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. |
CONSOLIDATED FINANCIAL STATEMENTS | Page |
September 30, 2018 | December 31, 2017 | ||||||
(expressed in thousands of U.S. dollars, except share data) | |||||||
ASSETS | |||||||
Short-term investments, trading, at fair value | $ | 231,950 | $ | 180,211 | |||
Fixed maturities, trading, at fair value | 6,313,330 | 5,696,073 | |||||
Fixed maturities, available-for-sale, at fair value (amortized cost: 2018 — $163,696; 2017 — $208,097) | 163,144 | 210,285 | |||||
Equities, trading, at fair value | 130,314 | 106,603 | |||||
Other investments, at fair value | 2,036,430 | 913,392 | |||||
Other investments, at cost | — | 125,621 | |||||
8,875,168 | 7,232,185 | ||||||
Cash and cash equivalents | 553,419 | 955,150 | |||||
Restricted cash and cash equivalents | 474,590 | 257,686 | |||||
Funds held - directly managed (Note 6) | 1,217,182 | 1,179,940 | |||||
Premiums receivable | 574,419 | 425,702 | |||||
Deferred tax assets (Note 19) | 13,782 | 13,001 | |||||
Prepaid reinsurance premiums | 191,669 | 245,101 | |||||
Reinsurance balances recoverable (Note 9) | 1,183,003 | 1,478,806 | |||||
792,553 | 542,224 | ||||||
Funds held by reinsured companies | 254,029 | 175,383 | |||||
Deferred acquisition costs | 125,132 | 64,984 | |||||
Goodwill and intangible assets (Note 13) | 219,295 | 180,589 | |||||
Other assets | 646,987 | 831,320 | |||||
Assets held for sale (Note 4) | — | 24,351 | |||||
TOTAL ASSETS | $ | 15,121,228 | $ | 13,606,422 | |||
LIABILITIES | |||||||
Losses and loss adjustment expenses (Note 10) | $ | 5,516,012 | $ | 5,603,419 | |||
3,019,721 | 1,794,669 | ||||||
Policy benefits for life and annuity contracts (Note 11) | 107,466 | 117,207 | |||||
Unearned premiums | 743,024 | 583,197 | |||||
Insurance and reinsurance balances payable | 381,114 | 236,697 | |||||
Deferred tax liabilities (Note 19) | 14,942 | 15,262 | |||||
Debt obligations (Note 14) | 394,470 | 646,689 | |||||
Other liabilities | 570,474 | 972,457 | |||||
Liabilities held for sale (Note 4) | — | 11,271 | |||||
TOTAL LIABILITIES | 10,747,223 | 9,980,868 | |||||
COMMITMENTS AND CONTINGENCIES (Note 21) | |||||||
REDEEMABLE NONCONTROLLING INTEREST (Note 15) | 458,328 | 479,606 | |||||
SHAREHOLDERS’ EQUITY (Note 16) | |||||||
Ordinary shares (par value $1 each, issued and outstanding 2018: 21,443,789; 2017: 19,406,722): | |||||||
Voting Ordinary shares (issued and outstanding 2018: 17,934,107; 2017: 16,402,279) | 17,934 | 16,402 | |||||
Non-voting convertible ordinary Series C Shares (issued and outstanding 2018 and 2017: 2,599,672) | 2,600 | 2,600 | |||||
Non-voting convertible ordinary Series E Shares (issued and outstanding 2018: 910,010; 2017: 404,771) | 910 | 405 | |||||
Preferred Shares: | |||||||
Series C Preferred Shares (issued and held in treasury 2018 and 2017: 388,571) | 389 | 389 | |||||
Series D Preferred Shares (issued and outstanding 2018: 16,000) | 400,000 | — | |||||
Treasury shares, at cost (Series C Preferred shares 2018 and 2017: 388,571) | (421,559 | ) | (421,559 | ) | |||
Additional paid-in capital | 1,812,727 | 1,395,067 | |||||
Accumulated other comprehensive income | 9,170 | 10,468 | |||||
Retained earnings | 2,083,193 | 2,132,912 | |||||
Total Enstar Group Limited Shareholders’ Equity | 3,905,364 | 3,136,684 | |||||
Noncontrolling interest | 10,313 | 9,264 | |||||
TOTAL SHAREHOLDERS’ EQUITY | 3,915,677 | 3,145,948 | |||||
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY | $ | 15,121,228 | $ | 13,606,422 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(expressed in thousands of U.S. dollars, except share and per share data) | |||||||||||||||
INCOME | |||||||||||||||
Net premiums earned | $ | 264,597 | $ | 148,025 | $ | 663,628 | $ | 452,494 | |||||||
Fees and commission income | 6,950 | 15,895 | 23,633 | 46,476 | |||||||||||
Net investment income | 69,430 | 52,028 | 202,218 | 150,184 | |||||||||||
Net realized and unrealized gains (losses) | (57,223 | ) | 29,301 | (254,671 | ) | 139,697 | |||||||||
Other income (expenses) | 11,543 | (3,848 | ) | 34,477 | 19,206 | ||||||||||
295,297 | 241,401 | 669,285 | 808,057 | ||||||||||||
EXPENSES | |||||||||||||||
Net incurred losses and loss adjustment expenses | 153,974 | 75,712 | 266,327 | 163,224 | |||||||||||
Life and annuity policy benefits | 423 | 1,060 | 217 | 5,048 | |||||||||||
Acquisition costs | 54,242 | 24,281 | 137,684 | 75,457 | |||||||||||
General and administrative expenses | 102,553 | 100,325 | 300,425 | 309,283 | |||||||||||
Interest expense | 4,640 | 6,410 | 21,573 | 20,851 | |||||||||||
Net foreign exchange losses | 1,040 | 4,775 | 1,389 | 15,612 | |||||||||||
Loss on sale of subsidiary | — | 6,740 | — | 16,349 | |||||||||||
316,872 | 219,303 | 727,615 | 605,824 | ||||||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES | (21,575 | ) | 22,098 | (58,330 | ) | 202,233 | |||||||||
INCOME TAXES | (746 | ) | (1,432 | ) | (4,564 | ) | (3,234 | ) | |||||||
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS | (22,321 | ) | 20,666 | (62,894 | ) | 198,999 | |||||||||
NET EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES | — | 3,495 | — | (1,005 | ) | ||||||||||
NET EARNINGS (LOSS) | (22,321 | ) | 24,161 | (62,894 | ) | 197,994 | |||||||||
Net loss (earnings) attributable to noncontrolling interest | 11,489 | 14,832 | 19,096 | (14,135 | ) | ||||||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED | (10,832 | ) | 38,993 | (43,798 | ) | 183,859 | |||||||||
Dividends on preferred shares | (5,133 | ) | — | (5,133 | ) | — | |||||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | (15,965 | ) | $ | 38,993 | $ | (48,931 | ) | $ | 183,859 | |||||
Earnings (Loss) per ordinary share attributable to Enstar Group Limited: | |||||||||||||||
Basic: | |||||||||||||||
Net earnings (loss) from continuing operations | $ | (0.74 | ) | $ | 1.83 | $ | (2.39 | ) | $ | 9.54 | |||||
Net earnings (loss) from discontinued operations | — | 0.18 | — | (0.05 | ) | ||||||||||
Net earnings (loss) per ordinary share | $ | (0.74 | ) | $ | 2.01 | $ | (2.39 | ) | $ | 9.49 | |||||
Diluted: | |||||||||||||||
Net earnings (loss) from continuing operations | $ | (0.74 | ) | $ | 1.81 | $ | (2.39 | ) | $ | 9.47 | |||||
Net earnings (loss) from discontinued operations | — | 0.18 | — | (0.05 | ) | ||||||||||
Net earnings (loss) per ordinary share | $ | (0.74 | ) | $ | 1.99 | $ | (2.39 | ) | $ | 9.42 | |||||
Weighted average ordinary shares outstanding: | |||||||||||||||
Basic | 21,440,914 | 19,392,120 | 20,444,634 | 19,384,897 | |||||||||||
Diluted | 21,665,356 | 19,559,168 | 20,653,544 | 19,515,987 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(expressed in thousands of U.S. dollars) | |||||||||||||||
NET EARNINGS (LOSS) | $ | (22,321 | ) | $ | 24,161 | $ | (62,894 | ) | $ | 197,994 | |||||
Other comprehensive income, net of tax: | |||||||||||||||
Unrealized holding gains (losses) on fixed income available-for-sale investments arising during the period | (1,310 | ) | 2,219 | (3,007 | ) | 4,598 | |||||||||
Reclassification adjustment for net realized gains (losses) included in net earnings | 2 | (3 | ) | 53 | (254 | ) | |||||||||
Unrealized gains (losses) arising during the period, net of reclassification adjustments | (1,308 | ) | 2,216 | (2,954 | ) | 4,344 | |||||||||
Change in currency translation adjustment | (143 | ) | 4,194 | 1,258 | 8,451 | ||||||||||
Reclassification to earnings on disposal of subsidiary | — | 7,440 | — | 7,440 | |||||||||||
Total currency translation adjustment | (143 | ) | 11,634 | 1,258 | 15,891 | ||||||||||
Total other comprehensive income (loss) | (1,451 | ) | 13,850 | (1,696 | ) | 20,235 | |||||||||
Comprehensive income (loss) | (23,772 | ) | 38,011 | (64,590 | ) | 218,229 | |||||||||
Comprehensive (income) loss attributable to noncontrolling interest | 11,505 | 14,432 | 19,494 | (15,983 | ) | ||||||||||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ | (12,267 | ) | $ | 52,443 | $ | (45,096 | ) | $ | 202,246 |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
(expressed in thousands of U.S. dollars) | |||||||
Share Capital — Voting Ordinary Shares | |||||||
Balance, beginning of period | $ | 16,402 | $ | 16,175 | |||
