 General and administrative expenses 93,499 115,828 115,828 269,216 359,086 Interest expense 18,158 15,003 50,638 42,436 Net foreign exchange (gains) losses (2,584) 8,156 (9,089) 1,375 93,309 286,381 317,768 875,393 EARNINGS (LOSS) BEFORE INCOME TAXES (163,636) 506,669 317,051 764,478 Income tax expense (9,839) (13,915) (13,279) (25,295) Earnings (loss) from equity method investments (14,147) 149,065 100,825 152,725 NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS (187,622) 641,819 404,597 891,908 Net earnings from discontinued operations, net of income taxes — 4,031 — 810 NET EARNINGS (LOSS) (187,622) 645,850 404,597 892,718 Net (earnings) loss attributable to noncontrolling interest 589 (21,912) (13,257) 30,802 NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR (187,033) 623,938 391,340 923,520 Dividends on preferred shares (8,925) (8,925) (26,775) (26,775) NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ (195,958) $ 615,013 $ 364,565 $ 896,745 COMPREHENSIVE INCOME (LOSS) NET EARNINGS (LOSS) $ (187,622) $ 645,850 $ 404,597 $ 892,718 Other comprehensive income (loss), net of income taxes: Unrealized gains (losses) arising during the period, net of reclassification adjustments (30,183) 9,331 (78,154) 61,542 Cumulative currency translation adjustment 1,342 1,891 2,361 — Total other comprehensive income (loss) (28,841) 11,222 (75,793) 61,542 Comprehensive income (loss) (216,463) 657,072 328,804 954,260 Comprehensive (income) loss attributable to noncontrolling interest 870 (22,546) (13,606) 23,962 COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ENSTAR $ (215,593) $ 634,526 $ 315,198 $ 978,222 (1) Includes amounts attributed to the InRe Fund. Refer to Note 12 - "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 September 30, 2021 for additional information.
| enstargroup.com 11 Earnings Per Share Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Numerator: Earnings (loss) attributable to Enstar ordinary shareholders: Net earnings (loss) from continuing operations (1) $ (195,958) $ 612,636 $ 364,565 $ 896,267 Net earnings from discontinued operations (2) — 2,377 — 478 Net earnings (loss) attributable to Enstar ordinary shareholders: (195,958) 615,013 364,565 896,745 Denominator: Weighted-average ordinary shares outstanding — basic (3) 18,349,483 21,578,106 20,502,755 21,564,447 Effect of dilutive securities: Share equivalents: Share-based compensation plans (4) 198,885 143,581 210,226 180,437 Warrants (5) — 57,042 80,659 54,743 Weighted-average ordinary shares outstanding — diluted 18,548,368 21,778,729 20,793,640 21,799,627 Earnings (loss) per share attributable to Enstar ordinary shareholders: Basic: Net earnings (loss) from continuing operations $ (10.68) $ 28.39 $ 17.78 $ 41.56 Net earnings from discontinued operations — 0.11 — 0.02 Net earnings (loss) per ordinary share $ (10.68) $ 28.50 $ 17.78 $ 41.58 Diluted (6): Net earnings (loss) from continuing operations $ (10.68) $ 28.13 $ 17.53 $ 41.13 Net earnings from discontinued operations — 0.11 — 0.02 Net earnings (loss) per ordinary share $ (10.68) $ 28.24 $ 17.53 $ 41.14 (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 from discontinued operations attributable to Enstar ordinary shareholders equals net earnings from discontinued operations, net of income tax benefit (expense), plus net earnings from discontinued operations attributable to noncontrolling interest; refer to Note 4 - "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 September 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 nine months ended September 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 nine months ended September 30, 2021, which resulted in a total of 89,590 Series C Non-Voting Ordinary Shares being issued in the period. As of September 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. (6) During a period of loss, the basic weighted average ordinary shares outstanding is used in the denominator of the diluted loss per ordinary share computation as the effect of including potentially dilutive securities would be anti-dilutive.
