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
Date of report (Date of earliest event reported): December 30, 2008
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).	
- 2 -

 
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	 	 	
- 3 -

 
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).	
- 4 -

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.
/s/ KPMG Audit Plc  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.
/s/ KPMG Audit Plc  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.
/s/ KPMG Audit Plc  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.
/s/ KPMG Audit Plc  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.
/s/ KPMG Audit Plc  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:	
 	 	 	 	 	
 	 	2008	 	
 	 	US$000	 	
Stop Loss Commutation	 	 	 	 	
Claims paid - reinsurers’ share 	 	 	419,524	 	
Change in the provision for claims - reinsurers’ share	 	 	(475,805	)	
 	 	 	 	 	
 	 	 	(56,281	)	
 	 	 	 	 	
Recharges under management agreements	 	 	 	 	
Administration expenses (see note 20)	 	 	(10,743	)	
Other charges (see note 10)	 	 	(1,349	)	
 	 	 	 	 	
 	 	 	(12,092	)	

 	 	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	 	

 	 	 	
(a)	 	Unrealised investment loss/(gain)	
 	 	 	
 	 	Under UK GAAP unrealised losses and gains 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. Under US GAAP movements in the valuation of investments that are available-for-sale are reported through Other Comprehensive Income and do not form part of net income.	
 	 	 	
(b)	 	Taxation	
 	 	 	
 	 	This adjustment reflects the differences between the calculation of current and deferred taxation as set out in the table below:	

 	 	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	 	

 	 	 	
(c)	 	Taxation	
 	 	 	
 	 	This adjustment reflects the differences between the calculation of current and deferred taxation as set out in the table below:	

 	 	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

 
UNIONAMERICA INSURANCE COMPANY LIMITED
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.

 
UNIONAMERICA INSURANCE COMPANY LIMITED
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	 	
 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to these financial statements.

 
UNIONAMERICA INSURANCE COMPANY LIMITED
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
For the Year Ended 31 December 2007
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	2007	 	 	2006	 	
 	 	Notes	 	 	US$000	 	 	US$000	 	
Opening shareholders’ funds	 	 	 	 	 	 	116,108	 	 	 	110,972	 	
Ordinary shares issued	 	 	 	 	 	 	 	 	 	 	 	 	
Share capital	 	 	7,10	 	 	 	38,597	 	 	 	0	 	
Share premium account	 	 	7,10	 	 	 	163,334	 	 	 	0	 	
Capital contribution	 	 	7	 	 	 	100,000	 	 	 	0	 	
Profit for the financial year	 	 	 	 	 	 	10,366	 	 	 	5,136	 	
 	 	 	 	 	 	 	 	 	 	
Closing shareholders’ funds	 	 	 	 	 	 	428,405	 	 	 	116,108	 	
 	 	 	 	 	 	 	 	 	 	
See accompanying notes to these financial statements.

 
UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements
Year ended 31 December 2007
1.	 	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.	
 	 	 	
2.	 	ACCOUNTING POLICIES	
 	 	 	
 	 	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.	

 
UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements
2.	 	ACCOUNTING POLICIES (continued)	
 	 	 	
 	 	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.	
 	 	 	
 	 	Part VII Transfer	
 	 	 	
 	 	The Company received a transfer of all the insurance liabilities and underlying outwards reinsurance agreements from SPRE 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.	

 
UNIONAMERICA INSURANCE COMPANY LIMITED

Notes to the financial statements
2.	 	ACCOUNTING POLICIES (Continued)	
 	 	 	
 	 	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.	
 	 	 	
 	 	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.	

 
UNIONAMERICA INSURANCE COMPANY LIMITED
Notes to the financial statements
3.	 	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 increase 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
4. SEGMENTAL INFORMATION
     Analysis of gross premiums written and earned, gross claims incurred, gross operating expenses, reinsurance balance and the result:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	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	)	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	2006 (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	 	 	(679	)	 	 	(679	)	 	 	1,946	 	 	 	(32	)	 	 	(1,328	)	 	 	(93	)	
Third-party liability	 	 	(735	)	 	 	(735	)	 	 	1,852	 	 	 	(689	)	 	 	(826	)	 	 	(398	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	(1,414	)	 	 	(1,414	)	 	 	3,798	 	 	 	(721	)	 	 	(2,154	)	 	 	(491	)	
Reinsurance	 	 	(6,612	)	 	 	(6,612	)	 	 	(18,662	)	 	 	(3,123	)	 	 	26,124	 	 	 	(2,273	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	(8,026	)	 	 	(8,026	)	 	 	(14,864	)	 	 	(3,844	)	 	 	23,970	 	 	 	(2,764	)	

 	 	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
5.	 	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.	
 	 	 	
6.	 	CLAIMS OUTSTANDING	
 	 	 	
 	 	Claims outstanding as at the balance sheet date were as follows:	

 	 	Gross	 	 	Reinsurance	 	 	Net	 	
 	 	US$000	 	 	US$000	 	 	US$000	 	
2007	 	 	 	 	 	 	 	 	 	 	 	 	
Claims outstanding	 	 	1,135,297	 	 	 	811,976	 	 	 	323,321	 	

2006	 	 	 	 	 	 	 	 	 	 	 	 	
Claims outstanding	 	 	356,922	 	 	 	356,922	 	 	 	0	 	

 	 	The movement in net claims outstanding in the year was:	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Net claims outstanding as at 1 January	 	 	0	 	 	 	0	 	
Translation adjustment	 	 	1,794	 	 	 	1,666	 	
 	 	 	 	 	 	 	
 	 	 	1,794	 	 	 	1,666	 	
 	 	 	 	 	 	 	 	 	
Claims incurred, net of reinsurance	 	 	(7,830	)	 	 	(13,350	)	
Claims payments, net of reinsurance	 	 	24,722	 	 	 	11,684	 	
Part VII transfer — Claims outstanding	 	 	793,193	 	 	 	0	 	
— Reinsurers’ share of claims outstanding	 	 	(488,558	)	 	 	0	 	
 	 	 	 	 	 	 	
Net claims outstanding as at 31 December	 	 	323,321	 	 	 	0	 	

 
UNIONAMERICA INSURANCE COMPANY LIMITED
Notes to the financial statements
7.	 	PART VII TRANSFER	
 	 	 	
 	 	On 31 December 2007 two portfolios of business were transferred to the Company, from SPRE Limited, formerly St Paul Reinsurance Company Limited and from Travelers Insurance Company Limited, formerly St Paul Travelers Insurance Company Limited, both fellow group undertakings.	
 	 	 	
 	 	The assets and liabilities transferred are set out below:	

 	 	US$000	 	 	US$000	 	
Assets	 	 	 	 	 	 	 	 	
Cash and investments	 	 	 	 	 	 	664,163	 	
Reinsurers’ share of technical provisions	 	 	 	 	 	 	488,558	 	
Debtors	 	 	 	 	 	 	57,892	 	
Other assets	 	 	 	 	 	 	40,785	 	

 	 	 	 	 	 	 	1,251,398	 	
 	 	 	 	 	 	 	 	
Liabilities	 	 	 	 	 	 	 	 	
Technical provisions	 	 	 	 	 	 	793,193	 	
Creditors	 	 	 	 	 	 	113,328	 	
Other liabilities	 	 	 	 	 	 	16,632	 	
 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	923,153	 	
 	 	 	 	 	 	 	 	 	
Assets transferred in excess of liabilities financed by:	 	 	 	 	 	 	 	 	
Ordinary shares issued	 	 	38,597	 	 	 	 	 	
Share premium account	 	 	163,334	 	 	 	 	 	
Capital contribution	 	 	100,000	 	 	 	 	 	
Consideration payable (See Note 18)	 	 	26,314	 	 	 	 	 	

 	 	 	 	 	 	 	328,245	 	

 	 	 	 	 	 	 	1,251,398	 	

 	 	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.	
 	 	 	
8.	 	NET OPERATING EXPENSES	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Gross acquisition costs	 	 	(194	)	 	 	(1,758	)	

 	 	 	(194	)	 	 	(1,758	)	
Administration expenses	 	 	4,862	 	 	 	5,602	 	

Gross operating expenses	 	 	4,668	 	 	 	3,844	 	
Reinsurance commissions	 	 	19	 	 	 	0	 	

 	 	 	4,687	 	 	 	3,844	 	

 
UNIONAMERICA INSURANCE COMPANY LIMITED
Notes to the financial statements
9.	 	INVESTMENT INCOME	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Income from investments	 	 	9,887	 	 	 	8,590	 	
Realised investment (losses)/gains	 	 	(308	)	 	 	245	 	

 	 	 	9,579	 	 	 	8,835	 	

10.	 	INVESTMENT EXPENSES AND CHARGES	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Investment management charges	 	 	0	 	 	 	(243	)	

 	 	 	0	 	 	 	(243	)	

11.	 	OTHER CHARGES, INCLUDING VALUE ADJUSTMENTS	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Management fees	 	 	(558	)	 	 	(553	)	

 	 	 	(558	)	 	 	(553	)	

12.	 	PROFIT ON ORDINARY ACTIVITIES BEFORE TAX	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Included in profit on ordinary activities before tax are:	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Income from listed securities (listed bonds)	 	 	7,928	 	 	 	7,542	 	
 	 	 	 	 	 	 	 	 	
Auditor’s remuneration in respect of:	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Audit of these financial statements	 	 	243	 	 	 	113	 	
Other services pursuant to legislation	 	 	44	 	 	 	63	 	
Other services	 	 	11	 	 	 	44	 	

 
UNIONAMERICA INSURANCE COMPANY LIMITED
Notes to the financial statements
13.	 	EMPLOYEES	
 	 	 	
 	 	The Company has a management agreement with Travelers Management Limited, formerly St. Paul Travelers Management Limited, a fellow group undertaking, which employs UK personnel and provides certain management services. The Company has an Underwriting, Administration and Management Agreement with Travelers Special Services Limited, formerly St. Paul Travelers Special Services Limited, another 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).	
 	 	 	
14.	 	TAXATION	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Reconciliation of the current tax (credit)/charge required under FRS 19	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Profit on ordinary activities before taxation	 	 	9,484	 	 	 	5,132	 	

Profit on ordinary activities before taxation multiplied by the standard rate of corporation taxation of 30% (2006: 30%)	 	 	2,845	 	 	 	1,540	 	
 	 	 	 	 	 	 	 	 	
Group relief surrendered	 	 	0	 	 	 	(1,540	)	
 	 	 	 	 	 	 	 	 	
Prior year corporation tax	 	 	(3,727	)	 	 	(4	)	

Tax credit for the period	 	 	(882	)	 	 	(4	)	

15.	 	OTHER FINANCIAL ASSETS	

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

 	 	2007 (US $000)	 	 	2006 (US $000)	 	
 	 	Market	 	 	 	 	 	 	Market	 	 	 	 	
 	 	Value	 	 	Cost	 	 	Value	 	 	Cost	 	
Shares & other variable yield securities	 	 	8,193	 	 	 	8,193	 	 	 	0	 	 	 	0	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Debt securities and other fixed income securities	 	 	813,827	 	 	 	812,819	 	 	 	159,987	 	 	 	160,824	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	822,020	 	 	 	821,012	 	 	 	159,987	 	 	 	160,824	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Deposits with credit institutions	 	 	39,667	 	 	 	39,667	 	 	 	15,227	 	 	 	15,227	 	

 	 	 	861,687	 	 	 	860,679	 	 	 	175,214	 	 	 	176,051	 	

 	(b)	 	Collateral deposits	
 	 	 	 	
 	 	 	Investments amounting to US$31,187,000 (2006: US$32,564,000) have been deposited with a third party to secure certain overseas liabilities.	
 	 	 	 	