Issue of shares | 1,532 | 24 | |||||
Conversion of Series C Non-Voting Convertible Ordinary Shares | — | 192 | |||||
Balance, end of period | $ | 17,934 | $ | 16,391 | |||
Share Capital — Series C Non-Voting Convertible Ordinary Shares | |||||||
Balance, beginning of period | $ | 2,600 | $ | 2,792 | |||
Conversion to Ordinary Shares | — | (192 | ) | ||||
Balance, end of period | $ | 2,600 | $ | 2,600 | |||
Share Capital — Series E Non-Voting Convertible Ordinary Shares | |||||||
Balance, beginning of period | $ | 405 | $ | 405 | |||
Issue of shares | 505 | — | |||||
Balance, end of period | $ | 910 | $ | 405 | |||
Share Capital — Series C Convertible Participating Non-Voting Perpetual Preferred Shares | |||||||
Balance, beginning and end of period | $ | 389 | $ | 389 | |||
Share Capital — Series D Perpetual Noncumulative Preferred Shares | |||||||
Balance, beginning of period | $ | — | $ | — | |||
Issue of shares | 400,000 | — | |||||
Balance, end of period | $ | 400,000 | $ | — | |||
Treasury Shares (Series C Preferred shares) | |||||||
Balance, beginning and end of period | $ | (421,559 | ) | $ | (421,559 | ) | |
Additional Paid-in Capital | |||||||
Balance, beginning of period | $ | 1,395,067 | $ | 1,380,109 | |||
Issue of voting ordinary shares | 413,679 | 647 | |||||
Issuance costs of Series D preferred shares | (10,781 | ) | — | ||||
Amortization of share-based compensation | 14,762 | 10,473 | |||||
Balance, end of period | $ | 1,812,727 | $ | 1,391,229 | |||
Accumulated Other Comprehensive Income (Loss) | |||||||
Balance, beginning of period | $ | 10,468 | $ | (23,549 | ) | ||
Currency translation adjustment | |||||||
Balance, beginning of period | 11,171 | (18,993 | ) | ||||
Change in currency translation adjustment | 1,270 | 8,440 | |||||
Reclassification to earnings on disposal of subsidiary | — | 7,440 | |||||
Balance, end of period | 12,441 | (3,113 | ) | ||||
Defined benefit pension liability | |||||||
Balance, beginning and end of period | (3,143 | ) | (4,644 | ) | |||
Unrealized gains (losses) on available-for-sale investments | |||||||
Balance, beginning of period | 2,440 | 88 | |||||
Change in unrealized gains (losses) on available-for-sale investments | (2,568 | ) | 2,508 | ||||
Balance, end of period | (128 | ) | 2,596 | ||||
Balance, end of period | $ | 9,170 | $ | (5,161 | ) | ||
Retained Earnings | |||||||
Balance, beginning of period | $ | 2,132,912 | $ | 1,847,550 | |||
Net earnings (losses) attributable to Enstar Group Limited | (62,894 | ) | 197,994 | ||||
Net loss (earnings) attributable to noncontrolling interest | 19,096 | (14,135 | ) | ||||
Dividends on preferred shares | (5,133 | ) | — | ||||
Change in redemption of redeemable noncontrolling interests | 785 | 760 | |||||
Cumulative effect of change in accounting principle | (1,573 | ) | 4,882 | ||||
Balance, end of period | $ | 2,083,193 | $ | 2,037,051 | |||
Noncontrolling Interest (excludes Redeemable Noncontrolling Interest) | |||||||
Balance, beginning of period | $ | 9,264 | $ | 8,520 | |||
Contribution of capital | 49 | 22 | |||||
Net earnings attributable to noncontrolling interest | 1,000 | 1,945 | |||||
Balance, end of period | $ | 10,313 | $ | 10,487 |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
(expressed in thousands of U.S. dollars) | |||||||
OPERATING ACTIVITIES: | |||||||
Net earnings (loss) | $ | (62,894 | ) | $ | 197,994 | ||
Net loss from discontinued operations | — | 1,005 | |||||
Adjustments to reconcile net earnings (losses) to cash flows used in operating activities: | |||||||
Realized losses (gains) on sale of investments | 15,794 | (5,012 | ) | ||||
Unrealized losses (gains) on investments | 190,598 | (108,011 | ) | ||||
Depreciation and other amortization | 25,276 | 28,925 | |||||
Net change in trading securities held on behalf of policyholders | — | 25,597 | |||||
Sales and maturities of trading securities | 3,380,333 | 4,111,406 | |||||
Purchases of trading securities | (4,081,938 | ) | (5,611,677 | ) | |||
Net loss on sale of subsidiary | — | 16,349 | |||||
Other non-cash items | 12,978 | 10,544 | |||||
Changes in: | |||||||
Reinsurance balances recoverable | (305,434 | ) | (628,654 | ) | |||
Funds held by reinsured companies | (115,888 | ) | (206,985 | ) | |||
Losses and loss adjustment expenses | 1,103,802 | 1,590,764 | |||||
Policy benefits for life and annuity contracts | (5,928 | ) | 170 | ||||
Insurance and reinsurance balances payable | 144,805 | (140,356 | ) | ||||
Unearned premiums | 159,827 | 20,330 | |||||
Other operating assets and liabilities | (370,376 | ) | 215,365 | ||||
Net cash flows provided by (used in) operating activities | 90,955 | (482,246 | ) | ||||
INVESTING ACTIVITIES: | |||||||
Acquisitions, net of cash acquired | 2,317 | (670 | ) | ||||
Sale of subsidiary, net of cash sold | — | 19,690 | |||||
Sales and maturities of available-for-sale securities | 48,889 | 60,202 | |||||
Purchase of available-for-sale securities | (10,385 | ) | (2,565 | ) | |||
Purchase of other investments | (784,316 | ) | (98,203 | ) | |||
Redemption of other investments | 340,298 | 202,581 | |||||
Other investing activities | (8,155 | ) | (16,831 | ) | |||
Net cash flows provided by (used in) investing activities | (411,352 | ) | 164,204 | ||||
FINANCING ACTIVITIES: | |||||||
Issuance of preferred shares, net of issuance costs | 389,219 | — | |||||
Dividends on preferred shares | (5,133 | ) | — | ||||
Contribution by noncontrolling interest | 49 | 22 | |||||
Dividends paid to noncontrolling interest | — | (27,458 | ) | ||||
Receipt of loans | 441,022 | 534,100 | |||||
Repayment of loans | (689,819 | ) | (564,203 | ) | |||
Net cash flows provided by (used in) financing activities | 135,338 | (57,539 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON FOREIGN CURRENCY CASH AND CASH EQUIVALENTS | 232 | 6,292 | |||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (184,827 | ) | (369,289 | ) | |||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 1,212,836 | 1,318,645 | |||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 1,028,009 | $ | 949,356 | |||
Supplemental Cash Flow Information: | |||||||
Income taxes paid, net of refunds | $ | 16,268 | $ | 11,107 | |||
Interest paid | $ | 24,618 | $ | 18,043 | |||
Reconciliation to Consolidated Balance Sheets: | |||||||
Cash and cash equivalents | 553,419 | 624,451 | |||||
Restricted cash and cash equivalents | 474,590 | 324,905 | |||||
Cash, cash equivalents and restricted cash | $ | 1,028,009 | $ | 949,356 |
• | liability for losses and loss adjustment expenses ("LAE"); |
• | liability for policy benefits for life 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, 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. |
Fair value of Enstar ordinary shares issued | $ | 414,750 | ||
Fair value of previously held equity method investment | 336,137 | |||
Adjustment for the fair value of preexisting relationships | 37,169 | |||
Total purchase price | $ | 788,056 | ||
Net assets acquired at fair value (excluding preexisting relationships) | $ | 746,320 | ||
Excess of purchase price over fair value of net assets acquired | $ | 41,736 |
Number of Enstar Ordinary shares issued | 2,007,017 | |||
Closing price of Enstar Ordinary shares as of May 14, 2018 | $ | 206.65 | ||
Fair value of Enstar Ordinary shares issued to shareholders of KaylaRe | $ | 414,750 |
Carrying value of previously held equity method investment prior to the close of the transaction | $ | 320,130 | ||
Price-to-book multiple | 1.05 | |||
Fair value of previously held equity method investment prior to the close of the transaction | $ | 336,137 | ||
Gain recognized on remeasurement of previously held equity method investment to fair value | $ | 16,007 |
ASSETS | Carrying value | Fair value | Loss on deemed settlement | ||||||||
Funds held by reinsured companies | $ | 386,793 | $ | 386,793 | $ | — | |||||
Deferred acquisition costs/Value of business acquired | 33,549 | 40,268 | 6,719 | ||||||||
TOTAL ASSETS | 420,342 | 427,061 | 6,719 | ||||||||
LIABILITIES | |||||||||||
Losses and LAE | 339,747 | 333,205 | (6,542 | ) | |||||||
Unearned premiums | 105,602 | 105,602 | — | ||||||||