| 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 5 - "Investments" to our unaudited condensed consolidated financial statements included within Item 1 of our Quarterly Report on Form 10-Q for the period ended September 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 4 for further details. (5) During a period of loss, the basic weighted average ordinary shares outstanding is used in the denominator of the diluted loss per ordinary share computation as the effect of including potentially dilutive securities would be anti-dilutive. Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Net earnings (loss) attributable to Enstar ordinary shareholders (A) $ (195,958) $ 615,013 $ 364,565 $ 896,745 Adjustments: Net realized and unrealized (gains) losses on fixed maturity investments and funds held - directly managed (1) 86,816 (67,294) 182,855 (207,097) Change in fair value of insurance contracts for which we have elected the fair value option (10,877) 21,042 (68,636) 96,848 Net gain on purchase and sales of subsidiaries (46,688) — (61,582) — Net earnings from discontinued operations — (4,031) — (810) Tax effects of adjustments (2) (3,317) 5,771 (14,596) 19,070 Adjustments attributable to noncontrolling interest (3) (6,013) 3,881 (4,372) (536) Non-GAAP operating income (loss) attributable to Enstar ordinary shareholders (B) (4) $ (176,037) $ 574,382 $ 398,234 $ 804,220 Diluted net earnings (loss) per ordinary share $ (10.68) $ 28.24 $ 17.53 $ 41.14 Adjustments: Net realized and unrealized (gains) losses on fixed maturity investments and funds held - directly managed (1) 4.73 (3.09) 8.79 (9.50) Change in fair value of insurance contracts for which we have elected the fair value option (0.59) 0.97 (3.30) 4.44 Net gain on purchase and sales of subsidiaries (2.54) — (2.96) — Net earnings from discontinued operations — (0.19) — (0.04) Tax effects of adjustments (2) (0.18) 0.26 (0.70) 0.87 Adjustments attributable to noncontrolling interest (3) (0.33) 0.18 (0.21) (0.02) Diluted non-GAAP operating income (loss) per ordinary share (4) (5) $ (9.59) $ 26.37 $ 19.15 $ 36.89 Weighted average ordinary shares outstanding: Basic 18,349,483 21,578,106 20,502,755 21,564,447 Diluted 18,548,368 21,778,729 20,793,640 21,799,627 Opening ordinary shareholders’ equity (C) $ 6,677,308 $ 4,676,913 $ 6,164,395 $ 4,332,183 Annualized GAAP return on opening ordinary shareholders’ equity = (A * (4 / # of Quarters) / (C) (11.7) % 52.6 % 7.9 % 27.6 %
| 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 September 30, 2021 for further details. (2) Non-GAAP financial measure, refer to the explanatory notes on page 4 for further details. Three Months Ended Nine Months Ended September 30, September 30, Financial Statement Note 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 (increase) in estimates of net ultimate losses - prior periods (A) Note 8 $ 72,302 $ (4,411) $ 139,365 $ 79,062 Increase in estimates of net ultimate losses - current period Note 8 (35,020) (8,218) (118,155) (24,153) Reduction in provisions for unallocated LAE Note 8 12,858 14,605 41,302 34,509 Net incurred losses and LAE - Run-off Note 8 $ 50,140 $ 1,976 $ 62,512 $ 89,418 Other income: Reduction in estimates of net ultimate defendant A&E liabilities - prior periods (B) Note 10 $ 4,983 $ 48,439 $ 18,985 $ 75,332 Reduction in estimated future defendant A&E expenses Note 10 997 3,124 4,505 6,127 All other income - Run-off (1) 4,096 — 2,862 Other income - Run-off Note 21 $ 5,979 $ 55,659 $ 23,490 $ 84,321 Reserve/claims savings: total reduction in net ultimate losses (2) = (A) + (B) $ 77,285 $ 44,028 $ 158,350 $ 154,394
