QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
BERMUDA | N/A |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | þ | Accelerated filer | ¨ | Non-accelerated filer | ¨ | Smaller reporting company | ¨ | Emerging growth company | ¨ |
Page | ||
PART I | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. |
March 31, 2017 | December 31, 2016 | ||||||
(expressed in thousands of U.S. dollars, except share data) | |||||||
ASSETS | |||||||
Short-term investments, trading, at fair value | $ | 263,511 | $ | 222,918 | |||
Short-term investments, available-for-sale, at fair value (amortized cost: 2017 — $nil; 2016 — $287) | — | 268 | |||||
Fixed maturities, trading, at fair value | 5,585,818 | 4,388,242 | |||||
Fixed maturities, available-for-sale, at fair value (amortized cost: 2017 — $244,199; 2016 — $269,577) | 242,686 | 267,499 | |||||
Equities, trading, at fair value | 106,337 | 95,047 | |||||
Other investments, at fair value | 932,155 | 937,047 | |||||
Other investments, at cost | 133,127 | 131,651 | |||||
Total investments | 7,263,634 | 6,042,672 | |||||
Cash and cash equivalents | 921,562 | 954,871 | |||||
Restricted cash and cash equivalents | 392,413 | 363,774 | |||||
Funds held - directly managed | 1,209,689 | 994,665 | |||||
Premiums receivable | 430,023 | 406,676 | |||||
Deferred tax assets | 12,436 | 11,374 | |||||
Prepaid reinsurance premiums | 234,107 | 219,115 | |||||
Reinsurance balances recoverable | 1,450,865 | 1,460,743 | |||||
Reinsurance balances recoverable, at fair value | 551,253 | — | |||||
Funds held by reinsured companies | 88,326 | 82,073 | |||||
Deferred acquisition costs | 72,088 | 58,114 | |||||
Goodwill and intangible assets | 183,685 | 184,855 | |||||
Other assets | 835,607 | 842,356 | |||||
Assets held for sale | 1,237,189 | 1,244,456 | |||||
TOTAL ASSETS | $ | 14,882,877 | $ | 12,865,744 | |||
LIABILITIES | |||||||
Losses and loss adjustment expenses | $ | 5,835,758 | $ | 5,987,867 | |||
Losses and loss adjustment expenses, at fair value | 1,924,829 | — | |||||
Policy benefits for life and annuity contracts | 111,709 | 112,095 | |||||
Unearned premiums | 578,951 | 548,343 | |||||
Insurance and reinsurance balances payable | 430,769 | 394,021 | |||||
Deferred tax liabilities | 23,265 | 28,356 | |||||
Debt obligations | 730,845 | 673,603 | |||||
Other liabilities | 757,357 | 705,318 | |||||
Liabilities held for sale | 1,142,247 | 1,150,787 | |||||
TOTAL LIABILITIES | 11,535,730 | 9,600,390 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
REDEEMABLE NONCONTROLLING INTEREST | 473,064 | 454,522 | |||||
SHAREHOLDERS’ EQUITY | |||||||
Share capital authorized, issued and fully paid, par value $1 each (authorized 2017 and 2016: 156,000,000): | |||||||
Ordinary shares (issued and outstanding 2017: 16,381,083; 2016: 16,175,250) | 16,381 | 16,175 | |||||
Non-voting convertible ordinary shares: | |||||||
Series C (issued and outstanding 2017: 2,599,672; 2016: 2,792,157) | 2,600 | 2,792 | |||||
Series E (issued and outstanding 2017: 404,771; 2016: 404,771) | 405 | 405 | |||||
Series C Preferred Shares (issued and outstanding 2017: 388,571; 2016: 388,571) | 389 | 389 | |||||
Treasury shares at cost (Preferred shares 2017: 388,571; 2016: 388,571) | (421,559 | ) | (421,559 | ) | |||
Additional paid-in capital | 1,382,421 | 1,380,109 | |||||
Accumulated other comprehensive loss | (21,727 | ) | (23,549 | ) | |||
Retained earnings | 1,905,956 | 1,847,550 | |||||
Total Enstar Group Limited Shareholders’ Equity | 2,864,866 | 2,802,312 | |||||
Noncontrolling interest | 9,217 | 8,520 | |||||
TOTAL SHAREHOLDERS’ EQUITY | 2,874,083 | 2,810,832 | |||||
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY | $ | 14,882,877 | $ | 12,865,744 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(expressed in thousands of U.S. dollars, except share and per share data) | |||||||
INCOME | |||||||
Net premiums earned | $ | 148,898 | $ | 192,887 | |||
Fees and commission income | 11,914 | 6,424 | |||||
Net investment income | 48,739 | 50,280 | |||||
Net realized and unrealized gains | 58,519 | 38,277 | |||||
Other income | 12,198 | 2,410 | |||||
280,268 | 290,278 | ||||||
EXPENSES | |||||||
Net incurred losses and loss adjustment expenses | 77,892 | 83,218 | |||||
Life and annuity policy benefits | (301 | ) | 158 | ||||
Acquisition costs | 20,821 | 45,029 | |||||
General and administrative expenses | 102,468 | 92,934 | |||||
Interest expense | 6,868 | 5,398 | |||||
Net foreign exchange losses | 3,715 | 1,772 | |||||
211,463 | 228,509 | ||||||
EARNINGS BEFORE INCOME TAXES | 68,805 | 61,769 | |||||
INCOME TAXES | 2,929 | (7,369 | ) | ||||
NET EARNINGS FROM CONTINUING OPERATIONS | 71,734 | 54,400 | |||||
NET EARNINGS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX EXPENSE | 371 | 205 | |||||
NET EARNINGS | 72,105 | 54,605 | |||||
Less: Net earnings attributable to noncontrolling interest | (17,425 | ) | (9,085 | ) | |||
NET EARNINGS ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ | 54,680 | $ | 45,520 | |||
Earnings per ordinary share attributable to Enstar Group Limited: | |||||||
Basic: | |||||||
Net earnings from continuing operations | $ | 2.80 | $ | 2.34 | |||
Net earnings from discontinued operations | 0.02 | 0.02 | |||||
Net earnings per ordinary share | $ | 2.82 | $ | 2.36 | |||
Diluted: | |||||||
Net earnings from continuing operations | $ | 2.78 | $ | 2.33 | |||
Net earnings from discontinued operations | 0.02 | 0.02 | |||||
Net earnings per ordinary share | $ | 2.80 | $ | 2.35 | |||
Weighted average ordinary shares outstanding: | |||||||
Basic | 19,374,728 | 19,282,946 | |||||
Diluted | 19,501,663 | 19,408,894 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(expressed in thousands of U.S. dollars) | |||||||
NET EARNINGS | $ | 72,105 | $ | 54,605 | |||
Other comprehensive income, net of tax: | |||||||
Unrealized holding gains on fixed income investments arising during the period | 686 | 6,964 | |||||
Reclassification adjustment for net realized gains included in net earnings | (149 | ) | (22 | ) | |||
Unrealized gains arising during the period, net of reclassification adjustment | 537 | 6,942 | |||||
Currency translation adjustment | 1,942 | 10,595 | |||||
Total other comprehensive income | 2,479 | 17,537 | |||||
Comprehensive income | 74,584 | 72,142 | |||||
Less comprehensive income attributable to noncontrolling interest | (18,082 | ) | (10,566 | ) | |||
COMPREHENSIVE INCOME ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ | 56,502 | $ | 61,576 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(expressed in thousands of U.S. dollars) | |||||||
Share Capital — Ordinary Shares | |||||||
Balance, beginning of period | $ | 16,175 | $ | 16,133 | |||
Issue of shares | 14 | 30 | |||||
Conversion of Series C Non-Voting Convertible Ordinary Shares | 192 | — | |||||
Balance, end of period | $ | 16,381 | $ | 16,163 | |||
Share Capital — Series A Non-Voting Convertible Ordinary Shares | |||||||
Balance, beginning and end of period | $ | — | $ | 2,973 | |||
Share Capital — Series C Non-Voting Convertible Ordinary Shares | |||||||
Balance, beginning of period | $ | 2,792 | $ | 2,726 | |||
Conversion to Ordinary Shares | (192 | ) | — | ||||
Balance, end of period | $ | 2,600 | $ | 2,973 | |||
Share Capital — Series E Non-Voting Convertible Ordinary Shares | |||||||
Balance, beginning and end of period | $ | 405 | $ | 405 | |||
Share Capital — Series C Convertible Participating Non-Voting Perpetual Preferred Stock | |||||||
Balance, beginning and end of period | $ | 389 | $ | — | |||
Treasury Shares | |||||||
Balance, beginning and end of period | $ | (421,559 | ) | $ | (421,559 | ) | |
Additional Paid-in Capital | |||||||
Balance, beginning of period | $ | 1,380,109 | $ | 1,373,044 | |||
Issue of shares and warrants | (511 | ) | (79 | ) | |||
Amortization of equity incentive plan | 2,823 | 238 | |||||
Balance, end of period | $ | 1,382,421 | $ | 1,373,203 | |||
Accumulated Other Comprehensive Loss | |||||||
Balance, beginning of period | $ | (23,549 | ) | $ | (35,162 | ) | |
Currency translation adjustment | |||||||
Balance, beginning of period | (18,993 | ) | (23,790 | ) | |||
Change in currency translation adjustment | 1,933 | 10,595 | |||||
Balance, end of period | (17,060 | ) | (13,195 | ) | |||
Defined benefit pension liability | |||||||
Balance, beginning and end of period | (4,644 | ) | (7,723 | ) | |||
Unrealized gains (losses) on investments | |||||||
Balance, beginning of period | 88 | (3,649 | ) | ||||
Change in unrealized gains (losses) on investments | (111 | ) | 5,463 | ||||
Balance, end of period | (23 | ) | 1,814 | ||||
Balance, end of period | $ | (21,727 | ) | $ | (19,104 | ) | |
Retained Earnings | |||||||
Balance, beginning of period | $ | 1,847,550 | $ | 1,578,312 | |||
Net earnings attributable to Enstar Group Limited | 54,680 | 45,520 | |||||
Accretion of redeemable noncontrolling interests to redemption value | (1,156 | ) | (875 | ) | |||
Cumulative effect of change in accounting principle | 4,882 | — | |||||
Balance, end of period | $ | 1,905,956 | $ | 1,622,957 | |||
Noncontrolling Interest (excludes Redeemable Noncontrolling Interest) | |||||||
Balance, beginning of period | $ | 8,520 | $ | 3,911 | |||
Net earnings attributable to noncontrolling interest | 697 | — | |||||
Foreign currency translation adjustments | — | (21 | ) | ||||
Balance, end of period | $ | 9,217 | $ | 3,890 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(expressed in thousands of U.S. dollars) | |||||||
OPERATING ACTIVITIES: | |||||||
Net earnings | $ | 72,105 | $ | 54,605 | |||
Net earnings from discontinued operations | (371 | ) | (205 | ) | |||
Adjustments to reconcile net earnings to cash flows used in operating activities: | |||||||
Net realized (gains) losses on sale of investments | (8,252 | ) | 1,411 | ||||
Net unrealized (gains) on investments | (50,267 | ) | (39,688 | ) | |||
Other non-cash items | 1,225 | 1,053 | |||||
Depreciation and other amortization | 9,302 | 10,745 | |||||
Net change in trading securities held on behalf of policyholders | 83 | (1,093 | ) | ||||
Sales and maturities of trading securities | 1,076,770 | 642,180 | |||||
Purchases of trading securities | (2,275,239 | ) | (711,545 | ) | |||
Changes in: | |||||||
Reinsurance balances recoverable | (540,939 | ) | 72,067 | ||||
Funds held by reinsured companies | (221,277 | ) | (1,085,780 | ) | |||
Losses and loss adjustment expenses | 1,769,233 | 916,058 | |||||
Policy benefits for life and annuity contracts | (1,972 | ) | (2,954 | ) | |||
Insurance and reinsurance balances payable | 36,508 | 11,719 | |||||
Unearned premiums | 30,607 | 24,682 | |||||
Other operating assets and liabilities | 8,345 | (44,550 | ) | ||||
Net cash flows used in operating activities | (94,139 | ) | (151,295 | ) | |||
INVESTING ACTIVITIES: | |||||||
Sales and maturities of available-for-sale securities | 24,724 | 25,846 | |||||
Purchase of available-for-sale securities | (7,188 | ) | (3,582 | ) | |||
Purchase of other investments | (38,237 | ) | 3,487 | ||||
Redemption of other investments | 69,326 | 62,838 | |||||
Other investing activities | (4,981 | ) | (1,219 | ) | |||
Net cash flows provided by investing activities | 43,644 | 87,370 | |||||
FINANCING ACTIVITIES: | |||||||
Receipt of loans | 437,100 | — | |||||
Repayment of loans | (381,000 | ) | (20,500 | ) | |||
Net cash flows provided by (used in) financing activities | 56,100 | (20,500 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON FOREIGN CURRENCY CASH AND CASH EQUIVALENTS | (10,275 | ) | 3,939 | ||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (4,670 | ) | (80,486 | ) | |||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 1,318,645 | 1,295,169 | |||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 1,313,975 | $ | 1,214,683 | |||
Supplemental Cash Flow Information: | |||||||
Income taxes paid, net of refunds | $ | 3,917 | $ | 10,687 | |||
Interest paid | $ | 6,385 | $ | 4,534 | |||
Reconciliation to Consolidated Balance Sheets: | |||||||
Cash and cash equivalents | 921,562 | 718,479 | |||||
Restricted cash and cash | 392,413 | 496,204 | |||||
Cash, cash equivalents and restricted cash | $ | 1,313,975 | $ | 1,214,683 |
• | liability for losses and loss adjustment expenses ("LAE"); |
• | liability for policy benefits for life and annuity contracts; |
• | reinsurance balances recoverable; |
• | gross and net premiums written and net premiums earned; |
• | impairment charges, including other-than-temporary impairments on investment securities classified as available-for-sale or held-to-maturity, and impairments on goodwill, intangible assets and deferred charges; |
• | fair value measurements of investments; |
• | fair value estimates associated with accounting for acquisitions; |
• | fair value estimates associated with loss portfolio transfer reinsurance agreements for which we have elected the fair value option; and |
• | redeemable noncontrolling interests. |
March 31, 2017 | December 31, 2016 | ||||||
Assets: | |||||||
Fixed maturities, trading, at fair value | $ | 299,451 | $ | 326,382 | |||
Fixed maturities, held-to-maturity, at amortized cost | 761,821 | 765,554 | |||||
Equities, trading, at fair value | 4,640 | 4,428 | |||||
Other investments, at fair value | 15,261 | 15,114 | |||||
Cash and cash equivalents | 26,893 | 18,018 | |||||
Restricted cash and cash equivalents | 13,027 | 5,202 | |||||
Deferred tax assets | 31,500 | 31,500 | |||||
Reinsurance balances recoverable | 17,754 | 18,029 | |||||
Other assets | 66,842 | 60,229 | |||||
Total assets held for sale | $ | 1,237,189 | $ | 1,244,456 | |||
Liabilities: | |||||||
Policy benefits for life and annuity contracts | $ | 1,136,230 | $ | 1,144,850 | |||
Other liabilities | 6,017 | 5,937 | |||||
Total liabilities held for sale | $ | 1,142,247 | $ | 1,150,787 |
March 31, 2017 | March 31, 2016 | ||||||
INCOME | |||||||
Net premiums earned | $ | 14,325 | $ | 16,522 | |||
Net investment income | 10,029 | 9,609 | |||||
Net realized and unrealized gains (losses) | 1,622 | (313 | ) | ||||
Other income | 360 | 3 | |||||
$ | 26,336 | $ | 25,821 | ||||
EXPENSES | |||||||
Life and annuity policy benefits | 20,670 | 20,822 | |||||
Acquisition costs | 2,036 | 2,236 | |||||
General and administrative expenses | 3,057 | 2,413 | |||||
Other expenses | (16 | ) | 3 | ||||
$ | 25,747 | $ | 25,474 | ||||
EARNINGS BEFORE INCOME TAXES | 589 | 347 | |||||
INCOME TAXES | (218 | ) | $ | (140 | ) | ||
NET EARNINGS FROM DISCONTINUED OPERATIONS | 371 | 207 |
March 31, 2017 | March 31, 2016 | ||||||
Operating activities | $ | 15,463 | $ | (10,793 | ) | ||
Investing activities | 1,237 | 11,008 | |||||
Change in cash of businesses held for sale | $ | 16,700 | $ | 215 |
March 31, 2017 | December 31, 2016 | ||||||
U.S. government and agency | $ | 776,216 | $ | 840,274 | |||
Non-U.S. government | 896,757 | 267,363 | |||||
Corporate | 3,080,120 | 2,387,322 | |||||
Municipal | 54,830 | 47,181 | |||||
Residential mortgage-backed | 334,767 | 373,528 | |||||
Commercial mortgage-backed | 223,567 | 217,212 | |||||
Asset-backed | 483,072 | 478,280 | |||||
Total fixed maturity and short-term investments | 5,849,329 | 4,611,160 | |||||
Equities — U.S. | 106,337 | 95,047 | |||||
$ | 5,955,666 | $ | 4,706,207 |
As at March 31, 2017 | Amortized Cost | Fair Value | % of Total Fair Value | ||||||||
One year or less | $ | 893,102 | $ | 886,878 | 15.2 | % | |||||
More than one year through two years | 734,677 | 732,586 | 12.5 | % | |||||||
More than two years through five years | 1,450,747 | 1,445,942 | 24.7 | % | |||||||
More than five years through ten years | 1,031,378 | 1,034,548 | 17.7 | % | |||||||
More than ten years | 693,101 | 707,969 | 12.1 | % | |||||||
Residential mortgage-backed | 338,576 | 334,767 | 5.7 | % | |||||||
Commercial mortgage-backed | 227,756 | 223,567 | 3.8 | % | |||||||
Asset-backed | 475,082 | 483,072 | 8.3 | % | |||||||
$ | 5,844,419 | $ | 5,849,329 | 100.0 | % |
As at March 31, 2017 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses Non-OTTI | Fair Value | ||||||||||||
U.S. government and agency | $ | 11,003 | $ | — | $ | (98 | ) | $ | 10,905 | |||||||
Non-U.S. government | 83,938 | 821 | (2,165 | ) | 82,594 | |||||||||||
Corporate | 138,986 | 1,861 | (1,977 | ) | 138,870 | |||||||||||
Municipal | 5,967 | 16 | (11 | ) | 5,972 | |||||||||||
Residential mortgage-backed | 467 | 37 | — | 504 | ||||||||||||
Asset-backed | 3,838 | 3 | — | 3,841 | ||||||||||||
$ | 244,199 | $ | 2,738 | $ | (4,251 | ) | $ | 242,686 |
As at December 31, 2016 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses Non-OTTI | Fair Value | ||||||||||||
U.S. government and agency | $ | 12,784 | $ | 32 | $ | (106 | ) | $ | 12,710 | |||||||
Non-U.S. government | 86,897 | 1,303 | (2,777 | ) | 85,423 | |||||||||||
Corporate | 159,243 | 2,040 | (2,628 | ) | 158,655 | |||||||||||
Municipal | 6,585 | 12 | (21 | ) | 6,576 | |||||||||||
Residential mortgage-backed | 488 | 39 | — | 527 | ||||||||||||
Asset-backed | 3,867 | 9 | — | 3,876 | ||||||||||||
$ | 269,864 | $ | 3,435 | $ | (5,532 | ) | $ | 267,767 |
As at March 31, 2017 | Amortized Cost | Fair Value | % of Total Fair Value | ||||||||
One year or less | $ | 50,370 | $ | 49,092 | 20.2 | % | |||||
More than one year through two years | 47,021 | 45,851 | 18.9 | % | |||||||
More than two years through five years | 64,942 | 64,279 | 26.5 | % | |||||||
More than five years through ten years | 41,016 | 42,091 | 17.3 | % | |||||||
More than ten years | 36,545 | 37,028 | 15.3 | % | |||||||
Residential mortgage-backed | 467 | 504 | 0.2 | % | |||||||
Asset-backed | 3,838 | 3,841 | 1.6 | % | |||||||
$ | 244,199 | $ | 242,686 | 100.0 | % |
12 Months or Greater | Less Than 12 Months | Total | ||||||||||||||||||||||
As at March 31, 2017 | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||
Fixed maturity and short-term investments, at fair value | ||||||||||||||||||||||||
U.S. government and agency | $ | — | $ | — | $ | 10,777 | $ | (98 | ) | $ | 10,777 | $ | (98 | ) | ||||||||||
Non-U.S. government | 6,230 | (1,144 | ) | 32,082 | (1,021 | ) | 38,312 | (2,165 | ) | |||||||||||||||
Corporate | 6,782 | (1,414 | ) | 41,181 | (563 | ) | 47,963 | (1,977 | ) | |||||||||||||||
Municipal | — | — | 2,603 | (11 | ) | 2,603 | (11 | ) | ||||||||||||||||
Total fixed maturity and short-term investments | $ | 13,012 | $ | (2,558 | ) | $ | 86,643 | $ | (1,693 | ) | $ | 99,655 | $ | (4,251 | ) |
12 Months or Greater | Less Than 12 Months | Total | ||||||||||||||||||||||
As at December 31, 2016 | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||
Fixed maturity and short-term investments, at fair value | ||||||||||||||||||||||||
U.S. government and agency | $ | — | $ | — | $ | 10,743 | $ | (106 | ) | $ | 10,743 | $ | (106 | ) | ||||||||||
Non-U.S. government | 8,316 | (1,794 | ) | 30,086 | (983 | ) | 38,402 | (2,777 | ) | |||||||||||||||
Corporate | 8,003 | (1,800 | ) | 42,304 | (828 | ) | 50,307 | (2,628 | ) | |||||||||||||||
Municipal | — | — | 3,132 | (21 | ) | 3,132 | (21 | ) | ||||||||||||||||
Total fixed maturity and short-term investments | $ | 16,319 | $ | (3,594 | ) | $ | 86,265 | $ | (1,938 | ) | $ | 102,584 | $ | (5,532 | ) |
Amortized Cost | Fair Value | % of Total Investments | AAA Rated | AA Rated | A Rated | BBB Rated | Non- Investment Grade | Not Rated | |||||||||||||||||||||||||||
Fixed maturity and short-term investments, at fair value | |||||||||||||||||||||||||||||||||||
U.S. government and agency | $ | 790,244 | $ | 787,121 | 12.9 | % | $ | 782,678 | $ | 4,443 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||
Non-U.S. government | 974,929 | 979,351 | 16.1 | % | 140,016 | 748,030 | 71,630 | 18,798 | — | 877 | |||||||||||||||||||||||||
Corporate | 3,216,890 | 3,218,990 | 52.8 | % | 163,042 | 474,830 | 1,683,839 | 769,272 | 122,925 | 5,082 | |||||||||||||||||||||||||
Municipal | 60,836 | 60,802 | 1.0 | % | 25,856 | 28,906 | 4,623 | 1,417 | — | — | |||||||||||||||||||||||||
Residential mortgage-backed | 339,043 | 335,271 | 5.5 | % | 284,488 | 11,122 | 6,128 | 279 | 33,253 | 1 | |||||||||||||||||||||||||
Commercial mortgage-backed | 227,756 | 223,567 | 3.7 | % | 89,253 | 44,067 | 45,729 | 28,142 | 23 | 16,353 | |||||||||||||||||||||||||
Asset-backed | 478,920 | 486,913 | 8.0 | % | 200,514 | 58,461 | 106,377 | 42,694 | 76,729 | 2,138 | |||||||||||||||||||||||||
Total | 6,088,618 | 6,092,015 | 100.0 | % | 1,685,847 | 1,369,859 | 1,918,326 | 860,602 | 232,930 | 24,451 | |||||||||||||||||||||||||
% of total fair value | 27.7 | % | 22.5 | % | 31.5 | % | 14.1 | % | 3.8 | % | 0.4 | % |
March 31, 2017 | December 31, 2016 | |||||||
Private equities and private equity funds | $ | 284,385 | $ | 300,529 | ||||
Fixed income funds | 253,499 | 249,023 | ||||||
Fixed income hedge funds | 78,537 | 85,976 | ||||||
Equity funds | 244,488 | 223,571 | ||||||
CLO equities | 56,964 | 61,565 | ||||||
CLO equity funds | 13,350 | 15,440 | ||||||
Other | 932 | 943 | ||||||
$ | 932,155 | $ | 937,047 |
• | Private equities and private equity funds invest primarily in the financial services industry. All of our investments in private equities and private equity funds are subject to restrictions on redemptions and sales that are determined by the governing documents and limit our ability to liquidate those investments. These restrictions have been in place since the dates of our initial investments. |
• | Fixed income funds comprise a number of positions in diversified fixed income funds that are managed by third-party managers. Underlying investments vary from high-grade corporate bonds to non-investment grade senior secured loans and bonds, but are generally invested in liquid fixed income markets. These funds have regularly published prices. The funds have liquidity terms that vary from daily up to quarterly. |
• | Fixed income hedge funds invest in a diversified portfolio of debt securities. The hedge funds have imposed lock-up periods of up to three years from the time of initial investment. Once eligible, redemptions are permitted quarterly with 90 days’ notice. |
• | Equity funds invest in a diversified portfolio of international publicly traded equity securities. The funds have liquidity terms that vary from daily to every two weeks. |
• | CLO equities comprise investments in the equity tranches of term-financed securitizations of diversified pools of corporate bank loans. CLO equities denote direct investments by us in these securities. |
• | CLO equity funds comprise two funds that invest primarily in the equity tranches of term-financed securitizations of diversified pools of corporate bank loans. One of the funds has a fair value of $2.0 million, part of a self-liquidating structure that is expected to pay out over one to five years. The other fund has a fair value of $11.4 million and is eligible for redemption in 2018. |
• | Other primarily comprises a fund that provides loans to educational institutions throughout the United States and its territories. |
March 31, 2017 | December 31, 2016 | |||||||||||||||||||||
Number of Contracts | Carrying Value | Face Value (Death Benefits) | Number of Contracts | Carrying Value | Face Value (Death Benefits) | |||||||||||||||||
Remaining Life Expectancy of Insureds: | ||||||||||||||||||||||
0 – 1 year | 2 | $ | 471 | $ | 700 | 2 | $ | 461 | $ | 700 | ||||||||||||
1 – 2 years | 7 | 11,748 | 18,206 | 7 | 11,396 | 18,337 | ||||||||||||||||
2 – 3 years | 11 | 15,802 | 29,743 | 11 | 15,338 | 29,715 | ||||||||||||||||
3 – 4 years | 16 | 17,041 | 31,205 | 17 | 17,013 | 32,189 | ||||||||||||||||
4 – 5 years | 17 | 17,943 | 38,302 | 16 | 10,377 | 23,302 | ||||||||||||||||
Thereafter | 172 | 70,122 | 407,607 | 181 | 77,066 | 431,034 | ||||||||||||||||
Total | 225 | $ | 133,127 | $ | 525,763 | 234 | $ | 131,651 | $ | 535,277 |
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Net realized gains (losses) on sale: | ||||||||
Gross realized gains on fixed maturity securities, available-for-sale | $ | 160 | $ | 265 | ||||
Gross realized losses on fixed maturity securities, available-for-sale | (11 | ) | (243 | ) | ||||
Net realized losses on fixed maturity securities, trading | (1,052 | ) | (1,906 | ) | ||||
Net realized gains on equity securities, trading | 574 | 473 | ||||||
Net realized gains on other investments | 12,434 | — | ||||||
Net realized investment losses on funds held - directly managed | (3,853 | ) | — | |||||
Total net realized gains (losses) on sale | $ | 8,252 | $ | (1,411 | ) | |||
Net unrealized gains: | ||||||||
Fixed maturity securities, trading | $ | 23,316 | $ | 43,196 | ||||
Equity securities, trading | 8,686 | 1,724 | ||||||
Other investments | 11,075 | (5,232 | ) | |||||
Change in fair value of embedded derivative on funds held - directly managed | 6,928 | — | ||||||
Change in value of fair value option on funds held - directly managed | 262 | — | ||||||
Total net unrealized gains | 50,267 | 39,688 | ||||||
Net realized and unrealized gains | $ | 58,519 | $ | 38,277 |
Three Months Ended March 31, | ||||||||
2017 | 2016 | |||||||
Fixed maturity investments | $ | 30,330 | $ | 27,198 | ||||
Short-term investments and cash and cash equivalents | 2,640 | 1,158 | ||||||
Equity securities | 726 | 1,060 | ||||||
Other investments | 3,509 | 6,034 | ||||||
Funds held | 39 | 7,604 | ||||||
Funds held - directly managed | 7,002 | — | ||||||
Life settlements and other | 6,896 | 8,443 | ||||||
Gross investment income | 51,142 | 51,497 | ||||||
Investment expenses | (2,403 | ) | (1,217 | ) | ||||
Net investment income | $ | 48,739 | $ | 50,280 |
March 31, 2017 | December 31, 2016 | |||||||
Collateral in trust for third party agreements | $ | 3,260,539 | $ | 1,975,022 | ||||
Assets on deposit with regulatory authorities | 795,290 | 882,400 | ||||||
Collateral for secured letter of credit facilities | 175,069 | 177,263 | ||||||
Funds at Lloyd's (1) | 220,216 | 220,328 | ||||||
$ | 4,451,114 | $ | 3,255,013 |
• | The funds held balance in relation to the Allianz transaction, described in Note 2 - "Significant New Business" in our consolidated financial statements in Form 10-K for the year ended December 31, 2016, moved from a fixed crediting rate to a variable rate of return on the underlying investments on October 1, 2016. This variable return reflects the economics of the investment portfolio underlying the funds held asset and qualifies as an embedded derivative. We have recorded the aggregate of the funds held, typically held at cost, and the embedded derivative as a single amount in our consolidated balance sheet. As at March 31, 2017 and December 31, 2016, the funds held at cost had a carrying value of $1,054.3 million and $1,023.0 million, respectively, and the embedded derivative had a fair value of $(21.4) million and $(28.3) million, respectively, the aggregate of which was $1,032.9 million and $994.7 million, respectively, as included in the table below. |
• | The fair value option was elected for the QBE reinsurance transaction described in Note 2 - "Significant New Business". As at March 31, 2017, the funds held had an amortized cost of $176.5 million and fair value of $176.8 million. |
March 31, 2017 | December 31, 2016 | ||||||
Fixed maturity investments: | |||||||
U.S. government and agency | $ | 34,187 | $ | 47,885 | |||
Non-U.S. government | 6,059 | 5,961 | |||||
Corporate | 786,315 | 663,556 | |||||
Municipal | 54,019 | 38,927 | |||||
Commercial mortgage-backed | 174,748 | 151,395 | |||||
Asset-backed | 96,207 | 79,806 | |||||
Total fixed maturity investments | $ | 1,151,535 | $ | 987,530 | |||
Other assets | 58,154 | 7,135 | |||||
$ | 1,209,689 | $ | 994,665 |
As at March 31, 2017 | Amortized Cost | Fair Value | % of Total Fair Value | ||||||||
More than one year through two years | $ | 34,050 | $ | 34,058 | 3.0 | % | |||||
More than two years through five years | 314,843 | 313,321 | 27.2 | % | |||||||
More than five years through ten years | 277,009 | 271,393 | 23.5 | % | |||||||
More than ten years | 269,532 | 261,808 | 22.7 | % | |||||||
Commercial mortgage-backed | 181,047 | 174,748 | 15.2 | % | |||||||
Asset-backed | 96,184 | 96,207 | 8.4 | % | |||||||
$ | 1,172,665 | $ | 1,151,535 | 100.0 | % |
Amortized Cost | Fair Value | % of Total Investments | AAA Rated | AA Rated | A Rated | BBB Rated | |||||||||||||||||||||
U.S. government and agency | $ | 34,198 | $ | 34,187 | 3.0 | % | $ | 34,187 | $ | — | $ | — | $ | — | |||||||||||||
Non-U.S. government | 6,019 | 6,059 | 0.5 | % | — | — | 2,948 | 3,111 | |||||||||||||||||||
Corporate | 799,530 | 786,315 | 68.2 | % | 7,199 | 63,529 | 312,830 | 402,757 | |||||||||||||||||||
Municipal | 55,687 | 54,019 | 4.7 | % | — | 17,861 | 28,960 | 7,198 | |||||||||||||||||||
Commercial mortgage-backed | 181,047 | 174,748 | 15.2 | % | 169,738 | 3,007 | 2,003 | — | |||||||||||||||||||
Asset-backed | 96,184 | 96,207 | 8.4 | % | 92,523 | 3,684 | — | — | |||||||||||||||||||
Total | $ | 1,172,665 | $ | 1,151,535 | 100.0 | % | $ | 303,647 | $ | 88,081 | $ | 346,741 | $ | 413,066 | |||||||||||||
% of total fair value | 26.4 | % | 7.6 | % | 30.1 | % | 35.9 | % |
2017 | ||||
Net realized losses on fixed maturity securities | $ | (3,853 | ) | |
Change in fair value of embedded derivative | 6,928 | |||
Change in value of fair value option on funds held - directly managed | 262 | |||
Net realized gains (losses) and change in fair value of funds held - directly managed | $ | 3,337 |
2017 | ||||
Fixed maturity investments | $ | 7,485 | ||
Short-term investments and cash and cash equivalents | 65 | |||
Gross investment income | 7,550 | |||
Investment expenses | (548 | ) | ||
Investment income on funds held - directly managed | $ | 7,002 |
• | Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. |
• | Level 2 - Valuations based on quoted prices in active markets for similar assets or liabilities, quoted prices for identical assets or liabilities in inactive markets, or for which significant inputs are observable (e.g. interest |
• | Level 3 - Valuations based on unobservable inputs where there is little or no market activity. Unadjusted third party pricing sources or management's assumptions and internal valuation models may be used to determine the fair values. |
March 31, 2017 | ||||||||||||||||
Investments: | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | ||||||||||||
U.S. government and agency | $ | — | $ | 787,121 | $ | — | $ | 787,121 | ||||||||
Non-U.S. government | — | 979,351 | — | 979,351 | ||||||||||||
Corporate | — | 3,162,811 | 56,179 | 3,218,990 | ||||||||||||
Municipal | — | 60,802 | — | 60,802 | ||||||||||||
Residential mortgage-backed | — | 335,271 | — | 335,271 | ||||||||||||
Commercial mortgage-backed | — | 198,715 | 24,852 | 223,567 | ||||||||||||
Asset-backed | — | 457,831 | 29,082 | 486,913 | ||||||||||||
Equities — U.S. | 102,192 | 4,145 | — | 106,337 | ||||||||||||
Other investments | — | 375,650 | 69,627 | 445,277 | ||||||||||||
Total investments | $ | 102,192 | $ | 6,361,697 | $ | 179,740 | $ | 6,643,629 | ||||||||
Funds Held - Directly Managed: | ||||||||||||||||
U.S. government and agency | $ | — | $ | 34,187 | $ | — | $ | 34,187 | ||||||||
Non-U.S. government | — | 6,059 | — | 6,059 | ||||||||||||
Corporate | — | 786,315 | — | 786,315 | ||||||||||||
Municipal | — | 54,019 | — | 54,019 | ||||||||||||
Commercial mortgage-backed | — | 174,748 | — | 174,748 | ||||||||||||
Asset-backed | — | 96,207 | — | 96,207 | ||||||||||||
Other funds held assets | — | 58,154 | — | 58,154 | ||||||||||||
$ | — | $ | 1,209,689 | $ | — | $ | 1,209,689 | |||||||||
Reinsurance recoverable: | ||||||||||||||||
Reinsurance recoverable | $ | — | $ | — | $ | 551,253 | $ | 551,253 | ||||||||
$ | — | $ | — | $ | 551,253 | $ | 551,253 | |||||||||