 	 	 	Investments amounting to US$226,721,000 (2006: US$120,146,000) are held in a US trust fund required by virtue of the Company’s accredited reinsurer status in a number of US jurisdictions.	

 
UNIONAMERICA INSURANCE COMPANY LIMITED
Notes to the financial statements
16.	 	OTHER DEBTORS	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Group relief receivable from fellow group undertakings	 	 	3,124	 	 	 	2,522	 	
Taxation recoverable	 	 	147	 	 	 	0	 	
Other debtors	 	 	961	 	 	 	150	 	

 	 	 	4,232	 	 	 	2,672	 	

17.	 	INDEMNITIES, CONTINGENT LIABILITIES AND COMMITMENTS	
 	 	 	
 	 	In the normal course of business, letters of credit to the value of US$48,567,740 (2006: US$25,262,000) have been issued to policyholders against insurance liabilities. The letters of credit have been collateralised with bank deposits of US$1,600,039 (2006: US$249,000) and investments of US$40,040,000 (2006: US$30,920,000).	
 	 	 	
18.	 	OTHER CREDITORS INCLUDING TAXATION AND SOCIAL SECURITY	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Amounts owed to group undertakings	 	 	86,206	 	 	 	99,400	 	
Income taxes	 	 	16,505	 	 	 	0	 	
Other — consideration payable (see Note 7)	 	 	26,314	 	 	 	0	 	
— other	 	 	19	 	 	 	5	 	

 	 	 	129,044	 	 	 	99,405	 	

19.	 	SHARE CAPITAL	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Authorised:	 	 	 	 	 	 	 	 	
110,000,000 (2006: 45,000,000) ordinary shares of US$1 each	 	 	110,000	 	 	 	45,000	 	
 	 	 	 	 	 	 	 	 	
Allotted, issued and fully paid:	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	
82,046,997 (2006: 43,450,000) ordinary shares of US$1 each	 	 	82,047	 	 	 	43,450	 	
 	 	 	 	 	 	 	
On 31 December 2007, 38,596,997 new ordinary shares were issued at US$5.232 per share as the consideration for the Part VII transfer of business from SPRE Limited, formerly St Paul Reinsurance Company Limited (see note 7).

 
UNIONAMERICA INSURANCE COMPANY LIMITED
Notes to the financial statements
20.	 	DIRECTORS’ EMOLUMENTS	
 	 	 	
 	 	Emoluments of directors are paid by Travelers Management Limited, formerly St. Paul Travelers Management Limited, a fellow group undertaking which employs all personnel within the Unionamerica Holdings Group 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.	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Directors’ emoluments	 	 	578	 	 	 	526	 	
 	 	 	 	 	 	 	 	 	
Company contributions to money purchase pension scheme	 	 	59	 	 	 	54	 	

 	 	 	637	 	 	 	580	 	
 	 	 	 	 	 	 	
The emoluments of the highest paid director were US$115,373 (2006: US$111,977)
The amount of contributions to money purchase pension schemes that is attributable to the highest paid director is US$11,272 (2006 : US$11,883)
 	 	 	 	 	 	 	 	 	
 	 	Number of Directors	 	
 	 	2007	 	 	2006	 	
Retirement benefits are accruing to the following number of directors:	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Money purchase schemes	 	 	6	 	 	 	6	 	
 	 	 	 	 	 	 	 	 	
The number of directors who exercised share options	 	 	1	 	 	 	1	 	

 
UNIONAMERICA INSURANCE COMPANY LIMITED
Notes to the financial statements
21.	 	MANAGEMENT COMPANY	
 	 	 	
 	 	The Company has no employees and all services are provided to the Company by Travelers Special Services Limited, formerly St. Paul Travelers Special Services Limited, a fellow subsidiary with which the Company has a management agreement. The charge for these services of US$4,862,000 (2006: US$5,602,000) is included in administrative expenses.	
 	 	 	
 	 	No loans were made to the directors or officers of the Company (2006: US$ Nil).	
 	 	 	
22.	 	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.	
 	 	 	
23.	 	POST BALANCE SHEET EVENTS	
 	 	 	
 	 	Subsequent to the year end, on 24 January 2008, the final issue of 4,921,126 shares at US$5.347 per share took place in settlement of the creditor for consideration payable of US$26,313,343 shown in the balance sheet at 31 December 2007. Following this issue of shares, share capital was increased by US$4,921,126 and share premium was increased by US$21,392,217 and accordingly the Company had shareholders’ equity of US$455 million.	
 	 	 	
 	 	On 30 December 2008, the Company was sold to Royston Run-off Limited, a subsidiary of Enstar Group Limited. Prior to the sale the company commuted certain stop loss contracts with former fellow subsidiaries of the Travelers Companies Inc. group.	
 	 	 	
24.	 	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
25	 	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 profit for the year after taxation, as determined under UK GAAP, are set out in the table below:	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
PROFIT FOR THE FINANCIAL YEAR	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
UK GAAP profit for the year after taxation	 	 	10,366	 	 	 	5,136	 	
 	 	 	 	 	 	 	 	 	
US GAAP adjustments	 	 	 	 	 	 	 	 	
(a) Unrealised investment (gain)/loss	 	 	(1,231	)	 	 	143	 	
(b) Taxation	 	 	369	 	 	 	(43	)	
(c) Other minor adjustments	 	 	35	 	 	 	17	 	

Total US GAAP adjustments	 	 	(827	)	 	 	117	 	

Net income under US GAAP	 	 	9,539	 	 	 	5,253	 	

(a)	 	Unrealised investment (gain)/loss	
 	 	 	
 	 	Under UK GAAP unrealised losses and gains 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. Under US GAAP movements in the valuation of investments that are available-for-sale are reported through Other Comprehensive Income and do not form part of net income.	
 	 	 	
(b)	 	Taxation	
 	 	 	
 	 	This adjustment reflects the differences between the calculation of current taxation.	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
SHAREHOLDERS’ EQUITY INTEREST	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
UK GAAP Shareholders’ equity interest	 	 	428,405	 	 	 	116,108	 	
 	 	 	 	 	 	 	 	 	
US GAAP adjustments	 	 	 	 	 	 	 	 	
(d) Taxation	 	 	326	 	 	 	(43	)	
(e) Other minor adjustments	 	 	49	 	 	 	14	 	

Total US GAAP adjustments	 	 	375	 	 	 	(29	)	

US GAAP Shareholders’ equity interest	 	 	428,780	 	 	 	116,079	 	

(d)	 	Taxation	
 	 	 	
 	 	This adjustment reflects the differences between the calculation of current taxation.	

 
UNIONAMERICA INSURANCE COMPANY LIMITED
Notes to the financial statements
25	 	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 ACCEPTED ACCOUNTING PRINCIPLES (“US GAAP”)	 	2007
US$000	 	 	2006
US$000	 	
Cash flows from operating activities:	 	 	 	 	 	 	 	 	
Net income	 	 	9,539	 	 	 	5,253	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	 	
Amortisation of investments	 	 	(911	)	 	 	(412	)	
Foreign currency translation on investments	 	 	(425	)	 	 	(636	)	
Net loss on sale of investments	 	 	266	 	 	 	520	 	
 	 	 	 	 	 	 	
 	 	 	8,469	 	 	 	4,725	 	
 	 	 	 	 	 	 	 	 	
Changes in assets and liabilities:	 	 	 	 	 	 	 	 	
Accrued interest receivable	 	 	(10,639	)	 	 	648	 	
Debtors arising out of reinsurance operations	 	 	(58,335	)	 	 	(30,993	)	
Loss and loss adjustment expenses recoverable from reinsurers	 	 	(476,012	)	 	 	35,107	 	
Other debtors	 	 	(2,890	)	 	 	(292	)	
Losses and loss adjustment expenses	 	 	778,375	 	 	 	(35,109	)	
Creditors arising out of reinsurance operations	 	 	40,966	 	 	 	9,677	 	
Other creditors	 	 	102,308	 	 	 	1,115	 	

Net cash provided / (used) in operating activities	 	 	382,242	 	 	 	(15,122	)	

Cash flows from investing activities	 	 	 	 	 	 	 	 	
Purchase of investments	 	 	(899,357	)	 	 	0	 	
Proceeds on sale of investments	 	 	239,624	 	 	 	3,669	 	

Net cash (used) / provided by investing activities	 	 	(659,733	)	 	 	3,669	 	

Cash flows from financing activities	 	 	 	 	 	 	 	 	
Dividends paid	 	 	0	 	 	 	0	 	
Proceeds from issue of share capital	 	 	301,931	 	 	 	0	 	

Net cash provided in financing activities	 	 	301,931	 	 	 	0	 	

Net increase / (decrease) in cash and cash equivalents	 	 	24,440	 	 	 	(11,453	)	
 	 	 	 	 	 	 	 	 	
Cash and cash equivalents, beginning of year	 	 	15,227	 	 	 	26,680	 	

Cash and cash equivalents, end of year	 	 	39,667	 	 	 	15,227	 	

 	
Supplementary cash flow information:	 	 	 	 	 	 	 	 	
Net income taxes paid	 	 	—	 	 	 	—	 	
 	 	 	 	 	 	 	
Interest paid	 	 	—	 	 	 	—	 	

EXHIBIT 99.3
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
(Registered in England No. 1460363)
FINANCIAL STATEMENTS
31 December 2008

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Independent Auditors’ Report
The Board of Directors
SPRE Limited:
We have audited the accompanying balance sheets of SPRE 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 SPRE 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 24 to the financial statements.
/s/ KPMG Audit Plc
KPMG Audit Plc
London, United Kingdom
March 18, 2009

 
SPRE LIMITED
(Formerly St. Paul Reinsurance 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	 	 	 	0	 	 	 	2,069	 	
Outward reinsurance premiums	 	 	 	 	 	 	0	 	 	 	(418	)	

 	 	 	 	 	 	 	0	 	 	 	1,651	 	

Change in the gross provision for unearned premiums	 	 	 	 	 	 	0	 	 	 	886	 	
Change in provision for unearned premiums, reinsurers’ share	 	 	 	 	 	 	0	 	 	 	(82	)	

 	 	 	 	 	 	 	0	 	 	 	804	 	

Earned premiums, net of reinsurance	 	 	 	 	 	 	0	 	 	 	2,455	 	
Allocated investment return transferred from the non-technical account	 	 	 	 	 	 	0	 	 	 	15,178	 	

 	 	 	 	 	 	 	0	 	 	 	17,633	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	
Claims incurred, net of reinsurance	 	 	 	 	 	 	 	 	 	 	 	 	
Claims paid — gross amount	 	 	 	 	 	 	0	 	 	 	(827,301	)	
 — reinsurers’ share	 	 	 	 	 	 	0	 	 	 	505,361	 	

 	 	 	 	 	 	 	0	 	 	 	(321,940	)	

Change in the provision for claims — gross amount	 	 	 	 	 	 	0	 	 	 	864,279	 	
— reinsurers’ share	 	 	 	 	 	 	0	 	 	 	(521,766	)	

 	 	 	 	 	 	 	0	 	 	 	342,513	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	
Claims incurred, net of reinsurance	 	 	 	 	 	 	0	 	 	 	20,573	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net operating expenses	 	 	10	 	 	 	0	 	 	 	(7,824	)	

Balance on the technical account — general business	 	 	 	 	 	 	0	 	 	 	30,382	 	

The above results relate to discontinued business.
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.

