UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Enstar Group Limited

(Exact name of registrant as specified in its charter)

Bermuda		001-33289		N/A
(State or other jurisdiction		(Commission		(IRS Employer
of incorporation)		File Number)		Identification No.)

P.O. Box HM 2267, Windsor Place, 3rd Floor
18 Queen Street, Hamilton HM JX Bermuda		N/A
(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):

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

     We are amending the Current Report on Form 8-K that we filed on December 30, 2008 to include the Financial Statements for the businesses acquired in connection with the acquisition of Unionamerica Holdings Limited from St. Paul Fire and Marine Insurance Company, an affiliate of the Travelers Companies, Inc., and to include the Pro Forma Financial Information set forth below under Item 9.01 Financial Statements and Exhibits.

Item 9.01. Financial Statements and Exhibits.

(a)		Financial Statements of Businesses Acquired.
		The required financial statements are attached hereto as Exhibits 99.1 through 99.4 and are incorporated in their entirety herein by reference.
(b)		Pro Forma Combined Financial Information.
		The required pro forma combined financial information is attached hereto as Exhibit 99.5 and is incorporated in its entirety herein by reference.
(d)		Exhibits.
23.1		Consent of KPMG Audit Plc for Unionamerica Insurance Company Limited (for the years ended December 31, 2008 and 2007).
23.2		Consent of KPMG Audit Plc for Unionamerica Insurance Company Limited (for the years ended December 31, 2007 and 2006).
23.3		Consent of KPMG Audit Plc for SPRE Limited (for the years ended December 31, 2008 and 2007).
23.4		Consent of KPMG Audit Plc for SPRE Limited (for the years ended December 31, 2007 and 2006).
99.1		Audited financial statements of Unionamerica Insurance Company Limited for the years ended December 31, 2008 and 2007.
99.2		Audited financial statements of Unionamerica Insurance Company Limited for the years ended December 31, 2007 and 2006.
99.3		Audited financial statements of SPRE Limited for the years ended December 31, 2008 and 2007.
99.4		Audited financial statements of SPRE Limited for the years ended December 31, 2007 and 2006.
99.5		Pro Forma Condensed Combined Consolidated Statement of Earnings of Enstar Group Limited as of December 31, 2008 (Unaudited).

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 thereunto duly authorized.

		ENSTAR GROUP LIMITED
Date: March 18, 2009		By:		/s/ Richard J. Harris
		Richard J. Harris
		Chief Financial Officer

EXHIBIT INDEX

23.1		Consent of KPMG Audit Plc for Unionamerica Insurance Company Limited (for the years ended December 31, 2008 and 2007).
23.2		Consent of KPMG Audit Plc for Unionamerica Insurance Company Limited (for the years ended December 31, 2007 and 2006).
23.3		Consent of KPMG Audit Plc for SPRE Limited (for the years ended December 31, 2008 and 2007).
23.4		Consent of KPMG Audit Plc for SPRE Limited (for the years ended December 31, 2007 and 2006).
99.1		Audited financial statements of Unionamerica Insurance Company Limited for the years ended December 31, 2008 and 2007.
99.2		Audited financial statements of Unionamerica Insurance Company Limited for the years ended December 31, 2007 and 2006.
99.3		Audited financial statements of SPRE Limited for the years ended December 31, 2008 and 2007.
99.4		Audited financial statements of SPRE Limited for the years ended December 31, 2007 and 2006.
99.5		Pro Forma Condensed Combined Consolidated Statement of Earnings of Enstar Group Limited as of December 31, 2008 (Unaudited).

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (No. 333-149551, No. 333-148863, No. 333-148862 and No. 333-141793) on Form S-8 of Enstar Group Limited of our report dated March 18, 2009 with respect to the balance sheets of Unionamerica Insurance Company Limited as of December 31, 2008 and 2007 and the related profit & loss accounts, and reconciliations of movements in shareholders’ funds for both of the years then ended, which report appears in this Current Report on Form 8-K/A of Enstar Group Limited.

KPMG Audit Plc
London, England
March 18, 2009

EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (No. 333-149551, No. 333-148863, No. 333-148862 and No. 333-141793) on Form S-8 of Enstar Group Limited of our report dated March 18, 2009 with respect to the balance sheets of Unionamerica Insurance Company Limited as of December 31, 2007 and 2006 and the related profit & loss accounts, and reconciliations of movements in shareholders’ funds for both of the years then ended, which report appears in this Current Report on Form 8-K/A of Enstar Group Limited.