| enstargroup.com 14 September 30, 2021 December 31, 2020 Short-term and fixed maturity investments, trading and AFS and funds held - directly managed U.S. government & agency $ 848,492 3.9 % $ 951,048 5.5 % U.K. government 35,988 0.2 % 51,082 0.3 % Other government 677,494 3.1 % 502,153 2.9 % Corporate 6,721,668 30.8 % 5,686,732 33.0 % Municipal 289,798 1.3 % 162,669 0.9 % Residential mortgage-backed 602,217 2.8 % 553,945 3.2 % Commercial mortgage-backed 1,080,582 4.9 % 854,090 4.9 % Asset-backed 944,036 4.3 % 557,460 3.2 % Structured products 1,033,097 4.7 % — — % Total 12,233,372 56.0 % 9,319,179 53.9 % Other assets included within funds held - directly managed 219,536 1.0 % 14,627 0.1 % Equities Publicly traded equities 257,470 1.2 % 260,767 1.5 % Exchange-traded funds 1,335,831 6.1 % 311,287 1.8 % Privately held equities 359,124 1.6 % 274,741 1.6 % Total 1,952,425 8.9 % 846,795 4.9 % Other investments Hedge funds (1) 215,378 1.0 % 2,638,339 15.3 % Fixed income funds 597,982 2.7 % 552,541 3.2 % Equity funds 4,831 — % 190,767 1.1 % Private equity funds 598,901 2.7 % 363,103 2.1 % CLO equities 153,795 0.7 % 128,083 0.7 % CLO equity funds 199,714 0.9 % 166,523 1.0 % Private credit funds 230,004 1.1 % 192,319 1.1 % Real estate debt fund 50,666 0.2 % 11,883 0.1 % Other 447 — % 476 — % Total 2,051,718 9.4 % 4,244,034 24.6 % Equity method investments 505,488 2.3 % 832,295 4.8 % Total investments 16,962,539 77.6 % 15,256,930 88.3 % Cash and cash equivalents (including restricted cash) 2,034,691 9.3 % 1,373,116 8.0 % Funds held by reinsured companies 2,410,021 11.0 % 635,819 3.7 % Net variable interest assets of the InRe Fund (2) 447,726 2.1 % — — % Total investable assets $ 21,854,977 100.0 % $ 17,265,865 100.0 % Duration (in years) (3) 5.89 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) Includes amounts of the InRe Fund as described in Note 12 - "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 September 30, 2021. (3) Calculation includes cash and cash equivalents, short-term investments, fixed maturities and the fixed maturities within our funds held - directly managed portfolios at September 30, 2021 and December 31, 2020.
| enstargroup.com 15 Investment Performance - GAAP Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Net investment income: Fixed income securities (1) $ 71,013 $ 63,472 $ 209,714 $ 214,130 Cash and restricted cash (546) 678 (1,013) 3,546 Other investments, including equities 14,402 10,771 41,457 33,880 Less: Investment expenses (5,361) (2,791) (12,243) (10,269) Net investment income (expense) of the InRe Fund (2) 13,217 — (6,954) — Total net investment income $ 92,725 $ 72,130 $ 230,961 $ 241,287 Net realized gains: Fixed income securities (1) $ 18,852 $ 45,156 $ 43,505 $ 105,683 Other investments, including equities 21,452 8,332 21,435 9,211 Net realized gains of the InRe Fund (2) 275,466 — 597,171 — Total net realized gains $ 315,770 $ 53,488 $ 662,111 $ 114,894 Net unrealized gains (losses): Fixed income securities, trading (1) $ (76,571) $ 22,138 $ (232,143) $ 101,414 Other investments, including equities 48,208 115,176 270,239 (7,155) Net unrealized gains (losses) of the InRe Fund (2) (560,672) 309,203 (589,040) 629,399 Total net unrealized gains (losses) $ (589,035) $ 446,517 $ (550,944) $ 723,658 Total investment return included in earnings (A) $ (180,540) $ 572,135 $ 342,128 $ 1,079,839 Other comprehensive income (loss): Unrealized gains (losses), on fixed income securities, AFS, net of reclassification adjustments excluding foreign exchange (B) (1) $ (26,277) $ 2,948 $ (73,178) $ 43,729 Total investment return = (A) + (B) $ (206,817) $ 575,083 $ 268,950 $ 1,123,568 Annualized income from fixed income assets (3) $ 281,868 $ 256,600 $ 278,266 $ 290,235 Average aggregate fixed income assets, at cost (3) (4) 16,081,944 10,984,792 14,506,405 10,735,478 Annualized investment book yield 1.75 % 2.34 % 1.92 % 2.70 % Average aggregate invested assets, at fair value (4) $ 20,944,120 $ 15,529,010 $ 19,821,784 $ 14,591,198 Investment return included in net earnings (0.86) % 3.68 % 1.73 % 7.40 % Total investment return (0.99) % 3.70 % 1.36 % 7.70 % (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 12 - "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 