 
SPRE LIMITED
(Formerly St. Paul Reinsurance 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	 	 	 	 	 	 	0	 	 	 	30,382	 	

Investment income	 	 	6	 	 	 	0	 	 	 	43,030	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Unrealised investment loss	 	 	 	 	 	 	0	 	 	 	(385	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Investment expenses and charges	 	 	7	 	 	 	0	 	 	 	(8,543	)	

 	 	 	 	 	 	 	0	 	 	 	34,102	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Allocated investment return transferred to the technical account — general business	 	 	 	 	 	 	0	 	 	 	(15,178	)	

 	 	 	 	 	 	 	0	 	 	 	18,924	 	

Other income	 	 	8	 	 	 	0	 	 	 	7,614	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Other charges, including value adjustments	 	 	9	 	 	 	0	 	 	 	(911	)	

Profit/(loss) on ordinary activities before tax	 	 	 	 	 	 	0	 	 	 	56,009	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Tax on Profit/(loss) on ordinary activities	 	 	13	 	 	 	0	 	 	 	(11,711	)	

Profit/(loss) for the year after tax	 	 	 	 	 	 	0	 	 	 	44,298	 	

See accompanying notes to these financial statements.

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Balance Sheet
At 31 December 2008
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	2008	 	 	2007	 	
 	 	Notes	 	 	US$000	 	 	US$000	 	
ASSETS	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Investments	 	 	 	 	 	 	 	 	 	 	 	 	
Investment in subsidiary undertaking	 	 	14	 	 	 	0	 	 	 	301,931	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Debtors	 	 	 	 	 	 	 	 	 	 	 	 	
Other debtors	 	 	15	 	 	 	0	 	 	 	26,314	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Other assets	 	 	 	 	 	 	 	 	 	 	 	 	
Cash at bank and in hand	 	 	 	 	 	 	100	 	 	 	100	 	

Total assets	 	 	 	 	 	 	100	 	 	 	328,345	 	

LIABILITIES AND SHAREHOLDER’S FUNDS	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Capital and reserves	 	 	 	 	 	 	 	 	 	 	 	 	
Called up share capital	 	 	20	 	 	 	0	 	 	 	420,775	 	
Profit and loss account	 	 	18	 	 	 	0	 	 	 	(92,530	)	

Equity Shareholders’ funds	 	 	 	 	 	 	0	 	 	 	328,245	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Creditors	 	 	 	 	 	 	 	 	 	 	 	 	
Other creditors including taxation and social security	 	 	17	 	 	 	100	 	 	 	100	 	

Total liabilities	 	 	 	 	 	 	100	 	 	 	328,345	 	

See accompanying notes to these financial statements.

 
SPRE LIMITED
(Formerly St. Paul Reinsurance 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	 	 	 	 	 	 	328,245	 	 	 	283,947	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Distribution in kind	 	 	 	 	 	 	(328,245	)	 	 	0	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Profit for the financial year after tax	 	 	18	 	 	 	0	 	 	 	44,298	 	

Closing shareholders’ funds	 	 	 	 	 	 	0	 	 	 	328,245	 	

See accompanying notes to these financial statements.

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Notes to the financial statements
Year Ended 31 December 2008
1.	 	BASIS OF PREPARATION	
 	 	 	
 	 	The financial statements have been prepared in accordance with the provisions of Section 255, and special provisions of Part 1 of Schedule 9A, of the United Kingdom Companies Act 1985.	
 	 	 	
 	 	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”).	
 	 	 	
 	 	During 2007 the Company completed a Part VII transfer of all its insurance assets, liabilities and outwards reinsurance agreements to Unionamerica Insurance Company Limited (“Unionamerica”). The transfer was effected on 31 December. The Company received shares in Unionamerica equivalent to 71.22% of the issued shared capital. On 24 April 2008 the Company made a distribution in kind in the form of the Company’s interests in Unionamerica. For all financial periods these accounts deal with SPRE Limited as a company and not as a group as its results and that of Unionamerica are consolidated into the results of the ultimate parent undertaking.	
 	 	 	
 	 	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.	
 	 	 	
2.	 	ACCOUNTING POLICIES	
 	 	 	
 	 	The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the 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.	
 	 	 	
 	 	Unearned premiums	
 	 	 	
 	 	The provision for unearned premiums comprises the amount representing that part of gross premiums written which is estimated to be earned in subsequent financial years, taking into account the risk profile of the contracts on a contract by contract basis.	
 	 	 	
 	 	Acquisition costs	
 	 	 	
 	 	Acquisition costs comprise all direct and indirect costs arising from the conclusion of insurance and reinsurance contracts.	
 	 	 	
 	 	Deferred acquisition costs represent the proportion of acquisition costs incurred that correspond to the proportion of gross premiums written which are unearned at the balance sheet date.	

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Notes to the financial statements
2.	 	ACCOUNTING POLICIES (continued)	
 	 	 	
 	 	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.	
 	 	 	
 	 	Estimation Techniques	
 	 	 	
 	 	The following notes on estimation techniques were applicable to the period prior to the Part VII transfer.	
 	 	 	
 	 	In addition to the inherent uncertainty of having to forecast the ultimate costs of those claims that have occurred but not yet been advised to the Company as at the balance sheet date, there is also the considerable uncertainty regarding the eventual final costs of the claims that have been reported by the balance sheet date but which remain unsettled.	
 	 	 	
 	 	As a consequence of these uncertainties the Company has to apply sophisticated estimation techniques to determine the appropriate level of claims provisions.	
 	 	 	
 	 	In overview, claims provisions are determined based upon prior experience, knowledge of market conditions and trends and the terms and conditions of the underlying contracts of insurance and reinsurance.	
 	 	 	
 	 	A variety of different statistical techniques are used by the Company’s in-house actuaries to determine the appropriate level of provision to carry. These methods include the following:	
 	 	 	
 	 	§ Chain ladder development of incurred claims, where claims to date for each accident year are extrapolated based upon the historical development patterns of earlier accident years.	
 	 	 	
 	 	§ Expected loss ratios where claims are calculated by applying loss ratios determined from prior experience adjusted for known changes in market conditions or claims trends, to earned premiums; and	
 	 	 	
 	 	§ Bornhuetter Ferguson method, which combines use of expected loss ratios, for the more recent and underdeveloped accident years, and the chain ladder projection of incurred claims data for earlier years.	
 	 	 	
 	 	All projections are carried out separately for each line of business.	
 	 	 	
 	 	Catastrophe losses are reserved separately primarily based on event by event analysis of potential exposure on contracts written.	
 	 	 	
 	 	Where possible the Company adopts multiple techniques to estimate the required level of provision. This assists in giving a greater understanding of the trends inherent in the data being projected and setting the range of possible outcomes. The most appropriate estimation technique is then selected taking into account the characteristics of the business class being reserved.	
 	 	 	
 	 	Establishing an appropriate level of claims provision is inherently uncertain. The degree of uncertainty will vary by product and line of business according to the characteristics of the insured risk.	

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Notes to the financial statements
2.	 	ACCOUNTING POLICIES (continued)	
 	 	 	
 	 	Unexpired risks	
 	 	 	
 	 	Provision is made for unexpired risks where the claims and administrative expenses likely to arise after the end of the financial year in respect of contracts concluded before that date are expected to exceed the unearned premiums net of any acquisition costs deferred. The provision for unexpired risks is calculated separately by classes of business that are managed together, after taking into account relevant future investment income.	
 	 	 	
 	 	Investments, 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 accruals 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 or historical cost if acquired during the year. Unrealised investment gains and losses are reflected in the profit and loss account.	
 	 	 	
 	 	Allocation of investment income	
 	 	 	
 	 	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.	
 	 	 	
 	 	Land and buildings	
 	 	 	
 	 	In order to present a true and fair view of the Company’s performance, freehold land and buildings are depreciated but are carried at current value and are subject to triennial revaluation. Any permanent diminution or subsequent reversal in value is taken to the profit and loss account.	
 	 	 	
 	 	Foreign currency translation	
 	 	 	
 	 	Foreign currency revenue and profit and loss items have been translated into US Dollars at the average quarterly rates of exchange. Monetary assets and liabilities held in foreign currency are translated into US Dollars at the rates of exchange ruling at the balance sheet date. Gains and losses on foreign currency translation are taken to the profit and loss account.	
 	 	 	
 	 	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.	

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Notes to the financial statements
3.	 	SEGMENTAL ANALYSIS	

 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
By major class of business	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Gross premiums written	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Property	 	 	0	 	 	 	610	 	
Casualty	 	 	0	 	 	 	1,233	 	
Marine/aviation/satellite	 	 	0	 	 	 	226	 	
 	 	 	 	 	 	 	
 	 	 	0	 	 	 	2,069	 	

Underwriting result	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Property	 	 	0	 	 	 	7,838	 	
Casualty	 	 	0	 	 	 	5,595	 	
Marine/aviation/satellite	 	 	0	 	 	 	1,771	 	
 	 	 	 	 	 	 	
 	 	 	0	 	 	 	15,204	 	

Net insurance funds	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Property	 	 	0	 	 	 	0	 	
Casualty	 	 	0	 	 	 	0	 	
Marine/aviation/satellite	 	 	0	 	 	 	0	 	
 	 	 	 	 	 	 	
 	 	 	0	 	 	 	0	 	
 	 	 	 	 	 	 	
The net assets and investment income are not managed at class level, therefore are not included in the segmental analysis.

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Notes to the financial statements.
3.	 	SEGMENTAL ANALYSIS (continued)	
 	 	 	
 	 	The transaction of London Market reinsurance and insurance non-marine business at the Company’s London office is regarded by the directors as the Company’s business segment.	

 	 	 	 	 	 	 	 	 	 	2008 (US $000)	 	 	 	 	 	 	 	
 	 	Gross	 	 	Gross	 	 	Gross	 	 	Gross	 	 	 	 	 	 	 	
 	 	premiums	 	 	premiums	 	 	claims	 	 	operating	 	 	Reinsurance	 	 	Underwriting	 	
 	 	written	 	 	earned	 	 	incurred	 	 	expenses	 	 	balance	 	 	profit	 	
Direct insurance	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Casualty	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	

 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	
Reinsurance	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	

 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	0	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	2007 (US $000)	 	 	 	 	 	 	 	
 	 	Gross	 	 	Gross	 	 	Gross	 	 	Gross	 	 	 	 	 	 	 	
 	 	premiums	 	 	premiums	 	 	claims	 	 	operating	 	 	Reinsurance	 	 	Underwriting	 	
 	 	written	 	 	earned	 	 	incurred	 	 	expenses	 	 	balance	 	 	loss	 	
Direct insurance	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property	 	 	(13	)	 	 	(13	)	 	 	321	 	 	 	(22	)	 	 	(64	)	 	 	222	 	
Casualty	 	 	0	 	 	 	0	 	 	 	(15	)	 	 	(1,343	)	 	 	(2,960	)	 	 	(4,318	)	

 	 	 	(13	)	 	 	(13	)	 	 	306	 	 	 	(1,365	)	 	 	(3,024	)	 	 	(4,096	)	
Reinsurance	 	 	2,082	 	 	 	2,968	 	 	 	36,672	 	 	 	(6,641	)	 	 	(13,879	)	 	 	19,300	 	

 	 	 	2,069	 	 	 	2,955	 	 	 	36,978	 	 	 	(8,006	)	 	 	(16,903	)	 	 	15,204	 	

 	 	The underwriting result represents the balance on the technical account — general business before investment income and charges.	

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.	

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Notes to the financial statements
5.	 	PART VII TRANSFER	

 	 	The Company transferred all of its insurance liabilities and underlying outwards reinsurance agreements to Unionamerica 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.	
 	 	 	