KPMG Audit Plc
London, England
March 18, 2009

EXHIBIT 23.3

CONSENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (No. 333-149551, No. 333-148863, No. 333-148862 and No. 333-141793) on Form S-8 of Enstar Group Limited of our report dated March 18, 2009 with respect to the balance sheets of SPRE Limited as of December 31, 2008 and 2007 and the related profit & loss accounts, and reconciliations of movements in shareholders’ funds for both of the years, then ended, which report appears in this Current Report on Form 8-K/A of Enstar Group Limited.

KPMG Audit Plc
London, England
March 18, 2009

EXHIBIT 23.4

CONSENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (No. 333-149551, No. 333-148863, No. 333-148862 and No. 333-141793) on Form S-8 of Enstar Group Limited of our report dated March 18, 2009 with respect to the balance sheets of SPRE Limited as of December 31, 2007 and 2006 and the related profit & loss accounts, and reconciliations of movements in shareholders’ funds for both of the years then ended which appears in this Current Report on Form 8-K/A of Enstar Group Limited.

KPMG Audit Plc
London, England
March 18, 2009

EXHIBIT 99.1

UNIONAMERICA INSURANCE COMPANY LIMITED

(Registered in England No.1022903)

FINANCIAL STATEMENTS

31 December 2008

UNIONAMERICA INSURANCE COMPANY LIMITED

Independent Auditors’ Report

The Board of Directors
Unionamerica Insurance Company Limited:

We have audited the accompanying balance sheets of Unionamerica Insurance Company Limited (“the Company”) as of December 31, 2008 and 2007, and the related profit and loss accounts and reconciliations of movements in shareholders’ funds for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (“U.S.”). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Unionamerica Insurance Company Limited as of December 31, 2008 and 2007, and the results of its operations for the years then ended, in conformity with generally accepted accounting principles in the United Kingdom.

Accounting principles generally accepted in the United Kingdom vary in certain significant respects from U.S. generally accepted accounting principles. Information relating to the nature and effect of such differences is presented in note 23 to the financial statements.

KPMG Audit Plc
London, United Kingdom
March 18, 2009

UNIONAMERICA INSURANCE COMPANY LIMITED

Profit & Loss Account
Technical Account — General Business
For the Year Ended 31 December 2008

						2008				2007
		Notes				US$000				US$000
Earned premiums, net of reinsurance
Gross premiums written			3				141				(231	)
Outward reinsurance premiums							93,331				(3,680	)
Earned premiums, net of reinsurance							93,472				(3,911	)
Allocated investment return transferred from the non-technical account							10,044				3,039
							103,516				(872	)
Claims incurred, net of reinsurance
Claims paid — gross amount							(137,821	)			(51,067	)
— reinsurers’ share							478,258				75,789
							340,437				24,722
Change in the provision for claims — gross amount							133,348				18,705
— reinsurers’ share							(669,397	)			(35,597	)
							(536,049	)			(16,892	)
Claims incurred, net of reinsurance			4, 5				(195,612	)			7,830
Net operating expenses			7				(10,693	)			(4,687	)
Balance on the technical account — general business							(102,789	)			2,271

The above results relate to discontinued business.

See accompanying notes to these financial statements.

UNIONAMERICA INSURANCE COMPANY LIMITED

Profit & Loss Account
Non -Technical Account — General Business
For the Year Ended 31 December 2008

						2008				2007
		Notes				US$000				US$000
Balance on the technical account — general business							(102,789	)			2,271
Investment income			8				19,958				9,579
Unrealised investment (loss)/gain							(1,823	)			1,231
Investment expenses and charges			9				(559	)			0
							17,576				10,810
Allocated investment return transferred to the technical account — general business							(10,044	)			(3,039	)
							7,532				7,771
Other charges, including value adjustments			10				(1,349	)			(558	)
(Loss)/profit on ordinary activities before tax			11				(96,606	)			9,484
Tax on (loss)/profit on ordinary activities			13				702				882
(Loss)/profit for the year after tax							(95,904	)			10,366

A separate statement of recognised gains and losses has not been prepared as there are no differences between the above result and the result after recognised gains and losses.

All business is discontinued as defined by Financial Reporting Standard 3.

See accompanying notes to these financial statements.