Insurance and reinsurance balances payable | 25,897 | 23,559 | (2,338 | ) | |||||||
Other liabilities | 1,864 | 1,864 | — | ||||||||
TOTAL LIABILITIES | 473,110 | 464,230 | (8,880 | ) | |||||||
NET ASSETS (LIABILITIES) | $ | (52,768 | ) | $ | (37,169 | ) | $ | 15,599 |
ASSETS | ||||
Fixed maturities, trading, at fair value | $ | 126,393 | ||
Other investments, at fair value | 626,476 | |||
Total investments | 752,869 | |||
Cash and cash equivalents | 5,657 | |||
Premiums receivable | 10,965 | |||
Deferred acquisition costs | 275 | |||
Other assets | 614 | |||
TOTAL ASSETS | $ | 770,380 | ||
LIABILITIES | ||||
Losses and LAE | $ | 4,059 | ||
Unearned premiums | 10,984 | |||
Insurance and reinsurance balances payable | 13 | |||
Other liabilities | 9,004 | |||
TOTAL LIABILITIES | 24,060 | |||
NET ASSETS ACQUIRED AT FAIR VALUE | $ | 746,320 |
Premiums earned | $ | 10,188 | ||
Incurred losses and LAE | (9,190 | ) | ||
Acquisition costs | (332 | ) | ||
Underwriting income | 666 | |||
Net investment income | 1,972 | |||
Net unrealized gains | (6,621 | ) | ||
General and administrative expenses | (573 | ) | ||
Net loss | $ | (4,556 | ) |
December 31, 2017 | |||
Assets: | |||
Fixed maturities, trading, at fair value | $ | 20,770 | |
Equities, trading, at fair value | 765 | ||
Cash and cash equivalents | 6,314 | ||
Restricted cash and cash equivalents | 13 | ||
Reinsurance balances recoverable | 1,728 | ||
Other assets | 269 | ||
Assets of businesses held for sale | 29,859 | ||
Less: Accrual of loss on sale | (5,508 | ) | |
Total assets held for sale | $ | 24,351 | |
Liabilities: | |||
Policy benefits for life and annuity contracts | $ | 10,666 | |
Other liabilities | 605 | ||
Total liabilities held-for-sale | $ | 11,271 |
Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2017 | 2017 | ||||||
INCOME | |||||||
Net premiums earned | $ | 14,082 | $ | 42,012 | |||
Net investment income | 10,077 | 30,383 | |||||
Net realized and unrealized gains (losses) | (233 | ) | 2,543 | ||||
Other income | 384 | 1,139 | |||||
24,310 | 76,077 | ||||||
EXPENSES | |||||||
Life and annuity policy benefits | 15,320 | 60,102 | |||||
Acquisition costs | 2,412 | 6,728 | |||||
General and administrative expenses | 2,809 | 9,584 | |||||
Other expenses | 4 | (12 | ) | ||||
20,545 | 76,402 | ||||||
EARNINGS (LOSSES) BEFORE INCOME TAXES | 3,765 | (325 | ) | ||||
INCOME TAXES | (270 | ) | (680 | ) | |||
NET EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS | $ | 3,495 | $ | (1,005 | ) |
Nine Months Ended September 30, | |||
2017 | |||
Operating activities | $ | 42,558 | |
Investing activities | 8,129 | ||
Change in cash of businesses held-for-sale | $ | 50,687 |
September 30, 2018 | December 31, 2017 | ||||||
U.S. government and agency | $ | 493,080 | $ | 554,036 | |||
Non-U.S. government | 1,018,212 | 607,132 | |||||
Corporate | 3,703,029 | 3,363,060 | |||||
Municipal | 76,599 | 100,221 | |||||
Residential mortgage-backed | 275,485 | 288,713 | |||||
Commercial mortgage-backed | 411,575 | 421,548 | |||||
Asset-backed | 567,300 | 541,574 | |||||
Total fixed maturity and short-term investments | 6,545,280 | 5,876,284 | |||||
Equities — U.S. | 72,765 | 106,363 | |||||
Equities — International | 57,549 | 240 | |||||
$ | 6,675,594 | $ | 5,982,887 |
As at September 30, 2018 | Amortized Cost | Fair Value | % of Total Fair Value | ||||||||
One year or less | $ | 428,656 | $ | 424,195 | 6.5 | % | |||||
More than one year through two years | 544,754 | 531,717 | 8.1 | % | |||||||
More than two years through five years | 1,641,037 | 1,601,237 | 24.4 | % | |||||||
More than five years through ten years | 1,506,829 | 1,464,185 | 22.4 | % | |||||||
More than ten years | 1,301,979 | 1,269,586 | 19.4 | % | |||||||
Residential mortgage-backed | 274,833 | 275,485 | 4.2 | % | |||||||
Commercial mortgage-backed | 423,471 | 411,575 | 6.3 | % | |||||||
Asset-backed | 567,538 | 567,300 | 8.7 | % | |||||||
$ | 6,689,097 | $ | 6,545,280 | 100.0 | % |
As at September 30, 2018 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses (Non-OTTI) | Fair Value | ||||||||||||
U.S. government and agency | $ | 703 | $ | — | $ | (5 | ) | $ | 698 | |||||||
Non-U.S. government | 75,741 | 851 | (1,036 | ) | 75,556 | |||||||||||
Corporate | 83,836 | 1,085 | (1,413 | ) | 83,508 | |||||||||||
Municipal | 3,401 | — | (34 | ) | 3,367 | |||||||||||
Residential mortgage-backed | 15 | — | — | 15 | ||||||||||||
$ | 163,696 | $ | 1,936 | $ | (2,488 | ) | $ | 163,144 |
As at December 31, 2017 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses (Non-OTTI) | Fair Value | ||||||||||||
U.S. government and agency | $ | 4,210 | $ | — | $ | (23 | ) | $ | 4,187 | |||||||
Non-U.S. government | 84,776 | 1,249 | (588 | ) | 85,437 | |||||||||||
Corporate | 113,561 | 2,436 | (876 | ) | 115,121 | |||||||||||
Municipal | 5,146 | 8 | (18 | ) | 5,136 | |||||||||||
Residential mortgage-backed | 31 | — | — | 31 | ||||||||||||
Asset-backed | 373 | — | — | 373 | ||||||||||||
$ | 208,097 | $ | 3,693 | $ | (1,505 | ) | $ | 210,285 |
As at September 30, 2018 | Amortized Cost | Fair Value | % of Total Fair Value | ||||||||
One year or less | $ | 18,265 | $ | 17,641 | 10.8 | % | |||||
More than one year through two years | 26,556 | 26,332 | 16.2 | % | |||||||
More than two years through five years | 31,604 | 31,634 | 19.4 | % | |||||||
More than five years through ten years | 55,804 | 55,818 | 34.2 | % | |||||||
More than ten years | 31,452 | 31,704 | 19.4 | % | |||||||
Residential mortgage-backed | 15 | 15 | — | % | |||||||
$ | 163,696 | $ | 163,144 | 100.0 | % |
12 Months or Greater | Less Than 12 Months | Total | ||||||||||||||||||||||
As at September 30, 2018 | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||
Fixed maturity investments, at fair value | ||||||||||||||||||||||||
U.S. government and agency | $ | 698 | $ | (5 | ) | $ | — | $ | — | $ | 698 | $ | (5 | ) | ||||||||||
Non-U.S. government | 4,233 | (406 | ) | 21,719 | (630 | ) | 25,952 | (1,036 | ) | |||||||||||||||
Corporate | 8,562 | (917 | ) | 33,808 | (496 | ) | 42,370 | (1,413 | ) | |||||||||||||||
Municipal | 617 | (12 | ) | 2,750 | (22 | ) | 3,367 | (34 | ) | |||||||||||||||
Total fixed maturity investments | $ | 14,110 | $ | (1,340 | ) | $ | 58,277 | $ | (1,148 | ) | $ | 72,387 | $ | (2,488 | ) |
12 Months or Greater | Less Than 12 Months | Total | ||||||||||||||||||||||
As at December 31, 2017 | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||
Fixed maturity investments, at fair value | ||||||||||||||||||||||||
U.S. government and agency | $ | 2,344 | $ | (16 | ) | $ | 1,842 | $ | (7 | ) | $ | 4,186 | $ | (23 | ) | |||||||||
Non-U.S. government | 11,101 | (373 | ) | 20,965 | (215 | ) | 32,066 | (588 | ) | |||||||||||||||
Corporate | 9,177 | (807 | ) | 24,200 | (69 | ) | 33,377 | (876 | ) | |||||||||||||||
Municipal | 369 | (5 | ) | 3,605 | (13 | ) | 3,974 | (18 | ) | |||||||||||||||
Total fixed maturity investments | $ | 22,991 | $ | (1,201 | ) | $ | 50,612 | $ | (304 | ) | $ | 73,603 | $ | (1,505 | ) |
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 | |||||||||||||||||||||||||||||||||||
U.S. government and agency | $ | 502,168 | $ | 493,778 | 7.4 | % | $ | 489,939 | $ | 3,839 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||
Non-U.S. government | 1,109,697 | 1,093,768 | 16.3 | % | 340,583 | 541,087 | 65,286 | 121,197 | 25,615 | — | |||||||||||||||||||||||||
Corporate | 3,893,368 | 3,786,537 | 56.4 | % | 154,961 | 445,858 | 1,986,880 | 1,016,401 | 180,730 | 1,707 | |||||||||||||||||||||||||
Municipal | 81,703 | 79,966 | 1.2 | % | 8,739 | 53,094 | 14,277 | 3,856 | — | — | |||||||||||||||||||||||||
Residential mortgage-backed | 274,848 | 275,500 | 4.1 | % | 163,190 | 2,526 | 11,331 | 1,540 | 92,180 | 4,733 | |||||||||||||||||||||||||
Commercial mortgage-backed | 423,471 | 411,575 | 6.1 | % | 210,902 | 47,118 | 70,164 | 60,296 | 9,936 | 13,159 | |||||||||||||||||||||||||
Asset-backed | 567,538 | 567,300 | 8.5 | % | 237,239 | 46,971 | 115,349 | 73,415 | 93,918 | 408 | |||||||||||||||||||||||||
Total | $ | 6,852,793 | $ | 6,708,424 | 100.0 | % | $ | 1,605,553 | $ | 1,140,493 | $ | 2,263,287 | $ | 1,276,705 | $ | 402,379 | $ | 20,007 | |||||||||||||||||