 	 	The assets and liabilities transferred are set out below:	

 	 	US$000	 	
Assets	 	 	 	 	
 	 	 	 	 	
Cash and investments	 	 	664,163	 	
Reinsurers’ share of technical provisions	 	 	266,040	 	
Reinsurers’ share of technical provisions — Internal stop loss	 	 	158,212	 	
Debtors	 	 	57,892	 	
Other assets	 	 	40,785	 	

 	 	 	1,187,092	 	
 	 	 	 	 	
Liabilities	 	 	 	 	
 	 	 	 	 	
Technical provisions	 	 	570,675	 	
Technical provisions — Internal stop loss	 	 	158,212	 	
Creditors	 	 	113,328	 	
Other liabilities	 	 	16,632	 	

 	 	 	858,847	 	

Surplus assets	 	 	328,245	 	

 	 	Following the transfer of surplus assets of US$328,245,000, the Company received shares in Unionamerica Insurance Company Limited to the value of US$301,931,000 on 31 December 2007, the balance of which was satisfied after the year end on 24 January 2008, by the issue of additional shares to the value of US$26,314,000 to the Company.	
 	 	 	
6.	 	INVESTMENT INCOME	

 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
Land and buildings	 	 	0	 	 	 	3,620	 	
Income from other financial investments	 	 	0	 	 	 	36,756	 	
Realised investment gains	 	 	0	 	 	 	2,654	 	
 	 	 	 	 	 	 	
 	 	 	0	 	 	 	43,030	 	

 

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Notes to the financial statements
7.	 	INVESTMENT EXPENSES AND CHARGES	

 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
Interest payable	 	 	0	 	 	 	8,175	 	
Investment management expenses	 	 	0	 	 	 	368	 	
 	 	 	 	 	 	 	
 	 	 	0	 	 	 	8,543	 	
 	 	 	 	 	 	 	
8. OTHER INCOME
 	 	 	 	 	 	 	 	 	
 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
Differences on foreign currency net asset translation	 	 	0	 	 	 	7,614	 	
 	 	 	 	 	 	 	
 	 	 	0	 	 	 	7,614	 	
 	 	 	 	 	 	 	
9. OTHER CHARGES
 	 	 	 	 	 	 	 	 	
 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
Other charges	 	 	0	 	 	 	911	 	
 	 	 	 	 	 	 	
 	 	 	0	 	 	 	911	 	

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Notes to the financial statements
10.	 	NET OPERATING EXPENSES	

 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
Gross acquisition costs	 	 	0	 	 	 	102	 	
Change in gross deferred acquisition costs	 	 	0	 	 	 	90	 	

 	 	 	0	 	 	 	192	 	
Administrative expenses	 	 	0	 	 	 	7,634	 	

Gross operating expenses	 	 	0	 	 	 	7,826	 	
Reinsurance commissions and profit participation	 	 	0	 	 	 	(2	)	

 	 	 	0	 	 	 	7,824	 	

11.	 	INCLUDED IN PROFIT AND LOSS ACCOUNT	

 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
Income from listed securities	 	 	0	 	 	 	36,756	 	
Interest payable on other loans	 	 	0	 	 	 	8,175	 	
Auditor’s remuneration in respect of:	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Audit of these financial statements	 	 	14	 	 	 	244	 	
Other services pursuant to legislation	 	 	14	 	 	 	44	 	
Tax services	 	 	15	 	 	 	15	 	
Auditors’ remuneration accruing in 2008 was paid by a fellow group undertaking.
12.	 	EMPLOYEES	
 	 	 	
 	 	The Company has no employees, but had a management agreement with Travelers Management Limited, a former fellow group undertaking, which employed UK personnel and provided certain management services. The Company had entered into an additional services agreement with Travelers Special Services Limited, another former fellow group undertaking, which provided a number of management services.	

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Notes to the financial statements
13. TAXATION
 	 	 	 	 	 	 	 	 	
 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
Analysis of charge in the period, current tax	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Tax charge for the year	 	 	0	 	 	 	14,208	 	
Adjustments in respect of prior periods	 	 	0	 	 	 	(2,497	)	

Tax on Profit on ordinary activities	 	 	0	 	 	 	11,711	 	

 	 	 	 	 	 	 	 	 	
 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
Reconciliation of the current tax charge required under FRS19	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Profit on ordinary activities before taxation	 	 	0	 	 	 	56,009	 	

Profit on ordinary activities before tax multiplied by the standard rate of corporation tax of 28.5% (see note below) (2007: 30%)	 	 	0	 	 	 	16,803	 	
 	 	 	 	 	 	 	 	 	
Movement in provisions	 	 	0	 	 	 	532	 	
Loss on disposal of building	 	 	0	 	 	 	(2,702	)	
Losses brought forward	 	 	0	 	 	 	(425	)	
Prior year corporation tax	 	 	0	 	 	 	(2,497	)	

Tax charge for the period	 	 	0	 	 	 	11,711	 	
 	 	 	 	 	 	 	
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.

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Notes to the financial statements
14. INVESTMENTS
 	 	 	 	 	 	 	 	 	
 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
Investment in subsidiary undertaking	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
At cost	 	
As at 1 January	 	 	301,931	 	 	 	0	 	
Acquisition during the year (See Note 5)	 	 	26,314	 	 	 	301,931	 	
Distribution in kind	 	 	(328,245	)	 	 	0	 	

As at 31 December	 	 	0	 	 	 	301,931	 	
 	 	 	 	 	 	 	
On 24 April 2008, SPRE Limited paid an interim dividend of a total amount of US$328,245,000 which was paid in the form of assets of SPRE Limited, such assets being 63,354,088 shares in Unionamerica Insurance Company Limited equivalent to the value of the dividend.
15. OTHER DEBTORS
 	 	 	 	 	 	 	 	 	
 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
Consideration receivable (See Note 5)	 	 	0	 	 	 	26,314	 	

 	 	 	0	 	 	 	26,314	 	
 	 	 	 	 	 	 	
16. CONTINGENCIES AND OTHER LIABILITIES
Following the Part VII transfer there are no contingencies or other liabilities to report.
17. OTHER CREDITORS INCLUDING TAXATION AND SOCIAL SECURITY
 	 	 	 	 	 	 	 	 	
 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
Sundry creditors	 	 	100	 	 	 	100	 	

 	 	 	100	 	 	 	100	 	

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Notes to the financial statements.
18. RESERVES – PROFIT AND LOSS ACCOUNT
 	 	 	 	 	 	 	 	 	
 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
As at 1 January	 	 	(92,530	)	 	 	(136,828	)	
Profit for the financial year	 	 	0	 	 	 	44,298	 	
Distribution	 	 	92,530	 	 	 	0	 	

As at 31 December	 	 	0	 	 	 	(92,530	)	
 	 	 	 	 	 	 	
19. PROVISION FOR OTHER RISKS AND CHARGES
Consequent to the decision to close the branch offices in Belgium and Germany, a provision was established, based on the directors’ best estimates, for the likely costs arising in exiting these businesses.
 	 	 	 	 	 	 	 	 	
 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
At the beginning of the year	 	 	0	 	 	 	1,419	 	
Utilised during the year	 	 	0	 	 	 	(1,419	)	

At the end of the year	 	 	0	 	 	 	0	 	
 	 	 	 	 	 	 	
20. SHARE CAPITAL
 	 	 	 	 	 	 	 	 	
 	 	2008	 	 	2007	 	
Authorised	 	£000	 	 	£000	 	
 	 	 	 	 	 	 	 	 	
83,301,419 (2007: 300,000,000) authorised ordinary shares of £1 each	 	 	83,301	 	 	 	300,000	 	

 	 	 	 	 	 	 	 	 	
Allotted, issued and fully paid	 	 	US$000	 	 	 	US$000	 	
 	 	 	 	 	 	 	 	 	
2 (2007: 216,698,583) ordinary shares of £1 each at par	 	 	0	 	 	 	420,775	 	
 	 	 	 	 	 	 	
On the 20th February 2008, the Company received approval from the High Court to reduce the share capital of the Company: On this date the authorized share capital of the company was reduced from £300,000,000 to £83,301,419 by the cancellation of 216,698,581 issued Ordinary shares of £1 each. Following the reduction the authorised share capital of the company is £83,301,419 divided into Ordinary shares of £1 each, of which 2 have been issued and credited as fully paid.

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Notes to the financial statements
21. REMUNERATION OF DIRECTORS
 	 	 	 	 	 	 	 	 	
 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
Directors’ emoluments	 	 	0	 	 	 	922	 	
Amounts receivable under long term incentive schemes	 	 	0	 	 	 	0	 	
 	 	 	 	 	 	 	
 	 	 	0	 	 	 	922	 	
 	 	 	 	 	 	 	 	 	
Company contributions to money purchase pension schemes	 	 	0	 	 	 	92	 	

 	 	 	0	 	 	 	1,014	 	
 	 	 	 	 	 	 	
The aggregate emoluments and amounts receivable under long term incentive schemes of the highest paid director were US$ Nil (2007: US$174,874).
Company contribution to money purchase pension schemes attributable to the highest paid director was US$ Nil (2007 : US$18,923).
 	 	 	 	 	 	 	 	 	
 	 	 	Number of Directors	 	
 	 	2008	 	 	2007	 	
Retirement benefits accruing to the following number of Directors under:	 	 	 	 	 	 	 	 	
Money purchase schemes	 	 	0	 	 	 	8	 	
Defined benefit schemes	 	 	0	 	 	 	0	 	
The number of directors who exercised share options	 	 	0	 	 	 	3	 	
 	 	 	 	 	 	 	 	 	
The number of directors in respect of whose services shares were received or receivable under long term incentive schemes was	 	 	0	 	 	 	0	 	
Emoluments of directors based in the UK were paid by Travelers Management Limited, a former fellow group undertaking which employed all UK personnel and provided full management services. The directors’ emoluments have been apportioned across the group as a whole, based on services rendered to companies in the group.

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Notes to the financial statements
22. 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 there were no transactions with former fellow group undertakings within The Travelers Companies Inc. group.
23. IMMEDIATE AND ULTIMATE HOLDING COMPANIES
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

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Notes to the financial statements
 	 	 	
24	 	SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES IN THE UNITED KINGDOM (“UK GAAP”) AND ACCOUNTING PRINCIPLES IN THE UNITED STATES OF AMERICA (“US GAAP”)	
The SPRE 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 profit for the year after taxation, as determined under UK GAAP, are set out in the table below:
 	 	 	 	 	 	 	 	 	
 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
PROFIT FOR THE FINANCIAL YEAR	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
UK GAAP profit for the year after taxation	 	 	0	 	 	 	44,298	 	
 	 	 	 	 	 	 	 	 	
US GAAP adjustments	 	 	 	 	 	 	 	 	
(a) Unrealised investment loss/(gain)	 	 	0	 	 	 	385	 	
(b) Valuation difference on freehold building	 	 	0	 	 	 	(1,403	)	

Total US GAAP adjustments	 	 	0	 	 	 	(1,018	)	

Net income under US GAAP	 	 	0	 	 	 	43,280	 	

(a) Unrealised investment loss/(gain)
Under UK GAAP unrealised losses and gains 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. Under US GAAP movements in the valuation of investments that are available-for-sale are reported through Other Comprehensive Income and do not form part of net income.
(b) Valuation difference on freehold building
Under UK GAAP the freehold property is carried at current value and is subject to triennial valuation by an independent property valuer who is a member of the Royal Institute of Chartered Surveyors. The open market value of the property is determined after the deduction of expected selling costs. Under US GAAP the freehold property is carried at historical cost less accumulated depreciation.
 	 	 	 	 	 	 	 	 	