UNIONAMERICA INSURANCE COMPANY LIMITED

Balance Sheet
At 31 December 2008

						2008				2007
		Notes				US$000				US$000
ASSETS
Investments
Other financial investments			14				663,880				822,020
Deposits with ceding undertakings							13,079				13,968
Reinsurers’ share of technical provisions
Claims outstanding			5				169,437				811,976
Debtors
Debtors arising out of direct insurance operations							0				3,232
Debtors arising out of reinsurance operations							52,421				137,401
Other debtors			15				149				4,232
Other assets
Cash at bank and in hand			14				367,601				39,667
Prepayments and accrued income
Accrued interest and rental income							10,085				12,590
Total assets							1,276,652				1,845,086
LIABILITIES AND SHAREHOLDERS’ FUNDS
Capital and reserves
Called up share capital			18				86,968				82,047
Capital contribution							100,000				100,000
Share premium account							184,727				163,334
Profit and loss account							(62,880	)			83,024
Equity Shareholders’ funds							308,815				428,405
Technical provisions
Claims outstanding			5				944,051				1,135,297
Creditors
Creditors arising out of direct insurance operations							0				1,217
Creditors arising out of reinsurance operations							22,681				82,690
Deposits received from reinsurers							324				68,433
Other creditors including taxation and social security			17				781				129,044
Total liabilities							1,276,652				1,845,086

See accompanying notes to these financial statements.

UNIONAMERICA INSURANCE COMPANY LIMITED

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
For the Year Ended 31 December 2008

						2008				2007
		Notes				US$000				US$000
Opening shareholders’ funds							428,405				116,108
Ordinary shares issued
Share capital			6,18				4,921				38,597
Share premium account			6,18				21,393				163,334
Capital contribution							0				100,000
Dividend paid							(50,000	)			0
Profit for the financial year							(95,904	)			10,366
Closing shareholders’ funds							308,815				428,405

See accompanying notes to these financial statements.

UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements
Year ended 31 December 2008

1.		ACCOUNTING POLICIES
		Basis of preparation
		The financial statements have been prepared in accordance with the provisions of Section 255 of, and the special provisions of Part 1 of schedule 9A to, the United Kingdom Companies Act 1985, relating to insurance companies.
		The financial statements have also been prepared in accordance with applicable accounting standards and under the historical cost accounting rules, modified to include the revaluation of investments, and comply with the Statement of Recommended Practice issued by the Association of British Insurers in December 2005 (as amended in December 2006) (“the ABI SORP”) .
		The directors consider that the going concern basis of accounting is appropriate. Furthermore, the expected cost, including internal claims handling expenses, of the run-off of the book of business is exceeded by the expected future investment return attributable to the Technical Account-General Business. Accordingly, no provision has been made for future run-off expenses.
		In accordance with FRS 8, Related Party Disclosures, the Company has not disclosed related party transactions with group companies, on the basis that the Company is a subsidiary undertaking with 100% voting rights controlled within a group which produces publicly available consolidated financial statements in which the Company is included.
		In accordance with FRS 1, Cashflow Statements, the Company is not required to prepare a cashflow statement because more than 90% of the voting rights of the Company are held within the group and the group’s consolidated financial statements are publicly available.
		The following accounting policies have been applied consistently in dealing with items which are considered material to the Company’s financial statements except as noted below.
		Basis of accounting for underwriting activities All classes of business are accounted for on an annual basis.
		Premiums
		Written premiums, gross of commission payable to intermediaries, comprise the estimated premiums on contracts entered into in a financial year, regardless of whether such amounts may relate in whole or in part to a later financial year, exclusive of taxes and duties levied on premiums.
		Premiums written include adjustments to premiums written in prior accounting periods and estimates for “pipeline” premiums. Outward reinsurance premiums are accounted for in the same accounting period as the premiums for the related direct insurance or inwards reinsurance business.
		Acquisition costs
		Acquisition costs comprise all direct and indirect costs arising from the conclusion of insurance and reinsurance contracts.
		Claims incurred
		Claims incurred include all claims and claims settlement expense payments made in respect of the financial period, the movement in the provision for outstanding claims and claims settlement expenses, and movement in claims incurred but not reported.
		Claims outstanding
		Full provision is made on an individual case basis for the estimated cost of claims notified but not yet settled by the balance sheet date after taking into account handling costs and settlement trends. A provision for claims incurred but not reported is established on a statistical basis. The level of provisions has been set on the basis of the information which is currently available, including potential outstanding claims advices and case law. The methods used and estimates made are reviewed regularly. Whilst the directors consider the gross provision for claims and the related reinsurance recoveries to be fairly stated on the basis of the information currently available to them, the ultimate liability can vary materially as a result of subsequent information and events. Any difference, which may be material, between provisions and subsequent settlements will be dealt with in the accounts of later years.

UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements

1.		ACCOUNTING POLICIES (continued)
		Part VII Transfer
		The Company received a transfer of all the insurance liabilities and underlying outwards reinsurance agreements from SPRE Limited, formerly St. Paul Reinsurance Company Limited, and a portfolio of business from Travelers Insurance Company Limited, formerly St. Paul Travelers Insurance Company Limited, under Part VII of the Financial Services and Markets Act 2000. This transfer was effective on 31 December 2007. The Part VII transfer has been accounted for in accordance with the ABI SORP.
		Estimation Techniques
		The provision for outstanding claims comprises an estimate of the cost of settling all notified outstanding claims including claims handling costs, and an estimate of the cost of settling IBNR claims including claims handling costs.
		The notified outstanding claims are based on advices from policyholders, intermediaries and assessors. IBNR claims are estimated using a variety of statistical techniques including:

	•		The development of previously settled claims (chain ladder)
	•		The development of previously notified claims (chain ladder)
	•		Expected loss ratios
	•		A combination of the above (Bornhuetter-Ferguson)

		In addition reference is made to external reviews and industry data. The methods are predominantly deterministic, however, where possible, stochastic methods are used to produce a range of possible outcomes. The reinsurers’ share of the provision for outstanding claims is then estimated based on the gross provisions having due regard to collectability, and contract terms and conditions.
		The estimation of the provisions for the ultimate cost of asbestos, environmental pollution and other latent health hazards is subject to a larger range of uncertainties than those in other classes of business. This is largely due in part to the long delay between the exposure to the harmful conditions and the notification of a claim to the insurer. As a consequence traditional claims estimation techniques cannot wholly be relied on, and estimates are made using the specialised knowledge of both internal and external experts and professional advisors.
		The establishment of outstanding claims provisions is subject to a great degree of variability in that, notwithstanding every effort to make appropriate provision, the eventual cost of settling outstanding claims may vary significantly from the initial estimate.
		Investment income, expenses and charges
		Investments are shown at market value. Debt securities and other fixed-income securities and shares and other variable-yield securities and units in unit trusts are stated at market value at the close of business on the balance sheet date, or on the last trading day before that date.
		Investment income is accounted for on an accrual basis. Interest is accrued up to the balance sheet date. Realised investment gains and losses comprise the difference between net sale proceeds and previous valuation unless acquired during the year.
		Allocation of investment income
		Unrealised gains and losses on investments represent the difference between the valuation of investments at the balance sheet date and previous valuation unless acquired during the year and are included in the Non-Technical Account. Investment income, realised gains and losses, expenses and charges are allocated from the non-technical account to the technical account based on investments held against technical provisions.
		Currency translation
		All revenue transactions during the year denominated in currencies other than United States dollars are recorded at the rates ruling at that time. Monetary assets and liabilities denominated in currencies other than United States dollars are translated into dollars at the exchange rates ruling at the year-end. Differences on exchange are dealt with in the profit and loss account.

UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements

1.		ACCOUNTING POLICIES (continued)
		Taxation
		The charge for taxation is based on the profit/(loss) for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes.
		Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting purposes which have arisen but not reversed by the balance sheet date, except as otherwise required by FRS 19.
2.		UNCERTAINTIES REGARDING ADEQUACY OF ASBESTOS AND ENVIRONMENTAL ISSUES
		Management has established reserves for asbestos and environmental claims based upon known facts, current law and management’s judgement. However, the uncertainties surrounding the final resolution of these claims continue, and it is difficult to determine the ultimate exposure for the asbestos and environmental claims and related litigation. As a result, the reserves are subject to revision as new information becomes available and claims develop.
		The continuing uncertainties include, without limitation, the risks and lack of predictability inherent in complex litigation, any impact from the bankruptcy protection sought by various asbestos producers and other asbestos defendants, a further increase or decrease in asbestos and environmental claims which cannot now be anticipated, the role of any umbrella or excess policies the Company has issued, the resolution or adjudication of some disputes pertaining to the amount of available coverage for asbestos and environmental claims in a manner inconsistent with the Company’s previous assessment of these claims, the number and outcome of direct actions against the Company and further developments pertaining to the environmental claims.
		In addition, the Company’s asbestos-related claims and claims adjustment expense experience has been impacted by the exhaustion or unavailability due to insolvency of other insurance sources potentially available to policyholders along with the insolvency or bankruptcy of other defendants. It is also not possible to predict changes in the legal and legislative environment and their impact on the future development of asbestos and environmental claims. This development will be affected by future court decisions and interpretations, as well as changes in applicable legislation, including legislation related to asbestos reform.
		It is also difficult to predict the ultimate outcome of large coverage disputes until settlement negotiations near completion and significant legal questions are resolved or, failing settlement, until the dispute is adjudicated. This is particularly the case with policyholders in bankruptcy where negotiations often involve a large number of claimants and other parties and require court approval to be effective. As part of its continuing analysis of asbestos reserves, which includes an annual ground-up review of asbestos policyholders, the Company continues to study the implications of these and other developments.
		Because of the uncertainties set forth above, additional liabilities may arise for amounts in excess of the current asbestos and environmental reserves. In addition, the Company’s estimate of claims and claim adjusting expenses may change. These additional liabilities and increases in estimates, or a range of either, cannot now be reasonably estimated and could result in income statement charges that could be material to the Company’s operating results and financial condition in future period.

UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements

3.		SEGMENTAL INFORMATION
		Analysis of gross premiums written and earned, gross claims incurred, gross operating expenses, reinsurance balance and the result:

		2008 (US$000)
														Gross
		Gross				Gross				Gross				operating								Under-
		premiums				premiums				claims				expenses				Reinsurance				writing
		written				earned				incurred				incurred				balance				loss
Direct insurance:
Fire and other damage to property			0				0				(1,925	)			(192	)			3,550				1,433
Third-party liability			0				0				(13,688	)			(1,386	)			8,090				(6,986	)
			0				0				(15,613	)			(1,578	)			11,640				(5,553	)
Reinsurance			141				141				11,140				(9,168	)			(109,395	)			(107,280	)
			141				141				(4,473	)			(10,746	)			(97,755	)			(112,833	)

		2007 (US$000)
														Gross
		Gross				Gross				Gross				operating								Under-
		premiums				premiums				claims				expenses				Reinsurance				writing
		written				earned				incurred				incurred				balance				loss
Direct insurance:
Fire and other damage to property			6				6				5,021				(194	)			(4,492	)			341
Third-party liability			(208	)			(208	)			(8,534	)			(647	)			11,055				1,666
			(202	)			(202	)			(3,513	)			(841	)			6,563				2,007
Reinsurance			(29	)			(29	)			(28,849	)			(3,827	)			29,930				(2,775	)
			(231	)			(231	)			(32,362	)			(4,668	)			36,493				(768	)

The net assets and investment income are not managed at a class level, and therefore are not included in the segmental analysis.

UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements

4.		PRIOR YEARS’ CLAIMS PROVISIONS
		(Under)/over provisions for claims provisions at the beginning of the period compared with payments and provisions at the end of the period in respect of prior years’ claims net of ceded reinsurance are represented by the claims incurred net of reinsurance figure in the Profit and Loss Technical Account.
5.		CLAIMS OUTSTANDING
		Claims outstanding as at the balance sheet date were as follows:

		Gross				Reinsurance				Net
		US$000				US$000				US$000
2008
Claims outstanding			944,051				169,437				774,614
2007
Claims outstanding			1,135,297				811,976				323,321

The movement in net claims outstanding in the year was:

		2008				2007
		US$000				US$000
Net claims outstanding as at 1 January			323,321				0
Reallocation of bad debt provision			(15,694	)			0
Translation adjustment			(69,062	)			1,794
			238,565				1,794
Claims incurred, net of reinsurance			195,612				(7,830	)
Claims payments, net of reinsurance			340,437				24,722
Part VII transfer — Claims outstanding			0				793,193
— Reinsurers’ share of claims outstanding			0				(488,558	)
Net claims outstanding as at 31 December			774,614				323,321

6.		PART VII TRANSFER
		On 31 December 2007 two portfolios of business were transferred to the Company, from SPRE Limited, and from Travelers Insurance Company Limited.
		In accordance with the agreement to issue an unspecified number of shares, the balance of consideration payable at 31 December 2007 of US$26.3 million was satisfied by the issue of 4,921,126 new ordinary shares at US$5.347 per share on 24 January 2008. Following this issue of shares the Company had shareholders’ equity of US$455 million.

UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements

7.

NET OPERATING EXPENSES

		2008				2007
		US$000				US$000
Gross acquisition costs			3				(194	)
			3				(194	)
Administration expenses			10,743				4,862
Gross operating expenses			10,746				4,668
Reinsurance commissions			(53	)			19
			10,693				4,687

8.

INVESTMENT INCOME

		2008				2007
		US$000				US$000
Income from investments			27,992				9,887
Realised investment (losses)/gains			(8,034	)			(308	)
			19,958				9,579

9.

INVESTMENT EXPENSES AND CHARGES

		2008				2007
		US$000				US$000
Investment management charges			(559	)			0
			(559	)			0

10.

OTHER CHARGES, INCLUDING VALUE ADJUSTMENTS

		2008				2007
		US$000				US$000
Management fees			(1,349	)			(558	)
			(1,349	)			(558	)

UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements

11.