September 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 September 30, 2021 December 31, 2020 Fixed maturities $ 12,233,372 56.0 % $ 9,319,179 54.0 % Equities 865,853 4.0 % 830,600 4.8 % Bond/loan funds 1,650,426 7.6 % 763,140 4.4 % Hedge funds 663,105 3.0 % 2,638,339 15.3 % Private equities 464,728 2.1 % 225,921 1.3 % CLO equities 384,656 1.8 % 294,606 1.7 % Private credit 341,056 1.6 % 298,597 1.7 % Real estate 81,598 0.4 % 39,161 0.2 % Other 447 — % 465 — % Cash and cash equivalents (including restricted cash) 2,034,691 9.3 % 1,373,116 8.0 % Funds held 2,629,557 12.0 % 650,446 3.8 % Total managed cash and investments 21,349,489 97.7 % 16,433,570 95.2 % Equity method investments 505,488 2.3 % 832,295 4.8 % Total investable assets (2) $ 21,854,977 100.0 % $ 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 September 30, 2021 December 31, 2020 Equities - GAAP $ 1,952,425 $ 846,795 Less: Exchange traded funds backed by fixed income securities (986,188) (156,362) Less: Bond fund held in equity format (66,257) (54,248) Less: CLO equity in equity format (31,147) — Less: Private debt in equity format (15,419) — Plus: Equities held in fund format 4,831 190,767 Plus: Privately held equity in fund format 3,538 3,648 Plus: LP structure with underlying public equities 4,070 — Equities - Non-GAAP 865,853 830,600 Hedge funds - GAAP 215,378 2,638,339 Plus: Net assets of consolidated VIE 447,727 — Hedge funds - Non-GAAP 663,105 2,638,339 Fixed income funds - GAAP 597,982 552,541 Plus: Exchange traded funds backed by fixed income securities 986,188 156,362 Plus: Bond fund held in equity format 66,256 54,237 Bond/loan funds - Non-GAAP 1,650,426 763,140 Private equity funds - GAAP 598,901 363,103 Less: Private credit held in fund format (95,633) (106,278) Less: Real estate held in fund format (30,932) (27,256) Less: Privately held equity in fund format (3,538) (3,648) Less: LP Structure with underlying public equities (4,070) — Private equities - Non-GAAP 464,728 225,921 CLO equities - GAAP 153,795 128,083 Plus: CLO equity funds 199,714 166,523 Plus: Equities in CLO equity format 31,147 — CLO equities - Non-GAAP 384,656 294,606 Private credit funds - GAAP 230,004 192,319 Plus: Private credit held in fund format 95,633 106,278 Plus: Private debt in equity format 15,419 — Private credit - Non-GAAP 341,056 298,597 Funds held by reinsured companies - GAAP 2,410,021 635,819 Plus: Other assets and liabilities in funds held format 219,536 14,627 Funds held - Non-GAAP 2,629,557 650,446 Real estate debt fund - GAAP 50,666 — Plus: Real estate held in fund format 30,932 27,256 Plus: Real estate held in other — 11,905 Real estate - Non-GAAP 81,598 39,161 Short-term and fixed maturity investments, trading and AFS and funds held - directly managed (2) 12,233,372 9,319,179 Other 447 465 Cash and cash equivalents (including restricted cash) - GAAP 2,034,691 1,373,116 Total managed cash and investments 21,349,489 16,433,570 Equity method investments 505,488 832,295 Total investable assets $ 21,854,977 $ 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 September 30, 2021 December 31, 2020 Change Ordinary shareholders' equity $ 5,569,865 $ 6,164,395 $ (594,530) Series D and E preferred shares 510,000 510,000 — Total Enstar shareholders' equity (A) 6,079,865 6,674,395 (594,530) Noncontrolling interest 227,072 13,609 213,463 Total shareholders' equity (B) 6,306,937 6,688,004 (381,067) Senior notes 1,269,369 843,447 425,922 Subordinated notes 421,369 344,812 76,557 Revolving credit facility — 185,000 (185,000) Total debt (C) 1,690,738 1,373,259 317,479 Redeemable noncontrolling interest (D) 181,417 365,436 (184,019) Total capitalization = (B) + (C) + (D) $ 8,179,092 $ 8,426,699 $ (247,607) Total capitalization attributable to Enstar = (A) + (C) $ 7,770,603 $ 8,047,654 $ (277,051) Debt to total capitalization 20.7 % 16.3 % 4.4 % Debt and Series D and E Preferred