Other Assets: | ||||||||||||||||
Derivative Instruments | $ | — | $ | 54 | $ | — | $ | 54 | ||||||||
$ | — | $ | 54 | $ | — | $ | 54 | |||||||||
Losses and LAE: | ||||||||||||||||
Losses and LAE | $ | — | $ | — | $ | 1,924,829 | $ | 1,924,829 | ||||||||
$ | — | $ | — | $ | 1,924,829 | $ | 1,924,829 | |||||||||
Other Liabilities: | ||||||||||||||||
Derivative Instruments | $ | — | $ | 965 | $ | — | $ | 965 | ||||||||
$ | — | $ | 965 | $ | — | $ | 965 |
December 31, 2016 | ||||||||||||||||
Investments: | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | ||||||||||||
U.S. government and agency | $ | — | $ | 852,984 | $ | — | $ | 852,984 | ||||||||
Non-U.S. government | — | 352,786 | — | 352,786 | ||||||||||||
Corporate | — | 2,471,444 | 74,534 | 2,545,978 | ||||||||||||
Municipal | — | 53,757 | — | 53,757 | ||||||||||||
Residential mortgage-backed | — | 374,055 | — | 374,055 | ||||||||||||
Commercial mortgage-backed | — | 204,999 | 12,213 | 217,212 | ||||||||||||
Asset-backed | — | 467,463 | 14,692 | 482,155 | ||||||||||||
Equities — U.S. | 91,287 | 3,760 | — | 95,047 | ||||||||||||
Other investments | — | 357,438 | 76,878 | 434,316 | ||||||||||||
Total investments | $ | 91,287 | $ | 5,138,686 | $ | 178,317 | $ | 5,408,290 | ||||||||
Funds Held - Directly Managed: | ||||||||||||||||
U.S. government and agency | $ | — | $ | 47,885 | $ | — | $ | 47,885 | ||||||||
Non-U.S. government | — | 5,961 | — | 5,961 | ||||||||||||
Corporate | — | 663,556 | — | 663,556 | ||||||||||||
Residential mortgage-backed | — | 38,927 | — | 38,927 | ||||||||||||
Commercial mortgage-backed | — | 151,395 | — | 151,395 | ||||||||||||
Asset-backed | — | 79,806 | — | 79,806 | ||||||||||||
Other funds held assets | — | 7,135 | — | 7,135 | ||||||||||||
$ | — | $ | 994,665 | $ | — | $ | 994,665 | |||||||||
Other Assets: | ||||||||||||||||
Derivative Instruments | $ | — | $ | 2,930 | $ | — | $ | 2,930 | ||||||||
$ | — | $ | 2,930 | $ | — | $ | 2,930 | |||||||||
Other Liabilities: | ||||||||||||||||
Derivative Instruments | $ | — | $ | 74 | $ | — | $ | 74 | ||||||||
$ | — | $ | 74 | $ | — | $ | 74 |
Other investments: | March 31, 2017 | December 31, 2016 | ||||||
Other investments measured at fair value | $ | 445,277 | $ | 434,316 | ||||
Other investments measured at NAV as practical expedient | 486,878 | 502,731 | ||||||
Total other investments shown on balance sheets | $ | 932,155 | $ | 937,047 |
• | U.S. government and agency securities consist of securities issued by the U.S. Treasury and mortgage pass-through agencies such as the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and other agencies. Non-U.S. government securities consist of bonds issued by non-U.S. governments and agencies along with supranational organizations. The significant inputs used to determine the fair value of these securities include the spread above the risk-free yield curve, reported trades and broker-dealer quotes. These are considered to be observable market inputs and, therefore, the fair values of these securities are classified as Level 2. |
• | Corporate securities consist primarily of investment-grade debt of a wide variety of corporate issuers and industries. The fair values of these securities are determined using the spread above the risk-free yield curve, reported trades, broker-dealer quotes, benchmark yields, and industry and market indicators. These are considered observable market inputs and, therefore, the fair values of these securities are classified as Level 2. Where pricing is unavailable from pricing services, such as in periods of low trading activity or when transactions are not orderly, we obtain non-binding quotes from broker-dealers. Where significant inputs are unable to be corroborated with market observable information, we classify the securities as Level 3. |
• | Municipal securities consist primarily of bonds issued by U.S.-domiciled state and municipal entities. The fair values of these securities are determined using the spread above the risk-free yield curve, reported trades, broker-dealer quotes and benchmark yields. These are considered observable market inputs and, therefore, the fair values of these securities are classified as Level 2. |
• | Asset-backed securities consist primarily of investment-grade bonds backed by pools of loans with a variety of underlying collateral. Residential and commercial mortgage-backed securities include both agency and non-agency originated securities. Where pricing is unavailable from pricing services, we obtain non-binding quotes from broker-dealers. This is generally the case when there is a low volume of trading activity and current transactions are not orderly. The significant inputs used to determine the fair value of these securities include the spread above the risk-free yield curve, reported trades, benchmark yields, prepayment speeds and default rates. The fair values of these securities are classified as Level 2 if the significant inputs are |
• | For our investments in private equities and private equity funds, we measure fair value by obtaining the most recently available NAV from the external fund manager or third-party administrator. The fair values of these investments are measured using the NAV as a practical expedient and therefore have not been categorized within the fair value hierarchy. |
• | Our investments in fixed income funds and equity funds are valued based on a combination of prices from independent pricing services, external fund managers or third-party administrators. For the publicly available prices we have classified the investments as Level 2. For the non-publicly available prices we are using NAV as a practical expedient and therefore these have not been categorized within the fair value hierarchy. |
• | For our investments in fixed income hedge funds, we measure fair value by obtaining the most recently available NAV as advised by the external fund manager or third-party administrator. The fair values of these investments are measured using the NAV as a practical expedient and therefore have not been categorized within the fair value hierarchy. |
• | We measure the fair value of our direct investment in CLO equities based on valuations provided by our external CLO equity manager. If the investment does not involve an external CLO equity manager, the fair value of the investment is valued based on valuations provided by the broker or lead underwriter of the investment (the "broker"). Our CLO equity investments have been classified as Level 3 due to the use of unobservable inputs in the valuation and the limited number of relevant trades in secondary markets. |
• | For our investments in CLO equity funds, we measure fair value by obtaining the most recently available NAV as advised by the external fund manager or third party administrator. The fair values of these investments are measured using the NAV as a practical expedient and therefore have not been categorized within the fair value hierarchy. |
Three Months Ended March 31, 2017 | Three Months Ended March 31, 2016 | |||||||||||||||||||||||||||||||
Fixed Maturity Investments | Other Investments | Equity Securities | Total | Fixed Maturity Investments | Other Investments | Equity Securities | Total | |||||||||||||||||||||||||
Beginning fair value | $ | 101,439 | $ | 76,878 | $ | — | $ | 178,317 | $ | 147,144 | $ | 77,016 | $ | — | $ | 224,160 | ||||||||||||||||
Purchases | 10,270 | — | 10,270 | — | 6,221 | — | 6,221 | |||||||||||||||||||||||||
Sales | (18,900 | ) | — | (18,900 | ) | (17,336 | ) | (4,658 | ) | — | (21,994 | ) | ||||||||||||||||||||
Net realized and unrealized gains | 635 | (7,251 | ) | (6,616 | ) | (5,592 | ) | (4,290 | ) | — | (9,882 | ) | ||||||||||||||||||||
Net transfers into (out of) Level 3 | 16,669 | — | 16,669 | (41,604 | ) | — | — | (41,604 | ) | |||||||||||||||||||||||
Ending fair value | $ | 110,113 | $ | 69,627 | $ | — | $ | 179,740 | $ | 82,612 | $ | 74,289 | $ | — | $ | 156,901 |
Three Months Ended March 31, 2017 | ||||||||
Liability for losses and LAE | Reinsurance recoverable | |||||||
Beginning fair value | $ | — | $ | — | ||||
Assumed business | 1,966,843 | 565,824 | ||||||
Changes in nominal amounts: | ||||||||
Net incurred losses and LAE | (6,238 | ) | — | |||||
Paid losses | (60,367 | ) | (17,006 | ) | ||||
Changes in fair value: | ||||||||
Discounted cash flows | 20,035 | 2,466 | ||||||
Risk margin | (4,489 | ) | (1,070 | ) | ||||
Effect of exchange rate movement | 9,045 | 1,039 | ||||||
Ending fair value | $ | 1,924,829 | $ | 551,253 |
March 31, 2017 | ||||
Valuation Technique | Unobservable (U) and Observable (O) Inputs | Weighted Average | ||
Internal model | Corporate bond yield (O) | A rated | ||
Internal model | Credit spread for non-performance risk (U) | 0.2% | ||
Internal model | Risk cost of capital (U) | 5.0% | ||
Internal model | Weighted average cost of capital (U) | 8.5% | ||
Internal model | Duration - liability (U) | 11.25 years | ||
Internal model | Duration - reinsurance recoverable (U) | 12.16 years |
• | An increase in the corporate bond rate or credit spread for non-performance risk would result in a decrease in the fair value of the liability for losses and LAE and reinsurance recoverable. Conversely, a decrease in the corporate bond rate or credit spread for non-performance risk would result in an increase in the fair value of the liability for losses and LAE and reinsurance recoverable. |
• | An increase in the weighted average cost of capital would result in an increase in the fair value of the liability for losses and LAE and reinsurance recoverable. Conversely, a decrease in the weighted average cost of capital would result in a decrease in the fair value of the liability for losses and LAE and reinsurance recoverable. |
• | An increase in the risk cost of capital would result in a increase in the fair value of the liability for losses and LAE and reinsurance recoverable. Conversely, a decrease in the risk cost of capital would result in a decrease in the fair value of the liability for losses and LAE and reinsurance recoverable. |
• | An acceleration of the estimated payment pattern would result in an increase in the fair value of the liability for losses and LAE and reinsurance recoverable. Conversely, a deceleration of the estimated payment pattern would result in a decrease in the fair value of the liability for losses and LAE and reinsurance recoverable. |
March 31, 2017 Fair Value | Amount of Gains (Losses) Deferred in AOCI (Effective Portion) | |||||||||||||||
Gross Notional Amount | Assets | Liabilities | Three Months Ended March 31, 2017 | |||||||||||||
Foreign exchange forward - AUD | $ | 61,168 | $ | — | $ | 519 | $ | (444 | ) | |||||||
Foreign exchange forward - CAD | 27,813 | 7 | 61 | 552 | ||||||||||||
Total qualifying hedges | $ | 88,981 | $ | 7 | $ | 580 | $ | 108 |
December 31, 2016 Fair Value | Amount of Gains Deferred in AOCI (Effective Portion) | |||||||||||||||
Gross Notional Amount | Assets | Liabilities | Year Ended December 31, 2016 | |||||||||||||
Foreign exchange forward - AUD | 45,467 | 2,753 | 74 | 2,568 | ||||||||||||
Foreign exchange forward - CAD | 37,175 | 177 | — | 1,186 | ||||||||||||
Total qualifying hedges | $ | 82,642 | $ | 2,930 | $ | 74 | $ | 3,754 |
March 31, 2017 Fair Value | Losses on non-qualifying hedges charged to earnings | |||||||||||||||
Gross Notional Amount | Assets | Liabilities | Three Months Ended March 31, 2017 | |||||||||||||
Foreign exchange forward - GBP | $ | 21,321 | $ | 18 | $ | 148 | $ | (148 | ) | |||||||
Foreign exchange forward - EUR | 18,185 | 29 | 237 | (237 | ) | |||||||||||
Total qualifying hedges | $ | 39,506 | $ | 47 | $ | 385 | $ | (385 | ) |
March 31, 2017 | ||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Life and Annuities | Total | ||||||||||||||||
Recoverable from reinsurers on unpaid: | ||||||||||||||||||||
Outstanding losses | $ | 998,611 | $ | 6,006 | $ | 163,930 | $ | 237 | $ | 1,168,784 | ||||||||||
IBNR | 664,905 | 22,893 | 199,377 | — | 887,175 | |||||||||||||||
Fair value adjustments | (6,160 | ) | 1,726 | (2,812 | ) | — | (7,246 | ) | ||||||||||||
Fair value adjustments - fair value option | (152,985 | ) | — | — | — | (152,985 | ) | |||||||||||||
Total reinsurance reserves recoverable | 1,504,371 | 30,625 | 360,495 | 237 | 1,895,728 | |||||||||||||||
Paid losses recoverable | 86,623 | 951 | 18,660 | 156 | 106,390 | |||||||||||||||
$ | 1,590,994 | $ | 31,576 | $ | 379,155 | $ | 393 | $ | 2,002,118 | |||||||||||
Reconciliation to Consolidated Balance Sheet: | ||||||||||||||||||||
Reinsurance balances recoverable | $ | 1,039,741 | $ | 31,576 | $ | 379,155 | $ | 393 | $ | 1,450,865 | ||||||||||
Reinsurance balances recoverable - fair value option | 551,253 | — | — | — | 551,253 | |||||||||||||||
Total | $ | 1,590,994 | $ | 31,576 | $ | 379,155 | $ | 393 | $ | 2,002,118 |
December 31, 2016 | ||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Life and Annuities | Total | ||||||||||||||||
Recoverable from reinsurers on unpaid: | ||||||||||||||||||||
Outstanding losses | $ | 621,288 | $ | 6,438 | $ | 182,478 | $ | 190 | $ | 810,394 | ||||||||||
IBNR | 393,550 | 21,753 | 178,259 | — | 593,562 | |||||||||||||||
Fair value adjustments | (13,885 | ) | 1,818 | (3,506 | ) | — | (15,573 | ) | ||||||||||||
Fair value adjustments - fair value option | — | — | — | — | — | |||||||||||||||
Total reinsurance reserves recoverable | 1,000,953 | 30,009 | 357,231 | 190 | 1,388,383 | |||||||||||||||
Paid losses recoverable | 47,160 | (1,081 | ) | 25,512 | 769 | 72,360 | ||||||||||||||
$ | 1,048,113 | $ | 28,928 | $ | 382,743 | $ | 959 | $ | 1,460,743 | |||||||||||
Reconciliation to Consolidated Balance Sheet: | ||||||||||||||||||||
Reinsurance balances recoverable | $ | 1,048,113 | $ | 28,928 | $ | 382,743 | $ | 959 | $ | 1,460,743 | ||||||||||
Reinsurance balances recoverable - fair value option | — | — | — | — | — | |||||||||||||||
Total | $ | 1,048,113 | $ | 28,928 | $ | 382,743 | $ | 959 | $ | 1,460,743 |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Life and Annuities | Total | % of Total | Non-life Run-off | Atrium | StarStone | Life and Annuities | Total | % of Total | ||||||||||||||||||||||||||||||||||
Top ten reinsurers | $ | 1,238,737 | $ | 19,429 | $ | 217,846 | $ | — | $ | 1,476,012 | 73.7 | % | $ | 737,074 | $ | 23,245 | $ | 226,283 | $ | — | $ | 986,602 | 67.6 | % | |||||||||||||||||||||
Other reinsurers > $1 million | 340,138 | 11,460 | 156,839 | — | 508,437 | 25.4 | % | 301,856 | 4,827 | 152,341 | — | 459,024 | 31.4 | % | |||||||||||||||||||||||||||||||
Other reinsurers < $1 million | 12,119 | 687 | 4,470 | 393 | 17,669 | 0.9 | % | 9,183 | 856 | 4,119 | 959 | 15,117 | 1.0 | % | |||||||||||||||||||||||||||||||
Total | $ | 1,590,994 | $ | 31,576 | $ | 379,155 | $ | 393 | $ | 2,002,118 | 100.0 | % | $ | 1,048,113 | $ | 28,928 | $ | 382,743 | $ | 959 | $ | 1,460,743 | 100.0 | % | |||||||||||||||||||||
Reconciliation to Consolidated Balance Sheet: | |||||||||||||||||||||||||||||||||||||||||||||
Reinsurance balances recoverable | $ | 1,039,741 | $ | 31,576 | $ | 379,155 | $ | 393 | $ | 1,450,865 | $ | 1,048,113 | $ | 28,928 | $ | 382,743 | $ | 959 | $ | 1,460,743 | |||||||||||||||||||||||||
Reinsurance balances recoverable - fair value option | 551,253 | — | — | — | 551,253 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Total | $ | 1,590,994 | $ | 31,576 | $ | 379,155 | $ | 393 | $ | 2,002,118 | $ | 1,048,113 | $ | 28,928 | $ | 382,743 | $ | 959 | $ | 1,460,743 |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||||||||
Gross | Provisions for Bad Debt | Net | Provisions as a % of Gross | Gross | Provisions for Bad Debt | Net | Provisions as a % of Gross | ||||||||||||||||||||||
Reinsurers rated A- or above | $ | 1,310,533 | $ | 38,704 | $ | 1,271,829 | 3.0 | % | $ | 892,776 | $ | 35,184 | $ | 857,592 | 3.9 | % | |||||||||||||
Reinsurers rated below A-, secured | 673,898 | — | 673,898 | — | % | 544,894 | — | 544,894 | — | % | |||||||||||||||||||
Reinsurers rated below A-, unsecured | 191,222 | 134,831 | 56,391 | 70.5 | % | 197,589 | 139,332 | 58,257 | 70.5 | % | |||||||||||||||||||
Total | $ | 2,175,653 | $ | 173,535 | $ | 2,002,118 | 8.0 | % | $ | 1,635,259 | $ | 174,516 | $ | 1,460,743 | 10.7 | % |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Total | Non-life Run-off | Atrium | StarStone | Total | ||||||||||||||||||||||||
Outstanding losses | $ | 3,461,547 | $ | 67,748 | $ | 484,217 | $ | 4,013,512 | $ | 2,697,737 | $ | 67,379 | $ | 502,115 | $ | 3,267,231 | |||||||||||||||
IBNR | 3,482,775 | 132,329 | 586,789 | 4,201,893 | 2,153,994 | 132,240 | 558,130 | 2,844,364 | |||||||||||||||||||||||
Fair value adjustments | (126,404 | ) | 12,046 | (692 | ) | (115,050 | ) | (135,368 | ) | 12,503 | (863 | ) | (123,728 | ) | |||||||||||||||||
Fair value adjustments - fair value option | (339,768 | ) | — | — | (339,768 | ) | — | — | — | — | |||||||||||||||||||||
Total | $ | 6,478,150 | $ | 212,123 | $ | 1,070,314 | $ | 7,760,587 | $ | 4,716,363 | $ | 212,122 | $ | 1,059,382 | $ | 5,987,867 |
Reconciliation to Consolidated Balance Sheet: | |||
Loss and loss adjustment expenses | $ | 5,835,758 | |
Loss and loss adjustment expenses, at fair value | 1,924,829 | ||
Total | $ | 7,760,587 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Balance as at beginning of period | $ | 5,987,867 | $ | 5,720,149 | |||
Less: reinsurance reserves recoverable | 1,388,193 | 1,360,382 | |||||
Less: deferred charges on retroactive reinsurance | 94,551 | 255,911 | |||||
Net balance as at beginning of period | 4,505,123 | 4,103,856 | |||||
Net incurred losses and LAE: | |||||||
Current period | 85,545 | 115,301 | |||||
Prior periods | (7,653 | ) | (32,083) | ||||
Total net incurred losses and LAE | 77,892 | 83,218 | |||||
Net paid losses: | |||||||
Current period | (8,719 | ) | (5,334) | ||||
Prior periods | (249,722 | ) | (186,403) | ||||
Total net paid losses | (258,441 | ) | (191,737) | ||||
Effect of exchange rate movement | 14,505 | 4,881 | |||||
Acquired on purchase of subsidiaries | — | — | |||||
Assumed business | 1,432,412 | 1,084,251 | |||||
Net balance as at March 31 | 5,771,491 | 5,084,469 | |||||
Plus: reinsurance reserves recoverable | 1,895,491 | 1,302,738 | |||||
Plus: deferred charges on retroactive reinsurance | 93,605 | 254,300 | |||||
Balance as at March 31 | $ | 7,760,587 | $ | 6,641,507 |
Three Months Ended March 31, 2017 | Three Months Ended March 31, 2016 | ||||||||||||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Total | Non-life Run-off | Atrium | StarStone | Total | ||||||||||||||||||||||||
Net losses paid | $ | 156,572 | $ | 13,673 | $ | 88,196 | $ | 258,441 | $ | 132,313 | $ | 7,748 | $ | 51,676 | $ | 191,737 | |||||||||||||||
Net change in case and LAE reserves | (83,134 | ) | 594 | (9,359 | ) | (91,899 | ) | (108,785 | ) | (1,772 | ) | 12,655 | (97,902 | ) | |||||||||||||||||
Net change in IBNR reserves | (78,647 | ) | (1,804 | ) | (10,152 | ) | (90,603 | ) | (37,063 | ) | 9,891 | 27,086 | (86 | ) | |||||||||||||||||
Amortization of deferred charges | 946 | — | — | 946 | 1,611 | — | — | 1,611 | |||||||||||||||||||||||
Increase (reduction) in estimates of net ultimate losses | (4,263 | ) | 12,463 | 68,685 | 76,885 | (11,924 | ) | 15,867 | 91,417 | 95,360 | |||||||||||||||||||||
Reduction in provisions for bad debt | — | — | — | — | (1,448 | ) | — | — | (1,448 | ) | |||||||||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (14,323 | ) | (8 | ) | (1 | ) | (14,332 | ) | (7,788 | ) | 84 | 1,011 | (6,693 | ) | |||||||||||||||||
Amortization of fair value adjustments | 1,347 | 33 | (523 | ) | 857 | (2,394 | ) | (362 | ) | (1,245 | ) | (4,001 | ) | ||||||||||||||||||
Changes in fair value - fair value option | 14,482 | — | — | 14,482 | — | — | — | — | |||||||||||||||||||||||
Net incurred losses and LAE | $ | (2,757 | ) | $ | 12,488 | $ | 68,161 | $ | 77,892 | $ | (23,554 | ) | $ | 15,589 | $ | 91,183 | $ | 83,218 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Balance as at beginning of period | $ | 4,716,363 | $ | 4,585,454 | |||
Less: reinsurance reserves recoverable | 1,000,953 | 1,034,747 | |||||
Less: deferred charges on retroactive insurance | 94,551 | 255,911 | |||||
Net balance as at beginning of period | 3,620,859 | 3,294,796 | |||||
Net incurred losses and LAE: | |||||||
Current period | 714 | 6,069 | |||||
Prior periods | (3,471) | (29,623 | ) | ||||
Total net incurred losses and LAE | (2,757) | (23,554 | ) | ||||
Net paid losses: | |||||||
Current period | (241) | (1,990 | ) | ||||
Prior periods | (156,331) | (130,323 | ) | ||||
Total net paid losses | (156,572) | (132,313 | ) | ||||
Effect of exchange rate movement | 17,625 | 4,640 | |||||
Assumed business | 1,401,019 | 1,084,251 | |||||
Net balance as at March 31 | 4,880,174 | 4,227,820 | |||||
Plus: reinsurance reserves recoverable | 1,504,371 | 977,096 | |||||
Plus: deferred charges on retroactive reinsurance | 93,605 | 254,300 | |||||
Balance as at March 31 | $ | 6,478,150 | $ | 5,459,216 |
Three Months Ended March 31, | |||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||
Prior Period | Current Period | Total | Prior Period | Current Period | Total | ||||||||||||||||||
Net losses paid | $ | 156,331 | $ | 241 | $ | 156,572 | $ | 130,323 | $ | 1,990 | $ | 132,313 | |||||||||||
Net change in case and LAE reserves | (83,134 | ) | — | (83,134 | ) | (108,969 | ) | 184 | (108,785 | ) | |||||||||||||
Net change in IBNR reserves | (79,078 | ) | 431 | (78,647 | ) | (40,513 | ) | 3,450 | (37,063 | ) | |||||||||||||
Amortization of deferred charges | 946 | — | 946 | 1,611 | — | 1,611 | |||||||||||||||||
Increase (reduction) in estimates of net ultimate losses | (4,935 | ) | 672 | (4,263 | ) | (17,548 | ) | 5,624 | (11,924 | ) | |||||||||||||
Increase (reduction) in provisions for bad debt | — | — | — | (1,448 | ) | — | (1,448 | ) | |||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (14,365 | ) | 42 | (14,323 | ) | (8,233 | ) | 445 | (7,788 | ) | |||||||||||||
Amortization of fair value adjustments | 1,347 | — | 1,347 | (2,394 | ) | — | (2,394 | ) | |||||||||||||||
Changes in fair value - fair value option | 14,482 | — | 14,482 | — | — | — | |||||||||||||||||
Net incurred losses and LAE | $ | (3,471 | ) | $ | 714 | $ | (2,757 | ) | $ | (29,623 | ) | $ | 6,069 | $ | (23,554 | ) |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Balance as at beginning of period | $ | 212,122 | $ | 201,017 | |||
Less: reinsurance reserves recoverable | 30,009 | 25,852 | |||||
Net balance as at beginning of period | 182,113 | 175,165 | |||||
Net incurred losses and LAE: | |||||||
Current period | 14,421 | 16,062 | |||||
Prior periods | (1,933 | ) | (473 | ) | |||
Total net incurred losses and LAE | 12,488 | 15,589 | |||||
Net paid losses: | |||||||
Current period | (4,262 | ) | (2,238 | ) | |||
Prior periods | (9,411 | ) | (5,510 | ) | |||
Total net paid losses | (13,673 | ) | (7,748 | ) | |||
Effect of exchange rate movement | 570 | 664 | |||||
Net balance as at March 31 | 181,498 | 183,670 | |||||
Plus: reinsurance reserves recoverable | 30,625 | 26,249 | |||||
Balance as at March 31 | $ | 212,123 | $ | 209,919 |
Three Months Ended March 31, | |||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||
Prior Period | Current Period | Total | Prior Period | Current Period | Total | ||||||||||||||||||
Net losses paid | $ | 9,411 | $ | 4,262 | $ | 13,673 | $ | 5,510 | $ | 2,238 | $ | 7,748 | |||||||||||
Net change in case and LAE reserves | (3,116 | ) | 3,710 | 594 | (3,960 | ) | 2,188 | (1,772 | ) | ||||||||||||||
Net change in IBNR reserves | (8,137 | ) | 6,333 | (1,804 | ) | (1,591 | ) | 11,482 | 9,891 | ||||||||||||||
Increase (reduction) in estimates of net ultimate losses | (1,842 | ) | 14,305 | 12,463 | (41 | ) | 15,908 | 15,867 | |||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (124 | ) | 116 | (8 | ) | (70 | ) | 154 | 84 | ||||||||||||||
Amortization of fair value adjustments | 33 | — | 33 | (362 | ) | — | (362 | ) | |||||||||||||||
Net incurred losses and LAE | $ | (1,933 | ) | $ | 14,421 | $ | 12,488 | $ | (473 | ) | $ | 16,062 | $ | 15,589 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Balance as at beginning of period | $ | 1,059,382 | $ | 933,678 | |||
Less: reinsurance reserves recoverable | 357,231 | 299,783 | |||||
Net balance as at beginning of period | 702,151 | 633,895 | |||||
Net incurred losses and LAE: | |||||||
Current period | 70,410 | 93,170 | |||||
Prior periods | (2,249) | (1,987 | ) | ||||
Total net incurred losses and LAE | 68,161 | 91,183 | |||||
Net paid losses: | |||||||
Current period | (4,216) | (1,106 | ) | ||||
Prior periods | (83,980) | (50,570 | ) | ||||
Total net paid losses | (88,196) | (51,676 | ) | ||||
Effect of exchange rate movement | (3,690) | (423 | ) | ||||
Assumed business | 31,393 | — | |||||
Net balance as at March 31 | 709,819 | 672,979 | |||||
Plus: reinsurance reserves recoverable | 360,495 | 299,393 | |||||
Balance as at March 31 | $ | 1,070,314 | $ | 972,372 |
Three Months Ended March 31, | |||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||
Prior Period | Current Period | Total | Prior Period | Current Period | Total | ||||||||||||||||||
Net losses paid | $ | 83,980 | $ | 4,216 | $ | 88,196 | $ | 50,570 | $ | 1,106 | $ | 51,676 | |||||||||||
Net change in case and LAE reserves | (24,843 | ) | 15,484 | (9,359 | ) | 4,636 | 8,019 | 12,655 | |||||||||||||||
Net change in IBNR reserves | (58,937 | ) | 48,785 | (10,152 | ) | (54,913 | ) | 81,999 | 27,086 | ||||||||||||||
Increase (reduction) in estimates of net ultimate losses | 200 | 68,485 | 68,685 | 293 | 91,124 | 91,417 | |||||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (1,926 | ) | 1,925 | (1 | ) | (1,035 | ) | 2,046 | 1,011 | ||||||||||||||
Amortization of fair value adjustments | (523 | ) | — | (523 | ) | (1,245 | ) | — | (1,245 | ) | |||||||||||||
Net incurred losses and LAE | $ | (2,249 | ) | $ | 70,410 | $ | 68,161 | $ | (1,987 | ) | $ | 93,170 | $ | 91,183 |
Three Months Ended March 31, | |||||||||||||||
2017 | 2016 | ||||||||||||||
Premiums Written | Premiums Earned | Premiums Written | Premiums Earned | ||||||||||||
Non-life Run-off | |||||||||||||||
Gross | $ | 983 | $ | 1,298 | $ | 6,697 | $ | 7,947 | |||||||
Ceded | (902 | ) | (1,222 | ) | (1,426 | ) | (2,512 | ) | |||||||
Net | $ | 81 | $ | 76 | $ | 5,271 | $ | 5,435 | |||||||
Atrium | |||||||||||||||
Gross | $ | 46,413 | $ | 36,220 | $ | 41,518 | $ | 35,434 | |||||||
Ceded | (4,494 | ) | (4,000 | ) | (3,338 | ) | (3,523 | ) | |||||||
Net | $ | 41,919 | $ | 32,220 | $ | 38,180 | $ | 31,911 | |||||||
StarStone | |||||||||||||||
Gross | $ | 226,536 | $ | 205,584 | $ | 217,043 | $ | 194,116 | |||||||
Ceded | (107,670 | ) | (90,176 | ) | (66,907 | ) | (40,034 | ) | |||||||
Net | $ | 118,866 | $ | 115,408 | $ | 150,136 | $ | 154,082 | |||||||
Life and Annuities | |||||||||||||||
Life | $ | 1,193 | $ | 1,194 | $ | 1,441 | $ | 1,459 | |||||||
Total | $ | 162,059 | $ | 148,898 | $ | 195,028 | $ | 192,887 |
Goodwill | Intangible assets with a definite life - Other | Intangible assets with an indefinite life | Total | Intangible assets with a definite life - FVA | Other assets - Deferred Charges | ||||||||||||||||||
Balance as at December 31, 2016 | $ | 73,071 | $ | 24,753 | $ | 87,031 | $ | 184,855 | $ | 145,158 | $ | 94,551 | |||||||||||
Acquired during the period | — | — | — | — | — | — | |||||||||||||||||
Amortization | — | (1,170 | ) | — | (1,170 | ) | (343 | ) | (946 | ) | |||||||||||||
Balance as at March 31, 2017 | $ | 73,071 | $ | 23,583 | $ | 87,031 | $ | 183,685 | $ | 144,815 | $ | 93,605 |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Gross Carrying Value | Accumulated Amortization | Net Carrying Value | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||
Intangible assets with a definite life: | |||||||||||||||||||||||
Fair value adjustments: | |||||||||||||||||||||||
Losses and LAE liabilities | $ | 458,202 | $ | (343,152 | ) | $ | 115,050 | $ | 458,202 | $ | (334,475 | ) | $ | 123,727 | |||||||||
Reinsurance balances recoverable | (175,924 | ) | 168,678 | (7,246 | ) | (175,924 | ) | 160,350 | (15,574 | ) | |||||||||||||
Other Assets | (48,840 | ) | 110 | (48,730 | ) | (48,840 | ) | — | (48,840 | ) | |||||||||||||
Other Liabilities | 85,845 | (104 | ) | 85,741 | 85,845 | — | 85,845 | ||||||||||||||||
Total | $ | 319,283 | $ | (174,468 | ) | $ | 144,815 | $ | 319,283 | $ | (174,125 | ) | $ | 145,158 | |||||||||
Other: | |||||||||||||||||||||||
Distribution channel | $ | 20,000 | $ | (4,444 | ) | $ | 15,556 | $ | 20,000 | $ | (4,111 | ) | $ | 15,889 | |||||||||
Technology | 15,000 | (11,640 | ) | 3,360 | 15,000 | (10,978 | ) | 4,022 | |||||||||||||||
Brand | 7,000 | (2,333 | ) | 4,667 | 7,000 | (2,158 | ) | 4,842 | |||||||||||||||
Total | $ | 42,000 | $ | (18,417 | ) | $ | 23,583 | $ | 42,000 | $ | (17,247 | ) | $ | 24,753 | |||||||||
Intangible assets with an indefinite life: | |||||||||||||||||||||||
Lloyd’s syndicate capacity | $ | 37,031 | $ | — | $ | 37,031 | $ | 37,031 | $ | — | $ | 37,031 | |||||||||||
Licenses | 19,900 | — | 19,900 | 19,900 | — | 19,900 | |||||||||||||||||
Management contract | 30,100 | — | 30,100 | 30,100 | — | 30,100 | |||||||||||||||||
Total | $ | 87,031 | $ | — | $ | 87,031 | $ | 87,031 | $ | — | $ | 87,031 | |||||||||||
Deferred charges on retroactive reinsurance | $ | 278,643 | $ | (185,038 | ) | $ | 93,605 | $278,643 | $ | (184,092 | ) | $94,551 |
Facility | Origination Date | Term | March 31, 2017 | December 31, 2016 | ||||||||
EGL Revolving Credit Facility | September 16, 2014 | 5 years | $ | 245,228 | $ | 535,103 | ||||||
Sussex Facility | December 24, 2014 | 4 years | 63,500 | 63,500 | ||||||||
EGL Term Loan Facility | November 18, 2016 | 3 years | 75,000 | 75,000 | ||||||||
Senior Notes | March 10, 2017 | 5 years | 350,000 | — | ||||||||
Less: Unamortized debt issuance costs | (2,883 | ) | — | |||||||||
Total Senior Notes | 347,117 | — | ||||||||||
Total debt obligations | $ | 730,845 | $ | 673,603 |
Three Months Ended March 31, 2017 | Year Ended December 31, 2016 | |||||||
Balance at beginning of period | $ | 454,522 | $ | 417,663 | ||||
Net earnings attributable to RNCI | 16,729 | 40,639 | ||||||
Accumulated other comprehensive earnings attributable to RNCI | 657 | 651 | ||||||
Change in redemption value of RNCI | 1,156 | (4,431 | ) | |||||
Balance at end of period | $ | 473,064 | $ | 454,522 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
Numerator: | |||||||
Net earnings from continuing operations | $ | 54,309 | $ | 45,315 | |||
Net earnings from discontinued operations | 371 | 205 | |||||
Net earnings attributable to Enstar Group Limited | 54,680 | 45,520 | |||||
Denominator: | |||||||
Weighted average ordinary shares outstanding — basic | 19,374,728 | 19,282,946 | |||||
Effect of dilutive securities: | |||||||
Share-based compensation plans | 55,656 | 38,518 | |||||
Warrants | 71,279 | 87,430 | |||||
Weighted average ordinary shares outstanding — diluted | 19,501,663 | 19,408,894 | |||||
Earnings per share attributable to Enstar Group Limited: | |||||||
Basic: | |||||||
Net earnings from continuing operations | $ | 2.80 | $ | 2.34 | |||
Net earnings from discontinued operations | $ | 0.02 | $ | 0.02 | |||
Net earnings per ordinary share | $ | 2.82 | $ | 2.36 | |||
Diluted: | |||||||
Net earnings from continuing operations | $ | 2.78 | $ | 2.33 | |||
Net earnings from discontinued operations | $ | 0.02 | $ | 0.02 | |||
Net earnings per ordinary share | $ | 2.80 | $ | 2.35 |
Three Months Ended March 31, 2017 | |||||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Life and Annuities | Eliminations | Consolidated | ||||||||||||||||||
INCOME | |||||||||||||||||||||||