PROFIT ON ORDINARY ACTIVITIES BEFORE TAX

		2008				2007
		US$000				US$000
Included in profit on ordinary activities before tax are:
Income from listed securities (listed bonds)			31,398				7,928
Auditor’s remuneration in respect of:
Audit of these financial statements			276				243
Other services pursuant to legislation			205				44
Other services			16				11

12.		EMPLOYEES
		The Company had a management agreement with Travelers Management Limited, a former fellow group undertaking in 2008, which employed UK personnel and provided certain management services. The Company had an Underwriting, Administration and Management Agreement in 2008, with Travelers Special Services Limited, another former fellow group undertaking, which provides a number of management services. The charges associated with these management agreements have been fully included within these financial statements (see note 21).
13.		TAXATION

		2008				2007
		US$000				US$000
Reconciliation of the current tax (credit)/charge required under FRS 19
(Loss)/profit on ordinary activities before taxation			(96,606	)			9,484
(Loss)/profit on ordinary activities before taxation multiplied by the standard rate of corporation taxation of 28.5% (See note below) (2007: 30%)			(27,532	)			2,845
Group relief surrendered for nil consideration			27,532				0
Prior year corporation tax			(702	)			(3,727	)
Tax credit for the period			(702	)			(882	)

Corporation tax reduced from 30% to 28% on 1 April 2008 and as a result of this a composite rate of 28.5% is being used in this calendar year

UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements

14.

OTHER FINANCIAL ASSETS

(a)

The Company’s investments, which are shown at market value, are as follows:

		2008 (US $000)								2007 (US $000)
		Market								Market
		Value				Cost				Value				Cost
Shares & other variable yield securities			2,000				5,218				8,193				8,193
Debt securities and other fixed income securities			617,939				615,092				813,827				812,819
Deposits with credit institutions			43,941				43,941				0				0
			663,880				664,251				822,020				821,012
Cash at bank and in hand			367,601				367,601				39,667				39,667
			1,031,481				1,031,852				861,687				860,679

	(b)		Collateral deposits
			Investments amounting to US$25,459,094 (2007: US$31,187,000) have been deposited with a third party to secure certain overseas liabilities.
			Investments amounting to US$207,623,654 (2007: US$226,721,000) are held in a US trust fund required by virtue of the Company’s accredited reinsurer status in a number of US jurisdictions.

15.

OTHER DEBTORS

		2008				2007
		US$000				US$000
Group relief receivable from fellow group undertakings			0				3,124
Taxation recoverable			109				147
Other debtors			40				961
			149				4,232

16.		INDEMNITIES, CONTINGENT LIABILITIES AND COMMITMENTS
		In the normal course of business, letters of credit to the value of US$33,694,970 (2007: US$48,567,740) have been issued to policyholders against insurance liabilities. The letters of credit have been collateralised with bank deposits of US$1,634,200 (2007: US$1,600,039) and investments of US$41,867,000 (2007: US$40,040,000).

UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements

17.

OTHER CREDITORS INCLUDING TAXATION AND SOCIAL SECURITY

		2008				2007
		US$000				US$000
Amounts owed to group undertakings			0				86,206
Income taxes			0				16,505
Other — consideration payable (see note 6)			0				26,314
— accrued management expenses			781				19
			781				129,044

18.

SHARE CAPITAL

		2008				2007
		US$000				US$000
Authorised:
110,000,000 (2007: 110,000,000) ordinary shares of US$1 each			110,000				110,000
Allotted, issued and fully paid:
86,968,123 (2007: 82,046,997) ordinary shares of US$1 each			86,968				82,047

		On 24 January, 4,921,126 new ordinary shares were issued at US$5.347 per share as the balance of consideration for the Part VII transfer of business from SPRE Limited, (see note 6).
19.		DIRECTORS’ EMOLUMENTS
		Emoluments of directors were paid by Travelers Management Limited, a former fellow group undertaking which employs all personnel and provides full management services. For the current year, the directors’ emoluments have been apportioned across the group as a whole, based on services rendered to the Company.

		2008				2007
		US$000				US$000
Directors’ emoluments			1,227				578
Company contributions to money purchase pension scheme			104				59
			1,331				637

The emoluments of the highest paid director were US$202,134 (2007: US$115,373)

UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements

19.		DIRECTORS’ EMOLUMENTS (continued)
		The amount of contributions to money purchase scheme that is attributable to the highest paid director is US$21,168 (2007: US$11,272)

			Number of Directors
		2008				2007
Retirement benefits are accruing to the following number of directors:
Money purchase schemes			8				6
The number of directors who exercised share options			1				1

20.		MANAGEMENT COMPANY
		The Company has no employees and all services were provided to the Company by Travelers Special Services Limited, a former fellow subsidiary with which the Company had a management agreement. The charge for these services of US$10,743,000 (2007: US$4,862,000) is included in administrative expenses.
		No loans were made to the directors or officers of the Company (2007: US$ Nil).
21.		RELATED PARTY TRANSACTIONS
		The Company has taken advantage of the exemption, contained in Financial Reporting Standard 8, from disclosing transactions with other group companies or with related parties in which the Company has no investments.
		During the current financial year the Company entered into transactions with former fellow group undertakings within The Travelers Companies Inc group. These transactions are noted below:

		The Company surrendered tax losses to former fellow group undertakings within The Travelers Companies Inc. group.
22.		IMMEDIATE AND ULTIMATE PARENT COMPANY
		Prior to 30 December 2008, the Company’s intermediate parent company was St. Paul Fire and Marine Insurance Company Limited which is registered in England & Wales. Prior to 30 December 2008, the Company’s ultimate parent company and controlling party was The Travelers Companies Inc.
		Post 30 December 2008 the immediate parent undertaking of the smallest group of which the Company is a member is Unionamerica Holdings Ltd, a company incorporated in Great Britain.
		The ultimate parent undertaking of the largest group of which the Company is a member and for which consolidated accounts have been prepared is Enstar Group Limited, a company incorporated in Bermuda. The consolidated financial statements of both parent undertakings are available to the public and may be obtained from the Company’s office at Avaya House, 2 Cathedral Hill, Guildford, Surrey, GU2 7YL.
		The annual U.S. Securities and Exchange Commission filing of Enstar Group Limited may be obtained from: U.S. Securities and Exchange Commission 450 Fifth Street, NW Washington, D.C. 20549 U.S.A

UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements

23		SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES IN THE UNITED KINGDOM (“UK GAAP”) AND ACCOUNTING PRINCIPLES IN THE UNITED STATES OF AMERICA (“US GAAP”)
		The Unionamerica Insurance Company Limited financial statements have been prepared in accordance with UK GAAP as applied in note 1. UK GAAP differs to the requirements of US GAAP in certain respects. The effects of the application of US GAAP to the (loss)/profit for the year after taxation, as determined under UK GAAP, are set out in the table below:

		2008				2007
		US$000				US$000
(LOSS)/PROFIT FOR THE FINANCIAL YEAR
UK GAAP (loss)/profit for the year after taxation			(95,904	)			10,366
US GAAP adjustments
(a) Unrealised investment loss/(gain)			1,823				(1,231	)
(b) Taxation			0				369
(c) Other minor adjustments			14				35
Total US GAAP adjustments			1,837				(827	)
Net (loss)/income under US GAAP			(94,067	)			9,539

		2008				2007
		US$000				US$000
US GAAP Taxation adjustments
Current taxation			0				369
Deferred taxation			0				0
			0				369

UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements

23

SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES IN THE UNITED KINGDOM (“UK GAAP”) AND ACCOUNTING PRINCIPLES IN THE UNITED STATES OF AMERICA (“US GAAP”) (continued)

		2008				2007
		US$000				US$000
SHAREHOLDERS’ EQUITY INTEREST
UK GAAP Shareholders’ equity interest			308,815				428,405
US GAAP adjustments
(c) Taxation			(430	)			326
(d) Other minor adjustments			0				49
Total US GAAP adjustments			(430	)			375
US GAAP Shareholders’ equity interest			308,835				428,780

		2008				2007
		US$000				US$000
US GAAP Taxation adjustments
Current taxation			(132	)			326
Deferred taxation			(298	)			0
			(430	)			326

UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements

23

SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES IN THE UNITED KINGDOM (“UK GAAP”) AND ACCOUNTING PRINCIPLES IN THE UNITED STATES OF AMERICA (“US GAAP”) (continued)

CASH FLOW STATEMENT AS DETERMINED IN ACCORDANCE WITH US GENERALLY		2008				2007
ACCEPTED ACCOUNTING PRINCIPLES (“US GAAP”)		US$000				US$000
Cash flows from operating activities:
Net (loss)/income			(94,067	)			9,539
Adjustments to reconcile net income to net cash provided by operating activities:
Amortisation of investments			3,680				(911	)
Foreign currency translation on investments			47,620				(425	)
Net loss on sale of investments			467				266
			(42,300	)			8,469
Changes in assets and liabilities:
Accrued interest receivable			2,505				(10,639	)
Debtors arising out of reinsurance operations			74,412				(58,335	)
Loss and loss adjustment expenses recoverable from reinsurers			663,497				(476,012	)
Other debtors			(2,185	)			(2,890	)
Losses and loss adjustment expenses			(191,246	)			778,375
Creditors arising out of reinsurance operations			(155,649	)			40,966
Other creditors			(101,963	)			102,308
Net cash provided in operating activities			247,071				382,242
Cash flows from investing activities
Purchase of investments			(666,628	)			(899,357	)
Proceeds on sale of investments			771,177				239,624
Net cash provided / (used) by investing activities			104,549				(659,733	)
Cash flows from financing activities
Dividends paid			(50,000	)			0
Proceeds from issue of share capital			26,314				301,931
Net cash (used) / provided in financing activities			(23,686	)			301,931
Net increase in cash and cash equivalents			327,934				24,440
Cash and cash equivalents, beginning of year			39,667				15,227
Cash and cash equivalents, end of year			367,601				39,667
Supplementary cash flow information
Net income taxes paid			(17,590	)			—
Interest paid			—				—