% of total fair value | 23.9 | % | 17.0 | % | 33.8 | % | 19.0 | % | 6.0 | % | 0.3 | % |
September 30, 2018 | December 31, 2017 | |||||||
Private equities and private equity funds | $ | 256,618 | $ | 289,556 | ||||
Fixed income funds | 383,328 | 229,999 | ||||||
Hedge funds | 879,571 | 63,773 | ||||||
Equity funds | 381,983 | 249,475 | ||||||
CLO equities | 48,368 | 56,765 | ||||||
CLO equity fund | 41,501 | 12,840 | ||||||
Private credit funds | 39,751 | 10,156 | ||||||
Call options on equity | 4,590 | — | ||||||
Other | 720 | 828 | ||||||
$ | 2,036,430 | $ | 913,392 |
• | 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. One of our funds has a lock-up period of up to two years and is eligible for quarterly redemptions thereafter with 65 days notice. All other funds have liquidity terms that vary from daily up to 45 day's notice. Investments of $0.3 million in fixed income funds were subject to gates or side-pockets, where |
• | Hedge funds may invest in a wide range of instruments, including debt and equity securities, and utilize various sophisticated strategies to achieve their objectives. We invest in a mixture of fixed income, equity and multi-strategy hedge funds. Our hedge funds have various lock-up periods of up to three years and redemption terms, predominantly 60 and 90 days. Certain of our hedge funds which are past their lock up periods are currently eligible for redemption while others are still in the lock-up period. |
• | Equity funds invest in a diversified portfolio of U.S. and international publicly-traded equity securities. The funds have liquidity terms that vary from daily up to quarterly. |
• | 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 fund invests primarily in the equity tranches of term-financed securitizations of diversified pools of corporate bank loans. The fund has a fair value of $41.5 million and is eligible for redemption. |
• | Private credit funds invest in direct senior or collateralized loans. The investments are subject to restrictions on redemption and sales that are determined by the governing documents and limit our ability to liquidate our positions in the funds. |
• | Call options on equities comprise directly held options to purchase the common equity of publicly traded corporations. |
• | Other primarily comprises a fund that provides loans to educational institutions throughout the United States and its territories. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Fixed maturity investments | $ | 48,062 | $ | 37,931 | $ | 140,097 | $ | 102,002 | |||||||
Short-term investments and cash and cash equivalents | 3,247 | 2,048 | 8,425 | 7,489 | |||||||||||
Funds held | 1,502 | 247 | 8,651 | 597 | |||||||||||
Funds held - directly managed | 9,776 | 8,516 | 27,990 | 24,121 | |||||||||||
Investment income from fixed maturities and cash and cash equivalents | 62,587 | 48,742 | 185,163 | 134,209 | |||||||||||
Equity securities | 946 | 1,344 | 3,788 | 3,207 | |||||||||||
Other investments | 8,324 | 3,120 | 14,600 | 10,016 | |||||||||||
Life settlements and other | — | 1,443 | 6,509 | 11,026 | |||||||||||
Investment income from equities and other investments | 9,270 | 5,907 | 24,897 | 24,249 | |||||||||||
Gross investment income | 71,857 | 54,649 | 210,060 | 158,458 | |||||||||||
Investment expenses | (2,427 | ) | (2,621 | ) | (7,842 | ) | (8,274 | ) | |||||||
Net investment income | $ | 69,430 | $ | 52,028 | $ | 202,218 | $ | 150,184 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net realized gains (losses) on sale: | ||||||||||||||||
Gross realized gains on fixed maturity securities, available-for-sale | $ | — | $ | 8 | $ | 27 | $ | 345 | ||||||||
Gross realized losses on fixed maturity securities, available-for-sale | (2 | ) | (5 | ) | (80 | ) | (91 | ) | ||||||||
Net realized gains (losses) on fixed maturity securities, trading | (8,797 | ) | 4,595 | (19,310 | ) | 3,608 | ||||||||||
Net realized gains on equity securities, trading | 666 | 340 | 3,569 | 1,150 | ||||||||||||
Net realized gains (losses) on funds held - directly managed | (1,904 | ) | 422 | (2,849 | ) | (3,720 | ) | |||||||||
Total net realized gains (losses) on sale | $ | (10,037 | ) | $ | 5,360 | $ | (18,643 | ) | $ | 1,292 | ||||||
Net unrealized gains (losses): | ||||||||||||||||
Fixed maturity securities, trading | $ | (13,423 | ) | $ | (10,747 | ) | $ | (159,691 | ) | $ | 23,795 | |||||
Equity securities, trading | 1,830 | 2,652 | 6,152 | 13,209 | ||||||||||||
Other Investments | (35,188 | ) | 27,802 | (37,059 | ) | 71,007 | ||||||||||
Change in fair value of embedded derivative on funds held – directly managed | (182 | ) | 3,967 | (41,107 | ) | 28,807 | ||||||||||
Change in value of fair value option on funds held - directly managed | (223 | ) | 267 | (4,323 | ) | 1,587 | ||||||||||
Total net unrealized gains (losses) | (47,186 | ) | 23,941 | (236,028 | ) | 138,405 | ||||||||||
Net realized and unrealized gains (losses) | $ | (57,223 | ) | $ | 29,301 | $ | (254,671 | ) | $ | 139,697 |
September 30, 2018 | December 31, 2017 | |||||||
Collateral in trust for third party agreements | $ | 3,354,994 | $ | 3,118,892 | ||||
Assets on deposit with regulatory authorities | 563,139 | 599,829 | ||||||
Collateral for secured letter of credit facilities | 134,286 | 151,467 | ||||||
Funds at Lloyd's (1) | 422,657 | 234,833 | ||||||
$ | 4,475,076 | $ | 4,105,021 |
• | The funds held balance in relation to the Allianz transaction, described in Note 4 - "Significant New Business" in our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017. This receives a variable return reflecting 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 September 30, 2018 and December 31, 2017, the funds held at cost had a carrying value of $1,074.1 million and $994.8 million, respectively, and the embedded derivative had a fair value of $(36.3) million and $4.7 million, respectively, the aggregate of which was $1,037.8 million and $999.5 million, respectively, as included in the table below. |
• | The funds held balance in relation to the QBE reinsurance transaction described in Note 4 - "Significant New Business" in our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017, for which we elected the fair value option. |
September 30, 2018 | December 31, 2017 | ||||||
Fixed maturity investments: | |||||||
U.S. government and agency | $ | 98,928 | $ | 69,850 | |||
Non-U.S. government | 22,610 | 2,926 | |||||
Corporate | 641,460 | 695,490 | |||||
Municipal | 53,679 | 58,930 | |||||
Residential mortgage-backed | 70,196 | 29,439 | |||||
Commercial mortgage-backed | 220,077 | 211,186 | |||||
Asset-backed | 95,743 | 97,565 | |||||
Total fixed maturity investments | $ | 1,202,693 | $ | 1,165,386 | |||
Other assets | 14,489 | 14,554 | |||||
$ | 1,217,182 | $ | 1,179,940 |
As at September 30, 2018 | Amortized Cost | Fair Value | % of Total Fair Value | ||||||||
One year or less | $ | 33,247 | $ | 33,105 | 2.8 | % | |||||
More than one year through two years | 69,423 | 68,667 | 5.7 | % | |||||||
More than two years through five years | 206,922 | 202,077 | 16.8 | % | |||||||
More than five years through ten years | 287,706 | 277,396 | 23.1 | % | |||||||
More than ten years | 246,045 | 235,432 | 19.6 | % | |||||||
Residential mortgage-backed | 71,876 | 70,196 | 5.8 | % | |||||||
Commercial mortgage-backed | 231,443 | 220,077 | 18.3 | % | |||||||
Asset-backed | 95,877 | 95,743 | 7.9 | % | |||||||
$ | 1,242,539 | $ | 1,202,693 | 100.0 | % |
Amortized Cost | Fair Value | % of Total Investments | AAA Rated | AA Rated | A Rated | BBB Rated | Non- Investment Grade | ||||||||||||||||||||||||
U.S. government and agency | $ | 100,764 | $ | 98,928 | 8.2 | % | $ | 98,928 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Non-U.S. government | 22,537 | 22,610 | 1.9 | % | — | 3,827 | 12,088 | 6,695 | — | ||||||||||||||||||||||
Corporate | 665,043 | 641,460 | 53.3 | % | 7,701 | 25,792 | 285,188 | 321,285 | 1,494 | ||||||||||||||||||||||
Municipal | 54,999 | 53,679 | 4.5 | % | — | 16,555 | 29,960 | 7,164 | — | ||||||||||||||||||||||
Residential mortgage-backed | 71,876 | 70,196 | 5.8 | % | 60,792 | — | — | — | 9,404 | ||||||||||||||||||||||