Net premiums earned | $ | 76 | $ | 32,220 | $ | 115,408 | $ | 1,194 | $ | — | $ | 148,898 | |||||||||||
Fees and commission income | 8,723 | 3,372 | 1,166 | — | (1,347 | ) | 11,914 | ||||||||||||||||
Net investment income | 35,729 | 1,124 | 5,449 | 7,334 | (897 | ) | 48,739 | ||||||||||||||||
Net realized and unrealized gains (losses) | 51,558 | 418 | 6,699 | (156 | ) | — | 58,519 | ||||||||||||||||
Other income | 11,928 | 69 | 46 | 155 | — | 12,198 | |||||||||||||||||
108,014 | 37,203 | 128,768 | 8,527 | (2,244 | ) | 280,268 | |||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Net incurred losses and LAE | (2,757 | ) | 12,488 | 68,161 | — | — | 77,892 | ||||||||||||||||
Life and annuity policy benefits | — | — | — | (301 | ) | — | (301 | ) | |||||||||||||||
Acquisition costs | 400 | 10,772 | 10,614 | 431 | (1,396 | ) | 20,821 | ||||||||||||||||
General and administrative expenses | 59,705 | 7,211 | 34,021 | 1,482 | 49 | 102,468 | |||||||||||||||||
Interest expense | 6,681 | 271 | 622 | 191 | (897 | ) | 6,868 | ||||||||||||||||
Net foreign exchange losses | 785 | 832 | 1,893 | 205 | — | 3,715 | |||||||||||||||||
64,814 | 31,574 | 115,311 | 2,008 | (2,244 | ) | 211,463 | |||||||||||||||||
EARNINGS BEFORE INCOME TAXES | 43,200 | 5,629 | 13,457 | 6,519 | — | 68,805 | |||||||||||||||||
INCOME TAXES | (960 | ) | (356 | ) | 4,249 | (4 | ) | — | 2,929 | ||||||||||||||
NET EARNINGS FROM CONTINUING OPERATIONS | 42,240 | 5,273 | 17,706 | 6,515 | — | 71,734 | |||||||||||||||||
NET EARNINGS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX EXPENSE | — | — | — | 371 | — | 371 | |||||||||||||||||
Less: Net earnings attributable to noncontrolling interest | (8,009 | ) | (2,163 | ) | (7,253 | ) | — | — | (17,425 | ) | |||||||||||||
NET EARNINGS ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ | 34,231 | $ | 3,110 | $ | 10,453 | $ | 6,886 | $ | — | $ | 54,680 |
Three Months Ended March 31, 2016 | |||||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Life and Annuities | Eliminations | Consolidated | ||||||||||||||||||
INCOME | |||||||||||||||||||||||
Net premiums earned | $ | 5,435 | $ | 31,911 | $ | 154,082 | $ | 1,459 | $ | — | $ | 192,887 | |||||||||||
Fees and commission income | 6,566 | 3,832 | — | — | (3,974 | ) | 6,424 | ||||||||||||||||
Net investment income | 36,230 | 554 | 5,280 | 8,638 | (422 | ) | 50,280 | ||||||||||||||||
Net realized and unrealized gains | 23,390 | 40 | 14,349 | 498 | — | 38,277 | |||||||||||||||||
Other income | 1,800 | 34 | 11 | 565 | — | 2,410 | |||||||||||||||||
73,421 | 36,371 | 173,722 | 11,160 | (4,396 | ) | 290,278 | |||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Net incurred losses and LAE | (23,554 | ) | 15,589 | 91,183 | — | — | 83,218 | ||||||||||||||||
Life and annuity policy benefits | — | — | — | 158 | — | 158 | |||||||||||||||||
Acquisition costs | 1,982 | 11,087 | 32,060 | 166 | (266 | ) | 45,029 | ||||||||||||||||
General and administrative expenses | 58,113 | 6,408 | 30,155 | 1,971 | (3,713 | ) | 92,934 | ||||||||||||||||
Interest expense | 5,480 | — | — | 335 | (417 | ) | 5,398 | ||||||||||||||||
Net foreign exchange losses (gains) | 880 | 1,815 | (1,299 | ) | 376 | — | 1,772 | ||||||||||||||||
42,901 | 34,899 | 152,099 | 3,006 | (4,396 | ) | 228,509 | |||||||||||||||||
EARNINGS BEFORE INCOME TAXES | 30,520 | 1,472 | 21,623 | 8,154 | — | 61,769 | |||||||||||||||||
INCOME TAXES | (4,673 | ) | (678 | ) | (2,018 | ) | — | — | (7,369 | ) | |||||||||||||
NET EARNINGS FROM CONTINUING OPERATIONS | 25,847 | 794 | 19,605 | 8,154 | — | 54,400 | |||||||||||||||||
NET EARNINGS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX EXPENSE | — | — | — | 205 | — | 205 | |||||||||||||||||
Less: Net earnings attributable to noncontrolling interest | (715 | ) | (326 | ) | (8,044 | ) | — | — | (9,085 | ) | |||||||||||||
NET EARNINGS ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ | 25,132 | $ | 468 | $ | 11,561 | $ | 8,359 | $ | — | $ | 45,520 |
March 31, | December 31, | ||||||
2017 | 2016 | ||||||
Total assets: | |||||||
Non-life Run-off | $ | 10,320,251 | $ | 8,297,103 | |||
Atrium | 590,921 | 563,754 | |||||
StarStone | 3,039,624 | 2,968,316 | |||||
Life and annuities | 1,643,235 | 1,644,013 | |||||
Less: | |||||||
Eliminations | (711,154 | ) | (607,442 | ) | |||
$ | 14,882,877 | $ | 12,865,744 |
Section | Page | |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(in thousands of U.S. dollars) | |||||||
INCOME | |||||||
Net premiums earned | $ | 148,898 | $ | 192,887 | |||
Fees and commission income | 11,914 | 6,424 | |||||
Net investment income | 48,739 | 50,280 | |||||
Net realized and unrealized gains | 58,519 | 38,277 | |||||
Other income | 12,198 | 2,410 | |||||
280,268 | 290,278 | ||||||
EXPENSES | |||||||
Net incurred losses and LAE | 77,892 | 83,218 | |||||
Life and annuity policy benefits | (301 | ) | 158 | ||||
Acquisition costs | 20,821 | 45,029 | |||||
General and administrative expenses | 102,468 | 92,934 | |||||
Interest expense | 6,868 | 5,398 | |||||
Net foreign exchange losses | 3,715 | 1,772 | |||||
211,463 | 228,509 | ||||||
EARNINGS BEFORE INCOME TAXES | 68,805 | 61,769 | |||||
INCOME TAXES | 2,929 | (7,369 | ) | ||||
NET EARNINGS FROM CONTINUING OPERATIONS | 71,734 | 54,400 | |||||
NET EARNINGS FROM DISCONTINUED OPERATIONS, NET OF INCOME | 371 | 205 | |||||
Less: Net earnings attributable to noncontrolling interest | (17,425 | ) | (9,085 | ) | |||
NET EARNINGS ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ | 54,680 | $ | 45,520 |
• | Consolidated net earnings of $54.7 million and basic and diluted earnings per ordinary share of $2.82 and $2.80, respectively |
• | Net earnings from Non-life Run-off segment of $34.2 million, including investment results |
• | Net investment income of $48.7 million and net realized and unrealized gains of $58.5 million |
• | Net premiums earned of $148.9 million, including $115.4 million and $32.2 million in our StarStone and Atrium segments, respectively |
• | Combined ratios of 97.9% and 82.8% for the active underwriting operations within our StarStone and Atrium segments, respectively (refer to "Non-GAAP Financial Measures" above) |
• | Total investments and cash of $8,577.6 million |
• | Total reinsurance balances recoverable of $2,002.1 million |
• | Total assets of $14,882.9 million |
• | Shareholders' equity of $2,864.9 million and redeemable noncontrolling interest of $473.1 million |
• | Total gross reserves for losses and LAE of $7,753.9 million, with $1,409.4 million of net reserves assumed in our Non-life Run-off operations during the three months ended March 31, 2017 |
• | Policy benefits for life and annuity contracts of $111.7 million |
• | Diluted book value per ordinary share of $146.62 |
• | Non-life Run-off - Net earnings attributable to the Non-life Run-off segment were $34.2 million and $25.1 million for the three months ended March 31, 2017 and 2016, respectively. The increase in net earnings was primarily due to improved investment results, partially offset by the reduction in estimates of net ultimate incurred losses and the increase in net earnings attributable to noncontrolling interest; |
• | StarStone - Net earnings attributable to the StarStone segment were $10.5 million and $11.6 million for the three months ended March 31, 2017 and 2016, respectively. The reduction in net earnings was primarily attributable to lower net realized and unrealized gains on investments in 2017 compared to 2016, partially offset by improved underwriting performance; |
• | Atrium - Net earnings for the three months ended March 31, 2017 and 2016 were $3.1 million and $0.5 million, respectively. The increase was attributable to improved underwriting and investment results; |
• | Life and Annuities - Net earnings attributable to the Life and Annuities segment were $6.9 million and $8.4 million for the three months ended March 31, 2017 and 2016, respectively, with the decrease primarily attributable to lower net investment income earned from life settlements during the period; |
• | Net Investment Income - Net investment income was $48.7 million and $50.3 million for the three months ended March 31, 2017 and 2016, respectively. The decrease was primarily attributable to lower income earned on other investments. |
• | Net Realized and Unrealized Gains - Net realized and unrealized gains were $58.5 million and $38.3 million for the three months ended March 31, 2017 and 2016, respectively. This increase was primarily attributable to higher net unrealized gains in 2017 due to an increase in the valuations of other investments, equity securities and funds held-directly managed during the period; and |
• | Noncontrolling Interest - Noncontrolling interest in earnings is directly attributable to the results from those subsidiary companies in which there are either noncontrolling interests or redeemable noncontrolling interests. For the three months ended March 31, 2017 and 2016, the noncontrolling interest in earnings was $17.4 million and $9.1 million, respectively, primarily reflecting improved results of our subsidiaries in the Non-Life Run-off segment, in which third parties hold noncontrolling interests. |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(in thousands of U.S. dollars) | |||||||
Segment split of net earnings attributable to Enstar Group Limited: | |||||||
Non-life Run-off | $ | 34,231 | $ | 25,132 | |||
Atrium | 3,110 | 468 | |||||
StarStone | 10,453 | 11,561 | |||||
Life and Annuities | 6,886 | 8,359 | |||||
Net earnings attributable to Enstar Group Limited | $ | 54,680 | $ | 45,520 |
Three Months Ended March 31, | |||||||||||
2017 | 2016 | Increase (decrease) | |||||||||
(in thousands of U.S. dollars) | |||||||||||
INCOME | |||||||||||
Net premiums earned | $ | 76 | $ | 5,435 | $ | (5,359 | ) | ||||
Fees and commission income | 8,723 | 6,566 | 2,157 | ||||||||
Net investment income | 35,729 | 36,230 | (501 | ) | |||||||
Net realized and unrealized gains | 51,558 | 23,390 | 28,168 | ||||||||
Other income | 11,928 | 1,800 | 10,128 | ||||||||
108,014 | 73,421 | 34,593 | |||||||||
EXPENSES | |||||||||||
Net incurred losses and LAE | (2,757 | ) | (23,554 | ) | 20,797 | ||||||
Acquisition costs | 400 | 1,982 | (1,582 | ) | |||||||
General and administrative expenses | 59,705 | 58,113 | 1,592 | ||||||||
Interest expense | 6,681 | 5,480 | 1,201 | ||||||||
Net foreign exchange losses | 785 | 880 | (95 | ) | |||||||
64,814 | 42,901 | 21,913 | |||||||||
EARNINGS BEFORE INCOME TAXES | 43,200 | 30,520 | 12,680 | ||||||||
INCOME TAXES | (960 | ) | (4,673 | ) | 3,713 | ||||||
NET EARNINGS | 42,240 | 25,847 | 16,393 | ||||||||
Less: Net loss (earnings) attributable to noncontrolling interest | (8,009 | ) | (715 | ) | (7,294 | ) | |||||
NET EARNINGS ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ | 34,231 | $ | 25,132 | $ | 9,099 |
Three Months Ended March 31, | |||||||||||
2017 | 2016 | Increase (decrease) | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Gross premiums written | $ | 983 | $ | 6,697 | $ | (5,714 | ) | ||||
Ceded reinsurance premiums written | (902 | ) | (1,426 | ) | 524 | ||||||
Net premiums written | 81 | 5,271 | (5,190 | ) | |||||||
Gross premiums earned | 1,298 | 7,947 | (6,649 | ) | |||||||
Ceded reinsurance premiums earned | (1,222 | ) | (2,512 | ) | 1,290 | ||||||
Net premiums earned | $ | 76 | $ | 5,435 | $ | (5,359 | ) |
Three Months Ended March 31, | |||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||
Prior Periods | Current Period | Total | Prior Periods | Current Period | Total | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Net losses paid | $ | 156,331 | $ | 241 | $ | 156,572 | $ | 130,323 | $ | 1,990 | $ | 132,313 | |||||||||||
Net change in case and LAE reserves (1) | (83,134 | ) | — | (83,134 | ) | (108,969 | ) | 184 | (108,785 | ) | |||||||||||||
Net change in IBNR reserves (1) | (79,078 | ) | 431 | (78,647 | ) | (40,513 | ) | 3,450 | (37,063 | ) | |||||||||||||
Amortization of deferred charge | 946 | — | 946 | 1,611 | — | 1,611 | |||||||||||||||||
Increase (reduction) in estimates of net ultimate losses | (4,935 | ) | 672 | (4,263 | ) | (17,548 | ) | 5,624 | (11,924 | ) | |||||||||||||
Increase (reduction) in provisions for bad debt | — | — | — | (1,448 | ) | — | (1,448 | ) | |||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (14,365 | ) | 42 | (14,323 | ) | (8,233 | ) | 445 | (7,788 | ) | |||||||||||||
Amortization of fair value adjustments | 1,347 | — | 1,347 | (2,394 | ) | — | (2,394 | ) | |||||||||||||||
Changes in fair value - fair value option | 14,482 | — | 14,482 | $ | — | $ | — | $ | — | ||||||||||||||
Net incurred losses and LAE | $ | (3,471 | ) | $ | 714 | $ | (2,757 | ) | $ | (29,623 | ) | $ | 6,069 | $ | (23,554 | ) |
Three Months Ended March 31, | |||||||||||
2017 | 2016 | Increase (decrease) | |||||||||
(in thousands of U.S. dollars) | |||||||||||
INCOME | |||||||||||
Net premiums earned | $ | 32,220 | $ | 31,911 | $ | 309 | |||||
Fees and commission income | 3,372 | 3,832 | (460 | ) | |||||||
Net investment income | 1,124 | 554 | 570 | ||||||||
Net realized and unrealized gains | 418 | 40 | 378 | ||||||||
Other income | 69 | 34 | 35 | ||||||||
37,203 | 36,371 | 832 | |||||||||
EXPENSES | |||||||||||
Net incurred losses and LAE | 12,488 | 15,589 | (3,101 | ) | |||||||
Acquisition costs | 10,772 | 11,087 | (315 | ) | |||||||
General and administrative expenses | 7,211 | 6,408 | 803 | ||||||||
Interest expense | 271 | — | 271 | ||||||||
Net foreign exchange losses | 832 | 1,815 | (983 | ) | |||||||
31,574 | 34,899 | (3,325 | ) | ||||||||
EARNINGS BEFORE INCOME TAXES | 5,629 | 1,472 | 4,157 | ||||||||
INCOME TAXES | (356 | ) | (678 | ) | 322 | ||||||
NET EARNINGS | 5,273 | 794 | 4,479 | ||||||||
Less: Net earnings attributable to noncontrolling interest | (2,163 | ) | (326 | ) | (1,837 | ) | |||||
NET EARNINGS ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ | 3,110 | $ | 468 | $ | 2,642 |
Three Months Ended March 31, | |||||||||||
2017 | 2016 | Increase (decrease) | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Atrium 5 | $ | 2,989 | $ | 329 | $ | 2,660 | |||||
AUL | 599 | 530 | 69 | ||||||||
Atrium Total | 3,588 | 859 | 2,729 | ||||||||
Holding Company | (478 | ) | (391 | ) | (87 | ) | |||||
NET EARNINGS ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ | 3,110 | $ | 468 | $ | 2,642 |
Three Months Ended March 31, | ||||||||
2017 | 2016 | (Favorable) Unfavorable | ||||||
Loss ratio (1) | 38.8 | % | 48.7 | % | (9.9 | )% | ||
Acquisition cost ratio (1) | 33.4 | % | 34.7 | % | (1.3 | )% | ||
Other operating expense ratio (1) | 10.6 | % | 10.9 | % | (0.3 | )% | ||
Combined ratio (1) | 82.8 | % | 94.3 | % | (11.5 | )% |
Three Months Ended March 31, | |||||||||||
2017 | 2016 | Increase (decrease) | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Marine | $ | 5,516 | $ | 4,631 | $ | 885 | |||||
Property and Casualty Binding Authorities | 9,870 | 9,679 | 191 | ||||||||
Upstream Energy | 3,025 | 2,873 | 152 | ||||||||
Reinsurance | 9,588 | 6,383 | 3,205 | ||||||||
Accident and Health | 5,261 | 4,267 | 994 | ||||||||
Non-Marine Direct and Facultative | 3,330 | 3,915 | (585 | ) | |||||||
Liability | 5,849 | 5,269 | 580 | ||||||||
Aviation | 2,979 | 3,452 | (473 | ) | |||||||
Terrorism(1) | 995 | 1,049 | (54 | ) | |||||||
Total | $ | 46,413 | $ | 41,518 | $ | 4,895 |
Three Months Ended March 31, | |||||||||||
2017 | 2016 | Increase (decrease) | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Marine | $ | 3,491 | $ | 4,358 | $ | (867 | ) | ||||
Property and Casualty Binding Authorities | 8,912 | 8,510 | 402 | ||||||||
Upstream Energy | 2,087 | 2,116 | (29 | ) | |||||||
Reinsurance | 3,702 | 2,780 | 922 | ||||||||
Accident and Health | 3,880 | 3,155 | 725 | ||||||||
Non-Marine Direct and Facultative | 3,030 | 3,566 | (536 | ) | |||||||
Liability | 4,884 | 4,913 | (29 | ) | |||||||
Aviation | 1,469 | 1,741 | (272 | ) | |||||||
Terrorism (1) | 765 | 772 | (7 | ) | |||||||
Total | $ | 32,220 | $ | 31,911 | $ | 309 |
Three Months Ended March 31, | |||||||||||
2017 | 2016 | Increase (decrease) | |||||||||
(in thousands of U.S. dollars) | |||||||||||
INCOME | |||||||||||
Net premiums earned | $ | 115,408 | $ | 154,082 | $ | (38,674 | ) | ||||
Fee and commission income | 1,166 | — | 1,166 | ||||||||
Net investment income | 5,449 | 5,280 | 169 | ||||||||
Net realized and unrealized gains | 6,698 | 14,349 | (7,651 | ) | |||||||
Other income | 46 | 11 | 35 | ||||||||
128,767 | 173,722 | (44,955 | ) | ||||||||
EXPENSES | |||||||||||
Net incurred losses and LAE | 68,161 | 91,183 | (23,022 | ) | |||||||
Acquisition costs | 10,614 | 32,060 | (21,446 | ) | |||||||
General and administrative expenses | 34,021 | 30,155 | 3,866 | ||||||||
Interest expense | 622 | — | 622 | ||||||||
Net foreign exchange losses (gains) | 1,893 | (1,299 | ) | 3,192 | |||||||
115,311 | 152,099 | (36,788 | ) | ||||||||
EARNINGS BEFORE INCOME TAXES | 13,456 | 21,623 | (8,167 | ) | |||||||
INCOME TAXES | 4,249 | (2,018 | ) | 6,267 | |||||||
NET EARNINGS | 17,705 | 19,605 | (1,900 | ) | |||||||
Less: Net earnings attributable to noncontrolling interest | (7,253 | ) | (8,044 | ) | 791 | ||||||
NET EARNINGS ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ | 10,452 | $ | 11,561 | $ | (1,109 | ) |
Three Months Ended March 31, | |||||||||||
2017 | 2016 | Increase (decrease) | |||||||||
(in thousands of U.S. dollars) | |||||||||||
StarStone(1) | $ | 10,402 | $ | 11,263 | $ | (861 | ) | ||||
Holding Company | 50 | 298 | (248 | ) | |||||||
NET EARNINGS ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ | 10,452 | $ | 11,561 | $ | (1,109 | ) |
Three Months Ended March 31, | ||||||||
2017 | 2016 | (Favorable) Unfavorable | ||||||
Loss ratio (1) | 59.3 | % | 60.2 | % | (0.9 | )% | ||
Acquisition cost ratio (1) | 9.2 | % | 20.9 | % | (11.7 | )% | ||
Other operating expense ratio (1) | 29.4 | % | 18.7 | % | 10.7 | % | ||
Combined ratio (1) | 97.9 | % | 99.8 | % | (1.9 | )% |
(1) | Refer to "Non-GAAP Financial Measures" for a description of how these ratios are calculated. The ratios are based upon the following amounts for StarStone, which exclude Holding Company amounts, for the three months ended March 31, 2017 and 2016, respectively: net premiums earned of $115,755 and $153,497, net incurred losses and LAE of $68,683 and $92,428, acquisition costs of $10,614 and $32,060, and other operating expenses of $33,991 and $28,731. |
Three Months Ended March 31, | |||||||||||
2017 | 2016 | Increase (decrease) | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Casualty | $ | 67,031 | $ | 67,312 | $ | (281 | ) | ||||
Marine | 75,752 | 69,377 | 6,375 | ||||||||
Property | 50,257 | 41,998 | 8,259 | ||||||||
Aerospace | 9,327 | 11,455 | (2,128 | ) | |||||||
Workers' Compensation | 24,169 | 26,901 | (2,732 | ) | |||||||
Total | $ | 226,536 | $ | 217,043 | $ | 9,493 |
Three Months Ended March 31, | |||||||||||
2017 | 2016 | Increase (decrease) | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Casualty | $ | 35,709 | $ | 48,409 | $ | (12,700 | ) | ||||
Marine | 27,310 | 33,989 | (6,679 | ) | |||||||
Property | 27,720 | 34,091 | (6,371 | ) | |||||||
Aerospace | 13,473 | 17,407 | (3,934 | ) | |||||||
Workers' Compensation | 11,196 | 20,186 | (8,990 | ) | |||||||
Total | $ | 115,408 | $ | 154,082 | $ | (38,674 | ) |
Three Months Ended March 31, | |||||||||||
2017 | 2016 | Increase (decrease) | |||||||||
(in thousands of U.S. dollars) | |||||||||||
INCOME | |||||||||||
Net premiums earned | $ | 1,194 | $ | 1,459 | $ | (265 | ) | ||||
Net investment income | 7,334 | 8,638 | (1,304 | ) | |||||||
Net realized and unrealized gains (losses) | (156 | ) | 498 | (654 | ) | ||||||
Other income | 155 | 565 | (410 | ) | |||||||
8,527 | 11,160 | (2,633 | ) | ||||||||
EXPENSES | |||||||||||
Life and annuity policy benefits | (301 | ) | 158 | (459 | ) | ||||||
Acquisition costs | 431 | 166 | 265 | ||||||||
General and administrative expenses | 1,482 | 1,971 | (489 | ) | |||||||
Interest expense | 191 | 335 | (144 | ) | |||||||
Net foreign exchange losses | 205 | 376 | (171 | ) | |||||||
2,008 | 3,006 | (998 | ) | ||||||||
EARNINGS BEFORE INCOME TAXES | 6,519 | 8,154 | (1,635 | ) | |||||||
INCOME TAXES | (4 | ) | — | (4 | ) | ||||||
NET EARNINGS FROM CONTINUING OPERATIONS | 6,515 | 8,154 | (1,639 | ) | |||||||
NET EARNINGS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX EXPENSE | 371 | 205 | 166 | ||||||||
NET EARNINGS ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ | 6,886 | $ | 8,359 | $ | (1,473 | ) |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||||||||
Investment Grade (1) | Non-Investment Grade (2) | Total | % | Investment Grade (1) | Non-Investment Grade (2) | Total | % | ||||||||||||||||
Fixed maturity and short-term investments, trading and available-for-sale | |||||||||||||||||||||||
U.S. government & agency | $ | 787,121 | $ | — | $ | 787,121 | 10.8 | % | $ | 852,984 | $ | — | $ | 852,984 | 14.1 | % | |||||||
Non-U.S. government | 978,474 | 877 | 979,351 | 13.5 | % | 352,786 | — | 352,786 | 5.8 | % | |||||||||||||
Corporate | 3,090,983 | 128,007 | 3,218,990 | 44.3 | % | 2,385,295 | 160,682 | 2,545,977 | 42.2 | % | |||||||||||||
Municipal | 60,802 | — | 60,802 | 0.8 | % | 53,757 | — | 53,757 | 0.9 | % | |||||||||||||
Residential mortgage-backed | 302,017 | 33,254 | 335,271 | 4.6 | % | 373,957 | 98 | 374,055 | 6.2 | % | |||||||||||||
Commercial mortgage-backed | 207,191 | 16,376 | 223,567 | 3.1 | % | 199,827 | 17,385 | 217,212 | 3.6 | % | |||||||||||||
Asset-backed | 408,046 | 78,867 | 486,913 | 6.7 | % | 409,671 | 72,485 | 482,156 | 8.0 | % | |||||||||||||
Total | 5,834,634 | 257,381 | 6,092,015 | 83.8 | % | 4,628,277 | 250,650 | 4,878,927 | 80.8 | % | |||||||||||||
Equities | |||||||||||||||||||||||
U.S. | 106,337 | 1.5 | % | 95,047 | 1.6 | % | |||||||||||||||||
Total | 106,337 | 1.5 | % | 95,047 | 1.6 | % | |||||||||||||||||
Other investments | |||||||||||||||||||||||
Private equity funds | 284,385 | 3.9 | % | 300,529 | 5.0 | % | |||||||||||||||||
Fixed income funds | 253,499 | 3.5 | % | 249,023 | 4.1 | % | |||||||||||||||||
Fixed income hedge funds | 78,537 | 1.1 | % | 85,976 | 1.4 | % | |||||||||||||||||
Equity funds | 244,488 | 3.4 | % | 223,571 | 3.7 | % | |||||||||||||||||
CLO equities | 56,964 | 0.8 | % | 61,565 | 1.0 | % | |||||||||||||||||
CLO equity funds | 13,350 | 0.2 | % | 15,440 | 0.3 | % | |||||||||||||||||
Other | 932 | — | % | 943 | — | % | |||||||||||||||||
Total | 932,155 | 12.9 | % | 937,047 | 15.5 | % | |||||||||||||||||
Other investments | |||||||||||||||||||||||
Life settlements | 130,832 | 1.8 | % | 129,474 | 2.1 | % | |||||||||||||||||
Total investments | $ | 5,834,634 | $ | 257,381 | $ | 7,261,339 | 100.0 | % | $ | 4,628,277 | $ | 250,650 | $ | 6,040,495 | 100.0 | % |
March 31, 2017 | December 31, 2016 | ||||||||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||||||||
Investment Grade (1) | Non-Investment Grade | Total | % | Investment Grade (1) | Non-Investment Grade | Total | % | ||||||||||||||||
Fixed maturity investments: | |||||||||||||||||||||||
U.S. government & agency | $ | 34,187 | $ | — | $ | 34,187 | 2.8 | % | $ | 47,885 | $ | — | $ | 47,885 | 4.8 | % | |||||||
Non-U.S. government | 6,059 | — | 6,059 | 0.5 | % | 5,961 | — | 5,961 | 0.6 | % | |||||||||||||
Corporate | 786,315 | — | 786,315 | 65.0 | % | 663,556 | — | 663,556 | 66.8 | % | |||||||||||||
Municipal | 54,019 | — | 54,019 | 4.5 | % | 38,927 | — | 38,927 | 3.9 | % | |||||||||||||
Commercial mortgage-backed | 174,748 | — | 174,748 | 14.4 | % | 151,395 | — | 151,395 | 15.2 | % | |||||||||||||
Asset-backed | 96,207 | — | 96,207 | 8.0 | % | 79,806 | — | 79,806 | 8.0 | % | |||||||||||||
Total | 1,151,535 | — | 1,151,535 | 95.2 | % | 987,530 | — | 987,530 | 99.3 | % | |||||||||||||
Other assets | — | — | 58,154 | 4.8 | % | — | — | 7,135 | 0.7 | % | |||||||||||||
Total funds held - directly managed | $ | 1,151,535 | $ | — | $ | 1,209,689 | 100.0 | % | $ | 987,530 | $ | — | $ | 994,665 | 100.0 | % |
(1) | Investment Grade are securities with a rating of BBB- or higher. |
Non-life Run-off | Atrium | StarStone | Life and Annuities | Total | ||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||
March 31, 2017 | ||||||||||||||||||||
Short-term investments, trading, at fair value | $ | 228,299 | $ | 2,173 | $ | 28,918 | $ | 4,121 | $ | 263,511 | ||||||||||
Fixed maturities, trading, at fair value | 4,384,482 | 41,650 | 1,126,767 | 32,919 | 5,585,818 | |||||||||||||||
Fixed maturities, available-for-sale, at fair value | 1,517 | 124,213 | — | 116,956 | 242,686 | |||||||||||||||
Equities, trading, at fair value | 97,990 | 1,496 | 6,851 | — | 106,337 | |||||||||||||||
Other investments, at fair value | 758,458 | 5,636 | 160,776 | 7,285 | 932,155 | |||||||||||||||
Other investments, at cost | — | — | — | 133,127 | 133,127 | |||||||||||||||
Total investments | 5,470,746 | 175,168 | 1,323,312 | 294,408 | 7,263,634 | |||||||||||||||
Cash and cash equivalents | 930,477 | 82,451 | 276,380 | 24,667 | 1,313,975 | |||||||||||||||
Funds held - directly managed | 1,209,689 | — | — | — | 1,209,689 | |||||||||||||||
Funds held by reinsured companies | 48,938 | 24,251 | 15,137 | — | 88,326 | |||||||||||||||
Total investable assets | $ | 7,659,850 | $ | 281,870 | $ | 1,614,829 | $ | 319,075 | $ | 9,875,624 | ||||||||||
Duration (in years) | 3.59 | 1.29 | 2.19 | 2.73 | 3.27 | |||||||||||||||
Average Credit Rating | A+ | AA- | A+ | A+ | A+ |
Non-life Run-off | Atrium | StarStone | Life and Annuities | Total | ||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||
December 31, 2016 | ||||||||||||||||||||
Short-term investments, trading, at fair value | $ | 201,188 | $ | 7,938 | $ | 6,160 | $ | 7,632 | $ | 222,918 | ||||||||||
Short-term investments, available-for-sale, at fair value | — | 268 | — | — | 268 | |||||||||||||||
Fixed maturities, trading, at fair value | 3,144,811 | 13,320 | 1,199,460 | 30,651 | 4,388,242 | |||||||||||||||
Fixed maturities, available-for-sale, at fair value | 3,108 | 142,562 | — | 121,829 | 267,499 | |||||||||||||||
Equities, trading, at fair value | 88,481 | — | 6,566 | — | 95,047 | |||||||||||||||
Other investments, at fair value | 783,857 | — | 153,190 | — | 937,047 | |||||||||||||||
Other investments, at cost | — | — | — | 131,651 | 131,651 | |||||||||||||||
Total investments | 4,221,445 | 164,088 | 1,365,376 | 291,763 | 6,042,672 | |||||||||||||||
Cash and cash equivalents | 916,900 | 83,548 | 295,341 | 22,856 | 1,318,645 | |||||||||||||||
Funds held - directly managed | 994,665 | — | — | — | 994,665 | |||||||||||||||
Funds held by reinsured companies | 48,525 | 22,883 | 10,665 | — | 82,073 | |||||||||||||||
Total investable assets | $ | 6,181,535 | $ | 270,519 | $ | 1,671,382 | $ | 314,619 | $ | 8,438,055 | ||||||||||
Duration (in years) | 2.68 | 1.20 | 2.31 | 2.67 | 2.56 | |||||||||||||||
Average Credit Rating | A+ | AA- | AA- | A+ | A+ |
Three Months Ended March 31, | ||||||||||||
2017 | 2016 | Increase (decrease) | ||||||||||
(in thousands of U.S. dollars) | ||||||||||||
Net investment income | $ | 48,739 | $ | 50,280 | $ | (1,541 | ) | |||||
Net realized and unrealized gains | 58,519 | 38,277 | 20,242 | |||||||||
Annualized Investment Book Yield | ||||||||||||
Annualized net investment income | 194,956 | 201,120 | (6,164 | ) | ||||||||
Average aggregate invested assets, at cost(1) | 8,974,985 | 8,840,012 | 134,973 | |||||||||
Annualized investment book yield | 2.17 | % | 2.28 | % | (0.11 | )% | ||||||
Financial Statement Portfolio Return | ||||||||||||
Total financial statement return(2) | 107,258 | 88,557 | 18,701 | |||||||||
Average aggregate invested assets, at fair value(1) | 8,950,828 | 8,790,523 | 160,305 | |||||||||
Financial statement portfolio return | 1.20 | % | 1.01 | % | 0.19 | % |
Three Months Ended March 31, | ||||||||||||
2017 | 2016 | Increase (decrease) | ||||||||||
(in thousands of U.S. dollars) | ||||||||||||
Net investment income | $ | 35,729 | $ | 36,230 | $ | (501 | ) | |||||
Net realized and unrealized gains | 51,558 | 23,390 | 28,168 | |||||||||
Annualized Investment Book Yield | ||||||||||||
Annualized net investment income | 142,916 | 144,920 | (2,004 | ) | ||||||||
Average aggregate invested assets, at cost | 6,750,902 | 6,621,521 | 129,381 | |||||||||
Annualized investment book yield | 2.12 | % | 2.19 | % | (0.07 | )% | ||||||
Financial Statement Portfolio Return | ||||||||||||
Total financial statement return | 87,287 | 59,620 | 27,667 | |||||||||
Average aggregate invested assets, at fair value | 6,733,689 | 6,595,522 | 138,167 | |||||||||
Financial statement portfolio return | 1.30 | % | 0.90 | % | 0.40% |
Three Months Ended March 31, | ||||||||||||
2017 | 2016 | Increase (decrease) | ||||||||||
(in thousands of U.S. dollars) | ||||||||||||
Net investment income | $ | 1,124 | $ | 554 | $ | 570 | ||||||
Net realized and unrealized gains | 418 | 40 | 378 | |||||||||
Annualized Investment Book Yield | ||||||||||||
Annualized net investment income | 4,496 | 2,216 | 2,280 | |||||||||
Average aggregate invested assets, at cost | 269,037 | 312,812 | (43,775 | ) | ||||||||
Annualized investment book yield | 1.67 | % | 0.71 | % | 0.96 | % | ||||||
Financial Statement Portfolio Return | ||||||||||||
Total financial statement return | 1,542 | 594 | 948 | |||||||||
Average aggregate invested assets, at fair value | 264,754 | 307,841 | (43,087 | ) | ||||||||
Financial statement portfolio return | 0.58 | % | 0.19 | % | 0.39 | % |
Three Months Ended March 31, | ||||||||||||
2017 | 2016 | Increase (decrease) | ||||||||||
(in thousands of U.S. dollars) | ||||||||||||
Net investment income | $ | 5,449 | $ | 5,280 | $ | 169 | ||||||
Net realized and unrealized gains | 6,699 | 14,349 | (7,650 | ) | ||||||||
Annualized Investment Book Yield | ||||||||||||
Annualized net investment income | 21,796 | 21,120 | 676 | |||||||||
Average aggregate invested assets, at cost | 1,642,587 | 1,582,017 | 60,570 | |||||||||
Annualized investment book yield | 1.33 | % | 1.34 | % | (0.01)% | |||||||
Financial Statement Portfolio Return | ||||||||||||
Total financial statement return | 12,148 | 19,629 | (7,481 | ) | ||||||||
Average aggregate invested assets, at fair value | 1,637,774 | 1,562,936 | 74,838 | |||||||||
Financial statement portfolio return | 0.74 | % | 1.26 | % | (0.52 | )% |
Three Months Ended March 31, | ||||||||||||
2017 | 2016 | Increase (decrease) | ||||||||||
(in thousands of U.S. dollars) | ||||||||||||
Net investment income | $ | 7,334 | $ | 8,638 | $ | (1,304 | ) | |||||
Net realized and unrealized gains (losses) | (156 | ) | 498 | (654 | ) | |||||||
Annualized Investment Book Yield | ||||||||||||
Annualized net investment income | 29,336 | 34,552 | (5,216 | ) | ||||||||
Average aggregate invested assets, at cost | 312,459 | 323,662 | (11,203 | ) | ||||||||
Annualized investment book yield | 9.39 | % | 10.68 | % | (1.29 | )% | ||||||
Financial Statement Portfolio Return | ||||||||||||
Total financial statement return | 7,178 | 9,136 | (1,958 | ) | ||||||||
Average aggregate invested assets, at fair value | 314,611 | 324,224 | (9,613 | ) | ||||||||
Financial statement portfolio return | 2.28 | % | 2.82 | % | (0.54 | )% |
Three Months Ended March 31, | ||||||||||||
2017 | 2016 | Increase (decrease) | ||||||||||
(in thousands of U.S. dollars) | ||||||||||||
Cash provided by (used in): | ||||||||||||
Operating activities | $ | (94,139 | ) | $ | (151,295 | ) | $ | 57,156 | ||||
Investing activities | 43,644 | 87,370 | (43,726 | ) | ||||||||
Financing activities | 56,100 | (20,500 | ) | 76,600 | ||||||||
Effect of exchange rate changes on cash | (10,275 | ) | 3,939 | (14,214 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | (4,670 | ) | (80,486 | ) | 75,816 | |||||||