 	 	2008	 	 	2007	 	
 	 	US$000	 	 	US$000	 	
SHAREHOLDERS’ EQUITY INTEREST	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
UK GAAP Shareholders’ equity interest	 	 	0	 	 	 	328,245	 	

US GAAP Shareholders’ equity interest	 	 	0	 	 	 	328,245	 	

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Note to the Financial Statements
 	 	 	
24	 	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	 	
CASH FLOW STATEMENT AS DETERMINED IN ACCORDANCE WITH US
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“US GAAP”)	 	US$000	 	 	US$000	 	
Cash flows from operating activities:	 	 	 	 	 	 	 	 	
Net income	 	 	0	 	 	 	43,280	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	 	
Amortisation of investments	 	 	0	 	 	 	(189	)	
Foreign currency translation on investments	 	 	0	 	 	 	(17,160	)	
Net loss on sale of investments	 	 	0	 	 	 	(2,654	)	

 	 	 	0	 	 	 	23,277	 	
 	 	 	 	 	 	 	 	 	
Changes in assets and liabilities:	 	 	 	 	 	 	 	 	
Accrued interest receivable	 	 	0	 	 	 	12,649	 	
Debtors arising out of reinsurance operations	 	 	0	 	 	 	66,598	 	
Loss and loss adjustment expenses recoverable from reinsurers	 	 	0	 	 	 	537,836	 	
Other debtors	 	 	0	 	 	 	136	 	
Losses and loss adjustment expenses	 	 	0	 	 	 	(870,996	)	
Creditors arising out of reinsurance operations	 	 	0	 	 	 	(175,291	)	
Other creditors	 	 	0	 	 	 	(2,304	)	

Net cash used in operating activities	 	 	0	 	 	 	(408,095	)	

Cash flows from investing activities	 	 	 	 	 	 	 	 	
Purchase of investments	 	 	0	 	 	 	(395,583	)	
Purchase of investment in subsidiary	 	 	0	 	 	 	(328,245	)	
Proceeds on sale of investments	 	 	0	 	 	 	1,102,095	 	
Proceeds from sale of freehold building	 	 	0	 	 	 	5,867	 	

Net cash provided by investing activities	 	 	0	 	 	 	384,134	 	

Net (decrease) in cash and cash equivalents	 	 	0	 	 	 	(23,961	)	
 	 	 	 	 	 	 	 	 	
Cash and cash equivalents, beginning of year	 	 	100	 	 	 	24,061	 	

Cash and cash equivalents, end of year	 	 	100	 	 	 	100	 	

 	 	
Supplemental cash flow information	 	 	 	 	 	 	 	 	
Net income taxes paid	 	 	—	 	 	 	—	 	
 	 	 	 	 	 	 	
Interest paid	 	 	—	 	 	 	—	 	

EXHIBIT 99.4
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
(Registered in England No. 1460363)
FINANCIAL STATEMENTS
31 December 2007

 
SPRE LIMITED
(Formerly St. Paul Reinsurance Company Limited)
Independent Auditors’ Report
The Board of Directors
SPRE Limited:
We have audited the accompanying balance sheets of SPRE 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 SPRE 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 28 to the financial statements.
/s/ KPMG Audit Plc

KPMG Audit Plc
London, United Kingdom
March 18, 2009

 
SPRE LIMITED
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	 	 	3	 	 	 	2,069	 	 	 	5,440	 	
Outward reinsurance premiums	 	 	 	 	 	 	(418	)	 	 	14,403	 	

 	 	 	 	 	 	 	1,651	 	 	 	19,843	 	

Change in the gross provision for unearned premiums	 	 	21	 	 	 	886	 	 	 	312	 	
Change in provision for unearned premiums, reinsurers’ share	 	 	21	 	 	 	(82	)	 	 	(47	)	

 	 	 	 	 	 	 	804	 	 	 	265	 	

Earned premiums, net of reinsurance	 	 	 	 	 	 	2,455	 	 	 	20,108	 	
Allocated investment return transferred from the non-technical account	 	 	 	 	 	 	15,178	 	 	 	16,755	 	

 	 	 	 	 	 	 	17,633	 	 	 	36,863	 	

Claims incurred, net of reinsurance	 	 	 	 	 	 	 	 	 	 	 	 	
Claims paid — gross amount	 	 	 	 	 	 	(827,301	)	 	 	(148,192	)	
— reinsurers’ share	 	 	 	 	 	 	505,361	 	 	 	30,938	 	

 	 	 	 	 	 	 	(321,940	)	 	 	(117,254	)	

Change in the provision for claims — gross amount	 	 	21	 	 	 	864,279	 	 	 	122,024	 	
— reinsurers’ share	 	 	21	 	 	 	(521,766	)	 	 	(113,250	)	

 	 	 	 	 	 	 	342,513	 	 	 	8,774	 	

Claims incurred, net of reinsurance	 	 	 	 	 	 	20,573	 	 	 	(108,480	)	

Net operating expenses	 	 	10	 	 	 	(7,824	)	 	 	(8,436	)	

Balance on the technical account — general business	 	 	 	 	 	 	30,382	 	 	 	(80,053	)	
 	 	 	 	 	 	 	 	 	 	 	
The above results relate to discontinued business.
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.

 
SPRE LIMITED
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	 	 	 	 	 	 	30,382	 	 	 	(80,053	)	

Investment income	 	 	6	 	 	 	43,030	 	 	 	37,366	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Unrealised investment loss	 	 	 	 	 	 	(385	)	 	 	(6,201	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Investment expenses and charges	 	 	7	 	 	 	(8,543	)	 	 	(7,582	)	

 	 	 	 	 	 	 	34,102	 	 	 	23,583	 	

Allocated investment return transferred to the technical account — general business	 	 	 	 	 	 	(15,178	)	 	 	(16,755	)	
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	18,924	 	 	 	6,828	 	

Other income	 	 	8	 	 	 	7,614	 	 	 	7,599	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Other charges, including value adjustments	 	 	9	 	 	 	(911	)	 	 	(1,184	)	

Profit/(loss) on ordinary activities before tax	 	 	 	 	 	 	56,009	 	 	 	(66,810	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Tax on Profit/(loss) on ordinary activities	 	 	13	 	 	 	(11,711	)	 	 	0	 	

Profit/(loss) for the year after tax	 	 	 	 	 	 	44,298	 	 	 	(66,810	)	
 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to these financial statements.

 
SPRE LIMITED
Balance Sheet
At 31 December 2007
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	2007	 	 	2006	 	
 	 	Notes	 	 	US$000	 	 	US$000	 	
ASSETS	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Investments	 	 	 	 	 	 	 	 	 	 	 	 	
Investment in subsidiary undertaking	 	 	15	 	 	 	301,931	 	 	 	0	 	
Land and buildings	 	 	14	 	 	 	0	 	 	 	4,466	 	
Other financial investments	 	 	15	 	 	 	0	 	 	 	686,893	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Reinsurers’ share of technical provisions	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for unearned premiums	 	 	21	 	 	 	0	 	 	 	80	 	
Claims outstanding	 	 	21	 	 	 	0	 	 	 	537,756	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Debtors	 	 	 	 	 	 	 	 	 	 	 	 	
Debtors arising out of reinsurance operations	 	 	16	 	 	 	0	 	 	 	66,598	 	
Other debtors	 	 	17	 	 	 	26,314	 	 	 	47	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Other assets	 	 	 	 	 	 	 	 	 	 	 	 	
Cash at bank and in hand	 	 	 	 	 	 	100	 	 	 	24,060	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Prepayments and accrued income	 	 	 	 	 	 	 	 	 	 	 	 	
Accrued interest and rental income	 	 	 	 	 	 	0	 	 	 	12,649	 	
Deferred acquisition costs	 	 	21	 	 	 	0	 	 	 	89	 	

Total assets	 	 	 	 	 	 	328,345	 	 	 	1,332,638	 	

LIABILITIES AND SHAREHOLDERS’ FUNDS	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Capital and reserves	 	 	 	 	 	 	 	 	 	 	 	 	
Called up share capital	 	 	23	 	 	 	420,775	 	 	 	420,775	 	
Profit and loss account	 	 	20	 	 	 	(92,530	)	 	 	(136,828	)	

Equity Shareholders’ funds	 	 	 	 	 	 	328,245	 	 	 	283,947	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Technical provisions	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for unearned premiums	 	 	21	 	 	 	0	 	 	 	868	 	
Claims outstanding	 	 	21	 	 	 	0	 	 	 	870,128	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Provision for other risks and charges	 	 	22	 	 	 	0	 	 	 	1,419	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Deposits received from reinsurers	 	 	 	 	 	 	0	 	 	 	124,948	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Creditors	 	 	 	 	 	 	 	 	 	 	 	 	
Creditors arising out of reinsurance operations	 	 	 	 	 	 	0	 	 	 	50,343	 	
Other creditors including taxation and social security	 	 	19	 	 	 	100	 	 	 	985	 	

Total liabilities	 	 	 	 	 	 	328,345	 	 	 	1,332,638	 	
 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to these financial statements.

 
SPRE LIMITED
Reconciliation of movements in shareholders’ funds
For the Year Ended 31 December 2007
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	2007	 	 	2006	 	
 	 	Notes	 	 	US$000	 	 	US$000	 	
Opening shareholders’ funds	 	 	 	 	 	 	283,947	 	 	 	350,757	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Profit/(Loss) for the financial year after tax	 	 	20	 	 	 	44,298	 	 	 	(66,810	)	
 	 	 	 	 	 	 	 	 	 	 	
Closing shareholders’ funds	 	 	 	 	 	 	328,245	 	 	 	283,947	 	
 	 	 	 	 	 	 	 	 	 	 	
See accompanying notes to these financial statements.

 
SPRE LIMITED
Notes to the financial statements
Year Ended 31 December 2007
1.	 	BASIS OF PREPARATION	
 	 	 	
 	 	The financial statements have been prepared in accordance with the provisions of Section 255, and special provisions of Part 1 of Schedule 9A, of the United Kingdom Companies Act 1985.	
 	 	 	
 	 	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”).	
 	 	 	
 	 	During the year the Company completed a Part VII transfer of all its insurance assets, liabilities and outwards reinsurance agreements to Unionamerica Insurance Company Limited (‘Unionamerica’). The transfer was effected on 31 December 2007. In consideration for the transfer of surplus assets of US$328 million, the Company received shares in Unionamerica equivalent to 71.22% of the issued share capital as at 31 December 2007. These accounts deal with SPRE Limited as a company and not as a group as its results and that of Unionamerica are consolidated into the results of The Travelers Companies Inc.	
 	 	 	
 	 	Prior to completion of the Part VII transfer, the expected cost of the run-off of the book of business was exceeded by the expected future investment return attributable to the Technical Account — General Business. Accordingly, no provision was made for future run-off expenses.	
 	 	 	
 	 	Following the successful completion of the Part VII transfer on 31 December 2007 the directors propose to proceed with the orderly wind up of the company’s affairs and intend to seek the liquidation of the company in early 2008. Accordingly, these accounts are prepared on a break up basis. Given that the assets retained by the company, following the Part VII transfer consist only of cash and its investment in its fellow subsidiary, Unionamerica Insurance Company Limited, no adjustment has been necessary as a result of the decision to present these financial statements on a break up basis.	
 	 	 	
 	 	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.	
 	 	 	
2.	 	ACCOUNTING POLICIES	
 	 	 	
 	 	The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the 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.	
 	 	 	
 	 	Unearned premiums	
 	 	 	
 	 	The provision for unearned premiums comprises the amount representing that part of gross premiums written which is estimated to be earned in subsequent financial years, taking into account the risk profile of the contracts on a contract by contract basis.	
 	 	 	