Commercial mortgage-backed | 231,443 | 220,077 | 18.3 | % | 211,747 | 6,367 | 1,963 | — | — | ||||||||||||||||||||||
Asset-backed | 95,877 | 95,743 | 8.0 | % | 75,417 | 16,289 | 4,037 | — | — | ||||||||||||||||||||||
Total | $ | 1,242,539 | $ | 1,202,693 | 100.0 | % | $ | 454,585 | $ | 68,830 | $ | 333,236 | $ | 335,144 | $ | 10,898 | |||||||||||||||
% of total fair value | 37.8 | % | 5.7 | % | 27.7 | % | 27.9 | % | 0.9 | % |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Fixed maturity investments | $ | 10,014 | $ | 8,702 | $ | 28,649 | $ | 25,004 | ||||||||
Short-term investments and cash and cash equivalents | 42 | 89 | 179 | 216 | ||||||||||||
Gross investment income | 10,056 | 8,791 | 28,828 | 25,220 | ||||||||||||
Investment expenses | (280 | ) | (275 | ) | (838 | ) | (1,099 | ) | ||||||||
Investment income on funds held - directly managed | $ | 9,776 | $ | 8,516 | $ | 27,990 | $ | 24,121 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net realized gains (losses) on fixed maturity securities | $ | (1,904 | ) | $ | 422 | $ | (2,849 | ) | $ | (3,720 | ) | |||||
Change in fair value of embedded derivative | (182 | ) | 3,967 | (41,107 | ) | 28,807 | ||||||||||
Change in value of fair value option on funds held - directly managed | (223 | ) | 267 | (4,323 | ) | 1,587 | ||||||||||
Net realized gains (losses) and change in fair value of funds held - directly managed | $ | (2,309 | ) | $ | 4,656 | $ | (48,279 | ) | $ | 26,674 |
• | 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 rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data. |
• | 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. |
September 30, 2018 | ||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value Based on NAV as Practical Expedient | Total Fair Value | ||||||||||||||||
Investments: | ||||||||||||||||||||
Fixed maturity investments: | ||||||||||||||||||||
U.S. government and agency | $ | — | $ | 493,778 | $ | — | $ | — | $ | 493,778 | ||||||||||
Non-U.S. government | — | 1,093,768 | — | — | 1,093,768 | |||||||||||||||
Corporate | — | 3,763,158 | 23,379 | — | 3,786,537 | |||||||||||||||
Municipal | — | 79,966 | — | — | 79,966 | |||||||||||||||
Residential mortgage-backed | — | 273,705 | 1,795 | — | 275,500 | |||||||||||||||
Commercial mortgage-backed | — | 402,192 | 9,383 | — | 411,575 | |||||||||||||||
Asset-backed | — | 535,578 | 31,722 | — | 567,300 | |||||||||||||||
$ | — | $ | 6,642,145 | $ | 66,279 | $ | — | $ | 6,708,424 | |||||||||||
Equities: | ||||||||||||||||||||
Equities — U.S. | $ | 70,720 | $ | 29 | $ | 2,016 | $ | — | $ | 72,765 | ||||||||||
Equities — International | 53,541 | 2,296 | 1,712 | — | 57,549 | |||||||||||||||
$ | 124,261 | $ | 2,325 | $ | 3,728 | $ | — | $ | 130,314 | |||||||||||
Other investments: | ||||||||||||||||||||
Private equities and private equity funds | $ | — | $ | — | $ | — | $ | 256,618 | $ | 256,618 | ||||||||||
Fixed income funds | — | 327,375 | — | 55,953 | 383,328 | |||||||||||||||
Hedge funds | — | — | — | 879,571 | 879,571 | |||||||||||||||
Equity funds | — | 117,337 | — | 264,646 | 381,983 | |||||||||||||||
CLO equities | — | — | 48,368 | — | 48,368 | |||||||||||||||
CLO equity fund | — | — | — | 41,501 | 41,501 | |||||||||||||||
Private credit funds | — | — | — | 39,751 | 39,751 | |||||||||||||||
Call options on equities | — | 4,590 | — | — | 4,590 | |||||||||||||||
Other | — | — | 313 | 407 | 720 | |||||||||||||||
$ | — | $ | 449,302 | $ | 48,681 | $ | 1,538,447 | $ | 2,036,430 | |||||||||||
Total Investments | $ | 124,261 | $ | 7,093,772 | $ | 118,688 | $ | 1,538,447 | $ | 8,875,168 | ||||||||||
Funds Held - Directly Managed: | ||||||||||||||||||||
U.S. government and agency | $ | — | $ | 98,928 | $ | — | $ | — | $ | 98,928 | ||||||||||
Non-U.S. government | — | 22,610 | — | — | 22,610 | |||||||||||||||
Corporate | — | 641,460 | — | — | 641,460 | |||||||||||||||
Municipal | — | 53,679 | — | — | 53,679 | |||||||||||||||
Residential mortgage-backed | — | 70,196 | — | — | 70,196 | |||||||||||||||
Commercial mortgage-backed | — | 220,077 | — | — | 220,077 | |||||||||||||||
Asset-backed | — | 95,743 | — | — | 95,743 | |||||||||||||||
Other assets | — | 14,489 | — | — | 14,489 | |||||||||||||||
$ | — | $ | 1,217,182 | $ | — | $ | — | $ | 1,217,182 | |||||||||||
Reinsurance balances recoverable: | $ | — | $ | — | $ | 792,553 | $ | — | $ | 792,553 | ||||||||||
Other Assets: | ||||||||||||||||||||
Derivative Instruments | $ | — | $ | 1,197 | $ | — | $ | — | $ | 1,197 | ||||||||||
$ | — | $ | 1,197 | $ | — | $ | — | $ | 1,197 | |||||||||||
Losses and LAE: | $ | — | $ | — | $ | 3,019,721 | $ | — | $ | 3,019,721 | ||||||||||
Other Liabilities: | ||||||||||||||||||||
Derivative Instruments | $ | — | $ | 5,775 | $ | — | $ | — | $ | 5,775 | ||||||||||
$ | — | $ | 5,775 | $ | — | $ | — | $ | 5,775 |
December 31, 2017 | ||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value Based on NAV as Practical Expedient | Total Fair Value | ||||||||||||||||
Investments: | ||||||||||||||||||||
Fixed maturity investments: | ||||||||||||||||||||
U.S. government and agency | $ | — | $ | 558,223 | $ | — | $ | — | $ | 558,223 | ||||||||||
Non-U.S. government | — | 692,569 | — | — | 692,569 | |||||||||||||||
Corporate | — | 3,411,003 | 67,178 | — | 3,478,181 | |||||||||||||||
Municipal | — | 105,357 | — | — | 105,357 | |||||||||||||||
Residential mortgage-backed | — | 285,664 | 3,080 | — | 288,744 | |||||||||||||||
Commercial mortgage-backed | — | 400,054 | 21,494 | — | 421,548 | |||||||||||||||
Asset-backed | — | 514,055 | 27,892 | — | 541,947 | |||||||||||||||
$ | — | $ | 5,966,925 | $ | 119,644 | $ | — | $ | 6,086,569 | |||||||||||
Equities: | ||||||||||||||||||||
Equities — U.S. | $ | 103,652 | $ | 2,711 | $ | — | $ | — | $ | 106,363 | ||||||||||
Equities — International | — | 240 | — | — | 240 | |||||||||||||||
$ | 103,652 | $ | 2,951 | $ | — | $ | — | $ | 106,603 | |||||||||||
Other investments: | ||||||||||||||||||||
Private equities and private equity funds | $ | — | $ | — | $ | — | $ | 289,556 | $ | 289,556 | ||||||||||
Fixed income funds | — | 202,570 | — | 27,429 | 229,999 | |||||||||||||||
Hedge funds | — | — | — | 63,773 | 63,773 | |||||||||||||||
Equity funds | — | 121,046 | — | 128,429 | 249,475 | |||||||||||||||
CLO equities | — | — | 56,765 | — | 56,765 | |||||||||||||||
CLO equity funds | — | — | — | 12,840 | 12,840 | |||||||||||||||
Private credit funds | — | — | — | 10,156 | 10,156 | |||||||||||||||
Other | — | — | 314 | 514 | 828 | |||||||||||||||
$ | — | $ | 323,616 | $ | 57,079 | $ | 532,697 | $ | 913,392 | |||||||||||
Total Investments | $ | 103,652 | $ | 6,293,492 | $ | 176,723 | $ | 532,697 | $ | 7,106,564 | ||||||||||
Funds Held - Directly Managed: | ||||||||||||||||||||
U.S. government and agency | $ | — | $ | 69,850 | $ | — | $ | — | $ | 69,850 | ||||||||||
Non-U.S. government | — | 2,926 | — | — | 2,926 | |||||||||||||||
Corporate | — | 695,490 | — | — | 695,490 | |||||||||||||||
Municipal | — | 58,930 | — | — | 58,930 | |||||||||||||||
Residential mortgage-backed | — | 29,439 | — | — | 29,439 | |||||||||||||||
Commercial mortgage-backed | — | 211,186 | — | — | 211,186 | |||||||||||||||
Asset-backed | — | 97,565 | — | — | 97,565 | |||||||||||||||
Other assets | — | 14,554 | — | — | 14,554 | |||||||||||||||
$ | — | $ | 1,179,940 | $ | — | $ | — | $ | 1,179,940 | |||||||||||
Reinsurance balances recoverable: | $ | — | $ | — | $ | 542,224 | $ | — | $ | 542,224 | ||||||||||
Other Assets: | ||||||||||||||||||||
Derivative Instruments | $ | — | $ | 319 | $ | — | $ | — | $ | 319 | ||||||||||
$ | — | $ | 319 | $ | — | $ | — | $ | 319 | |||||||||||
Losses and LAE: | $ | — | $ | — | $ | 1,794,669 | $ | — | $ | 1,794,669 | ||||||||||
Other Liabilities: | ||||||||||||||||||||
Derivative Instruments | $ | — | $ | 7,246 | $ | — | $ | — | $ | 7,246 | ||||||||||
$ | — | $ | 7,246 | $ | — | $ | — | $ | 7,246 | |||||||||||
• | 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 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. |
• | For our investments in private credit 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. |