Cash and cash equivalents, beginning of period | 1,318,645 | 1,295,169 | 23,476 | |||||||||
Cash and cash equivalents, end of period | $ | 1,313,975 | $ | 1,214,683 | $ | 99,292 |
Total | Less than 1 Year | 1 - 3 years | 3 - 5 years | More than 5 Years | |||||||||||||||
(in millions of U.S. dollars) | |||||||||||||||||||
Operating Activities | |||||||||||||||||||
Estimated gross reserves for losses and LAE (1) | $ | 8,131.3 | $ | 1,424.7 | $ | 2,415.1 | $ | 1,196.8 | $ | 3,094.7 | |||||||||
Policy benefits for life and annuity contracts (2) | 291.2 | 18.3 | 37.4 | 34.6 | 200.9 | ||||||||||||||
Operating lease obligations | 49.9 | 10.3 | 18.5 | 11.5 | 9.6 | ||||||||||||||
Investing Activities | |||||||||||||||||||
Investment commitments | 142.6 | 56.6 | 55.2 | 30.8 | — | ||||||||||||||
Financing Activities | |||||||||||||||||||
Loan repayments (including estimated interest payments) | 863.6 | 27.5 | 446.7 | 389.4 | — | ||||||||||||||
Total | $ | 9,478.6 | $ | 1,537.4 | $ | 2,972.9 | $ | 1,663.1 | $ | 3,305.2 |
(1) | The reserves for losses and LAE represent management’s estimate of the ultimate cost of settling losses. The estimation of losses is based on various complex and subjective judgments. Actual losses paid may differ, perhaps significantly, from the reserve estimates reflected in our financial statements. Similarly, the timing of payment of our estimated losses is not fixed and there may be significant changes in actual payment activity. The assumptions used in estimating the likely payments due by period are based on our historical claims payment experience and industry payment patterns, but due to the inherent uncertainty in the process of estimating the timing of such payments, there is a risk that the amounts paid in any such period can be significantly different from the amounts disclosed above. The amounts in the above table represent our estimates of known liabilities as of March 31, 2017 and do not take into account corresponding reinsurance recoverable amounts that would be due to us. Furthermore, certain of the reserves included in the unaudited condensed consolidated financial statements as of March 31, 2017 were acquired by us and initially recorded at fair value with subsequent amortization, whereas the expected payments by period in the table above are the estimated payments at a future time and do not reflect the fair value adjustment in the amount payable. |
(2) | Policy benefits for life and annuity contracts recorded in our unaudited condensed consolidated balance sheet as at March 31, 2017 of $111.7 million are computed on a discounted basis, whereas the expected payments by period in the table above are the estimated payments at a future time and do not reflect a discount of the amount payable. |
• | The discounted cash flow approach uses (i) estimated nominal cash flows based upon an appropriate payment pattern developed in accordance with standard actuarial techniques and (ii) a discount rate based upon a high quality rated corporate bond plus a credit spread for non-performance risk. The model uses corporate bond rates across the yield curve depending on the estimated timing of the future cash flows and specific to the currency of the risk. |
• | The risk margin was calculated using the present value of the cost of capital. The cost of capital approach uses (i) projected capital requirements, (ii) multiplied by the risk cost of capital representing the return required for non-hedgeable risk based upon the weighted average cost of capital less investment income, and (iii) discounted using the weighted average cost of capital. |
• | An increase in the corporate bond rate or credit spread for non-performance risk would result in a decrease in the fair value of the liability for losses and LAE and reinsurance recoverable. Conversely, a decrease in the corporate bond rate or credit spread for non-performance risk would result in an increase in the fair value of the liability for losses and LAE and reinsurance recoverable. |
• | An increase in the weighted average cost of capital would result in an increase in the fair value of the liability for losses and LAE and reinsurance recoverable. Conversely, a decrease in the weighted average cost of capital would result in a decrease in the fair value of the liability for losses and LAE and reinsurance recoverable. |
• | An increase in the risk cost of capital would result in a increase in the fair value of the liability for losses and LAE and reinsurance recoverable. Conversely, a decrease in the risk cost of capital would result in a decrease in the fair value of the liability for losses and LAE and reinsurance recoverable. |
• | An acceleration of the estimated payment pattern would result in an increase in the fair value of the liability for losses and LAE and reinsurance recoverable. Conversely, a deceleration of the estimated payment pattern would result in a decrease in the fair value of the liability for losses and LAE and reinsurance recoverable. |
• | risks associated with implementing our business strategies and initiatives; |
• | risks that we may require additional capital in the future, which may not be available or may be available only on unfavorable terms; |
• | the adequacy of our loss reserves and the need to adjust such reserves as claims develop over time; |
• | risks relating to the availability and collectability of our reinsurance; |
• | changes and uncertainty in economic conditions, including interest rates, inflation, currency exchange rates, equity markets and credit conditions, which could affect our investment portfolio, our ability to finance future acquisitions and our profitability; |
• | the risk that ongoing or future industry regulatory developments will disrupt our business, affect the ability of our subsidiaries to operate in the ordinary course or to make distributions to us, or mandate changes in industry practices in ways that increase our costs, decrease our revenues or require us to alter aspects of the way we do business; |
• | losses due to foreign currency exchange rate fluctuations; |
• | increased competitive pressures, including the consolidation and increased globalization of reinsurance providers; |
• | emerging claim and coverage issues; |
• | lengthy and unpredictable litigation affecting assessment of losses and/or coverage issues; |
• | loss of key personnel; |
• | the ability of our subsidiaries to distribute funds to us and the resulting impact on our liquidity; |
• | our ability to comply with covenants in our debt agreements; |
• | changes in our plans, strategies, objectives, expectations or intentions, which may happen at any time at management’s discretion; |
• | operational risks, including system, data security or human failures and external hazards; |
• | risks relating to our acquisitions, including our ability to continue to grow, successfully price acquisitions, evaluate opportunities, address operational challenges, support our planned growth and assimilate acquired companies into our internal control system in order to maintain effective internal controls, provide reliable financial reports and prevent fraud; |
• | risks relating to our ability to obtain regulatory approvals, including the timing, terms and conditions of any such approvals, and to satisfy other closing conditions in connection with our acquisition and disposition agreements, which could affect our ability to complete acquisitions; |
• | risks relating to our active underwriting businesses, including unpredictability and severity of catastrophic and other major loss events, failure of risk management and loss limitation methods, the risk of a ratings downgrade or withdrawal, cyclicality of demand and pricing in the insurance and reinsurance markets; |
• | our ability to implement our strategies relating to our active underwriting businesses; |
• | risks relating to our life and annuities business, including mortality and morbidity rates, lapse rates, the performance of assets to support the insured liabilities, and the risk of catastrophic events; |
• | risks relating to our investments in life settlements contracts, including that actual experience may differ from our assumptions regarding longevity, cost projections, and risk of non-payment from the insurance carrier; |
• | risks relating to our subsidiaries with liabilities arising from legacy manufacturing operations; |
• | risks relating to the performance of our investment portfolio and our ability to structure our investments in a manner that recognizes our liquidity needs; |
• | tax, regulatory or legal restrictions or limitations applicable to us or the insurance and reinsurance business generally; |
• | changes in tax laws or regulations applicable to us or our subsidiaries, or the risk that we or one of our non-U.S. subsidiaries become subject to significant, or significantly increased, income taxes in the United States or elsewhere; |
• | changes in Bermuda law or regulation or the political stability of Bermuda; and |
• | changes in accounting policies or practices. |
Interest Rate Shift in Basis Points | ||||||||||||||||||||
As at March 31, 2017 | -100 | -50 | — | +50 | +100 | |||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||
Total Market Value | $ | 6,321 | $ | 6,206 | $ | 6,092 | $ | 5,977 | $ | 5,867 | ||||||||||
Market Value Change from Base | 3.8 | % | 1.9 | % | — | (1.9 | )% | (3.7 | )% | |||||||||||
Change in Unrealized Value | $ | 229 | $ | 114 | $ | — | $ | (115 | ) | $ | (225 | ) | ||||||||
As at December 31, 2016 | -100 | -50 | — | +50 | +100 | |||||||||||||||
Total Market Value | $ | 5,040 | $ | 4,969 | $ | 4,879 | $ | 4,830 | $ | 4,762 | ||||||||||
Market Value Change from Base | 3.3 | % | 1.8 | % | — | (1.0 | )% | (2.4 | )% | |||||||||||
Change in Unrealized Value | $ | 161 | $ | 90 | $ | — | $ | (49 | ) | $ | (117 | ) |
2017 | GBP | Euro | AUD | CDN | Other | Total | ||||||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||||||
Total net foreign currency exposure | $ | 1.5 | $ | 39.4 | $ | 5.3 | $ | 42.8 | $ | 3.3 | $ | 92.3 | ||||||||||||
Pre-tax impact of a 10% movement of the U.S. dollar(1) | $ | 0.2 | $ | 3.9 | $ | 0.5 | $ | 4.3 | $ | 0.3 | $ | 9.2 | ||||||||||||
2016 | GBP | Euro | AUD | CDN | Other | Total | ||||||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||||||
Total net foreign currency exposure | $ | 20.6 | $ | 17.9 | $ | 12.2 | $ | 26.6 | $ | 5.2 | $ | 82.5 | ||||||||||||
Pre-tax impact of a 10% movement of the U.S. dollar(1) | $ | 2.1 | $ | 1.8 | $ | 1.2 | $ | 2.7 | $ | 0.5 | $ | 8.3 |
(1) | Assumes 10% change in the U.S. dollar relative to other currencies |
Period | Total Number of Shares Purchased(1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Program | |||||||||||
January 1, 2017 - January 31, 2017 | 862 | $ | 197.70 | $ | — | $ | — | ||||||||
February 1, 2017 - February 28, 2017 | — | $ | — | $ | — | $ | — | ||||||||
March 1, 2017 - March 31, 2017 | 3,751 | $ | 191.30 | $ | — | $ | — | ||||||||
Total | 4,613 | $ | — | $ | — |
(1) | Consist of shares withheld from employees in order to facilitate the payment of withholding taxes on restricted shares granted pursuant to our equity incentive plan. The shares are calculated at their fair market value, as determined by reference to the closing price of our ordinary shares on the vesting date. |
ENSTAR GROUP LIMITED | |
By: | /S/ MARK SMITH |
Mark Smith Chief Financial Officer, Authorized Signatory and Principal Financial Officer | |
By: | /S/ GUY BOWKER |
Guy Bowker Chief Accounting Officer and Principal Accounting Officer |
Exhibit No. | Description | |
Stock Purchase Agreement, dated February 17, 2017, by and between Southland National Holdings, Inc. and Laguna Life Holdings SARL (incorporated by reference to Exhibit 2.1 of the Company's Form 8-K filed on February 21, 2017). | ||
Memorandum of Association of Enstar Group Limited (incorporated by reference to Exhibit 3.1 of the Company’s Form 10-K/A filed on May 2, 2011). | ||
Fourth Amended and Restated Bye-Laws of Enstar Group Limited (incorporated by reference to Exhibit 3.2(b) of the Company’s Form 10-Q filed on August 11, 2014). | ||
Certificate of Designations of Series C Participating Non-Voting Perpetual Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company’s Form 8-K filed on June 17, 2016). | ||
Senior Indenture, dated as of March 10, 2017, between the Company and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed on March 10, 2017). | ||
First Supplemental Indenture, dated as of March 10, 2017, between the Company and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.2 of the Company’s Form 8-K filed on March 10, 2017). | ||
10.1+ | Amended and Restated Employment Agreement, dated as of March 28, 2017 and effective April 6, 2017, by and between Enstar Group Limited and Dominic F. Silvester (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on March 31, 2017). | |
10.2*+ | Amended and Restated Employment Agreement, dated as of April 12, 2017 and effective April 17, 2017, by and between Enstar Group Limited and Dominic F. Silvester. | |
31.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted under Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adopted under Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1** | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
32.2** | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101* | Interactive Data Files. |
1. | CAPACITY AND DUTIES |
1.1. | Employment; Acceptance of Employment. Company hereby employs Executive and Executive hereby agrees to continue employment by Company for the period and upon the terms and conditions hereinafter set forth. Effective on the date hereof, this Agreement amends and restates the Employment Agreement between Company and Executive, dated as of May 1, 2007 and as subsequently amended, in its entirety, and the rights and obligations of each party shall be governed entirely by this Agreement from the April 17, 2017 (the “Commencement Date”). |
1.2. | Capacity and Duties. |
(a) | Executive shall serve as Chief Executive Officer of Company. Executive shall perform such duties and shall have such authority consistent with his position as Chief Executive Officer as may from time to time be specified by the Board of Directors of Company, acting reasonably. Executive shall report directly to the Board of Directors of Company. The Company's principle place of business is in Bermuda. The Executive's work location has been and will be Bermuda for the period between 1 April 2006 and 16 April 2017. Unless otherwise agreed in the future, the Executive's work location from 17 April 2017 will be the United Kingdom . It is recognised that extensive travel will be necessary and appropriate in connection with the performance of Executive’s duties hereunder and in particular that certain actions required to be taken to satisfactorily dispose of the duties hereunder must be taken in Bermuda. |
(b) | Executive shall devote his full working time and energy, skill and best efforts during his working hours to the performance of his duties hereunder, in a manner that will comply with Company’s rules and policies and will faithfully and diligently further the business and interests of Company. Executive and Company each agree that the nature of the Executive's position is such that his working time cannot be measured and, accordingly, that his appointment hereunder falls within the scope of regulation 20 of the Working Time Regulations 1998. |
(c) | During the Term (as hereinafter defined), Executive shall not be employed by or participate or engage in or in any manner be a part of the management or operation of any business enterprise other than Company without the prior written consent of the Board of Directors of the Company, which consent shall not be unreasonably withheld or delayed. Notwithstanding anything herein to the contrary, nothing shall preclude Executive from (i) serving on the boards of directors of a reasonable number of other companies or corporations or the boards of a reasonable number of trade associations and/or charitable organizations, (ii) engaging in charitable, community and other business affairs, and (iii) managing his personal investments and affairs, provided that such activities do not materially interfere with the proper performance of his responsibilities and duties hereunder. |
2. | TERM OF EMPLOYMENT |
2.1. | Term. The term of Executive’s employment hereunder shall be three years commencing on the Commencement Date, as further extended or unless sooner terminated in accordance with the other provisions hereof (the “Term”). |
2.2. | Continuous employment. The Executive's period of continuous employment with the Company commenced on November 29, 2001. |
3. | COMPENSATION |
3.1. | Basic Compensation. As compensation for Executive’s services during the first twelve months of the Term, Company shall pay to Executive an initial salary at the annual rate of £1,848,090 which shall accrue from day to day and be payable in equal monthly installments by bank transfer to such account as Executive may designate for this purpose and subject to such deductions for income tax and National Insurance contributions (or any equivalent thereof) as may be required by law. For each subsequent twelve-month period of Executive’s employment hereunder, Executive’s salary shall be in the amount of his initial annual salary as aforesaid with such increases, as may be established by the Board of Directors of Company in consultation with Executive. Once increased, Executive’s annual salary cannot be decreased without the written consent of Executive. Executive’s annual salary, as determined in accordance with this Section 3.1, is hereinafter referred to as his “Base Salary.” |
3.2. | Performance Bonus. Executive shall, following the completion of each fiscal year of Company during the Term, be eligible for a performance bonus in accordance with Company’s performance bonus plan. Executive shall also be eligible for additional equity and other incentive awards, at a level commensurate with his position and in accordance with the policies and practices of the Company. |
3.3. | Employee Benefits. During the Term, Executive shall be entitled to participate in such of Company’s employee benefit plans and benefit programs, as may from time to time be provided by Company. If for any reason Executive's location in the United Kingdom precludes such participation, Company shall procure Executive's participation in such other plans and programs as shall most nearly replicate the benefits the Executive would otherwise have received, provided that if this cannot be done on any basis which provides benefits for Executive which, viewed as a whole in relation to each plan or program, are no less favourable to him than the benefits he would otherwise have received, Company shall pay Executive such additional annual salary under Section 3.1 above as shall be equal to the annual value to the Executive of the benefits he would otherwise have received. In addition, during the Term, Executive shall be entitled to the following: |
(a) | a life insurance policy in the amount of five times the Executive’s Base Salary, provided that Executive assists Company in the procurement of such policy (including, without limitation, submitting to any required physical examinations and completing accurately to the best of Executive's knowledge any applicable applications and or questionnaires); |
(b) | fully comprehensive medical and dental coverage on a worldwide basis for the Executive, his spouse and dependents and an annual medical examination for same. The Company further agrees to cover any reasonable medical and dental costs incurred by the Executive, his spouse and dependents during Term, whether or not such costs are covered by the Company's medical insurance policy; |
(c) | long term disability coverage, including coverage for serious illness, and full compensation (inclusive of any United Kingdom statutory sick pay entitlement) to be paid by Company at the same times and in the same manner as Executive's Base Salary for loss of earnings during the period up to and until Executive begins receiving benefits under such long term disability plan. In the event that the generally applicable group long-term disability plan contains a limitation on benefits that would result in Executive’s being entitled to benefit payments under such plan which are less than 50% of his Base Salary, Company shall provide Executive with an individual disability policy paying a benefit amount that, when coupled with the group policy benefit payable, would provide Executive with aggregate benefits in connection with his long-term disability equal to 50% of his Base Salary (provided that, if an individual policy cannot be obtained for such amount on commercially reasonable rates and on commercially reasonable terms, Company shall provide |
(d) | payment from the company of an annual amount equal to 10% of Executive’s Base Salary each year to Executive or as he may direct in writing as contribution to his pension plans; and |
(e) | during the Term, Executive will be reimbursed for one return trip for his family to/from any residence of the Executive outside the United Kingdom each calendar year. Executive’s wife may travel business class and his children may travel premium economy class. |
3.4. | Vacation. During the Term, Executive shall be entitled to a paid vacation of 30 days in each year of the Term together with the usual public holidays. On termination of Executive's employment hereunder, Executive shall be entitled to payment in lieu of accrued but untaken holiday. The amount of such payment in lieu shall be 1/260th of the Executive's annual Base Salary as at date of termination for each untaken day of the entitlement. |
3.5. | Expense Reimbursement. Company shall reimburse Executive for all reasonable out-of-pocket expenses incurred by him in connection with the performance of his duties hereunder in accordance with its regular reimbursement policies as in effect from time to time. |
4. | TERMINATION OF EMPLOYMENT |
4.1. | Death of Executive. If Executive dies during the Term, and for the year in which Executive dies, Company achieves the performance goals established in accordance with any incentive plan in which Executive participates, Company shall pay Executive’s personal representatives or estate an amount equal to the bonus that Executive would have received had he been employed by Company for the full year, multiplied by a fraction, the numerator of which is the number of calendar days Executive was employed in such year and the denominator of which is 365. In addition, Executive’s spouse and dependents (if any) shall be entitled for a period of 36 months, to continue to receive medical benefits coverage (as described in Section 3.3) at Company’s expense if and to the extent Company was paying for such benefits for Executive’s spouse and dependents at the time of Executive’s death. |
4.2. | Disability. If Executive is or has been materially unable for any reason to perform his duties hereunder for 120 days during any period of 150 consecutive days, Company shall have the right to terminate Executive’s employment upon 30 days’ prior written notice to Executive at any time during the continuation of such inability, in which event Company shall thereafter be obligated to continue to pay Executive’s Base Salary for a period of 36 months, periodically in accordance with Company’s regular payroll practices and, within 30 days of such notice, shall pay any other amounts (including salary, bonuses, expense reimbursement, etc.) that have been fully earned by, but not yet paid to, Executive under this Agreement as of the date of such termination, subject in each case to such deductions for income tax and National Insurance (or any equivalent thereof) contributions as may be required by law. The amount of payments to Executive under disability insurance policies paid for by Company shall be credited against and shall reduce the Base Salary otherwise payable by Company following termination of employment. If, for the year in which Executive’s employment is terminated pursuant to this Section, Company achieves the performance goals established in accordance with any incentive plan in which Executive participates, Company shall pay Executive an amount equal to the bonus that Executive would have received had he been employed by Company for the full year, multiplied by a fraction, the numerator of which is the number of calendar days Executive was employed in such year and the denominator of which is 365. Executive shall be entitled for a period of 36 months, to continue to receive at Company’s expense medical benefits coverage (as described in Section 3.3) for Executive and Executive’s spouse and dependents (if any) if and to the extent Company was paying for such benefits to Executive and Executive’s spouse and dependents at the time of such termination. |
4.3. | Termination for Cause. Executive’s employment hereunder shall terminate immediately upon notice that the Board of Directors of Company is terminating Executive for Cause (as defined herein), in which event |
4.4. | Termination without Cause or for Good Reason. |
(a) | If (1) Executive’s employment is terminated by Company for any reason other than Cause or the death of Executive, or (2) Executive’s employment is terminated by Executive for Good Reason (as defined herein): |
(i) | Company shall pay Executive any amounts (including salary, bonuses, expense reimbursement, etc.) that have been fully earned by, but not yet paid to, Executive under this Agreement as of the date of such termination, together with any payment in lieu of accrued but untaken holiday; |
(ii) | Company shall pay Executive a lump sum amount equal to three times the Base Salary payable to him as of the date of such termination, subject to such deductions for income tax and National Insurance (or any equivalent thereof) contributions as may be required by law; |
(iii) | Executive shall be entitled to continue to receive medical benefits coverage (as described in Section 3.3) for Executive and Executive’s spouse and dependents (if any) at Company’s expense for a period of 36 months; |
(iv) | Anything to the contrary in any other agreement or document notwithstanding, each outstanding equity incentive award granted to Executive before, on or within three years after the Commencement Date shall become immediately vested and exercisable on the date of such termination; and |
(v) | In addition, if, for the year in which Executive is terminated, Company achieves the performance goals established in accordance with any incentive plan in which Executive participates, Company shall pay an amount equal to the bonus that Executive would have received had he been employed by Company for the full year. |
(b) | Upon making the payments described in this Section 4.4, Company shall have no further obligation to Executive under this Agreement. To the extent that the payments to be made under this Section 4.4 are damages (which is not admitted), Company and Executive agree that the terms of this Section 4.4 represent a genuine pre-estimate of the loss to the Executive that would arise on termination of employment hereunder in the circumstances described and does not constitute a penalty. Company waives any requirement on Executive to mitigate his losses in respect of such termination. |
(c) | “Good Reason” shall mean the following: |
(i) | material breach of Company’s obligations hereunder, provided that Executive shall have given written notice thereof to Company, and Company shall have failed to remedy the breach within 30 days; |
(ii) | the relocation of Executive’s principal business office outside of the United Kingdom, without the Executive’s prior agreement; or |
(iii) | any material reduction in Executive’s duties or authority. |
4.5. | Change in Control. |
(a) | If, during the Term, there should be a Change of Control (as defined herein), and within 1 year thereafter either (i) Executive’s employment should be terminated for any reason other than for Cause or (ii) Executive terminates his employment for Good Reason (as defined in Section 4.4): |
(i) | Company shall pay Executive any amounts (including salary, bonuses, expense reimbursement, etc.) that have been fully earned by, but not yet paid to, Executive under this Agreement as of the date of such termination, together with any payment in lieu of accrued but untaken holiday; |
(ii) | Company shall pay Executive a lump sum amount equal to three times Executive’s Base Salary as of the date of such termination, subject to such deductions for income tax and National Insurance contributions as may be required by law; |
(iii) | Executive shall be entitled to continue to receive medical benefits coverage (as described in Section 3.3) for Executive and Executive’s spouse and dependents (if any) at Company’s expense for a period of 36 months; |
(iv) | Anything to the contrary in any other agreement or document notwithstanding, each outstanding equity incentive award granted to Executive before, on or after the date hereof shall become immediately vested and exercisable on the date of such termination; and |
(v) | In addition, if, for the year in which Executive is terminated, Company achieves the performance goals established in accordance with any incentive plan in which Executive participates, Company shall pay an amount equal to the bonus that Executive would have received had he been employed by Company for the full year. |
(b) | Upon making the payments described in this Section 4.5, Company shall have no further obligation to Executive under this Agreement. To the extent that the payments to be made under this Section 4.5 are damages (which is not admitted), Company and Executive agree that the terms of this Section 4.4 represent a genuine pre-estimate of the loss to the Executive that would arise on termination of employment hereunder in the circumstances described and does not constitute a penalty. Company waives any requirement on Executive to mitigate his losses in respect of such termination. |
(c) | A “Change in Control” of Company shall mean: |
(i) | the acquisition by any person, entity or “group” required to file a Schedule 13D or Schedule 14D-1 under the United States Securities Exchange Act of 1934 (the “1934 Act”) (excluding, for this purpose, Company, its subsidiaries, any employee benefit plan of Company or its subsidiaries which acquires ownership of voting securities of Company, and any group that includes Executive) of beneficial ownership (within the meaning of Rule 13d-3 under the 1934 Act) of 50% or more of either the then outstanding ordinary shares or the combined voting power of Company’s then outstanding voting securities entitled to vote generally in the election of directors; |
(ii) | the election or appointment to the Board of Directors of Company, or resignation of or removal from the Board, of directors with the result that the individuals who as of the date hereof constituted the Board (the “Incumbent Board”) no longer constitute at least a majority of the Board, provided that any person who becomes a director subsequent to the date hereof whose appointment, election, or nomination for election by Company’s shareholders, was approved by a vote of at least a majority of the Incumbent Board (other than an appointment, election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of Company) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or |