 	 	Acquisition costs	
 	 	 	
 	 	Acquisition costs comprise all direct and indirect costs arising from the conclusion of insurance and reinsurance contracts. Deferred acquisition costs represent the proportion of acquisition costs incurred that correspond to the proportion of gross premiums written which are unearned at the balance sheet date.	

 
SPRE LIMITED
Notes to the financial statements
2.	 	ACCOUNTING POLICIES (continued)	
 	 	 	
 	 	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.	
 	 	 	
 	 	Estimation Techniques	
 	 	 	
 	 	The following notes on estimation techniques were applicable to the period prior to the Part VII transfer.	
 	 	 	
 	 	In addition to the inherent uncertainty of having to forecast the ultimate costs of those claims that have occurred but not yet been advised to the Company as at the balance sheet date, there is also the considerable uncertainty regarding the eventual final costs of the claims that have been reported by the balance sheet date but which remain unsettled.	
 	 	 	
 	 	As a consequence of these uncertainties the Company has to apply sophisticated estimation techniques to determine the appropriate level of claims provisions.	
 	 	 	
 	 	In overview, claims provisions are determined based upon prior experience, knowledge of market conditions and trends and the terms and conditions of the underlying contracts of insurance and reinsurance.	
 	 	 	
 	 	A variety of different statistical techniques are used by the Company’s in-house actuaries to determine the appropriate level of provision to carry. These methods include the following:	
§ Chain ladder development of incurred claims, where claims to date for each accident year are extrapolated based upon the historical development patterns of earlier accident years.
§ Expected loss ratios where claims are calculated by applying loss ratios determined from prior experience adjusted for known changes in market conditions or claims trends, to earned premiums; and
§ Bornhuetter Ferguson method, which combines use of expected loss ratios, for the more recent and underdeveloped accident years, and the chain ladder projection of incurred claims data for earlier years.
 	 	All projections are carried out separately for each line of business.	
 	 	 	
 	 	Catastrophe losses are reserved separately primarily based on event by event analysis of potential exposure on contracts written.	
 	 	 	
 	 	Where possible the Company adopts multiple techniques to estimate the required level of provision. This assists in giving a greater understanding of the trends inherent in the data being projected and setting the range of possible outcomes. The most appropriate estimation technique is then selected taking into account the characteristics of the business class being reserved.	
 	 	 	
 	 	Establishing an appropriate level of claims provision is inherently uncertain. The degree of uncertainty will vary by product and line of business according to the characteristics of the insured risk.	

 
SPRE LIMITED
Notes to the financial statements
2.	 	ACCOUNTING POLICIES (continued)	
 	 	 	
 	 	Unexpired risks	
 	 	 	
 	 	Provision is made for unexpired risks where the claims and administrative expenses likely to arise after the end of the financial year in respect of contracts concluded before that date are expected to exceed the unearned premiums net of any acquisition costs deferred. The provision for unexpired risks is calculated separately by classes of business that are managed together, after taking into account relevant future investment income.	
 	 	 	
 	 	Investments, 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 accruals 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 or historical cost if acquired during the year. Unrealised investment gains and losses are reflected in the profit and loss account.	
 	 	 	
 	 	Allocation of investment income	
 	 	 	
 	 	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.	
 	 	 	
 	 	Land and buildings	
 	 	 	
 	 	In order to present a true and fair view of the Company’s performance, freehold land and buildings are depreciated but are carried at current value and are subject to triennial revaluation. Any permanent diminution or subsequent reversal in value is taken to the profit and loss account.	
 	 	 	
 	 	Foreign currency translation	
 	 	 	
 	 	Foreign currency revenue and profit and loss items have been translated into US Dollars at the average quarterly rates of exchange. Monetary assets and liabilities held in foreign currency are translated into US Dollars at the rates of exchange ruling at the balance sheet date. Gains and losses on foreign currency translation are taken to the profit and loss account.	
 	 	 	
 	 	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.	

 
SPRE LIMITED
Notes to the financial statements
3.	 	SEGMENTAL ANALYSIS	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
By major class of business	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Gross premiums written	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Property	 	 	610	 	 	 	1,998	 	
Casualty	 	 	1,233	 	 	 	3,466	 	
Marine/aviation/satellite	 	 	226	 	 	 	(24	)	

 	 	 	2,069	 	 	 	5,440	 	

Underwriting result	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Property	 	 	7,838	 	 	 	(14,118	)	
Casualty	 	 	5,595	 	 	 	(88,591	)	
Marine/aviation/satellite	 	 	1,771	 	 	 	5,901	 	

 	 	 	15,204	 	 	 	(96,808	)	

Net insurance funds	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Property	 	 	0	 	 	 	(99,364	)	
Casualty	 	 	0	 	 	 	398,836	 	
Marine/aviation/satellite	 	 	0	 	 	 	33,599	 	

 	 	 	0	 	 	 	333,071	 	

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

 
SPRE LIMITED
Notes to the financial statements.
3.	 	SEGMENTAL ANALYSIS (continued)	
 	 	 	
 	 	The transaction of London Market reinsurance and insurance non-marine business at the Company’s London office is regarded by the directors as the Company’s business segment.	

 	 	2007 (US $000)	 	
 	 	Gross	 	 	Gross	 	 	Gross	 	 	Gross	 	 	 	 	 	 	 	
 	 	premiums	 	 	premiums	 	 	claims	 	 	operating	 	 	Reinsurance	 	 	Underwriting	 	
 	 	written	 	 	earned	 	 	incurred	 	 	expenses	 	 	balance	 	 	profit	 	
Direct insurance	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property	 	 	(13	)	 	 	(13	)	 	 	321	 	 	 	(22	)	 	 	(64	)	 	 	222	 	
Casualty	 	 	0	 	 	 	0	 	 	 	(15	)	 	 	(1,343	)	 	 	(2,960	)	 	 	(4,318	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	(13	)	 	 	(13	)	 	 	306	 	 	 	(1,365	)	 	 	(3,024	)	 	 	(4,096	)	
Reinsurance	 	 	2,082	 	 	 	2,968	 	 	 	36,672	 	 	 	(6,641	)	 	 	(13,879	)	 	 	19,300	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	2,069	 	 	 	2,955	 	 	 	36,978	 	 	 	(8,006	)	 	 	(16,903	)	 	 	15,204	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	2006 (US $000)	 	
 	 	Gross	 	 	Gross	 	 	Gross	 	 	Gross	 	 	 	 	 	 	 	
 	 	premiums	 	 	premiums	 	 	claims	 	 	operating	 	 	Reinsurance	 	 	Underwriting	 	
 	 	written	 	 	earned	 	 	incurred	 	 	expenses	 	 	balance	 	 	loss	 	
Direct insurance	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Property	 	 	3	 	 	 	3	 	 	 	(534	)	 	 	(105	)	 	 	(10	)	 	 	(646	)	
Casualty	 	 	22	 	 	 	22	 	 	 	(47,557	)	 	 	(2,467	)	 	 	(492	)	 	 	(50,494	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	25	 	 	 	25	 	 	 	(48,091	)	 	 	(2,572	)	 	 	(502	)	 	 	(51,140	)	
Reinsurance	 	 	5,415	 	 	 	5,727	 	 	 	21,923	 	 	 	(5,907	)	 	 	(67,411	)	 	 	(45,668	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	5,440	 	 	 	5,752	 	 	 	(26,168	)	 	 	(8,479	)	 	 	(67,913	)	 	 	(96,808	)	

 	 	The underwriting result represents the balance on the technical account — general business before investment income and charges.	
 	 	 	
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.	

 
SPRE LIMITED
Notes to the financial statements
5.	 	PART VII TRANSFER	
 	 	 	
 	 	The Company transferred all of its insurance liabilities and underlying outwards reinsurance agreements to Unionamerica 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.	
 	 	 	
 	 	The assets and liabilities transferred are set out below:	

 	 	US$000	 	
Assets	 	 	 	 	
 	 	 	 	 	
Cash and investments	 	 	664,163	 	
Reinsurers’ share of technical provisions	 	 	266,040	 	
Reinsurers’ share of technical provisions — Internal stop loss	 	 	158,212	 	
Debtors	 	 	57,892	 	
Other assets	 	 	40,785	 	
 	 	 	 	
 	 	 	1,187,092	 	
 	 	 	 	 	
Liabilities	 	 	 	 	
 	 	 	 	 	
Technical provisions	 	 	570,675	 	
Technical provisions — Internal stop loss	 	 	158,212	 	
Creditors	 	 	113,328	 	
Other liabilities	 	 	16,632	 	
 	 	 	 	
 	 	 	858,847	 	
 	 	 	 	
Surplus assets	 	 	328,245	 	

 	 	Following the transfer of surplus assets of US$328,245,000, the Company received shares in Unionamerica Insurance Company Limited of US$301,931,000 on 31 December 2007, the balance of which was satisfied after the year end on 24 January 2008, by the issue of additional shares of US$26,314,000 to the Company.	
 	 	 	
6.	 	INVESTMENT INCOME	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Land and buildings	 	 	3,620	 	 	 	0	 	
Income from other financial investments	 	 	36,756	 	 	 	36,231	 	
Realised investment gains	 	 	2,654	 	 	 	1,135	 	
 	 	 	 	 	 	 	
 	 	 	43,030	 	 	 	37,366	 	

 
SPRE LIMITED
Notes to the financial statements
7.	 	INVESTMENT EXPENSES AND CHARGES	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Interest payable	 	 	8,175	 	 	 	2,291	 	
Investment management expenses	 	 	368	 	 	 	593	 	
Realised investment losses	 	 	0	 	 	 	4,698	 	
 	 	 	 	 	 	 	
 	 	 	8,543	 	 	 	7,582	 	

8.	 	OTHER INCOME	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Differences on foreign currency net asset translation	 	 	7,614	 	 	 	7,599	 	
 	 	 	 	 	 	 	
 	 	 	7,614	 	 	 	7,599	 	

9.	 	OTHER CHARGES	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Increase of provision	 	 	0	 	 	 	263	 	
Other charges	 	 	911	 	 	 	921	 	
 	 	 	 	 	 	 	
 	 	 	911	 	 	 	1,184	 	

 
SPRE LIMITED
Notes to the financial statements
10.	 	NET OPERATING EXPENSES	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Gross acquisition costs	 	 	102	 	 	 	592	 	
Change in gross deferred acquisition costs	 	 	90	 	 	 	34	 	
 	 	 	 	 	 	 	
 	 	 	192	 	 	 	626	 	
Administrative expenses	 	 	7,634	 	 	 	7,853	 	
 	 	 	 	 	 	 	
Gross operating expenses	 	 	7,826	 	 	 	8,479	 	
Reinsurance commissions and profit participation	 	 	(2	)	 	 	(43	)	
 	 	 	 	 	 	 	
 	 	 	7,824	 	 	 	8,436	 	

11.	 	INCLUDED IN PROFIT AND LOSS ACCOUNT	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Income from listed securities	 	 	36,756	 	 	 	34,960	 	
Interest payable on other loans	 	 	8,175	 	 	 	2,291	 	
Auditor’s remuneration in respect of:	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Audit of these financial statements	 	 	244	 	 	 	299	 	
Other services pursuant to legislation	 	 	44	 	 	 	42	 	
Tax services	 	 	15	 	 	 	22	 	

12.	 	EMPLOYEES	
 	 	 	
 	 	The Company has no employees, but has a management agreement with Travelers Management Limited, formerly St. Paul Travelers Management Limited, a fellow group undertaking, which employs UK personnel and provides certain management services. The Company has entered into an additional services agreement with Travelers Special Services Limited, formerly St. Paul Travelers Special Services Limited, another 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.	