• | For our investments in call options on publicly traded equities, we measure fair value by obtaining the latest option price as of our reporting date. These are classified as Level 2. |
Three Months Ended September 30, 2018 | ||||||||||||||||||||||||||||
Corporate | Residential mortgage-backed | Commercial mortgage-backed | Asset-backed | Equities | Other Investments | Total | ||||||||||||||||||||||
Beginning fair value | $ | 27,823 | $ | — | $ | 15,326 | $ | 46,608 | $ | 2,016 | $ | 54,154 | $ | 145,927 | ||||||||||||||
Purchases | 205 | — | 1,599 | 16,376 | — | — | 18,180 | |||||||||||||||||||||
Sales | (3,731 | ) | — | (3,271 | ) | (28,182 | ) | — | — | (35,184 | ) | |||||||||||||||||
Total realized and unrealized gains (losses) | 92 | 1 | (726 | ) | (346 | ) | — | (5,473 | ) | (6,452 | ) | |||||||||||||||||
Transfer into Level 3 from Level 2 | 292 | 1,794 | — | (1 | ) | 1,712 | — | 3,797 | ||||||||||||||||||||
Transfer out of Level 3 into Level 2 | (1,302 | ) | — | (3,545 | ) | (2,733 | ) | — | — | (7,580 | ) | |||||||||||||||||
Ending fair value | $ | 23,379 | $ | 1,795 | $ | 9,383 | $ | 31,722 | $ | 3,728 | $ | 48,681 | $ | 118,688 |
Three Months Ended September 30, 2017 | ||||||||||||||||||||||||||||
Corporate | Residential mortgage-backed | Commercial mortgage-backed | Asset-backed | Equities | Other Investments | Total | ||||||||||||||||||||||
Beginning fair value | $ | 54,356 | $ | 693 | $ | 22,865 | $ | 40,433 | $ | — | $ | 57,119 | $ | 175,466 | ||||||||||||||
Purchases | 2,510 | — | 11,274 | 4,350 | — | 143 | 18,277 | |||||||||||||||||||||
Sales | (3,350 | ) | (33 | ) | (602 | ) | (1,184 | ) | — | — | (5,169 | ) | ||||||||||||||||
Total realized and unrealized gains (losses) | (834 | ) | 3 | (398 | ) | (384 | ) | — | (1,538 | ) | (3,151 | ) | ||||||||||||||||
Transfer into Level 3 from Level 2 | 5,670 | — | 616 | 4,002 | — | — | 10,288 | |||||||||||||||||||||
Transfer out of Level 3 into Level 2 | (5,193 | ) | (663 | ) | (1,619 | ) | (10,528 | ) | — | — | (18,003 | ) | ||||||||||||||||
Ending fair value | $ | 53,159 | $ | — | $ | 32,136 | $ | 36,689 | $ | — | $ | 55,724 | $ | 177,708 |
Nine Months Ended September 30, 2018 | ||||||||||||||||||||||||||||
Corporate | Residential mortgage-backed | Commercial mortgage-backed | Asset-backed | Equities | Other Investments | Total | ||||||||||||||||||||||
Beginning fair value | $ | 67,178 | $ | 3,080 | $ | 21,494 | $ | 27,892 | $ | — | $ | 57,079 | $ | 176,723 | ||||||||||||||
Purchases | 12,008 | — | 3,402 | 45,967 | 2,000 | 752 | 64,129 | |||||||||||||||||||||
Sales | (64,641 | ) | (1,184 | ) | (4,998 | ) | (31,994 | ) | — | (600 | ) | (103,417 | ) | |||||||||||||||
Total realized and unrealized gains (losses) | 29 | (32 | ) | (674 | ) | (417 | ) | 16 | (8,550 | ) | (9,628 | ) | ||||||||||||||||
Transfer into Level 3 from Level 2 | 15,551 | 1,794 | 4,897 | 2,078 | 1,712 | — | 26,032 | |||||||||||||||||||||
Transfer out of Level 3 into Level 2 | (6,746 | ) | (1,863 | ) | (14,738 | ) | (11,804 | ) | — | — | (35,151 | ) | ||||||||||||||||
Ending fair value | $ | 23,379 | $ | 1,795 | $ | 9,383 | $ | 31,722 | $ | 3,728 | $ | 48,681 | $ | 118,688 |
Nine Months Ended September 30, 2017 | ||||||||||||||||||||||||||||
Corporate | Residential mortgage-backed | Commercial mortgage-backed | Asset-backed | Equities | Other Investments | Total | ||||||||||||||||||||||
Beginning fair value | $ | 74,534 | $ | — | $ | 12,213 | $ | 14,692 | $ | — | $ | 76,878 | $ | 178,317 | ||||||||||||||
Purchases | 18,078 | 711 | 21,621 | 5,730 | — | 435 | 46,575 | |||||||||||||||||||||
Sales | (28,467 | ) | (38 | ) | (1,336 | ) | (8,545 | ) | — | — | (38,386 | ) | ||||||||||||||||
Total realized and unrealized losses | (184 | ) | (10 | ) | (67 | ) | (175 | ) | — | (9,239 | ) | (9,675 | ) | |||||||||||||||
Transfer into Level 3 from Level 2 | 10,615 | — | 18,532 | 53,338 | — | — | 82,485 | |||||||||||||||||||||
Transfer out of Level 3 into Level 2 | (21,417 | ) | (663 | ) | (18,827 | ) | (28,351 | ) | — | (12,350 | ) | (81,608 | ) | |||||||||||||||
Ending fair value | $ | 53,159 | $ | — | $ | 32,136 | $ | 36,689 | $ | — | $ | 55,724 | $ | 177,708 |
Three Months Ended | |||||||||||||||
September 30, 2018 | September 30, 2017 | ||||||||||||||
Liability for losses and LAE | Reinsurance balances recoverable | Liability for losses and LAE | Reinsurance balances recoverable | ||||||||||||
Beginning fair value | $ | 3,221,366 | $ | 837,373 | $ | 1,892,297 | $ | 554,759 | |||||||
Assumed business | — | — | — | — | |||||||||||
Changes in nominal amounts: | |||||||||||||||
Net incurred losses and LAE | (19,973 | ) | 1,085 | (22,711 | ) | (3,181 | ) | ||||||||
Paid losses | (149,132 | ) | (41,819 | ) | (36,466 | ) | (9,453 | ) | |||||||
Changes in fair value: | |||||||||||||||
Discounted cash flows | (2,811 | ) | 483 | (6,826 | ) | 730 | |||||||||
Risk margin | (7,762 | ) | (1,949 | ) | (3,845 | ) | (897 | ) | |||||||
Effect of exchange rate movements | (21,967 | ) | (2,620 | ) | 32,803 | 3,790 | |||||||||
Ending fair value | $ | 3,019,721 | $ | 792,553 | $ | 1,855,252 | $ | 545,748 |
Nine Months Ended | |||||||||||||||
September 30, 2018 | September 30, 2017 | ||||||||||||||
Liability for losses and LAE | Reinsurance balances recoverable | Liability for losses and LAE | Reinsurance balances recoverable | ||||||||||||
Beginning fair value | $ | 1,794,669 | $ | 542,224 | $ | — | $ | — | |||||||
Assumed business | 1,890,061 | 372,780 | 1,966,843 | 565,824 | |||||||||||
Changes in nominal amounts: | |||||||||||||||
Net incurred losses and LAE | (75,169 | ) | 3,469 | (55,356 | ) | (5,276 | ) | ||||||||
Paid losses | (453,180 | ) | (95,354 | ) | (136,519 | ) | (30,947 | ) | |||||||
Changes in fair value: | |||||||||||||||
Discounted cash flows | (23,674 | ) | (13,399 | ) | 10,187 | 9,143 | |||||||||
Risk margin | (26,508 | ) | (4,668 | ) | (12,897 | ) | (2,599 | ) | |||||||
Effect of exchange rate movements | (86,478 | ) | (12,499 | ) | 82,994 | 9,603 | |||||||||
Ending fair value | $ | 3,019,721 | $ | 792,553 | $ | 1,855,252 | $ | 545,748 |
September 30, 2018 | December 31, 2017 | |||||
Valuation Technique | Unobservable (U) and Observable (O) Inputs | Weighted Average | ||||
Internal model | Corporate bond yield (O) | A rated | A rated | |||
Internal model | Credit spread for non-performance risk (U) | 0.2% | 0.2% | |||
Internal model | Risk cost of capital (U) | 5.0% | 5.0% | |||
Internal model | Weighted average cost of capital (U) | 8.5% | 8.5% | |||
Internal model | Duration - liability (U) | 8.05 years | 11.41 years | |||
Internal model | Duration - reinsurance balances recoverable (U) | 9.03 years | 11.66 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 balances 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 balances 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 balances 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 balances recoverable. |
• | An increase in the risk cost of capital would result in an increase in the fair value of the liability for losses and LAE and reinsurance balances 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 balances 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 balances 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 balances recoverable. |
September 30, 2018 | December 31, 2017 | |||||||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||||||
Gross Notional Amount | Assets | Liabilities | Gross Notional Amount | Assets | Liabilities | |||||||||||||||||||
Foreign exchange forward - AUD | $ | 43,410 | $ | 237 | $ | — | $ | 32,810 | $ | — | $ | 965 | ||||||||||||
Foreign exchange forward - EUR | 69,800 | 175 | — | — | — | — | ||||||||||||||||||
Foreign exchange forward - CAD | — | — | — | 27,141 | 11 | 512 | ||||||||||||||||||
Total qualifying hedges | $ | 113,210 | $ | 412 | $ | — | $ | 59,951 | $ | 11 | $ | 1,477 |
Amount of Gains (Losses) Deferred in AOCI | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Foreign exchange forward - AUD | $ | 678 | $ | (1,243 | ) | $ | 2,286 | $ | (1,805 | ) | ||||||
Foreign exchange forward - EUR | 52 | — | 52 | — | ||||||||||||
Foreign exchange forward - CAD | — | (1,038 | ) | — | (1,154 | ) | ||||||||||
Net gains (losses) on qualifying derivative hedges | $ | 730 | $ | (2,281 | ) | $ | 2,338 | $ | (2,959 | ) |