(iii) | approval by the shareholders of Company of: (i) a reorganization, merger or consolidation by reason of which persons who were the shareholders of Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 50% of the combined voting power of the reorganized, merged or consolidated company’s then outstanding voting securities entitled to vote generally in the election of directors, or (ii) a liquidation or dissolution of Company or the sale, transfer, lease or other disposition of all or substantially all of the undertaking or assets of Company (whether such assets are held directly or indirectly). |
5. | RESTRICTIVE COVENANTS |
5.1. | Restrictive Covenants. |
(a) | Executive acknowledges that he is one of a small number of key executives and that in such capacity, he will have access to confidential information of the Company and will engage in key client relationships on behalf of the Company and that it is fair and reasonable for protection of the legitimate interests of the Company and the other key executives of the Company that he should accept the restrictions described in Exhibit A hereto. |
(b) | Promptly following Executive’s termination of employment, Executive shall return to the Company all property of the Company, and all documents, accounts, letters and papers of every description relating to the affairs and business of the Company or any of its subsidiaries, and copies thereof in Executive’s possession or under his control, other than any such in Executive's possession or under his control in his capacity as a stockholder of Company or that are available publicly. |
(c) | Executive acknowledges and agrees that the covenants and obligations of Executive in Exhibit A and this Section 5.1 relate to special, unique and extraordinary matters and that a violation of any of the terms of such covenants and obligations will cause the Company irreparable injury for which adequate remedies are not available at law. Therefore, Executive agrees that the Company shall be entitled to an injunction, restraining order or such other equitable relief (without the requirement to post bond) restraining Executive from committing any violation of the covenants and obligations contained in Exhibit A and this Section 5.1. These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity. |
(d) | Executive agrees that if he applies for, or is offered employment by (or is to provide consultancy services to) any other person, firm, company, business entity or other organization whatsoever (other than an affiliate of the Company) during the restriction periods set forth in Exhibit A, he shall promptly, and before entering into any contract with any such third party, provide to such third party a full copy of Exhibit A and this Section 5.1 in order to ensure that such other party is fully aware of Executive’s obligations hereunder. |
5.2. | Intellectual Property Rights. Executive recognizes and agrees that Executive’s duties for the Company may include the preparation of materials, including written or graphic materials for the Company or its affiliate, and that any such materials conceived or written by Executive shall be made in the course of his employment for the purposes of section 11(2) of the Copyright, Designs and Patents Act 1988. Executive agrees that because any such work is so made, the Company (or the relevant affiliate of the Company) will solely retain and own all copyright in said materials. Executive agrees to disclose and assign to the Company his entire right, title and interest in and to all other intellectual property rights in such work and all inventions and improvements related to the Company’s business or to the business of the Company’s affiliates (including, but not limited to, all financial and sales information), whether patentable or not, whether made or conceived by him individually or jointly with others at any time during his employment by the Company hereunder. Such inventions and improvements are to become and remain the property of the Company and Executive shall take such actions as are reasonably necessary to effectuate the foregoing. |
6. | MISCELLANEOUS |
6.1. | Key Employee Insurance. Company shall have the right at its expense to purchase insurance on the life of Executive, in such amounts as it shall from time to time determine, of which Company shall be the |
6.2. | Indemnification/Litigation. Company shall indemnify and defend Executive against all claims arising out of Executive’s activities as an officer or employee of Company or its affiliates to the fullest extent permitted by law and under Company’s organizational documents. During the Term and for six years following the end of the Term, Executive shall be entitled to be covered by a policy of directors' and officers' liability insurance on commercially reasonable terms sufficient to cover the risk to Executive that would reasonably be expected to result from his activities as aforesaid and a copy of the policy shall be provided to Executive upon his request from time to time. To the extent permitted by law, Executive will, also continue to receive the benefit of the Director Indemnification Agreement between the Executive and the Company dated January 31, 2007, and the benefit of any variation to or replacement of the Director Indemnification Agreement agreed by the parties during the term. At the request of Company, Executive shall during and after the Term render reasonable assistance to Company in connection with any litigation or other proceeding involving Company or any of its affiliates, unless precluded from so doing by law. Company shall provide reasonable compensation to Executive for such assistance rendered after the Term. |
6.3. | Indemnification/Taxation. Company recognises that Executive has and will continue to spend significant time in jurisdictions outside of Executive's tax residence, and that while outside his tax residence Executive has and will continue to discharge his duties for Company. Company agrees as follows: |
(a) | to indemnify Executive for any liability for, or in connection with, any taxation relating to Executive's compensation in any jurisdiction other than the Executive’s tax residence (those being the work locations for the relevant periods specified at clause 1.2(a) herein) for the period for which the relevant tax claim or demand is made, which arises as a direct consequence of the Executive being in that jurisdiction in order to discharge his duties to Company prior to and/or after Commencement Date; and |
(i) | to provide all reasonable support to Executive in responding to any such claim or demand for or in connection with taxation by any statutory authority outside the jurisdiction of his tax residence; and |
(ii) | to indemnify Executive for all costs and expenses reasonably incurred by Executive (including legal fees) in responding to or defending any such claims or demands; and |
(b) | to engage a service provider to prepare all required tax filings by any statutory authority outside of the Executive’s tax residence arising due to Executive discharging his duties outside of his tax residence and related to Executive's compensation from Company, provided, however that Executive shall have the right to have his own personal tax adviser participate in the review and preparation of the filings. |
6.4. | No Mitigation. In no event shall Executive be required to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under this Agreement, and such amounts shall not be reduced whether or not Executive obtains other employment after termination of his employment hereunder. |
6.5. | Severability. The invalidity or unenforceability of any particular provision or part of any provision of this Agreement shall not affect the other provisions or parts hereof. |
6.6. | Assignment; Benefit. This Agreement shall not be assignable by Executive, and shall be assignable by Company only with the Executive’s consent and only to any person or entity which may become a successor in interest (by purchase of assets or stock, or by merger, or otherwise) to Company in the |
6.7. | Notices. All notices hereunder shall be in writing and shall be sufficiently given if hand-delivered, sent by documented overnight delivery service or registered or certified mail, postage prepaid, return receipt requested or by facsimile, receipt acknowledged, addressed as set forth below or to such other person and/or at such other address as may be furnished in writing by any party hereto to the other. Any such notice shall be deemed to have been given as of the date received, in the case of personal delivery, or on the date shown on the receipt or confirmation therefor, in all other cases. Any and all service of process and any other notice in any action, suit or proceeding shall be effective against any party if given as provided in this Agreement; provided that nothing herein shall be deemed to affect the right of any party to serve process in any other manner permitted by law. |
(a) | If to Company: |
(b) | If to Executive: |
6.8. | Entire Agreement; Modification; Advice of Counsel. |
(a) | This Agreement constitutes the entire agreement between the parties hereto with respect to the matters contemplated herein and supersedes all prior agreements and understandings with respect thereto. Each party acknowledges that in entering into this agreement it does not rely on, and shall have no remedies in respect of, any statement, representation, assurance or warranty (whether made innocently or negligently) that is not set out in this Agreement. Each party agrees that it shall have no claim for innocent or negligent misrepresentation or negligent misstatement based on any statement in this Agreement. Nothing in this Section 6.7(a) shall limit or exclude any liability for fraud. |
(b) | No addendum, amendment, modification, or waiver of this Agreement shall be effective unless in writing. Neither the failure nor any delay on the part of any party to exercise any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise of the same or of any other right or remedy with respect to such occurrence or with respect to any other occurrence. |
(c) | Executive acknowledges that he has been afforded an opportunity to consult with his counsel with respect to this Agreement. |
6.9. | Collective Agreements. There is no collective agreement which directly affects Executive's employment hereunder. |
6.10. | Third Party Rights. No one other than a party to this agreement shall have any right to enforce any of its terms. |
6.11. | Governing Law. This Agreement is made pursuant to, and shall be construed and enforced in accordance with, the laws of England and Wales, without giving effect to otherwise applicable principles of conflicts of law. |
6.12. | Jurisdiction. Company and Executive irrevocably agree that the courts of England and Wales shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this Agreement or its subject matter or formation (including non-contractual disputes or claims). |
6.13. | Headings; Counterparts. The headings of paragraphs in this Agreement are for convenience only and shall not affect its interpretation. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which, when taken together, shall be deemed to constitute the same Agreement. |
6.14. | Further Assurances. Each of the parties hereto shall execute such further instruments and take such additional actions as the other party shall reasonably request in order to effectuate the purposes of this Agreement. |
6.15. | Clawback Right. Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation paid to Executive pursuant to this Agreement or any other agreement or arrangement with Company that is subject to recovery under any law, government regulation, stock exchange listing requirement or Company policy approved by the Board and notified to the Executive, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation, stock exchange listing requirement or Company policy. |
6.16. | Withholding. All payments to Executive hereunder are subject to such deductions for income tax and National Insurance (or any equivalent thereof) as may be required by law. |
Signed as a deed on behalf of ENSTAR GROUP LIMITED, a Company incorporated under the laws of Bermuda, by ORLA GREGORY being a person who, in accordance with the laws of that territory, is acting under the authority of the Company /s/ Orla Gregory Authorised Signatory | |
Signed as a deed by Dominic F. Silvester in the presence of: | /s/ Dominic F Silvester Dominic F. Silvester |
/s/ David Hackett | |
Signature of witness | |
Name of witness: David Hackett Address of witness: * Occupation of witness: Accountant | |
*Forburrow Cottage Forburrow Hill Road Bramley Surrey, UK GBU5 0BU |
A. | Noncompetition. During the Term and, if Executive fails to remain employed through the third anniversary of the Commencement Date, for a period of eighteen (18) months after Executive’s employment terminates (the “Restriction Period”), Executive shall not, without the prior written permission of the Board, directly or indirectly engage in any Competitive Activity. The term “Competitive Activity” shall include (i) entering the employ of, or rendering services to, any person, firm or corporation engaged in the insurance and reinsurance run-off or any other business in which the Company or any of its affiliates has been engaged at any time during the last twelve months of the Term and to which Executive has rendered services or about which Executive has acquired Confidential Information or by which Executive has been engaged at any time during the last twelve months of his period of employment hereunder and in each case in any jurisdiction in which the Company or any of its affiliates has conducted substantial business (hereinafter defined as the “Business”); (ii) engaging in the Business for Executive’s own account or becoming interested in any such Business, directly or indirectly, as an individual, partner, shareholder, member, director, officer, principal, agent, employee, trustee, consultant, or in any other similar capacity; provided, however, nothing in this Paragraph A shall prohibit Executive from owning, solely as a passive investment, 5% or less of the total outstanding securities of a publicly-held company, or any interest held by Executive in a privately-held company as of the date of this Agreement; provided further that the provisions of this Paragraph A shall not apply in the event Executive’s employment with the Company is terminated without Cause or with Good Reason. |
B. | Confidentiality. Without the prior written consent of the Company, except to the extent required by an order of a court or tribunal having competent jurisdiction or under subpoena from an appropriate regulatory authority, Executive shall not disclose and shall use his best endeavours to prevent the disclosure of any trade secrets, customer lists, market data, marketing plans, sales plans, management organization information (including data and other information relating to members of the Board and management), operating policies or manuals, business plans or financial records, or other financial, commercial, business or technical information relating to the Company or any of its subsidiaries or affiliates or information designated as confidential or proprietary that the Company or any of its subsidiaries or affiliates may receive belonging to clients or others who do business with the Company or any of its subsidiaries or affiliates (collectively, “Confidential Information”) to any third person unless such Confidential Information has been previously disclosed to the public by the Company or any of its subsidiaries or affiliates or is in the public domain (other than by reason of Executive’s breach of this Paragraph B). In the event that Executive is required to disclose Confidential Information in a legal proceeding, Executive shall provide the Company with notice of such request as soon as reasonably practicable, so that the Company may timely seek an appropriate protective order or waive compliance with this Paragraph B, except if such notice would be unlawful or would place Executive in breach of an order of a court or tribunal having competent jurisdiction or of any applicable regulatory rules or codes of practice or of an undertaking he is required to give by law or regulation. Nothing in this Agreement prohibits or restricts Executive (or Executive’s attorney) from initiating communications directly with, responding to an inquiry from, or providing testimony before the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), any other self-regulatory organization or any other regulatory authority regarding possible violations of applicable law or making other disclosures that are protected under the whistleblower provisions of any applicable law. |
C. | Non-Solicitation of Employees. During the Restriction Period, Executive shall not, without the prior written permission of the Board, directly or indirectly induce any Senior Employee of the Company or any of its affiliates to terminate employment with such entity, and shall not directly or indirectly, either individually or as owner, agent, employee, consultant or otherwise, offer employment to or employ any Senior Employee unless such person shall have ceased to be employed by the Company or any affiliate for a period of at least six (6) months. For the purpose of this Paragraph C, “Senior Employee” shall mean a person who, at any time during the last twelve months of Executive’s period of employment hereunder: |
(i) | is engaged or employed (other than in a clerical, secretarial or administrative capacity) as an employee, director or consultant of the Company or its affiliates; and |
(ii) | is or was engaged in a capacity in which he obtained Confidential Information; and |
(iii) | had personal dealings with Executive. |
D. | Non-Disparagement. Save as may be required by law or by any applicable regulatory rules or codes of practice or an order of a court or tribunal of competent jurisdiction, Executive shall not do or say anything adverse or harmful to, or otherwise disparaging of, the Company or its subsidiaries and their respective goodwill. Save as may be required as aforesaid, the Company shall not, and shall use its reasonable endeavours to ensure that its officers, directors, employees and subsidiaries do not, do or say anything adverse or harmful to, or otherwise disparaging of, Executive and his goodwill; provided that no action by either party in connection with the enforcement of its rights hereunder shall be construed as a violation of this Paragraph D. |
E. | Definition. In this Exhibit A, “directly or indirectly” (without prejudice to the generality of the expression) means whether as principal or agent (either alone or jointly or in partnership with any other person, firm or company) or as a shareholder, member or holder of loan capital in any other company or being concerned or interested in any other person, firm or company and whether as a director, partner, consultant, employee or otherwise. |
F. | Severability. Each of the provisions contained in this Exhibit A is and shall be construed as separate and severable and if one or more of such provisions is held to be against the public interest or unlawful or in any way an unreasonable restraint of trade or unenforceable in whole or in part for any reason, the remaining provisions of this Exhibit A or part thereof, as appropriate, shall continue to be in full force and effect. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Enstar Group Limited; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/S/ DOMINIC F. SILVESTER |
Dominic F. Silvester |
Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Enstar Group Limited; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/S/ MARK SMITH |
Mark Smith |
Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/S/ DOMINIC F. SILVESTER |
Dominic F. Silvester |
Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/S/ MARK SMITH |
Mark Smith |
Chief Financial Officer |
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Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 05, 2017 |
|
Document Information [Line Items] | ||
Entity Registrant Name | Enstar Group LTD | |
Entity Central Index Key | 0001363829 | |
Trading Symbol | ESGR | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Voting Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 16,418,069 | |
Non-Voting Convertible Ordinary Shares | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 3,004,443 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||
NET EARNINGS | $ 72,105 | $ 54,605 |
Other comprehensive income, net of tax: | ||
Unrealized holding gains on fixed income investments arising during the period | 686 | 6,964 |
Reclassification adjustment for net realized gains included in net earnings | (149) | (22) |
Unrealized gains arising during the period, net of reclassification adjustment | 537 | 6,942 |
Currency translation adjustment | 1,942 | 10,595 |
Total other comprehensive income | 2,479 | 17,537 |
Comprehensive income | 74,584 | 72,142 |
Less comprehensive income attributable to noncontrolling interest | (18,082) | (10,566) |
COMPREHENSIVE INCOME ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ 56,502 | $ 61,576 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands |
Total |
Ordinary Shares
Voting Common Stock
|
Ordinary Shares
Series A Non-Voting Convertible Ordinary Shares
|
Ordinary Shares
Series C Non-Voting Convertible Ordinary Shares
|
Ordinary Shares
Series E Non-Voting Convertible Ordinary Shares
|
Preferred Stock
Series C Preferred Shares
|
Treasury Shares |
Additional Paid-in Capital |
Accumulated Other Comprehensive Loss |
Currency translation adjustment |
Defined benefit pension liability |
Unrealized gains (losses) on investments |
Retained Earnings |
Noncontrolling Interest (excludes Redeemable Noncontrolling Interest) |
Foreign currency translation adjustments |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Cumulative effect of change in accounting principle | $ 0 | ||||||||||||||
Balance, beginning of period at Dec. 31, 2015 | $ 16,133 | $ 2,726 | $ 1,373,044 | $ (35,162) | $ (23,790) | $ (7,723) | $ (3,649) | 1,578,312 | $ 3,911 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Issue of shares | 30 | ||||||||||||||
Conversion of shares | 0 | 0 | |||||||||||||
Issue of shares and warrants | (79) | ||||||||||||||
Amortization of equity incentive plan | 238 | ||||||||||||||
Accretion of redeemable noncontrolling interests to redemption value | (875) | ||||||||||||||
Change in other comprehensive income (loss) | $ 17,537 | 10,595 | 5,463 | $ (21) | |||||||||||
Net earnings (losses) | 45,520 | 0 | |||||||||||||
Balance, end of period at Mar. 31, 2016 | 16,163 | $ 2,973 | 2,973 | $ 405 | $ 0 | $ (421,559) | 1,373,203 | (19,104) | (13,195) | 1,814 | 1,622,957 | 3,890 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Cumulative effect of change in accounting principle | 4,882 | ||||||||||||||
Balance, beginning of period at Dec. 31, 2016 | 2,810,832 | 16,175 | 2,792 | 1,380,109 | (23,549) | (18,993) | $ (4,644) | 88 | 1,847,550 | 8,520 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Issue of shares | 14 | ||||||||||||||
Conversion of shares | 192 | (192) | |||||||||||||
Issue of shares and warrants | (511) | ||||||||||||||
Amortization of equity incentive plan | 2,823 | ||||||||||||||
Accretion of redeemable noncontrolling interests to redemption value | (1,156) | ||||||||||||||
Change in other comprehensive income (loss) | 2,479 | 1,933 | (111) | $ 0 | |||||||||||
Net earnings (losses) | 54,680 | 697 | |||||||||||||
Balance, end of period at Mar. 31, 2017 | $ 2,874,083 | $ 16,381 | $ 0 | $ 2,600 | $ 405 | $ 389 | $ (421,559) | $ 1,382,421 | $ (21,727) | $ (17,060) | $ (23) | $ 1,905,956 | $ 9,217 |
Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation and Consolidation These unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, these financial statements reflect all adjustments consisting of normal recurring items considered necessary for a fair presentation under U.S. GAAP. The results of operations for any interim period are not necessarily indicative of results of the full year. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016. All significant inter-company transactions and balances have been eliminated. Results of operations for acquired subsidiaries are included from the date of acquisition. In these notes, the terms "we," "us," "our," or "the Company" refer to Enstar Group Limited and its consolidated subsidiaries. Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from these estimates. Results of changes in estimates are reflected in earnings in the period in which the change is made. Our principal estimates include, but are not limited to:
Significant New Accounting Policies As a result of electing the fair value option in relation to the two new transactions described in Note 2 - "Significant New Business", the Company has adopted a significant new accounting policy during the three months ended March 31, 2017. Other than the policy described below, there have been no material changes to the Company’s significant accounting policies from those described in Note 2 - "Significant Accounting Policies" to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Retroactive Reinsurance - Fair Value Option In our Non-life Run-off segment we have elected to apply the fair value option for certain loss portfolio transfer reinsurance transactions. This is an irrevocable election that applies to all balances under the insurance contract, including funds held assets, reinsurance recoverable, and the liability for losses and loss adjustment expenses. The Company uses an internal model to calculate the fair value of the liability for losses and loss adjustment expenses and reinsurance recoverable asset. Note 6 - "Fair Value Measurements" describes the internal model, including the observable and unobservable inputs used in the model. New Accounting Standards Adopted in 2017 Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting In March 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-09, which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The impact of adopting this guidance on our consolidated financial statements was a cumulative-effect adjustment of $4.9 million to opening retained earnings for the excess tax benefit not previously recognized. ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities In March 2017, the Financial Accounting Standards Board ("FASB") issued ASU 2017-08, which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. The adoption of this guidance did not have a material impact on our consolidated financial statements. ASU 2016-07, Simplifying the Transition to the Equity Method of Accounting In March 2016, the FASB issued ASU 2016-07, which simplifies the equity method of accounting by eliminating the requirement to retrospectively apply the equity method to an investment that subsequently qualifies for such accounting as a result of an increase in the level of ownership interest or degree of influence. Entities are therefore required to apply the guidance prospectively to increases in the level of ownership interest or degree of influence occurring after the ASU’s effective date. The ASU further requires that unrealized holding gains or losses in accumulated other comprehensive income related to an available-for-sale security that becomes eligible for the equity method be recognized in earnings as of the date on which the investment qualifies for the equity method. The adoption of this guidance did not have any impact our consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted Note 2 "Significant Accounting Policies" of our Annual Report on Form 10-K for the year ended December 31, 2016 describes accounting pronouncements that were not adopted as of December 31, 2016. Those pronouncements are not yet adopted unless discussed above in "New Accounting Standards Adopted in 2017". In addition, the following pronouncements were issued during the three months ended March 31, 2017 and are not yet adopted. ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost In March 2017, the FASB issued ASU 2017-07, which amends the requirements in Accounting Standards Codification (“ASC”) 715 related to the income statement presentation of the components of net periodic benefit cost for an entity’s sponsored defined benefit pension and other postretirement plans. The ASU requires entities to (1) disaggregate the current-service-cost component from the other components of net benefit cost (the “other components”) and present it with other current compensation costs for related employees in the statement of earnings, and (2) present the other components elsewhere in the statement of earnings and outside of income from operations if such a subtotal is presented. The ASU also requires entities to disclose the captions within the statement of earnings that contain the other components if they are not presented on appropriately described separate lines. In addition, only the service-cost component of the net benefit cost is eligible for capitalization, which is a change from current practice, under which entities capitalize the aggregate net benefit cost when applicable. The ASU’s amendments are effective for interim and annual reporting periods beginning after December 15, 2017, although early adoption is permitted. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements. ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets In February 2017, the FASB issued ASU 2017-05 to clarify the scope of the Board’s guidance on nonfinancial asset derecognition (ASC 610-20) as well as the accounting for partial sales of nonfinancial assets. The ASU conforms the derecognition on nonfinancial assets with the model for transactions in the new revenue standard (ASC 606, as amended). The ASU clarifies that ASC 610-20 applies to the derecognition of all nonfinancial assets and in-substance nonfinancial assets. The ASU also clarifies that if a transaction is partially within the scope of ASC 610-20 and partially within the scope of other guidance, an entity should apply the separation and allocation guidance in ASC 606. The ASU also requires an entity to derecognize the nonfinancial asset or in-substance nonfinancial asset in a partial sale transaction when (1) the entity ceases to have a controlling financial interest in a subsidiary pursuant to ASC 810, and (2) control of the asset is transferred in accordance with ASC 606. The effective date of the ASU is aligned with the requirements in the new revenue standard, which is effective for interim and annual reporting periods beginning after December 15, 2017. Similar to the new revenue standard, the ASU allows an entity to use a full or modified retrospective adoption approach. Similar to the new revenue standard, we expect to adopt this guidance on January 1, 2018 using the modified retrospective approach, however we do not expect this adoption to have a material impact on our consolidated financial statements. |
Significant New Business |
3 Months Ended |