EXHIBIT 99.2

UNIONAMERICA INSURANCE COMPANY LIMITED

(Registered in England No.1022903)

FINANCIAL STATEMENTS

31 December 2007

UNIONAMERICA INSURANCE COMPANY LIMITED

Independent Auditors’ Report

The Board of Directors
Unionamerica Insurance Company Limited:

We have audited the accompanying balance sheets of Unionamerica Insurance Company Limited (“the Company”) as of December 31, 2007 and 2006, and the related profit and loss accounts and reconciliations of movements in shareholders’ funds for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (“U.S.”). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Unionamerica Insurance Company Limited as of December 31, 2007 and 2006, and the results of its operations for the years then ended, in conformity with generally accepted accounting principles in the United Kingdom.

Accounting principles generally accepted in the United Kingdom vary in certain significant respects from U.S. generally accepted accounting principles. Information relating to the nature and effect of such differences is presented in note 25 to the financial statements.

 

 

 

 

 

/s/ KPMG Audit Plc

KPMG Audit Plc
London, United Kingdom
March 18, 2009

Profit & Loss Account
Technical Account — General Business
For the Year Ended 31 December 2007

						2007				2006
		Notes				US$000				US$000
Earned premiums, net of reinsurance
Gross premiums written			4				(231	)			(8,026	)
Outward reinsurance premiums							(3,680	)			(4,244	)
Earned premiums, net of reinsurance							(3,911	)			(12,270	)
Allocated investment return transferred from the non-technical account							3,039				2,764
							(872	)			(9,506	)
Claims incurred, net of reinsurance
Claims paid — gross amount							(51,067	)			(52,118	)
— reinsurers’ share							75,789				63,802
							24,722				11,684
Change in the provision for claims — gross amount							18,705				37,254
— reinsurers’ share							(35,597	)			(35,588	)
							(16,892	)			1,666
Claims incurred, net of reinsurance			5, 6				7,830				13,350
Net operating expenses			8				(4,687	)			(3,844	)
Balance on the technical account — general business							2,271				0

The above results relate to discontinued business.

See accompanying notes to these financial statements.

Profit & Loss Account
Non -Technical Account — General Business
For the Year Ended 31 December 2007

						2007				2006
		Notes				US$000				US$000
Balance on the technical account — general business							2,271				0
Investment income			9				9,579				8,835
Unrealised investment gain/(loss)							1,231				(143	)
Investment expenses and charges			10				0				(243	)
							10,810				8,449
Allocated investment return transferred to the technical account — general business							(3,039	)			(2,764	)
							7,771				5,685
Other charges, including value adjustments			11				(558	)			(553	)
Profit on ordinary activities before tax			12				9,484				5,132
Tax on profit on ordinary activities			14				882				4
Profit for the year after tax							10,366				5,136

A separate statement of recognised gains and losses has not been prepared as there are no differences between the above result and the result after recognised gains and losses.

See accompanying notes to these financial statements.

UNIONAMERICA INSURANCE COMPANY LIMITED

Balance Sheet
At 31 December 2007

						2007				2006
		Notes				US$000				US$000
ASSETS
Investments
Other financial investments			15				822,020				159,987
Deposits with ceding undertakings							13,968				5,466
Reinsurers’ share of technical provisions
Claims outstanding			6				811,976				356,922
Debtors
Debtors arising out of direct insurance operations							3,232				14,634
Debtors arising out of reinsurance operations							137,401				51,064
Accrued premium income							0				0
Other debtors			16				4,232				2,672
Other assets
Cash at bank and in hand			15				39,667				15,227
Prepayments and accrued income
Accrued interest and rental income							12,590				1,951
Total assets							1,845,086				607,923
LIABILITIES AND SHAREHOLDERS’ FUNDS
Capital and reserves
Called up share capital			19				82,047				43,450
Capital contribution							100,000				0
Share premium account							163,334				0
Profit and loss account							83,024				72,658
Equity Shareholders’ funds			23				428,405				116,108
Technical provisions
Claims outstanding			6				1,135,297				356,922
Creditors
Creditors arising out of direct insurance operations							1,217				86
Creditors arising out of reinsurance operations							82,690				35,402
Deposits received from reinsurers							68,433				0
Other creditors including taxation and social security			18				129,044				99,405
Total liabilities							1,845,086				607,923