Shares to total capitalization 26.9 % 22.3 % 4.6 % Debt to total capitalization attributable to Enstar 21.8 % 17.1 % 4.7 % Debt and Series D and E Preferred Shares to total capitalization available to Enstar 28.3 % 23.4 % 4.9 % Capital Position & Credit Ratings Credit ratings (1) Standard and Poor’s Fitch Ratings Long-term issuer BBB (Outlook: Positive) BBB (Outlook: Positive) 2022 and 2029 Senior notes BBB BBB- 2031 Senior notes BBB- BBB- Junior subordinated notes BB+ BB+ 2031 Subordinated notes Not Rated Not Rated Series D and E preferred shares BB+ BB+ (1) Credit ratings are provided by third parties, Standard 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 September 30, 2021 Run-off Enhanzed Re (1) Investments (1) Legacy Underwriting Corporate & Other (2) Total INCOME Net premiums earned $ 38,880 $ — $ — $ 12,714 $ — $ 51,594 Fees and commission income 6,653 — — — — 6,653 Net investment income — — 92,430 295 — 92,725 Net realized and unrealized losses — — (272,738) (527) — (273,265) Other income (expense) 5,979 — — (2,029) 1,328 5,278 Net gain on purchase and sales of subsidiaries — — — — 46,688 46,688 51,512 — (180,308) 10,453 48,016 (70,327) EXPENSES Net incurred losses and loss adjustment expenses (50,140) — — 5,498 17,931 (26,711) Acquisition costs 8,053 — — 2,894 — 10,947 General and administrative expenses 47,062 — 8,786 2,061 35,590 93,499 4,975 — 8,786 10,453 53,521 77,735 EARNINGS (LOSS) BEFORE INTEREST EXPENSE, FOREIGN EXCHANGE AND INCOME TAXES 46,537 — (189,094) — (5,505) (148,062) Loss from equity method investments — — (14,147) — — (14,147) SEGMENT INCOME (LOSS) $ 46,537 $ — $ (203,241) $ — (5,505) (162,209) Interest expense (18,158) (18,158) Net foreign exchange gains 2,584 2,584 Income tax expense (9,839) (9,839) NET LOSS (187,622) Net loss attributable to noncontrolling interest 589 589 NET LOSS ATTRIBUTABLE TO ENSTAR (187,033) Dividends on preferred shares (8,925) (8,925) NET LOSS ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ (39,254) $ (195,958) (1) On September 1, 2021, we acquired control of Enhanzed Re through a step acquisition. Prior to that date, the results of Enhanzed Re were recorded in earnings from equity method investments within the Investments segment. As we record Enhanzed Re's results on a one quarter lag, there are no Enhanzed Re operating results to report for this quarter. (2) 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.
20 Consolidated Results by Segment - Quarter to Date Three months ended September 30, 2020 Run-off Investments Legacy Underwriting Corporate & Other (1) Total INCOME Net premiums earned $ 17,476 $ — $ 144,248 $ — $ 161,724 Fees and commission income 3,637 — 7,150 — 10,787 Net investment income — 64,054 8,076 — 72,130 Net realized and unrealized gains — 486,671 13,334 — 500,005 Other income (expense) 55,659 — 171 (7,426) 48,404 76,772 550,725 172,979 (7,426) 793,050 EXPENSES Net incurred losses and loss adjustment expenses (1,976) — 75,874 35,788 109,686 Acquisition costs 2,730 — 34,978 — 37,708 General and administrative expenses 42,173 7,549 32,669 33,437 115,828 42,927 7,549 143,521 69,225 263,222 EARNINGS (LOSS) BEFORE INTEREST EXPENSE, FOREIGN EXCHANGE AND INCOME TAXES 33,845 543,176 29,458 (76,651) 529,828 Earnings from equity method investments — 149,065 — — 149,065 SEGMENT INCOME (LOSS) $ 33,845 $ 692,241 $ 29,458 (76,651) 678,893 Interest expense (15,003) (15,003) Net foreign exchange losses (8,156) (8,156) Income tax expense (13,915) (13,915) NET EARNINGS FROM CONTINUING OPERATIONS 641,819 Net earnings from discontinued operations, net of income taxes 4,031 4,031 NET EARNINGS 645,850 Net earnings attributable to noncontrolling interest (21,912) (21,912) NET EARNINGS ATTRIBUTABLE TO ENSTAR 623,938 Dividends on preferred shares (8,925) (8,925) NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ (140,531) $ 615,013 (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.