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Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SIGNIFICANT NEW BUSINESS | SIGNIFICANT NEW BUSINESS RSA On February 7, 2017, we entered into an agreement to reinsure U.K. employers' liability legacy business of RSA Insurance Group PLC ("RSA"). Pursuant to the transaction, our subsidiary assumed gross insurance reserves of £1,046.4 million ($1,301.8 million), relating to 2005 and prior year business. Net insurance reserves assumed were £927.5 million ($1,153.9 million) and the reinsurance premium paid to Enstar’s subsidiary was £801.6 million ($997.2 million). We elected the fair value option for this reinsurance contract. The initial fair value adjustment on the gross reserves was $174.1 million, and on the net reserves was $156.7 million. Refer to Note 6 - "Fair Value Measurements" for a description of the fair value process and assumptions. Following the initial reinsurance transaction, which transferred the economics of the portfolio up to the policy's limits, we and RSA are pursuing a portfolio transfer of the business under Part VII of the Financial Services and Markets Act 2000, which would provide legal finality for RSA's obligations. The transfer is subject to court, regulatory and other approvals. QBE On January 11, 2017, we closed a transaction to reinsure multi-line property and casualty business of QBE Insurance Group Limited ("QBE"). Our subsidiary assumed gross reinsurance reserves of approximately $1,019.0 million (net reserves of $447.0 million) relating to the portfolio, which primarily includes workers' compensation, construction defect, and general liability discontinued lines of business. We elected the fair value option for this reinsurance contract. The initial fair value adjustment on the gross reserves was $180.0 million, and on the net reserves was $43.2 million. Refer to Note 6 - "Fair Value Measurements" for a description of the fair value process and assumptions. In addition our subsidiary has pledged a portion of the premium as collateral to a subsidiary of QBE, and we have provided additional collateral and a limited parental guarantee. |
Held-For-Sale Business |
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Held-For-Sale Business | HELD-FOR-SALE BUSINESS On February 17, 2017, we entered into a definitive agreement to sell Pavonia Holdings (US) Inc. and its subsidiaries (“Pavonia”) for total consideration of $120.0 million to Southland National Holdings, Inc. The transaction is expected to close in the third or fourth quarter of 2017. The closing of the transaction is subject to customary closing conditions, including regulatory approvals. The proceeds of the sale are expected to be used to pay down our revolving credit facility following closing. Pavonia is a substantial portion of the Life and Annuities segment. We have classified the assets and liabilities of the businesses to be sold as held-for-sale. The following table summarizes the components of assets and liabilities held-for-sale on our consolidated balance sheet as at March 31, 2017 and December 31, 2016:
As of March 31, 2017 and December 31, 2016, included in the table above were restricted investments of $781.2 million and $786.0 million, respectively. The cumulative currency translation adjustment ("CTA") balance in accumulated other comprehensive income (loss), a component of shareholders’ equity, included $(14.4) million and $(14.8) million as at March 31, 2017 and December 31, 2016, respectively, related to Pavonia. Upon completion of the sale, the CTA will be included in earnings as a reduction of the gain on sale. The Pavonia business qualifies as a discontinued operation. The following table summarizes the components of net earnings (losses) from discontinued operations on the consolidated statements of earnings for the three months ended March 31, 2017 and 2016:
The following table presents the cash flows of Pavonia for the three months ended March 31, 2017, and 2016:
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS | INVESTMENTS We hold: (i) trading portfolios of fixed maturity investments, short-term investments and equities, carried at fair value; (ii) available-for-sale portfolios of fixed maturity and short-term investments carried at fair value; and (iii) other investments carried at either fair value or cost. Trading The fair values of our fixed maturity investments, short-term investments and equities classified as trading were as follows:
Included within residential and commercial mortgage-backed securities as at March 31, 2017 were securities issued by U.S. governmental agencies with a fair value of $268.2 million (as at December 31, 2016: $362.9 million). Included within corporate securities as at March 31, 2017 were senior secured loans of $57.1 million (as at December 31, 2016: $90.7 million). The contractual maturities of our fixed maturity and short-term investments classified as trading are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
Available-for-sale The amortized cost and fair values of our fixed maturity and short-term investments classified as available-for-sale were as follows:
The contractual maturities of our fixed maturity and short-term investments classified as available-for-sale are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
Gross Unrealized Losses The following tables summarize our fixed maturity and short-term investments in a gross unrealized loss position:
As at March 31, 2017 and December 31, 2016, the number of securities classified as available-for-sale in an unrealized loss position was 140 and 156, respectively. Of these securities, the number of securities that had been in an unrealized loss position for twelve months or longer was 32 and 41, respectively. Other-Than-Temporary Impairment For the three months ended March 31, 2017 and 2016, we did not recognize any other-than-temporary impairment losses on our available-for-sale securities. We determined that no credit losses existed as at March 31, 2017 and 2016. A description of our other-than-temporary impairment process is included in Note 2 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016. There were no changes to our process during the three months ended March 31, 2017. Credit Ratings The following table sets forth the credit ratings of our fixed maturity and short-term investments as of March 31, 2017:
Other Investments, at fair value The following table summarizes our other investments carried at fair value:
The valuation of our other investments is described in Note 6 - "Fair Value Measurements." Due to a lag in the valuations of certain funds reported by the managers, we may record changes in valuation with up to a three-month lag. We regularly review and discuss fund performance with the fund managers to corroborate the reasonableness of the reported net asset values and to assess whether any events have occurred within the lag period that would affect the valuation of the investments. The following is a description of the nature of each of these investment categories:
Investments of $0.5 million in fixed income hedge funds were subject to gates or side-pockets, where redemptions are subject to the sale of underlying investments. A gate is the ability to deny or delay a redemption request, whereas a side-pocket is a designated account for which the investor loses its redemption rights. As at March 31, 2017, we had unfunded commitments to private equity funds of $142.6 million. Other Investments, at cost Our other investments carried at cost of $133.1 million as of March 31, 2017 consist of life settlement contracts. During the three months ended March 31, 2017 and 2016, net investment income included $6.9 million and $8.8 million, respectively, related to investments in life settlements. There were impairment charges of $0.1 million and $nil recognized in net realized and unrealized gains/losses during the three months ended March 31, 2017 and 2016, respectively. The following table presents further information regarding our investments in life settlements as of March 31, 2017 and December 31, 2016.
Remaining life expectancy for year 0-1 in the table above references policies whose current life expectancy is less than 12 months as of the reporting date. Remaining life expectancy is not an indication of expected maturity. Actual maturity in any category above may vary significantly (either earlier or later) from the remaining life expectancies reported. At March 31, 2017, our best estimate of the life insurance premiums required to keep the policies in force, payable in the 12 months ending March 31, 2018 and the four succeeding years ending March 31, 2022 is $17.5 million, $17.4 million, $17.6 million, $16.0 million and $15.2 million, respectively. Net Realized and Unrealized Gains Components of net realized and unrealized gains for the three months ended March 31, 2017 and 2016 were as follows:
The gross realized gains and losses on available-for-sale securities included in the table above resulted from sales of $24.7 million and $15.4 million for the three months ended March 31, 2017 and 2016, respectively. Net Investment Income Major categories of net investment income for the three months ended March 31, 2017 and 2016 are summarized as follows:
Restricted Assets We are required to maintain investments and cash and cash equivalents on deposit to support our insurance and reinsurance operations. The investments and cash and cash equivalents on deposit are available to settle insurance and reinsurance liabilities. We also utilize trust accounts to collateralize business with our insurance and reinsurance counterparties. These trust accounts generally take the place of letter of credit requirements. The assets in trusts as collateral are primarily highly rated fixed maturity securities. The carrying value of our restricted assets, including restricted cash of $392.4 million and $363.8 million, as of March 31, 2017 and December 31, 2016, respectively, was as follows:
(1) Our underwriting businesses include three Lloyd's syndicates. Lloyd's determines the required capital principally through the annual business plan of each syndicate. This capital is referred to as "Funds at Lloyd's" and will be drawn upon in the event that a syndicate has a loss that cannot be funded from other sources. We have an unsecured letter of credit agreement for Funds at Lloyd’s purposes ("FAL Facility") to issue up to $140.0 million of letters of credit, with a provision to increase the facility up to $200.0 million. The FAL Facility is available to satisfy our Funds at Lloyd’s requirements and expires in 2021. As at March 31, 2017, our combined Funds at Lloyd's were comprised of cash and investments of $220.2 million and unsecured letters of credit of $122.0 million. The increase in the collateral in trust for third-party agreements was primarily due to the loss portfolio transfer reinsurance transactions with RSA and QBE described in Note 2 - "Significant New Business". |
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FUNDS HELD - DIRECTLY MANAGED | FUNDS HELD - DIRECTLY MANAGED Funds held - directly managed is comprised of the following:
The following table presents the fair values of assets and liabilities underlying the funds held - directly managed account as at March 31, 2017 and December 31, 2016:
The contractual maturities of our fixed maturity investments underlying the funds held - directly managed account are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
Credit Ratings The following table sets forth the credit ratings of our fixed maturity investments underlying the funds held - directly managed account as of March 31, 2017.
Net Realized Gains and Change in Fair Value due to Embedded Derivative and Fair Value Option Net realized gains and change in fair value for the three months ended March 31, 2017 are summarized as follows:
There were no funds held - directly managed as at March 31, 2016. Net Investment Income Major categories of net investment income underlying the funds held - directly managed for the three months ended March 31, 2017 are summarized as follows:
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair Value Hierarchy Fair value is defined as the price at which to sell an asset or transfer a liability (i.e. the "exit price") in an orderly transaction between market participants. We use a fair value hierarchy that gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data. The hierarchy is broken down into three levels as follows:
We have categorized our assets and liabilities that are recorded at fair value on a recurring basis among levels based on the observability of inputs as follows:
Certain of our other investments are measured at fair value using NAV per share (or its equivalent) as a practical expedient and have not been classified within the fair value hierarchy above. The following table reconciles our other investments in the tables above with the amounts presented on our consolidated balance sheets:
Valuation Methodologies of Financial Instruments Measured at Fair Value Fixed Maturity Investments The fair values for all securities in the fixed maturity investments and funds held - directly managed portfolios are independently provided by the investment accounting service providers, investment managers and investment custodians, each of which utilize internationally recognized independent pricing services. We record the unadjusted price provided by the investment accounting service providers, investment managers or investment custodians and validate this price through a process that includes, but is not limited to: (i) comparison of prices against alternative pricing sources; (ii) quantitative analysis (e.g. comparing the quarterly return for each managed portfolio to its target benchmark); (iii) evaluation of methodologies used by external parties to estimate fair value, including a review of the inputs used for pricing; and (iv) comparing the price to our knowledge of the current investment market. Our internal price validation procedures and review of fair value methodology documentation provided by independent pricing services have not historically resulted in adjustment in the prices obtained from the pricing service. The independent pricing services used by the investment accounting service providers, investment managers and investment custodians obtain actual transaction prices for securities that have quoted prices in active markets. Where we utilize single unadjusted broker-dealer quotes, they are generally provided by market makers or broker-dealers who are recognized as market participants in the markets in which they are providing the quotes. For determining the fair value of securities that are not actively traded, in general, pricing services use "matrix pricing" in which the independent pricing service uses observable market inputs including, but not limited to, reported trades, benchmark yields, broker-dealer quotes, interest rates, prepayment speeds, default rates and such other inputs as are available from market sources to determine a reasonable fair value. In addition, pricing services use valuation models, using observable data, such as an Option Adjusted Spread model, to develop prepayment and interest rate scenarios. The Option Adjusted Spread model is commonly used to estimate fair value for securities such as mortgage-backed and asset-backed securities. The following describes the techniques generally used to determine the fair value of our fixed maturity investments by asset class, including the investments underlying the funds held - directly managed.
Equities Our investments in equities are predominantly traded on the major exchanges and are primarily managed by our external advisors. We use an internationally recognized pricing service to estimate the fair value of our equities. Our equities are widely diversified and there is no significant concentration in any specific industry. We have categorized all of our investments in equities other than preferred stock as Level 1 investments because the fair values of these investments are based on unadjusted quoted prices in active markets for identical assets or liabilities. The fair value estimates of our investments in preferred stock are based on observable market data and, as a result, have been categorized as Level 2. Other investments, at fair value We have ongoing due diligence processes with respect to the other investments carried at fair value in which we invest and their managers. These processes are designed to assist us in assessing the quality of information provided by, or on behalf of, each fund and in determining whether such information continues to be reliable or whether further review is warranted. Certain funds do not provide full transparency of their underlying holdings; however, we obtain the audited financial statements for funds annually, and regularly review and discuss the fund performance with the fund managers to corroborate the reasonableness of the reported net asset values ("NAV"). The use of NAV as an estimate of the fair value for investments in certain entities that calculate NAV is a permitted practical expedient. Due to the time lag in the NAV reported by certain fund managers we adjust the valuation for capital calls and distributions. Other investments measured at fair value using NAV as a practical expedient have not been classified in the fair value hierarchy. Other investments for which we do not use NAV as a practical expedient have been valued using prices from independent pricing services, investment managers and broker-dealers. The following describes the techniques generally used to determine the fair value of our other investments.
In providing valuations, the CLO equity manager and brokers use observable and unobservable inputs. Of the significant unobservable market inputs used, the default and loss severity rates involve the most judgment and create the most sensitivity. A significant increase or decrease in either of these significant inputs in isolation would result in lower or higher fair value estimates for direct investments in CLO equities and, in general, a change in default rate assumptions will be accompanied by a directionally similar change in loss severity rate assumptions. Collateral spreads and estimated maturity dates are less subjective inputs because they are based on the historical average of actual spreads and the weighted-average life of the current underlying portfolios, respectively. A significant increase or decrease in either of these significant inputs in isolation would result in higher or lower fair value estimates for direct investments in CLO equities. In general, these inputs have no significant interrelationship with each other or with default and loss severity rates. On a quarterly basis, we receive the valuation from the external CLO manager and brokers and then review the underlying cash flows and key assumptions used by them. We review and update the significant unobservable inputs based on information obtained from secondary markets. These inputs are our responsibility and we assess the reasonableness of the inputs (and if necessary, update the inputs) through communicating with industry participants, monitoring of the transactions in which we participate (for example, to evaluate default and loss severity rate trends), and reviewing market conditions, historical results, and emerging trends that may impact future cash flows. If valuations from the external CLO equity manager or brokers are not available, we use an income approach based on certain observable and unobservable inputs to value these investments. An income approach is also used to corroborate the reasonableness of the valuations provided by the external manager and brokers. Where an income approach is followed, the valuation is based on available trade information, such as expected cash flows and market assumptions on default and loss severity rates. Other inputs used in the valuation process include asset spreads, loan prepayment speeds, collateral spreads and estimated maturity dates.
Insurance Contracts - Fair Value Option The Company uses an internal model to calculate the fair value of the liability for losses and loss adjustment expenses and reinsurance recoverable asset for certain retroactive reinsurance contracts where we have elected the fair value option in our Non-life Run-off segment. The fair value was calculated as the aggregate of discounted cash flows plus a risk margin. The discounted cash flow approach uses (i) estimated nominal cash flows based upon an appropriate payment pattern developed in accordance with standard actuarial techniques and (ii) a discount rate based upon a high quality rated corporate bond plus a credit spread for non-performance risk. The model uses corporate bond rates across the yield curve depending on the estimated timing of the future cash flows and specific to the currency of the risk. The risk margin was calculated using the present value of the cost of capital. The cost of capital approach uses (i) projected capital requirements, (ii) multiplied by the risk cost of capital representing the return required for non-hedgeable risk based upon the weighted average cost of capital less investment income, and (iii) discounted using the weighted average cost of capital. Level 3 Measurements and Changes in Leveling Transfers into or out of levels are recorded at their fair values as of the end of the reporting period, consistent with the date of determination of fair value. Investments During the three months ended March 31, 2017, we transferred $1.6 million of corporate securities, $13.9 million of commercial mortgage-backed securities and $17.6 million of asset-backed securities from Level 2 to Level 3. These securities were transferred from Level 2 to Level 3 due to insufficient market observable inputs for the valuation of the specific assets. During the three months ended March 31, 2017, we transferred $10.6 million of corporate securities, $1.2 million of commercial mortgage-backed securities and $4.6 million of asset-backed securities from Level 3 to Level 2. The transfers from Level 3 to Level 2 were based upon us obtaining market observable information regarding the valuations of the specific assets. There were no transfers between Levels 1 and 2. The following table presents a reconciliation of the beginning and ending balances for all investments measured at fair value on a recurring basis using Level 3 inputs during the three months ended March 31, 2017 and 2016:
Net realized and unrealized gains (losses) related to Level 3 assets in the table above are included in net realized and unrealized gains (losses) in our unaudited condensed consolidated statements of earnings. Insurance Contracts - Fair Value Option The following table presents a reconciliation of the beginning and ending balances for all insurance contracts measured at fair value on a recurring basis using Level 3 inputs during the three months ended March 31, 2017:
Changes in fair value related to Level 3 assets and liabilities in the table above are included in net incurred losses and LAE in our unaudited condensed consolidated statements of earnings. Below is a summary of the quantitative information regarding the significant observable and unobservable inputs used in the internal model to determine fair value on a recurring basis as at March 31, 2017 and as at the acquisition dates during the three month period ended March 31, 2017:
The fair value of the liability for losses and LAE and reinsurance recoverable may increase or decrease due to changes in the corporate bond rate, the credit spread for non-performance risk, the risk cost of capital, the weighted average cost of capital and the estimated payment pattern:
In addition, the estimate of the capital required to support the liabilities is based upon current industry standards for capital adequacy. If the required capital per unit of risk increases then the fair value of the liability for losses and LAE and reinsurance recoverable would increase. Conversely, a decrease in required capital would result in a decrease in the fair value of the liability for losses and LAE and reinsurance recoverable. Disclosure of Fair Values for Financial Instruments Carried at Cost As of March 31, 2017 and December 31, 2016, investments in life settlement contracts were carried at cost of $133.1 million and $131.7 million, respectively, and their fair values were $130.8 million and $129.5 million, respectively. The fair value of investments in life settlement contracts is determined using a discounted cash flow methodology that utilizes unobservable inputs. Due to the individual nature of each investment in life settlement contracts and the illiquidity of the existing market, significant inputs to the fair value include our estimates of premiums necessary to keep the policies in-force, and our assumptions for mortality and discount rates. Our mortality assumptions are based on a combination of medical underwriting information obtained from a third-party underwriter for each referenced life and internal proprietary mortality studies of older aged U.S. insured lives. These assumptions are used to develop an estimate of future net cash flows that, after discounting, are intended to be reflective of the asset's value in the life settlement market. As of March 31, 2017, our Senior Notes were carried at amortized cost of $347.1 million while the fair value based on observable market pricing from a third party pricing service was $355.0 million. The fair value is classified as Level 2. Disclosure of the fair value of amounts relating to insurance contracts is not required, except for those for which we elected the fair value option, as described above. Our remaining assets and liabilities that are carried at cost or amortized cost have approximately the same fair value as at March 31, 2017 and December 31, 2016 due to their short-term nature. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS Foreign Currency Hedging of Net Investments We use foreign currency forward exchange rate contracts in qualifying hedging relationships to hedge the foreign currency exchange rate risk associated with certain of our net investments in foreign operations. At March 31, 2017 and December 31, 2016, we had forward currency contracts in place, which we had designated as hedges of the net investments in our foreign operations. The following table presents the gross notional amounts, estimated fair values recorded within other assets and liabilities and the amounts of the net gains and losses deferred in the currency translation adjustment account which is a component of accumulated other comprehensive income (loss) ("AOCI"), in shareholders' equity, related to our foreign currency forward exchange rate contracts as at March 31, 2017 and December 31, 2016.
We did not have any forward currency contract hedges of our net investments in foreign operations during the three months ended March 31, 2016. We also borrowed €75.0 million (approximately $80.2 million) during 2016 that was designated as a non-derivative hedge of our net investment in certain subsidiaries whose functional currency is denominated in Euros as described in Note 13 - "Debt Obligations". Derivatives Not Designated or Not Qualifying as Hedging Instruments From time to time, we may also utilize foreign currency forward contracts as part of our overall foreign currency risk management strategy or to obtain exposure to a particular financial market, as well as for yield enhancement, which are not designated or do not qualify as hedging instruments. Foreign Currency Forward Contracts The following table presents the gross notional amounts, estimated fair values recorded within other assets and liabilities and the amounts included in net earnings related to our non-qualifying foreign currency forward exchange rate hedging relationships as at March 31, 2017.
There were no such contracts utilized during the three months ended March 31, 2016 and as at December 31, 2016. Investments in Call Options on Equities We use equity call option instruments either to obtain exposure to a particular equity instrument or for yield enhancement in non-qualifying hedging relationships, although we did not use any equity derivative instruments during the three months ended March 31, 2017. During the three months ended March 31, 2016, we purchased call options on equities at a cost of $5.5 million and recorded unrealized gains in net earnings of $0.6 million. |
Reinsurance Balances Recoverable |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REINSURANCE BALANCES RECOVERABLE | REINSURANCE BALANCES RECOVERABLE The following tables provide the total reinsurance balances recoverable by segment as at March 31, 2017 and December 31, 2016:
Our insurance and reinsurance run-off subsidiaries, prior to acquisition, used retrocessional agreements to reduce their exposure to the risk of insurance and reinsurance assumed. On an annual basis, both Atrium and StarStone purchase a tailored outwards reinsurance program designed to manage their risk profiles. The majority of Atrium’s and StarStone's third-party reinsurance cover is with highly rated reinsurers or is collateralized by pledged assets or letters of credit. The fair value adjustments, determined on acquisition of insurance and reinsurance subsidiaries, are based on the estimated timing of loss and LAE recoveries and an assumed interest rate equivalent to a risk free rate for securities with similar duration to the acquired reinsurance recoverables plus a spread for credit risk, and are amortized over the estimated recovery period, as adjusted for accelerations in timing of payments as a result of commutation settlements. The determination of the fair value adjustments on the retroactive reinsurance contracts for which we have elected the fair value option is described in Note 6 - "Fair Value Measurements". As of March 31, 2017 and December 31, 2016, we had reinsurance balances recoverable of approximately $2.0 billion and $1.5 billion, respectively. The increase of $541.4 million in reinsurance balances recoverable was primarily a result of the QBE and RSA reinsurance transactions, which closed in the quarter, offset by reserve reductions in our Non-life Run-off segment and cash collections made during the three months ended March 31, 2017. Top Ten Reinsurers
Five of the top ten external reinsurers, as at March 31, 2017 and December 31, 2016, were rated A- or better, with the remaining five being non-rated reinsurers from which $622.5 million was recoverable (December 31, 2016: $512.2 million recoverable from four reinsurers). For the five non-rated reinsurers, including KaylaRe Ltd., we hold security in the form of pledged assets in trust or letters of credit issued to us in the full amount of the recoverable. As at March 31, 2017, reinsurance balances recoverable of $264.0 million (December 31, 2016: $241.7 million) related to KaylaRe Ltd., $214.0 million (December 31, 2016: $154.9 million) related to Lloyd’s syndicates and $323.8 million (December 31, 2016: $67.3 million) related to Hannover Ruck SE, all of which represented 10% or more of total reinsurance balances recoverable. Lloyd’s is rated A+ by Standard & Poor’s and A by A.M. Best, and Hannover Ruck SE is rated AA- by Standard & Poor’s and A+ by A.M. Best. Provisions for Uncollectible Reinsurance Recoverables We remain liable to the extent that retrocessionaires do not meet their obligations under these agreements, and therefore, we evaluate and monitor concentration of credit risk among our reinsurers. Provisions are made for amounts considered potentially uncollectible. The following table shows our reinsurance balances recoverable by rating of reinsurer and our provisions for uncollectible reinsurance balances recoverable ("provisions for bad debt") as at March 31, 2017 and December 31, 2016. The provisions for bad debt all relate to the Non-life Run-off segment.