 
SPRE LIMITED
Notes to the financial statements
13.	 	TAXATION	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Analysis of charge in the period, current tax	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Tax charge for the year	 	 	14,208	 	 	 	0	 	
Adjustments in respect of prior periods	 	 	(2,497	)	 	 	0	 	
 	 	 	 	 	 	 	
Tax on Profit on ordinary activities	 	 	11,711	 	 	 	0	 	

 	 	 	 	 	 	 	 	 	
 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Reconciliation of the current tax charge required under FRS19	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Profit/(loss) on ordinary activities before taxation	 	 	56,009	 	 	 	(66,810	)	

Profit/(loss) on ordinary activities before tax multiplied by the standard rate of corporation tax of 30% (2006: 30%)	 	 	16,803	 	 	 	(20,043	)	
 	 	 	 	 	 	 	 	 	
Tax losses for the year to be utilised — Group relief	 	 	0	 	 	 	20,043	 	
Movement in provisions	 	 	532	 	 	 	0	 	
Loss on disposal of building	 	 	(2,702	)	 	 	0	 	
Losses brought forward	 	 	(425	)	 	 	0	 	
Prior year corporation tax	 	 	(2,497	)	 	 	0	 	
 	 	 	 	 	 	 	
Tax charge for the period	 	 	11,711	 	 	 	0	 	

14.	 	LAND AND BUILDINGS — FREEHOLD	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Current value at 31 December	 	 	0	 	 	 	4,466	 	

 	 	The land & buildings were sold to a fellow group company during the year.	

 
SPRE LIMITED
Notes to the financial statements
15.	 	INVESTMENTS	

 	 	2007	 	 	2006	 	
Investment in subsidiary undertaking	 	US$000	 	 	US$000	 	
At cost	 	
As at 1 January	 	 	0	 	 	 	0	 	
Acquisition during the year (See Note 5)	 	 	301,931	 	 	 	0	 	

As at 31 December	 	 	301,931	 	 	 	0	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	Economic	 	
 	 	 	 	 	 	 	 	 	 	Voting Rights	 	
Name of Undertaking	 	Description of Shares Held	 	 	Business	 	 	in Shares	 	
Unionamerica Insurance Company Limited (Incorporated in Great Britain and registered in England)	 	Ordinary $1 Shares	 	Insurance and Reinsurance	 	 	71.22	%	

 
SPRE LIMITED
Notes to the financial statements
15.	 	INVESTMENTS (continued)	
 	 	 	
 	 	Other Financial Investments	

 	 	2007 (US $000)	 	 	2006 (US $000)	 	
 	 	Market	 	 	Amortised/	 	 	Actual	 	 	Market	 	 	Amortised/	 	 	Actual	 	
 	 	value	 	 	book cost	 	 	cost	 	 	value	 	 	book cost	 	 	cost	 	
Shares & other variable-yield securities and units in unit trusts**	 	 	0	 	 	 	0	 	 	 	0	 	 	 	8,334	 	 	 	8,334	 	 	 	8,334	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Debt Securities and other fixed income securities*	 	 	0	 	 	 	0	 	 	 	0	 	 	 	513,995	 	 	 	512,715	 	 	 	534,361	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Government securities*	 	 	0	 	 	 	0	 	 	 	0	 	 	 	164,564	 	 	 	165,460	 	 	 	168,004	 	

 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	686,893	 	 	 	686,509	 	 	 	710,699	 	

Included in the above Investments:	

Listed on the London Stock Exchange	 	 	0	 	 	 	0	 	 	 	0	 	 	 	35,418	 	 	 	35,496	 	 	 	36,574	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Listed on other investment exchanges	 	 	0	 	 	 	0	 	 	 	0	 	 	 	643,141	 	 	 	642,679	 	 	 	665,791	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Unlisted warrants	 	 	0	 	 	 	0	 	 	 	0	 	 	 	8,334	 	 	 	8,334	 	 	 	8,334	 	

 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	686,893	 	 	 	686,509	 	 	 	710,699	 	

 	 	The investments were transferred to Unionamerica Insurance Company Limited, as part of the Part VII transfer.	

*	 	Government securities and fixed interest securities are shown at market value. Short term deposits are shown at nominal value. Equities are shown at market value.	
 	 	 	
 	 	With the exception of short term deposits and unlisted warrants, all the investments are listed on recognised stock exchanges.	
 	 	 	
 	 	Investments amounting to US$Nil (2006: US$121,097,667) are held in a U.S. trust fund required by virtue of the Company’s accredited reinsurer status in a number of U.S. jurisdictions	
 	 	 	
**	 	Shares and other variable securities include US$Nil (2006: US$8,334,000), representing Nil (2006:894,260) warrants in Platinum Underwriting Holdings Limited valued at US$Nil (2006:US$9.32) per warrant.	

 
SPRE LIMITED
Notes to the financial statements
16.	 	DEBTORS ARISING OUT OF REINSURANCE OPERATIONS	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Pipeline premiums	 	 	0	 	 	 	1,000	 	
Other underwriting debtors	 	 	0	 	 	 	65,598	 	
 	 	 	 	 	 	 	
 	 	 	0	 	 	 	66,598	 	

 	 	Included within the debtors figures above, the debtors due after more than one year are $0 (2006: $539,285).	
 	 	 	
17.	 	OTHER DEBTORS	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Taxation recoverable	 	 	0	 	 	 	47	 	
Consideration receivable (See Note 5)	 	 	26,314	 	 	 	0	 	
 	 	 	 	 	 	 	
 	 	 	26,314	 	 	 	47	 	

18.	 	CONTINGENCIES AND OTHER LIABILITIES	
 	 	 	
 	 	Following the Part VII transfer there are no contingencies or other liabilities to report.	
 	 	 	
19.	 	OTHER CREDITORS INCLUDING TAXATION AND SOCIAL SECURITY	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Sundry creditors	 	 	100	 	 	 	18	 	
Amounts due to fellow group undertakings	 	 	0	 	 	 	967	 	
 	 	 	 	 	 	 	
 	 	 	100	 	 	 	985	 	

20.	 	RESERVES — PROFIT AND LOSS ACCOUNT	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
As at 1 January	 	 	(136,828	)	 	 	(70,018	)	
Profit/(loss) for the financial year	 	 	44,298	 	 	 	(66,810	)	
 	 	 	 	 	 	 	
As at 31 December	 	 	(92,530	)	 	 	(136,828	)	

 
SPRE LIMITED
Notes to the financial statements
21.	 	TECHNICAL PROVISIONS AND DEFERRED ACQUISITION COSTS	

 	 	Provision	 	 	 	 	 	 	 	
 	 	for unearned	 	 	Claims	 	 	 	 	
 	 	premiums	 	 	outstanding	 	 	Total	 	
 	 	US$000	 	 	US$000	 	 	US$000	 	
Gross amount	 	 	 	 	 	 	 	 	 	 	 	 	
At the beginning of the year	 	 	868	 	 	 	870,128	 	 	 	870,996	 	
Translation adjustment	 	 	18	 	 	 	(5,849	)	 	 	(5,831	)	
Movement in the provision	 	 	(886	)	 	 	(135,392	)	 	 	(136,278	)	
Part VII transfer (see Note 5)	 	 	0	 	 	 	(728,887	)	 	 	(728,887	)	
 	 	 	 	 	 	 	 	 	 	
At the end of the year	 	 	0	 	 	 	0	 	 	 	0	 	

Reinsurance amount	 	 	 	 	 	 	 	 	 	 	 	 	
At the beginning of the year	 	 	(80	)	 	 	(537,756	)	 	 	(537,836	)	
Translation adjustment	 	 	(2	)	 	 	15,990	 	 	 	15,988	 	
Movement in the provision	 	 	82	 	 	 	97,514	 	 	 	97596	 	
Part VII transfer (see Note 5)	 	 	0	 	 	 	424,252	 	 	 	424,252	 	
 	 	 	 	 	 	 	 	 	 	
At the end of the year	 	 	0	 	 	 	0	 	 	 	0	 	

Net technical provisions	 	 	 	 	 	 	 	 	 	 	 	 	
At the end of the year	 	 	0	 	 	 	0	 	 	 	0	 	
 	 	 	 	 	 	 	 	 	 	
At the beginning of the year	 	 	788	 	 	 	332,372	 	 	 	333,160	 	

 	 	 	 	 	 	 	 	 	
 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Deferred acquisition costs	 	 	 	 	 	 	 	 	
Gross commissions	 	 	0	 	 	 	(89	)	
Ceded commissions	 	 	0	 	 	 	0	 	
 	 	 	 	 	 	 	
 	 	 	0	 	 	 	(89	)	
 	 	 	 	 	 	 	
Net insurance funds	 	 	0	 	 	 	333,071	 	

 
SPRE LIMITED
Notes to the financial statements.
22.	 	PROVISION FOR OTHER RISKS AND CHARGES	
 	 	 	
 	 	Consequent to the decision to close the branch offices in Belgium and Germany, a provision was established, based on the directors’ best estimates, for the likely costs arising in exiting these businesses.	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
At the beginning of the year	 	 	1,419	 	 	 	2,261	 	
Utilised during the year	 	 	(1,419	)	 	 	(1,105	)	
Change of provision	 	 	0	 	 	 	263	 	
 	 	 	 	 	 	 	
At the end of the year	 	 	0	 	 	 	1,419	 	

23.	 	SHARE CAPITAL	

 	 	2007	 	 	2006	 	
Authorised	 	£000	 	 	£000	 	
300,000,000 (2006: 300,000,000) authorised ordinary shares of £1 each	 	 	300,000	 	 	 	300,000	 	

 	 	 	 	 	 	 	 	 	
Allotted, issued and fully paid	 	US$000	 	 	US$000	 	
216,698,583 (2006: 216,698,583) ordinary shares of £1 each at par	 	 	420,775	 	 	 	420,775	 	

 
SPRE LIMITED
Notes to the financial statements
24. 	 	REMUNERATION OF DIRECTORS	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
Directors’ emoluments	 	 	922	 	 	 	825	 	
Amounts receivable under long term incentive schemes	 	 	0	 	 	 	0	 	
 	 	 	 	 	 	 	
 	 	 	922	 	 	 	825	 	
Company contributions to money purchase pension schemes	 	 	92	 	 	 	84	 	
 	 	 	 	 	 	 	
 	 	 	1,014	 	 	 	909	 	

 	 	The aggregate emoluments and amounts receivable under long term incentive schemes of the highest paid director were US$174,874 (2006: US$174,314).	
 	 	 	
 	 	Company contribution to money purchase schemes attributable to the highest paid director was US$18,923 (2006 : US$18,648).	

 	 	 	Number of Directors	 	
 	 	2007	 	 	2006	 	
Retirement benefits accruing to the following number of Directors under:	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Money purchase schemes	 	 	8	 	 	 	8	 	
 	 	 	 	 	 	 	 	 	
The number of directors who exercised share options	 	 	3	 	 	 	1	 	
 	 	 	 	 	 	 	 	 	
The number of directors in respect of whose services shares were received or receivable under long term incentive schemes was	 	 	0	 	 	 	0	 	
Emoluments of directors based in the UK are paid by Travelers Management Limited, formerly St. Paul Travelers Management Limited, a fellow group undertaking which employs all UK personnel and provides full management services. The directors’ emoluments have been apportioned across the group as a whole, based on services rendered to companies in the group.

 
SPRE LIMITED
Notes to the financial statements
25.	 	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.	
 	 	 	
26.	 	POST BALANCE SHEET EVENTS	
 	 	 	
 	 	Subsequent to the year end, on 30 January 2008 the Share Capital of the Company was reduced from £300,000,000 to £83,301,419, by the cancellation of 216,698,581 issued ordinary shares of £1 each. The capital reduction was effected by a Special Resolution and with the sanction of an order of the High Court of Justice dated 20 February 2008.	
 	 	 	