21 Consolidated Results by Segment - Year to Date Nine Months Ended September 30, 2021 Run-off Enhanzed Re (1) Investments (1) Legacy Underwriting Corporate & Other (2) Total INCOME Net premiums earned $ 154,120 $ — $ — $ 49,994 $ — $ 204,114 Fees and commission income 24,525 — — — — 24,525 Net investment income — — 229,620 1,341 — 230,961 Net realized and unrealized gains (losses) — — 112,793 (1,626) — 111,167 Other income (expense) 23,490 — — (11,096) (9,924) 2,470 Net gain on purchase and sales of subsidiaries — — — — 61,582 61,582 202,135 — 342,413 38,613 51,658 634,819 EXPENSES Net incurred losses and loss adjustment expenses (62,512) — — 20,257 (659) (42,914) Acquisition costs 37,124 — — 12,793 — 49,917 General and administrative expenses 138,791 — 24,629 5,563 100,233 269,216 113,403 — 24,629 38,613 99,574 276,219 EARNINGS (LOSS) BEFORE INTEREST EXPENSE, FOREIGN EXCHANGE AND INCOME TAXES 88,732 — 317,784 — (47,916) 358,600 Earnings from equity method investments — — 100,825 — — 100,825 SEGMENT INCOME (LOSS) $ 88,732 $ — $ 418,609 $ — (47,916) 459,425 Interest expense (50,638) (50,638) Net foreign exchange gains 9,089 9,089 Income tax expense (13,279) (13,279) NET EARNINGS 404,597 Net earnings attributable to noncontrolling interest (13,257) (13,257) NET EARNINGS ATTRIBUTABLE TO ENSTAR 391,340 Dividends on preferred shares (26,775) (26,775) NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ (142,776) $ 364,565 (1) On September 1, 2021, we acquired control of Enhanzed Re through a step acquisition. Prior to that date, the results of Enhanzed Re were recorded in earnings from equity method investments within the Investments segment. As we record Enhanzed Re's results on a one quarter lag, there are no Enhanzed Re operating results to report this period. (2) 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.
22 Consolidated Results by Segment - Year to Date Nine Months Ended September 30, 2020 Run-off Investments Legacy Underwriting Corporate & Other (1) Total INCOME Net premiums earned $ 44,023 $ — $ 419,923 $ — $ 463,946 Fees and commission income 12,588 — 15,737 — 28,325 Net investment income — 215,280 26,007 — 241,287 Net realized and unrealized gains — 838,483 69 — 838,552 Other income (expense) 84,321 — 321 (16,881) 67,761 140,932 1,053,763 462,057 (16,881) 1,639,871 EXPENSES Net incurred losses and loss adjustment expenses (89,418) — 276,787 152,309 339,678 Acquisition costs 13,226 — 119,592 — 132,818 General and administrative expenses 118,026 21,817 128,789 90,454 359,086 41,834 21,817 525,168 242,763 831,582 EARNINGS (LOSS) BEFORE INTEREST EXPENSE, FOREIGN EXCHANGE AND INCOME TAXES 99,098 1,031,946 (63,111) (259,644) 808,289 Earnings from equity method investments — 152,725 — — 152,725 SEGMENT INCOME (LOSS) $ 99,098 $ 1,184,671 $ (63,111) (259,644) 961,014 Interest expense (42,436) (42,436) Net foreign exchange losses (1,375) (1,375) Income tax expense (25,295) (25,295) NET EARNINGS FROM CONTINUING OPERATIONS 891,908 Net earnings from discontinued operations, net of income taxes 810 810 NET EARNINGS 892,718 Net loss attributable to noncontrolling interest 30,802 30,802 NET EARNINGS ATTRIBUTABLE TO ENSTAR 923,520 Dividends on preferred shares (26,775) (26,775) NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS $ (323,913) $ 896,745 (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.