PREMIUMS WRITTEN AND EARNED The following table provides a summary of net premiums written and earned in our Non-life Run-off, Atrium, StarStone and Life and Annuities segments for the three months ended March 31, 2017 and 2016:
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Losses and Loss Adjustment Expenses |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOSSES AND LOSS ADJUSTMENT EXPENSES | LOSSES AND LOSS ADJUSTMENT EXPENSES The liability for losses and loss adjustment expenses ("LAE") includes an amount determined from reported claims and an amount based on historical loss experience and industry statistics for incurred but not reported ("IBNR") using a variety of actuarial methods. Our loss reserves cover multiple lines of business, which include workers' compensation, general casualty, asbestos and environmental, marine, aviation and transit, construction defects and other non-life lines of business. Refer to Note 11 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016 for more information on establishing the liability for losses and LAE. The following table summarizes the liability for losses and LAE by segment as at March 31, 2017 and December 31, 2016:
The overall increase in the liability for losses and LAE between December 31, 2016 and March 31, 2017 was primarily attributable to the assumed reinsurance agreements with RSA and QBE in our Non-life Run-off segment, for which we have elected the fair value option, as described in Note 2 - "Significant New Business." The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three months ended March 31, 2017 and 2016:
The tables below provide the net incurred losses and LAE in the Non-life Run-off, Atrium and StarStone segments for the three months ended March 31, 2017 and 2016:
Non-Life Run-off Segment The table below provides a reconciliation of the beginning and ending reserves for losses and LAE for the three months ended March 31, 2017 and 2016 for the Non-life Run-off segment:
Net incurred losses and LAE in the Non-life Run-off segment for the three months ended March 31, 2017 and 2016 were as follows:
Net change in case and LAE reserves comprises the movement during the period in specific case reserve liabilities as a result of claims settlements or changes advised to us by our policyholders and attorneys, less changes in case reserves recoverable advised by us to our reinsurers as a result of the settlement or movement of assumed claims. Net change in IBNR represents the gross change in our actuarial estimates of IBNR, less amounts recoverable. Three Months Ended March 31, 2017 The reduction in net incurred losses and LAE for the three months ended March 31, 2017 of $2.8 million included net incurred losses and LAE of $0.7 million related to current period net earned premium, primarily for the run-off business acquired with Sussex. Excluding current period net incurred losses and LAE of $0.7 million, net incurred losses and LAE liabilities relating to prior periods were reduced by $3.5 million, which was attributable to a reduction in estimates of net ultimate losses of $4.9 million, a reduction in provisions for unallocated LAE of $14.4 million, relating to 2017 run-off activity, partially offset by amortization of fair value adjustments over the estimated payout period relating to companies acquired amounting to $1.3 million and an increase in fair value of $14.5 million related to our assumed retroactive reinsurance agreements with RSA and QBE completed during the quarter and for which we have elected the fair value option. The reduction in estimates of net ultimate losses for the three months ended March 31, 2017 included a net change in case and IBNR reserves of $162.2 million. The reduction of estimates in net ultimate losses for the three months ended March 31, 2017 was reduced by amortization of the deferred charge of $0.9 million. Three Months Ended March 31, 2016 The reduction in net incurred losses and LAE for the three months ended March 31, 2016 of $23.6 million included net incurred losses and LAE of $6.1 million related to current period net earned premium of $5.6 million, primarily for the run-off business acquired with Sussex. Excluding current period net incurred losses and LAE of $6.1 million, net incurred losses and LAE liabilities relating to prior periods were reduced by $29.6 million, which was attributable to a reduction in estimates of net ultimate losses of $17.5 million, a reduction in provisions for bad debt of $1.4 million, and a reduction in provisions for unallocated LAE of $8.2 million, and amortization of fair value adjustments over the estimated payout period relating to companies acquired amounting to $2.4 million, relating to 2016 run-off activity. The reduction in estimates of net ultimate losses for the three months ended March 31, 2016 included a net change in case and IBNR reserves of $145.8 million. The reduction of estimates in net ultimate losses for the three months ended March 31, 2016 was reduced by amortization of the deferred charge of $1.6 million. The reduction in provisions for bad debt of $1.4 million was a result of the collection of certain reinsurance recoverables against which bad debt provisions had been provided in earlier periods. Atrium The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three months ended March 31, 2017 and 2016:
Net incurred losses and LAE in the Atrium segment for the three months ended March 31, 2017 and 2016 were as follows:
StarStone The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three months ended March 31, 2017 and 2016:
Net incurred losses and LAE in the StarStone segment for the three months ended March 31, 2017 and 2016 were as follows:
POLICY BENEFITS FOR LIFE AND ANNUITY CONTRACTS Policy benefits for life contracts as at March 31, 2017 and December 31, 2016 were $111.7 million and $112.1 million, respectively. The annuity amounts presented in previous financial statements are now classified as held-for-sale liabilities. Refer to Note 2 - "Significant Accounting Policies - (d) Policy Benefits for Life and Annuity Contracts" of the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016 for a description of the assumptions used and the process for establishing our assumptions and estimates. |
Policy Benefits for Life and Annuity Contracts |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
POLICY BENEFITS FOR LIFE AND ANNUITY CONTRACTS | LOSSES AND LOSS ADJUSTMENT EXPENSES The liability for losses and loss adjustment expenses ("LAE") includes an amount determined from reported claims and an amount based on historical loss experience and industry statistics for incurred but not reported ("IBNR") using a variety of actuarial methods. Our loss reserves cover multiple lines of business, which include workers' compensation, general casualty, asbestos and environmental, marine, aviation and transit, construction defects and other non-life lines of business. Refer to Note 11 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016 for more information on establishing the liability for losses and LAE. The following table summarizes the liability for losses and LAE by segment as at March 31, 2017 and December 31, 2016:
The overall increase in the liability for losses and LAE between December 31, 2016 and March 31, 2017 was primarily attributable to the assumed reinsurance agreements with RSA and QBE in our Non-life Run-off segment, for which we have elected the fair value option, as described in Note 2 - "Significant New Business." The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three months ended March 31, 2017 and 2016:
The tables below provide the net incurred losses and LAE in the Non-life Run-off, Atrium and StarStone segments for the three months ended March 31, 2017 and 2016:
Non-Life Run-off Segment The table below provides a reconciliation of the beginning and ending reserves for losses and LAE for the three months ended March 31, 2017 and 2016 for the Non-life Run-off segment:
Net incurred losses and LAE in the Non-life Run-off segment for the three months ended March 31, 2017 and 2016 were as follows:
Net change in case and LAE reserves comprises the movement during the period in specific case reserve liabilities as a result of claims settlements or changes advised to us by our policyholders and attorneys, less changes in case reserves recoverable advised by us to our reinsurers as a result of the settlement or movement of assumed claims. Net change in IBNR represents the gross change in our actuarial estimates of IBNR, less amounts recoverable. Three Months Ended March 31, 2017 The reduction in net incurred losses and LAE for the three months ended March 31, 2017 of $2.8 million included net incurred losses and LAE of $0.7 million related to current period net earned premium, primarily for the run-off business acquired with Sussex. Excluding current period net incurred losses and LAE of $0.7 million, net incurred losses and LAE liabilities relating to prior periods were reduced by $3.5 million, which was attributable to a reduction in estimates of net ultimate losses of $4.9 million, a reduction in provisions for unallocated LAE of $14.4 million, relating to 2017 run-off activity, partially offset by amortization of fair value adjustments over the estimated payout period relating to companies acquired amounting to $1.3 million and an increase in fair value of $14.5 million related to our assumed retroactive reinsurance agreements with RSA and QBE completed during the quarter and for which we have elected the fair value option. The reduction in estimates of net ultimate losses for the three months ended March 31, 2017 included a net change in case and IBNR reserves of $162.2 million. The reduction of estimates in net ultimate losses for the three months ended March 31, 2017 was reduced by amortization of the deferred charge of $0.9 million. Three Months Ended March 31, 2016 The reduction in net incurred losses and LAE for the three months ended March 31, 2016 of $23.6 million included net incurred losses and LAE of $6.1 million related to current period net earned premium of $5.6 million, primarily for the run-off business acquired with Sussex. Excluding current period net incurred losses and LAE of $6.1 million, net incurred losses and LAE liabilities relating to prior periods were reduced by $29.6 million, which was attributable to a reduction in estimates of net ultimate losses of $17.5 million, a reduction in provisions for bad debt of $1.4 million, and a reduction in provisions for unallocated LAE of $8.2 million, and amortization of fair value adjustments over the estimated payout period relating to companies acquired amounting to $2.4 million, relating to 2016 run-off activity. The reduction in estimates of net ultimate losses for the three months ended March 31, 2016 included a net change in case and IBNR reserves of $145.8 million. The reduction of estimates in net ultimate losses for the three months ended March 31, 2016 was reduced by amortization of the deferred charge of $1.6 million. The reduction in provisions for bad debt of $1.4 million was a result of the collection of certain reinsurance recoverables against which bad debt provisions had been provided in earlier periods. Atrium The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three months ended March 31, 2017 and 2016:
Net incurred losses and LAE in the Atrium segment for the three months ended March 31, 2017 and 2016 were as follows:
StarStone The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three months ended March 31, 2017 and 2016:
Net incurred losses and LAE in the StarStone segment for the three months ended March 31, 2017 and 2016 were as follows:
POLICY BENEFITS FOR LIFE AND ANNUITY CONTRACTS Policy benefits for life contracts as at March 31, 2017 and December 31, 2016 were $111.7 million and $112.1 million, respectively. The annuity amounts presented in previous financial statements are now classified as held-for-sale liabilities. Refer to Note 2 - "Significant Accounting Policies - (d) Policy Benefits for Life and Annuity Contracts" of the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016 for a description of the assumptions used and the process for establishing our assumptions and estimates. |
Premiums Written and Earned |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PREMIUMS WRITTEN AND EARNED | REINSURANCE BALANCES RECOVERABLE The following tables provide the total reinsurance balances recoverable by segment as at March 31, 2017 and December 31, 2016:
Our insurance and reinsurance run-off subsidiaries, prior to acquisition, used retrocessional agreements to reduce their exposure to the risk of insurance and reinsurance assumed. On an annual basis, both Atrium and StarStone purchase a tailored outwards reinsurance program designed to manage their risk profiles. The majority of Atrium’s and StarStone's third-party reinsurance cover is with highly rated reinsurers or is collateralized by pledged assets or letters of credit. The fair value adjustments, determined on acquisition of insurance and reinsurance subsidiaries, are based on the estimated timing of loss and LAE recoveries and an assumed interest rate equivalent to a risk free rate for securities with similar duration to the acquired reinsurance recoverables plus a spread for credit risk, and are amortized over the estimated recovery period, as adjusted for accelerations in timing of payments as a result of commutation settlements. The determination of the fair value adjustments on the retroactive reinsurance contracts for which we have elected the fair value option is described in Note 6 - "Fair Value Measurements". As of March 31, 2017 and December 31, 2016, we had reinsurance balances recoverable of approximately $2.0 billion and $1.5 billion, respectively. The increase of $541.4 million in reinsurance balances recoverable was primarily a result of the QBE and RSA reinsurance transactions, which closed in the quarter, offset by reserve reductions in our Non-life Run-off segment and cash collections made during the three months ended March 31, 2017. Top Ten Reinsurers
Five of the top ten external reinsurers, as at March 31, 2017 and December 31, 2016, were rated A- or better, with the remaining five being non-rated reinsurers from which $622.5 million was recoverable (December 31, 2016: $512.2 million recoverable from four reinsurers). For the five non-rated reinsurers, including KaylaRe Ltd., we hold security in the form of pledged assets in trust or letters of credit issued to us in the full amount of the recoverable. As at March 31, 2017, reinsurance balances recoverable of $264.0 million (December 31, 2016: $241.7 million) related to KaylaRe Ltd., $214.0 million (December 31, 2016: $154.9 million) related to Lloyd’s syndicates and $323.8 million (December 31, 2016: $67.3 million) related to Hannover Ruck SE, all of which represented 10% or more of total reinsurance balances recoverable. Lloyd’s is rated A+ by Standard & Poor’s and A by A.M. Best, and Hannover Ruck SE is rated AA- by Standard & Poor’s and A+ by A.M. Best. Provisions for Uncollectible Reinsurance Recoverables We remain liable to the extent that retrocessionaires do not meet their obligations under these agreements, and therefore, we evaluate and monitor concentration of credit risk among our reinsurers. Provisions are made for amounts considered potentially uncollectible. The following table shows our reinsurance balances recoverable by rating of reinsurer and our provisions for uncollectible reinsurance balances recoverable ("provisions for bad debt") as at March 31, 2017 and December 31, 2016. The provisions for bad debt all relate to the Non-life Run-off segment.
PREMIUMS WRITTEN AND EARNED The following table provides a summary of net premiums written and earned in our Non-life Run-off, Atrium, StarStone and Life and Annuities segments for the three months ended March 31, 2017 and 2016:
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Goodwill, Intangible Assets and Deferred Charge |
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Goodwill, Intangible Assets, Intangible Assets Arising from Insurance Contracts Acquired in Business Combination, and Deferred Charges Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL, INTANGIBLE ASSETS AND DEFERRED CHARGE | GOODWILL, INTANGIBLE ASSETS AND DEFERRED CHARGE The following table presents a reconciliation of the beginning and ending goodwill, intangible assets and the deferred charge during the three months ended March 31, 2017:
Refer to Note 14 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016 for more information on goodwill, intangible assets and the deferred charge. Intangible asset amortization for the three months ended March 31, 2017 and 2016 was $1.5 million and $0.1 million, respectively. The gross carrying value, accumulated amortization and net carrying value of intangible assets by type and the deferred charge at March 31, 2017 and December 31, 2016 were as follows:
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Debt Obligations |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT OBLIGATIONS | DEBT OBLIGATIONS We utilize debt arrangements primarily for acquisitions and, from time to time, for general corporate purposes. Debt obligations as of March 31, 2017 and December 31, 2016 were as follows:
For the three months ended March 31, 2017 and 2016, interest expense was $6.3 million and $5.4 million, respectively, on our debt obligations. EGL Revolving Credit Facility This 5-year revolving credit facility, originated on September 16, 2014, and most recently amended on March 20, 2017, is among Enstar Group Limited and certain of its subsidiaries, as borrowers and as guarantors, and various financial institutions. We are permitted to borrow up to an aggregate of $831.3 million. As of March 31, 2017, there was $586.1 million of available unutilized capacity under this facility. We are in compliance with the covenants of the EGL Revolving Credit Facility. Subsequent to March 31, 2017, we utilized $20.0 million and repaid $15.0 million, bringing unutilized capacity under this facility to $581.1 million. As of March 31, 2017 and December 31, 2016, there was a €75.0 million loan (approximately $80.2 million) under the facility that was designated as a non-derivative hedge of our net investment in certain subsidiaries whose functional currency is denominated in Euros. The foreign exchange effect of revaluing these Euro borrowings resulted in a loss of $1.1 million recognized in the currency translation adjustment within accumulated other comprehensive income (loss) for the three months ended March 31, 2017. These amounts were offset against equivalent amounts recognized upon the translation of those subsidiaries' financial statements from functional currency into U.S. dollars. There were no ineffective portions of the net investment hedge during the three months ended March 31, 2017, which would have required reclassification from accumulated other comprehensive income (loss) into earnings. The non-derivative hedge was not in place for the three months ended March 31, 2016. Sussex Facility On December 24, 2014, we entered into a 4-year term loan (the "Sussex Facility") with two financial institutions. This facility was fully utilized to initially borrow $109.0 million to fund 50% of the consideration payable for the acquisition of Sussex, which was completed on January 27, 2015. For the three months ended March 31, 2017 and 2016, we repaid nil and $20.5 million, respectively, of the outstanding principal under this facility. We are in compliance with the covenants of the Sussex Facility. EGL Term Loan Facility On November 18, 2016, we entered into and fully utilized a 3-year $75.0 million unsecured term loan (the "EGL Term Loan Facility"). We are in compliance with the covenants of the EGL Term Loan Facility. Refer to Note 15 of the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016 for further information on the terms of the above facilities. Senior Notes On March 10, 2017, we issued Senior Notes for an aggregate principal amount of $350.0 million. The Senior Notes pay 4.5% interest semi-annually and mature on March 10, 2022. The Senior Notes are unsecured and unsubordinated obligations that rank equally to any of our other unsecured and unsubordinated obligations, senior to any future obligations that are expressly subordinated to the Senior Notes, effectively subordinate to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally subordinate to all liabilities of our subsidiaries. The Senior Notes are rated BBB- and have an optional redemption on a make whole basis at any time prior to the date that is one month prior to the maturity for the Notes, at a redemption price equal to the greater of (i) 100% of the principal amount of the Notes being redeemed and (ii) the sum of the present value of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued as of the date of redemption), discounted to their present value as of such date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 40 basis points. On or after the date that is one month prior to the maturity of the Notes, the Notes are redeemable at a redemption price equal to 100% of the principal amount of the notes to be redeemed. We incurred costs of $2.9 million in issuing the Senior Notes. These costs included underwriters’ fees, legal and accounting fees, and other fees, and are capitalized and presented as a direct deduction from the principal amount of debt obligations in the consolidated balance sheets. These costs are amortized over the term of the debt and are included in interest expense in the consolidated statements of operations. |
Noncontrolling Interests |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NONCONTROLLING INTERESTS | NONCONTROLLING INTERESTS Redeemable Noncontrolling Interest Redeemable noncontrolling interest ("RNCI") as of March 31, 2017 and December 31, 2016 comprised the ownership interests held by the Trident V Funds ("Trident") (39.32%) and Dowling Capital Partners, L.P. ("Dowling")(1.71%) in our subsidiary North Bay Holdings Limited ("North Bay"). North Bay owns our investments in StarStone and Atrium as well as certain non-life run-off portfolios. The following is a reconciliation of the beginning and ending carrying amount of the equity attributable to the RNCI as of March 31, 2017 and December 31, 2016:
Refer to Note 19 - "Related Party Transactions" and Note 20 - "Commitments and Contingencies" for additional information regarding RNCI. Noncontrolling Interest As of March 31, 2017 and December 31, 2016, we had $9.2 million and $8.5 million, respectively, of noncontrolling interest ("NCI") primarily related to an external interest in one of our non-life run-off subsidiaries. |
Share Capital |
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Mar. 31, 2017 | |
Equity [Abstract] | |
SHARE CAPITAL | SHARE CAPITAL During the three months ended March 31, 2017, there were 192,485 Series C Non-Voting Ordinary Shares converted into Voting Ordinary Shares in a widely dispersed offering by their registered holders. Refer to Note 17 of the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016 for additional information on our Share Capital. |
Earnings Per Share |
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EARNINGS PER SHARE | EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2017 and 2016:
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Share-Based Compensation and Pensions |
3 Months Ended |
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Mar. 31, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
SHARE-BASED COMPENSATION AND PENSIONS | SHARE-BASED COMPENSATION AND PENSIONS We provide various employee benefits including share-based compensation, an employee share purchase plan, an annual incentive compensation program, and pension plans. These are described in Note 19 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016. On June 14, 2016, our shareholders approved the 2016 Equity Incentive Plan, which governs the terms of awards granted subsequent to its adoption. The plan replaced the expiring 2006 Equity Incentive Plan. Any outstanding awards granted under the 2006 plan remain in effect pursuant to their terms. Share-based compensation expense for the three months ended March 31, 2017 and 2016 was $3.8 million and $8.2 million, respectively. Employee share purchase plan expense for the three months ended March 31, 2017 and 2016 was less than $0.1 million for both periods. Pension expense for the three months ended March 31, 2017 and 2016 was $2.3 million and $3.1 million, respectively. |
Taxation |
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Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
TAXATION | TAXATION Interim Tax Calculation Method We use the estimated annual effective tax rate method for computing our interim tax provision. This method applies our best estimate of the effective tax rate expected for the full year to our year-to-date earnings before income taxes. We provide for income tax expense or benefit based upon our pre-tax earnings and the provisions of currently enacted tax laws. Certain items deemed to be unusual, infrequent or not reliably estimated are excluded from the estimated annual effective tax rate. In the event such items are identified, the actual tax expense or benefit is reported in the same period as the related item. Certain other items are not included in the estimated annual effective tax rate, such as changes in the assessment of valuation allowance on deferred tax assets and uncertain tax positions, if any. Interim Tax Expense (Benefit) The effective tax rates on income for the three months ended March 31, 2017 and 2016 were (4.3)% and 11.9%, respectively. The effective tax rate on income differs from the statutory rate of 0% due to tax on foreign operations, primarily the United States and the United Kingdom. We have foreign operating subsidiaries and branch operations principally located in the United States, United Kingdom, Continental Europe and Australia that are subject to federal, foreign, state and local taxes in those jurisdictions. Deferred income tax liabilities have not been accrued with respect to the undistributed earnings of our foreign subsidiaries. If the earnings were to be distributed, as dividends or other distributions, withholding taxes may be imposed by the jurisdiction of the paying subsidiary. For our U.S. subsidiaries, we have not currently accrued any withholding taxes with respect to un-remitted earnings as management has no current intention of remitting these earnings. For our United Kingdom subsidiaries, there are no withholding taxes imposed. For our other foreign subsidiaries, it would not be practicable to compute such amounts due to a variety of factors, including the amount, timing, and manner of any repatriation. Because we operate in many jurisdictions, our net earnings are subject to risk due to changing tax laws and tax rates around the world. The current, rapidly changing economic environment may increase the likelihood of substantial changes to tax laws in the jurisdictions in which we operate. Assessment of Valuation Allowance on Deferred Tax Assets We have estimated the future taxable income of our foreign subsidiaries and have provided a valuation allowance in respect of loss carryforwards where we do not expect to realize a benefit. We have considered all available evidence using a “more likely than not” standard in determining the amount of the valuation allowance. During the three months ended March 31, 2017, we had no change in our assessment of our valuation allowance on deferred tax assets. Accounting for Uncertainty in Income Taxes There were no unrecognized tax benefits relating to uncertain tax positions as at March 31, 2017 and December 31, 2016. Tax Examinations Our operating subsidiaries may be subject to audit by various tax authorities and may have different statutes of limitations expiration dates. With limited exceptions, our major subsidiaries that operate in the United States, United Kingdom and Australia are no longer subject to tax examinations for years before 2012. |
Related Party Transactions |
3 Months Ended |
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Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Stone Point Capital LLC Through several private transactions occurring from May 2012 to July 2012, Trident acquired 1,350,000 of our Voting Ordinary Shares (which now constitutes approximately 8.2% of our outstanding Voting Ordinary Shares). On November 6, 2013, we appointed James D. Carey to our Board of Directors. Mr. Carey is the sole member of an entity that is one of four general partners of the entities serving as general partners for Trident, is a member of the investment committees of such general partners, and is a member and senior principal of Stone Point Capital LLC ("Stone Point"), the manager of the Trident funds. In addition, we have entered into certain agreements with Trident with respect to Trident’s co-investments in the Atrium, Arden, and StarStone acquisitions. These include investors’ agreements and shareholders’ agreements, which provide for, among other things: (i) our right to redeem Trident’s equity interest in the Atrium/Arden and StarStone transactions in cash at fair market value within the 90 days following the fifth anniversary of the Arden and StarStone closings, respectively, and at any time following the seventh anniversary of the Arden and StarStone closings, respectively; and (ii) Trident’s right to have its equity co-investment interests in the Atrium/Arden and StarStone transactions redeemed by us at fair market value (which we may satisfy in either cash or our ordinary shares) following the seventh anniversaries of the Arden closing and StarStone closing, respectively. As of March 31, 2017, we have included $453.4 million (December 31, 2016: $435.6 million) as RNCI on our balance sheet relating to these Trident co-investment transactions. Pursuant to the terms of the shareholders’ agreements, Mr. Carey serves as a Trident representative on the boards of the holding companies established in connection with the Atrium/Arden and StarStone co-investment transactions. Trident also has a second representative on these boards who is a Stone Point employee. As at March 31, 2017, we had investments in funds (carried within other investments) and a registered investment company affiliated with entities owned by Trident or otherwise affiliated with Stone Point. The fair value of the investments in the funds was $240.5 million and $232.1 million as of March 31, 2017 and December 31, 2016, respectively. The fair value of our investment in the registered investment company was $26.6 million and $20.9 million as at March 31, 2017 and December 31, 2016, respectively. For the three months ended March 31, 2017 and 2016, we recognized net realized and unrealized gains of $7.0 million and $0.2 million, respectively, in respect of the fund investments and net unrealized gains of $5.2 million and net unrealized losses of $0.1 million, respectively, in respect of the registered investment company investment. For the three months ended March 31, 2017 and 2016, we recognized interest income of $0.5 million and $0.5 million in respect of the registered investment company. We also have separate accounts, with a balance of $219.6 million and $215.0 million as at March 31, 2017 and December 31, 2016, respectively, managed by Eagle Point Credit Management and PRIMA Capital Advisors, which are affiliates of entities owned by Trident, with respect to which we incurred approximately $0.1 million and $0.1 million in management fees for the three months ended March 31, 2017 and 2016, respectively. In addition, we are invested in funds (carried within other investments) managed by Sound Point Capital, an entity in which Mr. Carey has an indirect minority ownership interest and serves as a director. The fair value of our investments in Sound Point Capital funds was $25.7 million and $25.4 million as of March 31, 2017 and December 31, 2016, respectively. For the three months ended March 31, 2017 and 2016, we have recognized net unrealized gains of $0.4 million and net unrealized losses of $0.4 million, respectively, in respect of investments managed by Sound Point Capital. Sound Point Capital has acted as collateral manager for certain of our direct investments in CLO equity securities. The fair value of these investments was $18.1 million and $20.3 million as at March 31, 2017 and December 31, 2016, respectively. For the three months ended March 31, 2017 and 2016, we recognized net unrealized losses of $2.1 million and $0.9 million, respectively. For the three months ended March 31, 2017 and 2016, we recognized interest income of $1.2 million and $2.1 million, respectively, in respect of these investments. We have a separate account managed by Sound Point Capital, with a balance of $61.6 million and $61.2 million as at March 31, 2017 and December 31, 2016, respectively, with respect to which we incurred approximately $0.1 million and $0.1 million in management fees for the three months ended March 31, 2017 and 2016, respectively. CPPIB Canada Pension Plan Investment Board ("CPPIB"), together with management of Wilton Re, owns 100% of the common stock of Wilton Re. Subsequent to the closing of our transaction with Wilton Re, on June 3, 2015, CPPIB purchased voting and non-voting shares in Enstar from FR XI Offshore AIV, L.P., First Reserve Fund XII, L.P., FR XII-A Parallel Vehicle L.P. and FR Torus Co-Investment, L.P. These shares constitute an approximately 9.1% voting interest and an approximately 9.8% aggregate economic interest in Enstar. On September 29, 2015, CPPIB exercised its acquired right to appoint a representative to our Board of Directors. During November 2016, CPPIB acquired additional non-voting shares in Enstar from Goldman Sachs in a private transaction. Following this transaction, CPPIB's shares constitute an approximate 9.1% voting interest and an approximate 16% aggregate economic interest in Enstar. In addition, approximately 4.5% of our voting shares (constituting an aggregate economic interest of approximately 3.8%) are held indirectly by CPPIB through CPPIB Epsilon Ontario Limited Partnership ("CPPIB LP"). CPPIB is the sole limited partner of CPPIB LP, and CPPIB Epsilon Ontario Trust ("CPPIB Trust") is the general partner, and CPPIB's director representative is the trustee of CPPIB Trust. We also have a pre-existing reinsurance recoverable based on normal commercial terms from a company later acquired by Wilton Re, which was carried on our balance sheet at $9.3 million as of March 31, 2017. KaylaRe On December 15, 2016, our equity method investee, KaylaRe Holdings Ltd. ("KaylaRe"), completed an initial capital raise of $620.0 million. We own approximately 48.4% of KaylaRe's common shares. We also have a warrant to purchase up to 900,000 common shares of KaylaRe, approximately 48.4% of the outstanding warrants, exercisable upon an initial public offering or listing of KaylaRe’s common shares at an exercise price of $20.00 per share. The remaining common shares and warrants of KaylaRe are held by the Trident funds (approximately 8.1%) and HH KaylaRe Holdings, Ltd. (approximately 43.5%), an affiliate of Hillhouse Capital Management (“Hillhouse”). In addition, Hillhouse will receive warrants as consideration for investment management services provided. We recorded the investment in KaylaRe using the equity method basis of accounting, pursuant to the conclusion that we are not required to consolidate following an analysis based on the guidance in ASC 810 - Consolidation. Our investment in the common shares and warrants of KaylaRe was carried at $300.6 million and $294.6 million in other assets on our consolidated balance sheet as at March 31, 2017 and December 31, 2016, respectively. In connection with our investment in KaylaRe, we entered into a Shareholders Agreement with the other shareholders in KaylaRe, including the Trident funds and Hillhouse. The Shareholders Agreement (i) provides us with the right to appoint one member to the KaylaRe Board of Directors until the date that we own less than 1,250,000 common shares, (ii) includes a five year lock-up period on common shares of KaylaRe (unless KaylaRe completes an initial public offering before the expiry of this five year lock-up period), and (iii) provides customary tag-along rights and rights of first refusal in the case of certain proposed transfers by any other shareholder and customary preemptive rights in the event of a proposed new issuance of equity securities by KaylaRe. In the event that KaylaRe has not consummated an initial public offering by March 31, 2021, the Trident funds have the right to require us and Hillhouse to purchase on a pro rata basis all of their common shares in KaylaRe at the then-current fair market value. Our subsidiary, Enstar Limited, acts as insurance and reinsurance manager to KaylaRe's subsidiary, KaylaRe Ltd. Affiliates of Enstar have also entered into various reinsurance agreements with KaylaRe Ltd., and KaylaRe Ltd. will also have the opportunity to participate in future Enstar legacy transactions. We also provide administrative services to KaylaRe and KaylaRe Ltd. Through a Quota Share Agreement dated December 15, 2016 (the "KaylaRe-StarStone QS"), several of our StarStone affiliates have entered into a Quota Share Treaty with KaylaRe Ltd. pursuant to which KaylaRe Ltd. reinsures 35% of all business written by these StarStone affiliates for risks attaching from January 1, 2016, net of the StarStone affiliates’ external reinsurance programs. During the three months ended March 31, 2017, StarStone ceded $56.0 million of premium earned, $33.7 million of net incurred losses and LAE and $21.9 million of acquisition costs to KaylaRe Ltd. under the KaylaRe-StarStone QS. Our Non-life Run-off subsidiaries did not cede any net incurred losses to KaylaRe Ltd. during the three months ended March 31, 2017. Our consolidated balance sheets as at March 31, 2017 and December 31, 2016 include the following balances related to transactions between us and KaylaRe and KaylaRe Ltd.: reinsurance recoverable of $264.0 million (2016: $242.1 million), prepaid reinsurance premiums of $104.6 million (2016: $109.0 million), funds held of $182.3 million (2016: $182.3 million) recorded in other liabilities, insurance and reinsurance balances payable of $158.3 million (2016: $132.6 million), and ceded acquisition costs of $34.0 million (2016: $41.2 million) recorded as a reduction of deferred acquisition costs. Hillhouse Investment funds managed by Hillhouse collectively own approximately 2.1% of Enstar’s voting ordinary shares. These funds also own nonvoting ordinary shares and warrants to purchase additional non-voting ordinary shares, which together with their voting ordinary shares, represent an approximate 9.8% economic interest in Enstar. As of March 31, 2017 and December 31, 2016, our equity method investee, KaylaRe, had investments in a fund managed by Hillhouse with a fair value of $361.0 million and $350.0 million, respectively. |
Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Concentrations of Credit Risk We believe that there are no significant concentrations of credit risk associated with our cash and cash equivalents, fixed maturity investments, or other investments. Cash, cash equivalents and fixed maturity investments are managed pursuant to guidelines that follow prudent standards of diversification and limit the allowable holdings of a single issue and issuers. Other investments are managed pursuant to guidelines that emphasize diversification and liquidity. Pursuant to these guidelines, we manage and monitor risk across a variety of investment funds and vehicles, markets and counterparties. We are also subject to custodial credit risk on our fixed maturity and equity investments, which we manage by diversifying our holdings amongst large financial institutions that are highly regulated. We have exposure to credit risk on certain of our assets pledged to ceding companies under insurance contracts. In addition, we are potentially exposed should any insurance intermediaries be unable to fulfill their contractual obligations with respect to payments of balances owed to and by us. Credit risk exists in relation to reinsurance balances recoverable. We remain liable to the extent that retrocessionaires do not meet their contractual obligations and, therefore, we evaluate and monitor concentration of credit risk among our reinsurers. These amounts are discussed in Note 8 - "Reinsurance Balances Recoverable." We are also subject to credit risk in relation to funds held by reinsured companies. Under funds held arrangements, the reinsured company has retained funds that would otherwise have been remitted to our reinsurance subsidiaries. The funds balance is credited with investment income and losses payable are deducted. We are subject to credit risk if the reinsured company is unable to honor the value of the funds held balances, such as in the event of insolvency. However, we generally have the contractual ability to offset any shortfall in the payment of the funds held balances with amounts owed by us to the reinsured for losses payable and other amounts contractually due. We routinely monitor the creditworthiness of reinsured companies with whom we have funds held arrangements. We have a significant concentration of $1.0 billion to one reinsured company which has financial strength credit ratings of A+ from A.M. Best and AA from Standard & Poor's. We limit the amount of credit exposure to any one counterparty, and none of our counterparty credit exposures, excluding U.S. Government instruments and the funds held counterparty noted above, exceeded 10% of shareholders’ equity as of March 31, 2017. Legal Proceedings We are, from time to time, involved in various legal proceedings in the ordinary course of business, including litigation and arbitration regarding claims. Estimated losses relating to claims arising in the ordinary course of business, including the anticipated outcome of any pending arbitration or litigation, are included in the liability for losses and LAE in our consolidated balance sheets. In addition to claims litigation, we may be subject to other lawsuits and regulatory actions in the normal course of business, which may involve, among other things, allegations of underwriting errors or omissions, employment claims or regulatory activity. We do not believe that the resolution of any currently pending legal proceedings, either individually or taken as a whole, will have a material effect on our business, results of operations or financial condition. We anticipate that, similar to the rest of the insurance and reinsurance industry, we will continue to be subject to litigation and arbitration proceedings in the ordinary course of business, including litigation generally related to the scope of coverage with respect to asbestos and environmental and other claims. Unfunded Investment Commitments As at March 31, 2017, we had unfunded commitments to investment funds of $142.6 million. Guarantees As at March 31, 2017 and December 31, 2016, parental guarantees supporting subsidiaries' insurance obligations were $612.6 million and $625.7 million, respectively. Asbestos Personal Injury Liabilities We acquired Dana Companies, LLC ("Dana") on December 30, 2016, as described in Note 3 - "Acquisitions" of our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016. Dana continues to process asbestos personal injury claims in the normal course of business and is separately managed. Other liabilities included $217.1 million and $220.5 million for indemnity and defense costs for pending and future claims at March 31, 2017 and December 31, 2016, respectively, determined using standard actuarial techniques for asbestos-related exposures. Other liabilities also included $2.2 million and $2.3 million for environmental liabilities associated with Dana properties at March 31, 2017 and December 31, 2016, respectively. Other assets included $130.9 million and $133.0 million at March 31, 2017 and December 31, 2016, respectively, for estimated insurance recoveries relating to these liabilities. The recorded asset represents our assessment of the capacity of the insurance agreements to provide for the payment of anticipated defense and indemnity costs for pending claims and projected future demands. The recognition of these recoveries is based on an assessment of the right to recover under the respective contracts and on the financial strength of the insurers. The recorded asset does not represent the limits of our insurance coverage, but rather the amount we would expect to recover if the accrued indemnity and defense costs were paid in full. Redeemable Noncontrolling Interest We have the right to purchase the RNCI interests from the RNCI holders at certain times in the future (each such right, a "call right"), and the RNCI holders have the right to sell their RNCI interests to us at certain times in the future (each such right, a "put right"). The RNCI rights held by Trident are described in Note 19 - "Related Party Transactions." Dowling has a right to participate if Trident exercises its put right. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION We monitor and report our results of operations in four segments: Non-life Run-off, Atrium, StarStone and Life and Annuities. These segments are described in Note 1 and Note 24 to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016. The following tables set forth selected and condensed consolidated statement of earnings results by segment for the three months ended March 31, 2017 and 2016:
Assets by Segment Invested assets are managed on a subsidiary-by-subsidiary basis, and investment income and realized and unrealized gains (losses) on investments are recognized in each segment as earned. Our total assets as at March 31, 2017 and December 31, 2016 by segment were as follows (the elimination items include the elimination of intersegment assets):
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Significant Accounting Policies (Policies) |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Basis of Preparation | These unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. |
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Basis of Consolidation | Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, these financial statements reflect all adjustments consisting of normal recurring items considered necessary for a fair presentation under U.S. GAAP. The results of operations for any interim period are not necessarily indicative of results of the full year. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016. All significant inter-company transactions and balances have been eliminated. Results of operations for acquired subsidiaries are included from the date of acquisition. In these notes, the terms "we," "us," "our," or "the Company" refer to Enstar Group Limited and its consolidated subsidiaries. |
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Reclassifications | Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings. |
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Use of Estimates | The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from these estimates. Results of changes in estimates are reflected in earnings in the period in which the change is made. Our principal estimates include, but are not limited to:
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Retroactive Reinsurance - Fair Value Option | In our Non-life Run-off segment we have elected to apply the fair value option for certain loss portfolio transfer reinsurance transactions. This is an irrevocable election that applies to all balances under the insurance contract, including funds held assets, reinsurance recoverable, and the liability for losses and loss adjustment expenses. The Company uses an internal model to calculate the fair value of the liability for losses and loss adjustment expenses and reinsurance recoverable asset. Note 6 - "Fair Value Measurements" describes the internal model, including the observable and unobservable inputs used in the model. |
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New Accounting Standards Adopted and Recently Issued Accounting Pronouncements Not Yet Adopted | New Accounting Standards Adopted in 2017 Accounting Standards Update ("ASU") 2016-09, Improvements to Employee Share-Based Payment Accounting In March 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-09, which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The impact of adopting this guidance on our consolidated financial statements was a cumulative-effect adjustment of $4.9 million to opening retained earnings for the excess tax benefit not previously recognized. ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities In March 2017, the Financial Accounting Standards Board ("FASB") issued ASU 2017-08, which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. The adoption of this guidance did not have a material impact on our consolidated financial statements. ASU 2016-07, Simplifying the Transition to the Equity Method of Accounting In March 2016, the FASB issued ASU 2016-07, which simplifies the equity method of accounting by eliminating the requirement to retrospectively apply the equity method to an investment that subsequently qualifies for such accounting as a result of an increase in the level of ownership interest or degree of influence. Entities are therefore required to apply the guidance prospectively to increases in the level of ownership interest or degree of influence occurring after the ASU’s effective date. The ASU further requires that unrealized holding gains or losses in accumulated other comprehensive income related to an available-for-sale security that becomes eligible for the equity method be recognized in earnings as of the date on which the investment qualifies for the equity method. The adoption of this guidance did not have any impact our consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted Note 2 "Significant Accounting Policies" of our Annual Report on Form 10-K for the year ended December 31, 2016 describes accounting pronouncements that were not adopted as of December 31, 2016. Those pronouncements are not yet adopted unless discussed above in "New Accounting Standards Adopted in 2017". In addition, the following pronouncements were issued during the three months ended March 31, 2017 and are not yet adopted. ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost In March 2017, the FASB issued ASU 2017-07, which amends the requirements in Accounting Standards Codification (“ASC”) 715 related to the income statement presentation of the components of net periodic benefit cost for an entity’s sponsored defined benefit pension and other postretirement plans. The ASU requires entities to (1) disaggregate the current-service-cost component from the other components of net benefit cost (the “other components”) and present it with other current compensation costs for related employees in the statement of earnings, and (2) present the other components elsewhere in the statement of earnings and outside of income from operations if such a subtotal is presented. The ASU also requires entities to disclose the captions within the statement of earnings that contain the other components if they are not presented on appropriately described separate lines. In addition, only the service-cost component of the net benefit cost is eligible for capitalization, which is a change from current practice, under which entities capitalize the aggregate net benefit cost when applicable. The ASU’s amendments are effective for interim and annual reporting periods beginning after December 15, 2017, although early adoption is permitted. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements. ASU 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets In February 2017, the FASB issued ASU 2017-05 to clarify the scope of the Board’s guidance on nonfinancial asset derecognition (ASC 610-20) as well as the accounting for partial sales of nonfinancial assets. The ASU conforms the derecognition on nonfinancial assets with the model for transactions in the new revenue standard (ASC 606, as amended). The ASU clarifies that ASC 610-20 applies to the derecognition of all nonfinancial assets and in-substance nonfinancial assets. The ASU also clarifies that if a transaction is partially within the scope of ASC 610-20 and partially within the scope of other guidance, an entity should apply the separation and allocation guidance in ASC 606. The ASU also requires an entity to derecognize the nonfinancial asset or in-substance nonfinancial asset in a partial sale transaction when (1) the entity ceases to have a controlling financial interest in a subsidiary pursuant to ASC 810, and (2) control of the asset is transferred in accordance with ASC 606. The effective date of the ASU is aligned with the requirements in the new revenue standard, which is effective for interim and annual reporting periods beginning after December 15, 2017. Similar to the new revenue standard, the ASU allows an entity to use a full or modified retrospective adoption approach. Similar to the new revenue standard, we expect to adopt this guidance on January 1, 2018 using the modified retrospective approach, however we do not expect this adoption to have a material impact on our consolidated financial statements. |
Held-For-Sale Business (Tables) |
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Financial Information of Held-For-Sale Business | The following table summarizes the components of net earnings (losses) from discontinued operations on the consolidated statements of earnings for the three months ended March 31, 2017 and 2016:
The following table presents the cash flows of Pavonia for the three months ended March 31, 2017, and 2016:
The following table summarizes the components of assets and liabilities held-for-sale on our consolidated balance sheet as at March 31, 2017 and December 31, 2016:
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Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Values of Investments in Fixed Maturity Investments, Short-Term Investments and Equities, Trading Securities | The fair values of our fixed maturity investments, short-term investments and equities classified as trading were as follows:
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Summary of Amortized Cost and Estimated Fair Value of Fixed Maturities by Contractual Maturity | The contractual maturities of our fixed maturity and short-term investments classified as trading are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
The contractual maturities of our fixed maturity and short-term investments classified as available-for-sale are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
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Amortized Cost and Estimated Fair Values of Company's Fixed Maturity and Short-Term Investments Classified as Available-for-Sale | The amortized cost and fair values of our fixed maturity and short-term investments classified as available-for-sale were as follows:
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Summary of Investments Classified as Available-for-Sale in Unrealized Loss Position as Well as Aggregate Fair Value and Gross Unrealized Loss by Length of Time | The following tables summarize our fixed maturity and short-term investments in a gross unrealized loss position:
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Credit Ratings Company's Fixed Maturity and Short-Term Investments Available-for-Sale | The following table sets forth the credit ratings of our fixed maturity and short-term investments as of March 31, 2017:
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Other Investments | The following table summarizes our other investments carried at fair value:
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Schedule of Life Settlement Contracts, Investment Method | The following table presents further information regarding our investments in life settlements as of March 31, 2017 and December 31, 2016.