 	 	The Company was deregistered with the FSA on 12 February 2008 and the company subsequently changed its name from St. Paul Reinsurance Company Limited to SPRE Limited on 12 March 2008.	
 	 	 	
 	 	On 26 March 2008, the Financial Services Authority (FSA) approved the Company’s application to distribute in specie the Company’s investment in Unionamerica Insurance Company Limited, to its immediate parent, Unionamerica Acquisition Company Limited.	
 	 	 	
 	 	On 30 December 2008, the Company was sold to Royston Run-off Limited, a subsidiary of Enstar Group Limited.	
 	 	 	
27.	 	IMMEDIATE AND ULTIMATE HOLDING COMPANIES	
 	 	 	
 	 	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	

 
SPRE LIMITED
Notes to the financial statements
28	 SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES IN THE UNITED KINGDOM (“UK GAAP”) AND ACCOUNTING PRINCIPLES IN THE UNITED STATES OF AMERICA (“US GAAP”)	
 	 	 	
 	 	The SPRE 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 profit/(loss) for the year after taxation, as determined under UK GAAP, are set out in the table below:	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
PROFIT/(LOSS) FOR THE FINANCIAL YEAR	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
UK GAAP profit/(loss) for the year after taxation	 	 	44,298	 	 	 	(66,810	)	
 	 	 	 	 	 	 	 	 	
US GAAP adjustments	 	 	 	 	 	 	 	 	
(a) Unrealised investment loss	 	 	385	 	 	 	6,201	 	
(b) Valuation difference on freehold building	 	 	(1,403	)	 	 	0	 	

Total US GAAP adjustments	 	 	(1,018	)	 	 	6,201	 	

Net income/(loss) under US GAAP	 	 	43,280	 	 	 	(60,609	)	

 
 	 	 	
(a)	 	Unrealised investment (gain)/loss	
 	 	 	
 	 	Under UK GAAP unrealised losses and gains 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. Under US GAAP movements in the valuation of investments that are available-for-sale are reported through Other Comprehensive Income and do not form part of net income.	
 	 	 	
(b)	 	Valuation difference on freehold building	
 	 	 	
 	 	Under UK GAAP the freehold property is carried at current value and is subject to triennial valuation by an independent property valuer who is a member of the Royal Institute of Chartered Surveyors. The open market value of the property is determined after the deduction of expected selling costs. Under US GAAP the freehold property is carried at historical cost less accumulated depreciation.	

 	 	2007	 	 	2006	 	
 	 	US$000	 	 	US$000	 	
SHAREHOLDERS’ EQUITY INTEREST	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
UK GAAP Shareholders’ equity interest	 	 	328,245	 	 	 	283,947	 	
 	 	 	 	 	 	 	 	 	
US GAAP adjustments	 	 	 	 	 	 	 	 	
(c) Valuation difference on freehold building	 	 	0	 	 	 	1,403	 	

Total US GAAP adjustments	 	 	0	 	 	 	1,403	 	

US GAAP Shareholders’ equity interest	 	 	328,245	 	 	 	285,350	 	

 
 	 	 	
(c)	 	Valuation difference on freehold building	
 	 	 	
 	 	Under UK GAAP the freehold property is carried at current value and is subject to triennial valuation by an independent property valuer who is a member of the Royal Institute of Chartered Surveyors. The open market value of the property is determined after the deduction of expected selling costs. Under US GAAP the freehold property is carried at historical cost less accumulated depreciation.	

 
SPRE LIMITED
Notes to the financial statements
28	 SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES IN THE UNITED KINGDOM (“UK GAAP”) AND ACCOUNTING PRINCIPLES IN THE UNITED STATES OF AMERICA (“US GAAP”)  (continued)	

 	 	2007	 	 	2006	 	 	
 	 	US$000	 	 	US$000	 	 	
CASH FLOW STATEMENT AS DETERMINED IN ACCORDANCE WITH US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“US GAAP”)	 	 	 	 	 	 	 	 	 	
Cash flows from operating activities:	 	 	 	 	 	 	 	 	 	
Net income/(loss)	 	 	43,280	 	 	 	(60,609	)	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	 	 	
Amortisation of investments	 	 	(189	)	 	 	2,553	 	 	
Foreign currency translation on investments	 	 	(17,160	)	 	 	(33,093	)	 	
Net loss on sale of investments	 	 	(2,654	)	 	 	3,563	 	 	

 	 	 	23,277	 	 	 	(87,586	)	 	
 	 	 	 	 	 	 	 	 	 	
Changes in assets and liabilities:	 	 	 	 	 	 	 	 	 	
Accrued interest receivable	 	 	12,649	 	 	 	1,425	 	 	
Debtors arising out of reinsurance operations	 	 	66,598	 	 	 	12,947	 	 	
Loss and loss adjustment expenses recoverable from reinsurers	 	 	537,836	 	 	 	114,679	 	 	
Other debtors	 	 	136	 	 	 	95	 	 	
Losses and loss adjustment expenses	 	 	(870,996	)	 	 	(93,658	)	 	
Creditors arising out of reinsurance operations	 	 	(175,291	)	 	 	(20,379	)	 	
Other creditors	 	 	(2,304	)	 	 	(5,912	)	 	

Net cash used in operating activities	 	 	(408,095	)	 	 	(78,389	)	 	

Cash flows from investing activities	 	 	 	 	 	 	 	 	 	
Purchase of investments	 	 	(395,583	)	 	 	(235,526	)	 	
Purchase of investment in subsidiary	 	 	(328,245	)	 	 	0	 	 	
Proceeds on sale of investments	 	 	1,102,095	 	 	 	308,788	 	 	
Proceeds from sale of freehold building	 	 	5,867	 	 	 	0	 	 	

Net cash provided by investing activities	 	 	384,134	 	 	 	73,262	 	 	

Net (decrease) in cash and cash equivalents	 	 	(23,961	)	 	 	(5,127	)	 	
 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents, beginning of year	 	 	24,061	 	 	 	29,188	 	 	

Cash and cash equivalents, end of year	 	 	100	 	 	 	24,061	 	 	

 	
Supplementary cash flow information:	 	 	 	 	 	 	 	 	 	
Net income taxes paid	 	 	0	 	 	 	0	 	 	
 	 	 	 	 	 	 	 	
Interest paid	 	 	0	 	 	 	0	 	 	

EXHIBIT 99.5
ENSTAR GROUP LIMITED
UNAUDITED PRO FORMA CONDENSED COMBINED
CONSOLIDATED STATEMENT OF EARNINGS
     The following unaudited pro forma condensed combined consolidated statement of earnings is based on the historical statements of earnings of Enstar Group Limited (“Enstar”) and of Unionamerica Insurance Company Limited, Unionamerica Acquisition Company, Unionamerica Holdings Limited and SPRE Limited (formerly St. Paul Reinsurance Company Limited) (the acquired companies collectively, “Unionamerica”), and have been prepared to illustrate the effects of the acquisition of Unionamerica from St. Paul Fire and Marine Insurance Company (an affiliate of The Travelers Companies, Inc.) by Royston Run-off Limited (“Royston”), a wholly-owned subsidiary of Enstar, which was completed on December 30, 2008. The unaudited pro forma condensed combined consolidated statement of earnings is presented as if the acquisition was completed as of January 1, 2008.
     The pro forma financial information is presented for illustrative purposes only under one set of assumptions and does not reflect the financial results of the combined companies had consideration been given to other assumptions or to the impact of possible operating efficiencies, asset dispositions, and other factors. Further, the pro forma financial information does not necessarily reflect the historical results of the combined company that actually would have occurred had the transaction been in effect during the period indicated or that may be obtained in the future. The unaudited pro forma condensed combined statement of earnings should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements, including the related notes, of Enstar covering the twelve-month period ended December 31, 2008 included in Enstar’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, which was filed with the United States Securities and Exchange Commission on March 4, 2009 (the “2008 Annual Report”), as well as the historical financial statements of Unionamerica included elsewhere in this Current Report on Form 8-K/A, with the exception of historical information for Unionamerica Holdings Limited and Unionamerica Acquisition Company Limited as these entities were materially insignificant to the transaction as a whole. A pro forma condensed combined balance sheet is not presented in this Current Report on Form 8-K/A, because the Unionamerica transaction was completed on December 30, 2008. As a result, assets and liabilities of Unionamerica at their estimated fair market values are included in Enstar’s historical consolidated balance sheet as of December 31, 2008, which is included in Enstar’s 2008 Annual Report.

 
ENSTAR GROUP LIMITED
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENTS OF EARNINGS
for the year ended December 31, 2008
(Expressed in thousands of U.S dollars, except share and per share data)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Enstar Group	 	 	Unionamerica	 	 	Adjustment	 	 	 	 	
 	 	Limited	 	 	 	 	 	Entries	 	 	Combined	 	
INCOME	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Consulting fees	 	$	25,151	 	 	$	—	 	 	$	—	 	 	$	25,151	 	
Net investment income and net realized gains	 	 	26,601	 	 	 	22,729	 	 	 	—	 	 	 	49,330	 	
Net realized (losses)	 	 	(1,655	)	 	 	—	 	 	 	—	 	 	 	(1,655	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	50,097	 	 	 	22,729	 	 	 	—	 	 	 	72,826	 	

EXPENSES	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net reduction in loss and loss adjustment expense liabilities	 	 	(242,104	)	 	 	102,140	 	 	 	22,327	(a)	 	 	(117,637	)	
Salaries and benefits	 	 	56,270	 	 	 	6,385	 	 	 	—	 	 	 	62,655	 	
General and administrative expenses	 	 	53,357	 	 	 	5,331	 	 	 	—	 	 	 	58,688	 	
Interest expense	 	 	23,370	 	 	 	—	 	 	 	13,409	(b)	 	 	36,779	 	
Foreign exchange loss	 	 	14,986	 	 	 	5,563	 	 	 	—	 	 	 	20,549	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	(94,121	)	 	 	119,419	 	 	 	35,736	 	 	 	61,034	 	

EARNINGS BEFORE INCOME TAXES, MINORITY INTEREST AND SHARE OF NET (LOSS) OF PARTLY OWNED COMPANY	 	 	144,218	 	 	 	(96,690	)	 	 	(35,736	)	 	 	11,792	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
INCOME TAXES	 	 	(46,854	)	 	 	(1,308	)	 	 	3,822	(c)	 	 	(44,340	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
MINORITY INTEREST	 	 	(50,808	)	 	 	—	 	 	 	38,973	(d)	 	 	(11,835	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
SHARE OF NET (LOSS) OF PARTLY OWNED COMPANY	 	 	(201	)	 	 	—	 	 	 	—	 	 	 	(201	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
EARNINGS FROM CONTINUING OPERATIONS	 	$	46,355	 	 	$	(97,998	)	 	$	7,059	 	 	$	(44,584	)	

Earnings per share — basic	 	$	3.67	 	 	 	 	 	 	 	 	 	 	$	(3.53	)	
Earnings per share — diluted	 	$	3.59	 	 	 	 	 	 	 	 	 	 	$	(3.53	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average shares outstanding — basic	 	 	12,638,333	 	 	 	 	 	 	 	 	 	 	 	12,638,333	 	
Weighted average shares outstanding — diluted	 	 	12,921,475	 	 	 	 	 	 	 	 	 	 	 	12,638,333	 	
Note a
Amortization of fair value adjustments
Note b
Adjustment to interest expense to reflect the financing costs of the acquisitions
Note c
Adjustment to income taxes for pro forma adjustments
Note d
Reflect minority interest’s share of: 1) results of Unionamerica; and 2) net pro forma income statement adjustments