Amount of Gains (Losses) Deferred in AOCI | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net gains (losses) on qualifying non-derivative hedges | $ | 696 | $ | (1,785 | ) | $ | 3,144 | $ | (8,280 | ) |
September 30, 2018 | December 31, 2017 | |||||||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||||||
Gross Notional Amount | Assets | Liabilities | Gross Notional Amount | Assets | Liabilities | |||||||||||||||||||
Foreign exchange forward - AUD | $ | 35,090 | $ | 236 | $ | — | $ | 57,028 | $ | — | $ | 1,002 | ||||||||||||
Foreign exchange forward - CAD | 91,577 | 42 | — | — | — | — | ||||||||||||||||||
Foreign exchange forward - EUR | 29,035 | 71 | 500 | 19,235 | 46 | 455 | ||||||||||||||||||
Foreign exchange forward - GBP | 251,059 | 436 | 5,275 | 207,323 | 262 | 4,312 | ||||||||||||||||||
Total non-qualifying hedges | $ | 406,761 | $ | 785 | $ | 5,775 | $ | 283,586 | $ | 308 | $ | 5,769 |
Gains (Losses) on non-qualifying-hedges included in net earnings | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Foreign exchange forward - AUD | $ | 957 | $ | — | $ | 3,453 | $ | — | ||||||||
Foreign exchange forward - CAD | (1,782 | ) | — | 5,465 | — | |||||||||||
Foreign exchange forward - EUR | 458 | — | 1,815 | (562 | ) | |||||||||||
Foreign exchange forward - GBP | 4,154 | (3,831 | ) | 8,389 | $ | (4,701 | ) | |||||||||
Net gains (losses) on non-qualifying hedges | $ | 3,787 | $ | (3,831 | ) | $ | 19,122 | $ | (5,263 | ) |
September 30, 2018 | ||||||||||||||||
Non-life Run-off | Atrium | StarStone | Total | |||||||||||||
Recoverable from reinsurers on unpaid: | ||||||||||||||||
Outstanding losses | $ | 932,142 | $ | 13,051 | $ | 214,963 | $ | 1,160,156 | ||||||||
IBNR | 664,873 | 31,445 | 175,302 | 871,620 | ||||||||||||
Fair value adjustments | (14,489 | ) | 886 | (1,550 | ) | (15,153 | ) | |||||||||
Fair value adjustments - fair value option | (170,436 | ) | — | — | (170,436 | ) | ||||||||||
Total reinsurance reserves recoverable | 1,412,090 | 45,382 | 388,715 | 1,846,187 | ||||||||||||
Paid losses recoverable | 108,218 | (1,808 | ) | 22,959 | 129,369 | |||||||||||
$ | 1,520,308 | $ | 43,574 | $ | 411,674 | $ | 1,975,556 | |||||||||
Reconciliation to Consolidated Balance Sheet: | ||||||||||||||||
Reinsurance balances recoverable | $ | 727,755 | $ | 43,574 | $ | 411,674 | $ | 1,183,003 | ||||||||
Reinsurance balances recoverable - fair value option | 792,553 | — | — | 792,553 | ||||||||||||
Total | $ | 1,520,308 | $ | 43,574 | $ | 411,674 | $ | 1,975,556 |
December 31, 2017 | ||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Other | Total | ||||||||||||||||
Recoverable from reinsurers on unpaid: | ||||||||||||||||||||
Outstanding losses | $ | 932,284 | $ | 7,472 | $ | 211,650 | $ | 16 | $ | 1,151,422 | ||||||||||
IBNR | 590,154 | 31,476 | 242,620 | — | 864,250 | |||||||||||||||
Fair value adjustments | (12,970 | ) | 1,583 | (2,253 | ) | — | (13,640 | ) | ||||||||||||
Fair value adjustments - fair value option | (131,983 | ) | — | — | — | (131,983 | ) | |||||||||||||
Total reinsurance reserves recoverable | 1,377,485 | 40,531 | 452,017 | 16 | 1,870,049 | |||||||||||||||
Paid losses recoverable | 128,253 | (451 | ) | 23,179 | — | 150,981 | ||||||||||||||
$ | 1,505,738 | $ | 40,080 | $ | 475,196 | $ | 16 | $ | 2,021,030 | |||||||||||
Reconciliation to Consolidated Balance Sheet: | ||||||||||||||||||||
Reinsurance balances recoverable | $ | 963,514 | $ | 40,080 | $ | 475,196 | $ | 16 | $ | 1,478,806 | ||||||||||
Reinsurance balances recoverable - fair value option | 542,224 | — | — | — | 542,224 | |||||||||||||||
Total | $ | 1,505,738 | $ | 40,080 | $ | 475,196 | $ | 16 | $ | 2,021,030 |
September 30, 2018 | ||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Total | % of Total | ||||||||||||||
Top ten reinsurers | $ | 1,167,500 | $ | 28,669 | $ | 239,686 | $ | 1,435,855 | 72.7 | % | ||||||||
Other reinsurers > $1 million | 335,939 | 14,232 | 168,194 | 518,365 | 26.2 | % | ||||||||||||
Other reinsurers < $1 million | 16,869 | 673 | 3,794 | 21,336 | 1.1 | % | ||||||||||||
Total | $ | 1,520,308 | $ | 43,574 | $ | 411,674 | $ | 1,975,556 | 100.0 | % |
December 31, 2017 | ||||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Other | Total | % of Total | |||||||||||||||||
Top ten reinsurers | $ | 1,166,057 | $ | 22,422 | $ | 328,257 | $ | — | $ | 1,516,736 | 75.0 | % | ||||||||||
Other reinsurers > $1 million | 322,722 | 16,631 | 144,336 | — | 483,689 | 24.0 | % | |||||||||||||||
Other reinsurers < $1 million | 16,959 | 1,027 | 2,603 | 16 | 20,605 | 1.0 | % | |||||||||||||||
Total | $ | 1,505,738 | $ | 40,080 | $ | 475,196 | $ | 16 | $ | 2,021,030 | 100.0 | % |
September 30, 2018 | December 31, 2017 | ||||||
Information regarding top ten reinsurers: | |||||||
Number of top 10 reinsurers rated A- or better | 7 | 6 | |||||
Number of top 10 non-rated reinsurers (1) | 3 | 4 | |||||
Top 10 rated A- or better reinsurers recoverables | $ | 1,116,423 | $ | 829,164 | |||
Top 10 collaterized non-rated reinsurers recoverables (1) | $ | 319,432 | $ | 687,572 | |||
$ | 1,435,855 | $ | 1,516,736 | ||||
Single reinsurers that represent 10% or more of total reinsurance balance recoverables as at September 30, 2018: | |||||||
Hannover Ruck SE (2) | $ | 327,287 | $ | 320,047 | |||
Lloyd's Syndicates (3) | $ | 303,598 | $ | 193,838 |
September 30, 2018 | December 31, 2017 | ||||||||||||||||||||||||||||
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 | $ | 1,600,220 | $ | 54,960 | $ | 1,545,260 | 3.4 | % | $ | 1,252,887 | $ | 51,115 | $ | 1,201,772 | 4.1 | % | |||||||||||||
Reinsurers rated below A-, secured | 397,775 | — | 397,775 | — | % | 771,097 | — | 771,097 | — | % | |||||||||||||||||||
Reinsurers rated below A-, unsecured | 135,987 | 103,466 | 32,521 | 76.1 | % | 162,259 | 114,098 | 48,161 | 70.3 | % | |||||||||||||||||||
Total | $ | 2,133,982 | $ | 158,426 | $ | 1,975,556 | 7.4 | % | $ | 2,186,243 | $ | 165,213 | $ | 2,021,030 | 7.6 | % |
September 30, 2018 | |||||||||||||||
Non-life Run-off | Atrium | StarStone | Total | ||||||||||||
Outstanding losses | $ | 3,998,430 | $ | 83,138 | $ | 714,231 | $ | 4,795,799 | |||||||
IBNR | 3,072,291 | 152,462 | 723,987 | 3,948,740 | |||||||||||
Fair value adjustments | (120,916 | ) | 4,749 | (381 | ) | (116,548 | ) | ||||||||
Fair value adjustments - fair value option | (457,215 | ) | — | — | (457,215 | ) | |||||||||
ULAE | 340,165 | 2,418 | 22,374 | 364,957 | |||||||||||
Total | $ | 6,832,755 | $ | 242,767 | $ | 1,460,211 | $ | 8,535,733 | |||||||
Reconciliation to Consolidated Balance Sheet: | |||||||||||||||
Loss and loss adjustment expenses | $ | 3,813,034 | $ | 242,767 | $ | 1,460,211 | $ | 5,516,012 | |||||||
Loss and loss adjustment expenses, at fair value | 3,019,721 | — | — | 3,019,721 | |||||||||||
Total | $ | 6,832,755 | $ | 242,767 | $ | 1,460,211 | $ | 8,535,733 |
December 31, 2017 | |||||||||||||||
Non-life Run-off | Atrium | StarStone | Total | ||||||||||||
Outstanding losses | $ | 3,185,703 | $ | 78,363 | $ | 590,977 | $ | 3,855,043 | |||||||
IBNR | 2,903,927 | 150,508 | 599,221 | 3,653,656 | |||||||||||
Fair value adjustments | (125,998 | ) | 9,547 | (555 | ) | (117,006 | ) | ||||||||
Fair value adjustments - fair value option | (314,748 | ) | — | — | (314,748 | ) | |||||||||
ULAE | 300,588 | 2,455 | 18,100 | 321,143 | |||||||||||
Total | $ | 5,949,472 | $ | 240,873 | $ | 1,207,743 | $ | 7,398,088 | |||||||
Reconciliation to Consolidated Balance Sheet: | |||||||||||||||
Loss and loss adjustment expenses | $ | 4,154,803 | $ | 240,873 | $ | 1,207,743 | $ | 5,603,419 | |||||||
Loss and loss adjustment expenses, at fair value | $ | 1,794,669 | $ | — | $ | — | $ | 1,794,669 | |||||||
Total | $ | 5,949,472 | $ | 240,873 | $ | 1,207,743 | $ | 7,398,088 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Balance as at beginning of period | $ | 8,608,387 | $ | 7,641,384 | $ | 7,398,088 | $ | 5,987,867 | |||||||
Less: reinsurance reserves recoverable | 1,866,969 | 1,923,962 | 1,870,033 | 1,388,193 | |||||||||||
Less: deferred charges on retroactive reinsurance | 71,393 | 88,475 | 80,192 | 94,551 | |||||||||||