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Realized Gain (Loss) on Investments | Components of net realized and unrealized gains for the three months ended March 31, 2017 and 2016 were as follows:
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Unrealized Gain (Loss) on Investments | Components of net realized and unrealized gains for the three months ended March 31, 2017 and 2016 were as follows:
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Major Categories of Net Investment Income | Major categories of net investment income for the three months ended March 31, 2017 and 2016 are summarized as follows:
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Schedule of Carrying Value of Restricted Investments | The carrying value of our restricted assets, including restricted cash of $392.4 million and $363.8 million, as of March 31, 2017 and December 31, 2016, respectively, was as follows:
(1) Our underwriting businesses include three Lloyd's syndicates. Lloyd's determines the required capital principally through the annual business plan of each syndicate. This capital is referred to as "Funds at Lloyd's" and will be drawn upon in the event that a syndicate has a loss that cannot be funded from other sources. We have an unsecured letter of credit agreement for Funds at Lloyd’s purposes ("FAL Facility") to issue up to $140.0 million of letters of credit, with a provision to increase the facility up to $200.0 million. The FAL Facility is available to satisfy our Funds at Lloyd’s requirements and expires in 2021. As at March 31, 2017, our combined Funds at Lloyd's were comprised of cash and investments of $220.2 million and unsecured letters of credit of $122.0 million. |
Funds Held - Directly Managed (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Value of Assets and Liabilities Underlying Funds Held - Directly Managed | The following table presents the fair values of assets and liabilities underlying the funds held - directly managed account as at March 31, 2017 and December 31, 2016:
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Contractual Maturities of Fixed Maturity Investments Underlying Funds Held - Directly Managed | The contractual maturities of our fixed maturity investments underlying the funds held - directly managed account are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
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Funds Held - Directly Managed, by Credit Rating | The following table sets forth the credit ratings of our fixed maturity investments underlying the funds held - directly managed account as of March 31, 2017.
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Net Realized and Unrealized Investment (Losses) Gains | Net realized gains and change in fair value for the three months ended March 31, 2017 are summarized as follows:
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Net Investment Income | Major categories of net investment income underlying the funds held - directly managed for the three months ended March 31, 2017 are summarized as follows:
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Categorized Investments Recorded at Fair Value among Levels | We have categorized our assets and liabilities that are recorded at fair value on a recurring basis among levels based on the observability of inputs as follows:
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Fair Value, Investments, Entities that Calculate Net Asset Value Per Share | The following table reconciles our other investments in the tables above with the amounts presented on our consolidated balance sheets:
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Reconciliation for Assets Measured at Fair Value on a Recurring Basis | The following table presents a reconciliation of the beginning and ending balances for all investments measured at fair value on a recurring basis using Level 3 inputs during the three months ended March 31, 2017 and 2016:
The following table presents a reconciliation of the beginning and ending balances for all insurance contracts measured at fair value on a recurring basis using Level 3 inputs during the three months ended March 31, 2017:
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Reconciliation for Liabilities Measured at Fair Value on a Recurring Basis | The following table presents a reconciliation of the beginning and ending balances for all insurance contracts measured at fair value on a recurring basis using Level 3 inputs during the three months ended March 31, 2017:
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Quantitative Information | Below is a summary of the quantitative information regarding the significant observable and unobservable inputs used in the internal model to determine fair value on a recurring basis as at March 31, 2017 and as at the acquisition dates during the three month period ended March 31, 2017:
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Derivative Instruments (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Value and Unrealized Gains (Losses) on Derivative Instruments | The following table presents the gross notional amounts, estimated fair values recorded within other assets and liabilities and the amounts included in net earnings related to our non-qualifying foreign currency forward exchange rate hedging relationships as at March 31, 2017.
The following table presents the gross notional amounts, estimated fair values recorded within other assets and liabilities and the amounts of the net gains and losses deferred in the currency translation adjustment account which is a component of accumulated other comprehensive income (loss) ("AOCI"), in shareholders' equity, related to our foreign currency forward exchange rate contracts as at March 31, 2017 and December 31, 2016.
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Reinsurance Balances Recoverable (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Reinsurance Reserves Recoverable and Uncollectible Reinsurance Balances Recoverable | The following tables provide the total reinsurance balances recoverable by segment as at March 31, 2017 and December 31, 2016:
The following table shows our reinsurance balances recoverable by rating of reinsurer and our provisions for uncollectible reinsurance balances recoverable ("provisions for bad debt") as at March 31, 2017 and December 31, 2016. The provisions for bad debt all relate to the Non-life Run-off segment.
The following table provides a summary of net premiums written and earned in our Non-life Run-off, Atrium, StarStone and Life and Annuities segments for the three months ended March 31, 2017 and 2016:
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Reinsurance Balances Recoverable by Reinsurer | Top Ten Reinsurers
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Losses and Loss Adjustment Expenses (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Losses and Loss Adjustment Expense Liabilities, and Reconciliation of Beginning and Ending Balances | The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three months ended March 31, 2017 and 2016:
The table below provides a reconciliation of the beginning and ending reserves for losses and LAE for the three months ended March 31, 2017 and 2016 for the Non-life Run-off segment:
The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three months ended March 31, 2017 and 2016:
The following table summarizes the liability for losses and LAE by segment as at March 31, 2017 and December 31, 2016:
The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three months ended March 31, 2017 and 2016:
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Schedule of Incurred Losses | Net incurred losses and LAE in the Atrium segment for the three months ended March 31, 2017 and 2016 were as follows:
The tables below provide the net incurred losses and LAE in the Non-life Run-off, Atrium and StarStone segments for the three months ended March 31, 2017 and 2016:
Net incurred losses and LAE in the Non-life Run-off segment for the three months ended March 31, 2017 and 2016 were as follows:
Net incurred losses and LAE in the StarStone segment for the three months ended March 31, 2017 and 2016 were as follows:
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Premiums Written and Earned (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Premiums Written and Earned | The following tables provide the total reinsurance balances recoverable by segment as at March 31, 2017 and December 31, 2016:
The following table shows our reinsurance balances recoverable by rating of reinsurer and our provisions for uncollectible reinsurance balances recoverable ("provisions for bad debt") as at March 31, 2017 and December 31, 2016. The provisions for bad debt all relate to the Non-life Run-off segment.
The following table provides a summary of net premiums written and earned in our Non-life Run-off, Atrium, StarStone and Life and Annuities segments for the three months ended March 31, 2017 and 2016:
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Goodwill, Intangible Assets and Deferred Charges (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill, Intangible Assets, Intangible Assets Arising from Insurance Contracts Acquired in Business Combination, and Deferred Charges Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill, Intangible Assets and Deferred Charge | The following table presents a reconciliation of the beginning and ending goodwill, intangible assets and the deferred charge during the three months ended March 31, 2017:
The gross carrying value, accumulated amortization and net carrying value of intangible assets by type and the deferred charge at March 31, 2017 and December 31, 2016 were as follows:
|
Debt Obligations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts of Loans Payable Outstanding, and Accrued Interest | Debt obligations as of March 31, 2017 and December 31, 2016 were as follows:
|
Noncontrolling Interests (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amount of Equity Attributable to Noncontrolling Interest | The following is a reconciliation of the beginning and ending carrying amount of the equity attributable to the RNCI as of March 31, 2017 and December 31, 2016:
|
Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comparison of Basic and Diluted Earnings per Share | The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2017 and 2016:
|
Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Operations by Segment | The following tables set forth selected and condensed consolidated statement of earnings results by segment for the three months ended March 31, 2017 and 2016:
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Summary of Company's Assets by Segment | Our total assets as at March 31, 2017 and December 31, 2016 by segment were as follows (the elimination items include the elimination of intersegment assets):
|
Significant New Business - Additional Information (Detail) $ in Thousands, £ in Millions |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Feb. 07, 2017
USD ($)
|
Feb. 07, 2017
GBP (£)
|
Jan. 11, 2017
USD ($)
|
Mar. 31, 2017
USD ($)
|
Mar. 31, 2016
USD ($)
|
Feb. 07, 2017
GBP (£)
|
|
Guarantor Obligations [Line Items] | ||||||
Assumed business | $ 1,432,412 | $ 1,084,251 | ||||
RSA Insurance Group PLC [Member] | ||||||
Guarantor Obligations [Line Items] | ||||||
Assumed business | $ 1,301,800 | £ 1,046.4 | ||||
Net insurance reserves assumed | 1,153,900 | £ 927.5 | ||||
Reinsurance premium payable | 997,200 | £ 801.6 | ||||
Fair value adjustment on gross reserves | 174,100 | |||||
Fair value adjustment on net reserves | $ 156,700 | |||||
QBE Insurance Group Limited | ||||||
Guarantor Obligations [Line Items] | ||||||
Assumed business | $ 1,019,000 | |||||
Net insurance reserves assumed | 447,000 | |||||
Fair value adjustment on gross reserves | 180,000 | |||||
Fair value adjustment on net reserves | $ 43,200 |
Held-For-Sale Business - Additional Information (Details) - Pavonia - Discontinued Operations, Held-for-sale - USD ($) $ in Millions |
Mar. 31, 2017 |
Feb. 17, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Disposal, consideration | $ 120.0 | ||
Disposal, restricted investments | $ 781.2 | $ 786.0 | |
CTA balance related to disposal | $ (14.4) | $ (14.8) |
Investments - Other Than Temporary Impairment (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Investments, Debt and Equity Securities [Abstract] | ||
Other than temporary impairment losses, available-for-sale securities | $ 0 | $ 0 |
Available-for-sale Securities | ||
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items] | ||
Credit losses | $ 0 | $ 0 |
Investments - Net Investment Income (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Net Investment Income [Line Items] | ||
Gross investment income | $ 51,142 | $ 51,497 |
Investment expenses | (2,403) | (1,217) |
Net investment income | 48,739 | 50,280 |
Fixed maturity investments | ||
Net Investment Income [Line Items] | ||
Gross investment income | 30,330 | 27,198 |
Short-term investments and cash and cash equivalents | ||
Net Investment Income [Line Items] | ||
Gross investment income | 2,640 | 1,158 |
Equity securities | ||
Net Investment Income [Line Items] | ||
Gross investment income | 726 | 1,060 |
Other investments | ||
Net Investment Income [Line Items] | ||
Gross investment income | 3,509 | 6,034 |
Funds held | ||
Net Investment Income [Line Items] | ||
Gross investment income | 39 | 7,604 |
Funds held - directly managed | ||
Net Investment Income [Line Items] | ||
Gross investment income | 7,550 | |
Investment expenses | (548) | |
Net investment income | 7,002 | 0 |
Life settlements and other | ||
Net Investment Income [Line Items] | ||
Gross investment income | $ 6,896 | $ 8,443 |
Investments - Restricted Assets (Detail) |
Mar. 31, 2017
USD ($)
syndicate
|
Dec. 31, 2016
USD ($)
|
Mar. 31, 2016
USD ($)
|
---|---|---|---|
Investments, Debt and Equity Securities [Abstract] | |||
Restricted cash and cash equivalents | $ 392,413,000 | $ 363,774,000 | $ 496,204,000 |
Collateral in trust for third party agreements | 3,260,539,000 | 1,975,022,000 | |
Assets on deposit with regulatory authorities | 795,290,000 | 882,400,000 | |
Assets on deposit with regulatory authorities | 175,069,000 | 177,263,000 | |
Funds at Lloyd's | 220,216,000 | 220,328,000 | |
Restricted assets, total | $ 4,451,114,000 | $ 3,255,013,000 | |
Number of syndicates | syndicate | 3 | ||
Cash and investments | $ 220,200,000 | ||
Collateral for line of credit facility | 122,000,000 | ||
FAL Facility | Line of Credit | Letters of Credit | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | 140,000,000.0 | ||
Higher borrowing capacity option | $ 200,000,000.0 |
Funds Held - Directly Managed - Net Realized and Unrealized Investment (Losses) Gains (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Gain (Loss) on Investments [Line Items] | ||
Net realized and unrealized gains (losses) | $ 58,519 | $ 38,277 |
Funds held - directly managed | ||
Gain (Loss) on Investments [Line Items] | ||
Net realized losses on fixed maturity securities | (3,853) | 0 |
Change in fair value of embedded derivative | 6,928 | 0 |
Change in value of fair value option on funds held - directly managed | 262 | $ 0 |
Net realized and unrealized gains (losses) | $ 3,337 |
Funds Held - Directly Managed - Net Investment Income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Net Investment Income [Line Items] | ||
Gross investment income | $ 51,142 | $ 51,497 |
Investment expenses | (2,403) | (1,217) |
Net investment income | 48,739 | 50,280 |
Funds held - directly managed | ||
Net Investment Income [Line Items] | ||
Gross investment income | 7,550 | |
Investment expenses | (548) | |
Net investment income | 7,002 | $ 0 |
Funds held - directly managed | Fixed Maturities [Member] | ||
Net Investment Income [Line Items] | ||
Gross investment income | 7,485 | |
Funds held - directly managed | Short-term investments and cash and cash equivalents | ||
Net Investment Income [Line Items] | ||
Gross investment income | $ 65 |
Funds Held - Directly Managed - Additional Information (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule of Funds Held, Directly Managed [Line Items] | ||
Trading securities, amortized cost | $ 5,844,419 | |
Trading securities, debt | 5,849,329 | |
Allianz [Member] | ||
Schedule of Funds Held, Directly Managed [Line Items] | ||
Funds held - directly managed, at cost, carrying value | 1,054,300 | $ 1,023,000 |
Funds held - directly managed, fair value of embedded derivative | (21,400) | (28,300) |
Funds held - directly managed | 1,032,900 | 994,700 |
Funds held - directly managed | ||
Schedule of Funds Held, Directly Managed [Line Items] | ||
Trading securities, amortized cost | 1,172,665 | |
Trading securities, debt | 1,151,535 | $ 987,530 |
Funds held - directly managed | QBE Insurance Group Limited | ||
Schedule of Funds Held, Directly Managed [Line Items] | ||
Trading securities, amortized cost | 176,500 | |
Trading securities, debt | $ 176,800 |
Fair Value Measurements - Other Investments (Details) - Recurring - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total other investments shown on balance sheets | $ 6,643,629 | $ 5,408,290 |
Other Investments | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Other investments | 445,277 | 434,316 |
Other investments measured at NAV as practical expedient | 486,878 | 502,731 |
Total other investments shown on balance sheets | $ 932,155 | $ 937,047 |
Fair Value Measurements - Quantitative Information (Details) - Recurring - Internal model |
3 Months Ended |
---|---|
Mar. 31, 2017 | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Credit spread for non-performance risk | 0.20% |
Risk cost of capital | 5.00% |
Weighted average cost of capital | 8.50% |
Reinsurance recoverable | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Duration | 12 years 1 month 28 days |
Liability for losses and LAE | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Duration | 11 years 3 months |
Derivative Instruments Derivative Instruments - Investments in Call Options on Equities (Details) - Not designated as hedging instrument - Call options on equities $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Derivative [Line Items] | |
Cost | $ 5.5 |
Unrealized gains in net earnings | $ 0.6 |
Reinsurance Balances Recoverable - Summary of Provisions for Uncollectible Reinsurance Balances Recoverable by Rating of Reinsurer (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Effects of Reinsurance [Line Items] | ||
Gross | $ 2,175,653 | $ 1,635,259 |
Provisions for Bad Debt | 173,535 | 174,516 |
Net | $ 2,002,118 | $ 1,460,743 |
Provisions as a % of Gross | 8.00% | 10.70% |
Reinsurers rated A- or above | ||
Effects of Reinsurance [Line Items] | ||
Gross | $ 1,310,533 | $ 892,776 |
Provisions for Bad Debt | 38,704 | 35,184 |
Net | $ 1,271,829 | $ 857,592 |
Provisions as a % of Gross | 3.00% | 3.90% |
Secured | Reinsurers rated below A- | ||
Effects of Reinsurance [Line Items] | ||
Gross | $ 673,898 | $ 544,894 |
Provisions for Bad Debt | 0 | 0 |
Net | $ 673,898 | $ 544,894 |
Provisions as a % of Gross | 0.00% | 0.00% |
Unsecured | Reinsurers rated below A- | ||
Effects of Reinsurance [Line Items] | ||
Gross | $ 191,222 | $ 197,589 |
Provisions for Bad Debt | 134,831 | 139,332 |
Net | $ 56,391 | $ 58,257 |
Provisions as a % of Gross | 70.50% | 70.50% |
Policy Benefits for Life and Annuity Contracts - Schedule of Life and Annuity Benefits (Detail) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Insurance [Abstract] | ||
Policy benefits for life contracts | $ 111.7 | $ 112.1 |
Goodwill, Intangible Assets and Deferred Charge - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Goodwill, Intangible Assets, Intangible Assets Arising from Insurance Contracts Acquired in Business Combination, and Deferred Charges Disclosure [Abstract] | ||
Amortization of intangible assets | $ 1.5 | $ 0.1 |
Debt Obligations - Amounts Outstanding and Accrued Interest (Detail) - USD ($) $ in Thousands |
Mar. 10, 2017 |
Nov. 18, 2016 |
Dec. 24, 2014 |
Sep. 16, 2014 |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|---|---|
Debt Instrument [Line Items] | ||||||
Debt obligations | $ 730,845 | $ 673,603 | ||||
Line of Credit | EGL Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Term | 5 years | |||||
Debt obligations | 245,228 | 535,103 | ||||
Line of Credit | Sussex Facility | ||||||
Debt Instrument [Line Items] | ||||||
Term | 4 years | |||||
Debt obligations | 63,500 | 63,500 | ||||
Line of Credit | EGL Term Loan Facility | ||||||
Debt Instrument [Line Items] | ||||||
Term | 3 years | |||||
Debt obligations | 75,000 | 75,000 | ||||
Senior Notes | Senior Notes Due 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Term | 5 years | |||||
Senior Notes | 350,000 | 0 | ||||
Less: Unamortized debt issuance costs | (2,883) | 0 | ||||
Debt obligations | $ 347,117 | $ 0 |
Noncontrolling Interests - Additional Information (Detail) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Noncontrolling Interest [Line Items] | ||
Noncontrolling interest | $ 9,217 | $ 8,520 |
Trident | Subsidiaries | ||
Noncontrolling Interest [Line Items] | ||
Interest owned by an entity (percent) | 39.32% | 39.32% |
Dowling | Subsidiaries | ||
Noncontrolling Interest [Line Items] | ||
Interest owned by an entity (percent) | 1.71% | 1.71% |
Noncontrolling Interests - Carrying Amount of Equity Attributable to Noncontrolling Interest (Detail) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Increase (Decrease) in Redeemable Noncontrolling Interest [Roll Forward] | ||
Balance at beginning of period | $ 454,522 | $ 417,663 |
Net earnings (loss) attributable to RNCI | 16,729 | 40,639 |
Accumulated other comprehensive earnings (loss) attributable to RNCI | 657 | 651 |
Change in redemption value of RNCI | 1,156 | (4,431) |
Balance at end of period | $ 473,064 | $ 454,522 |
Share Capital (Details) |
3 Months Ended |
---|---|
Mar. 31, 2017
shares
| |
Series C Non-Voting Convertible Ordinary Shares | |
Class of Stock [Line Items] | |
Common shares issued upon conversion (in shares) | 192,485 |
Share-Based Compensation and Pensions (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Pension expense | $ 2.3 | $ 3.1 |
Restricted Stock And Stock Appreciation Rights SARS | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation expense | 3.8 | 8.2 |
Employee Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation expense | $ 0.1 | $ 0.1 |
Taxation - Additional Information (Detail) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||
Effective tax rate | (4.30%) | 11.90% | |
Statutory rate | 0.00% | 0.00% | |
Unrecognized tax benefits | $ 0 | $ 0 |
Related Party Transactions - CPPIB (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Nov. 30, 2016 |
Jun. 03, 2015 |
---|---|---|---|
CPPIB and Management of Wilton Re | |||
Related Party Transaction [Line Items] | |||
Ownership percentage by parent | 100.00% | ||
Affiliated Entity | CPPIB and Management of Wilton Re | |||
Related Party Transaction [Line Items] | |||
Ownership percentage | 9.10% | 9.10% | |
Economic interest percentage | 16.00% | 9.80% | |
Reinsurance recoverables | $ 9.3 | ||
Affiliated Entity | CPPIB LP | |||
Related Party Transaction [Line Items] | |||
Ownership percentage | 4.50% | ||
Economic interest percentage | 3.80% |
Related Party Transactions - Hillhouse (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Related Party Transaction [Line Items] | ||
Other investments | $ 932,155 | $ 937,047 |
Hillhouse Affiliates | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Ownership percentage | 2.10% | |
Economic interest percentage | 9.80% | |
Hillhouse | KaylaRe Holdings Ltd | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Other investments | $ 361,000 | $ 350,000 |
Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Guarantor Obligations [Line Items] | ||
Funds held by reinsured companies | $ 88,326 | $ 82,073 |
Commitments, unfunded | 142,600 | |
Limited Parental Guarantee | ||
Guarantor Obligations [Line Items] | ||
Total parental guarantees | 612,600 | 625,700 |
Reinsurance Recoverables | Reinsurer Concentration Risk | ||
Guarantor Obligations [Line Items] | ||
Funds held by reinsured companies | 1,000,000 | |
Asbestos personal injury liabilities | ||
Guarantor Obligations [Line Items] | ||
Indemnity and defense costs | 217,100 | 220,500 |
Insurance recoveries receivable | 130,900 | 133,000 |
Asbestos personal injury liabilities | Dana properties | ||
Guarantor Obligations [Line Items] | ||
Indemnity and defense costs | $ 2,200 | $ 2,300 |
Segment Information - Additional Information (Detail) |
3 Months Ended |
---|---|
Mar. 31, 2017
Segment
| |
Segment Reporting [Abstract] | |
Number of segments | 4 |
Segment Information - Summary of Company's Assets by Segment (Detail) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 14,882,877 | $ 12,865,744 |
Operating Segments | Non-Life Run-Off | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 10,320,251 | 8,297,103 |
Operating Segments | Atrium | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 590,921 | 563,754 |
Operating Segments | StarStone | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 3,039,624 | 2,968,316 |
Operating Segments | Life and Annuities Segment | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 1,643,235 | 1,644,013 |
Eliminations | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ (711,154) | $ (607,442) |
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