Net balance as at beginning of period | 6,670,025 | 5,628,947 | 5,447,863 | 4,505,123 | |||||||||||
Net incurred losses and LAE: | |||||||||||||||
Current period | 219,050 | 147,846 | 468,064 | 314,791 | |||||||||||
Prior periods | (65,076 | ) | (72,134) | (201,737 | ) | (151,567 | ) | ||||||||
Total net incurred losses and LAE | 153,974 | 75,712 | 266,327 | 163,224 | |||||||||||
Net paid losses: | |||||||||||||||
Current period | (24,266 | ) | (15,928) | (62,843 | ) | (40,820 | ) | ||||||||
Prior periods | (296,709 | ) | (215,173) | (937,846 | ) | (670,117 | ) | ||||||||
Total net paid losses | (320,975 | ) | (231,101) | (1,000,689 | ) | (710,937 | ) | ||||||||
Effect of exchange rate movement | (26,825 | ) | 55,712 | (108,659 | ) | 139,448 | |||||||||
Acquired on purchase of subsidiaries | 22,713 | 3,282 | 366,519 | 3,282 | |||||||||||
Assumed business | 103,615 | — | 1,631,166 | 1,432,412 | |||||||||||
Net balance as at September 30 | 6,602,527 | 5,532,552 | 6,602,527 | 5,532,552 | |||||||||||
Plus: reinsurance reserves recoverable | 1,846,187 | 1,998,001 | 1,846,187 | 1,998,001 | |||||||||||
Plus: deferred charges on retroactive reinsurance | 87,019 | 85,164 | 87,019 | 85,164 | |||||||||||
Balance as at September 30 | $ | 8,535,733 | $ | 7,615,717 | $ | 8,535,733 | $ | 7,615,717 |
Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||
September 30, 2018 | September 30, 2017 | ||||||||||||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Total | Non-life Run-off | Atrium | StarStone | Total | ||||||||||||||||||||||||
Net losses paid | $ | 195,770 | $ | 16,310 | $ | 108,895 | $ | 320,975 | $ | 136,014 | $ | 14,131 | $ | 80,956 | $ | 231,101 | |||||||||||||||
Net change in case and LAE reserves | (128,662 | ) | (546 | ) | 17,549 | (111,659 | ) | (66,392 | ) | 239 | (934 | ) | (67,087 | ) | |||||||||||||||||
Net change in IBNR reserves | (102,148 | ) | 2,818 | 71,160 | (28,170 | ) | (120,766 | ) | 22,525 | 30,173 | (68,068 | ) | |||||||||||||||||||
Increase (reduction) in estimates of net ultimate losses | (35,040 | ) | 18,582 | 197,604 | 181,146 | (51,144 | ) | 36,895 | 110,195 | 95,946 | |||||||||||||||||||||
Increase in provisions for bad debt | — | — | — | — | — | 242 | — | 242 | |||||||||||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (24,460 | ) | (2 | ) | 1,582 | (22,880 | ) | (16,038 | ) | 64 | 1,247 | (14,727 | ) | ||||||||||||||||||
Amortization of deferred charges | 1,582 | — | — | 1,582 | 3,311 | — | — | 3,311 | |||||||||||||||||||||||
Amortization of fair value adjustments | 4,247 | (727 | ) | (287 | ) | 3,233 | 3,493 | (1,928 | ) | (121 | ) | 1,444 | |||||||||||||||||||
Changes in fair value - fair value option | (9,107 | ) | — | — | (9,107 | ) | (10,504 | ) | — | — | (10,504 | ) | |||||||||||||||||||
Net incurred losses and LAE | $ | (62,778 | ) | $ | 17,853 | $ | 198,899 | $ | 153,974 | $ | (70,882 | ) | $ | 35,273 | $ | 111,321 | $ | 75,712 |
Nine Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||
September 30, 2018 | September 30, 2017 | ||||||||||||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Total | Non-life Run-off | Atrium | StarStone | Total | ||||||||||||||||||||||||
Net losses paid | $ | 644,665 | $ | 53,187 | $ | 302,837 | $ | 1,000,689 | $ | 436,998 | $ | 40,625 | $ | 233,314 | $ | 710,937 | |||||||||||||||
Net change in case and LAE reserves | (376,512 | ) | (98 | ) | 38,915 | (337,695 | ) | (276,935 | ) | (288 | ) | (2,148 | ) | (279,371 | ) | ||||||||||||||||
Net change in IBNR reserves | (413,898 | ) | 2,964 | 75,031 | (335,903 | ) | (261,724 | ) | 17,179 | 13,371 | (231,174 | ) | |||||||||||||||||||
Increase (reduction) in estimates of net ultimate losses | (145,745 | ) | 56,053 | 416,783 | 327,091 | (101,661 | ) | 57,516 | 244,537 | 200,392 | |||||||||||||||||||||
Increase (reduction) in provisions for bad debt | — | — | — | — | (735 | ) | 242 | — | (493 | ) | |||||||||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (48,723 | ) | — | 4,012 | (44,711 | ) | (41,296 | ) | — | 1,533 | (39,763 | ) | |||||||||||||||||||
Amortization of deferred charges | 10,381 | — | — | 10,381 | 9,387 | — | — | 9,387 | |||||||||||||||||||||||
Amortization of fair value adjustments | 10,312 | (4,102 | ) | (529 | ) | 5,681 | 5,518 | (1,808 | ) | (755 | ) | 2,955 | |||||||||||||||||||
Changes in fair value - fair value option | (32,115 | ) | — | — | (32,115 | ) | (9,254 | ) | — | — | (9,254 | ) | |||||||||||||||||||
Net incurred losses and LAE | $ | (205,890 | ) | $ | 51,951 | $ | 420,266 | $ | 266,327 | $ | (138,041 | ) | $ | 55,950 | $ | 245,315 | $ | 163,224 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Balance as at beginning of period | $ | 7,025,750 | $ | 6,317,279 | $ | 5,949,472 | $ | 4,716,363 | |||||||
Less: reinsurance reserves recoverable | 1,462,139 | 1,500,557 | 1,377,485 | 1,000,953 | |||||||||||
Less: deferred charges on retroactive insurance | 71,393 | 88,475 | 80,192 | 94,551 | |||||||||||
Net balance as at beginning of period | 5,492,218 | 4,728,247 | 4,491,795 | 3,620,859 | |||||||||||
Net incurred losses and LAE: | |||||||||||||||
Current period | 10,017 | 30 | 15,476 | 1,205 | |||||||||||
Prior periods | (72,795) | (70,912 | ) | (221,366 | ) | (139,246 | ) | ||||||||
Total net incurred losses and LAE | (62,778) | (70,882 | ) | (205,890 | ) | (138,041 | ) | ||||||||
Net paid losses: | |||||||||||||||
Current period | (2,713) | (33 | ) | (3,304 | ) | (404 | ) | ||||||||
Prior periods | (193,057) | (135,981 | ) | (641,361 | ) | (436,594 | ) | ||||||||
Total net paid losses | (195,770) | (136,014 | ) | (644,665 | ) | (436,998 | ) | ||||||||
Effect of exchange rate movement | (26,352 | ) | 46,080 | (102,030) | 120,592 | ||||||||||
Acquired on purchase of subsidiaries | 22,713 | 3,282 | 173,538 | 3,282 | |||||||||||
Assumed business | 103,615 | — | 1,620,898 | 1,401,019 | |||||||||||
Net balance as at September 30 | 5,333,646 | 4,570,713 | 5,333,646 | 4,570,713 | |||||||||||
Plus: reinsurance reserves recoverable | 1,412,090 | 1,475,855 | 1,412,090 | 1,475,855 | |||||||||||
Plus: deferred charges on retroactive reinsurance | 87,019 | 85,164 | 87,019 | 85,164 | |||||||||||
Balance as at September 30 | $ | 6,832,755 | $ | 6,131,732 | $ | 6,832,755 | $ | 6,131,732 |
Three Months Ended September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Prior Period | Current Period | Total | Prior Period | Current Period | Total | ||||||||||||||||||
Net losses paid | $ | 193,057 | $ | 2,713 | $ | 195,770 | $ | 135,981 | $ | 33 | $ | 136,014 | |||||||||||
Net change in case and LAE reserves | (128,827 | ) | 165 | (128,662 | ) | (66,376 | ) | (16 | ) | (66,392 | ) | ||||||||||||
Net change in IBNR reserves | (109,287 | ) | 7,139 | (102,148 | ) | (120,614 | ) | (152 | ) | (120,766 | ) | ||||||||||||
Increase (reduction) in estimates of net ultimate losses | (45,057 | ) | 10,017 | (35,040 | ) | (51,009 | ) | (135 | ) | (51,144 | ) | ||||||||||||
Increase (reduction) in provisions for unallocated LAE | (24,460 | ) | — | (24,460 | ) | (16,203 | ) | 165 | (16,038 | ) | |||||||||||||
Amortization of deferred charges | 1,582 | — | 1,582 | 3,311 | — | 3,311 | |||||||||||||||||
Amortization of fair value adjustments | 4,247 | — | 4,247 | 3,493 | — | 3,493 | |||||||||||||||||
Changes in fair value - fair value option | (9,107 | ) | — | (9,107 | ) | (10,504 | ) | — | (10,504 | ) | |||||||||||||
Net incurred losses and LAE | $ | (72,795 | ) | $ | 10,017 | $ | (62,778 | ) | $ | (70,912 | ) | $ | 30 | $ | (70,882 | ) |
Nine Months Ended September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Prior Period | Current Period | Total | Prior Period | Current Period | Total | ||||||||||||||||||
Net losses paid | $ | 641,361 | $ | 3,304 | $ | 644,665 | $ | 436,594 | $ | 404 | $ | 436,998 | |||||||||||
Net change in case and LAE reserves | (377,735 | ) | 1,223 | (376,512 | ) | (276,903 | ) | (32 | ) | (276,935 | ) | ||||||||||||
Net change in IBNR reserves | (424,847 | ) | 10,949 | (413,898 | ) | (262,296 | ) | 572 | (261,724 | ) | |||||||||||||
Increase (reduction) in estimates of net ultimate losses | (161,221 | ) | 15,476 | (145,745 | ) | (102,605 | ) | 944 | (101,661 | ) | |||||||||||||
Reduction in provisions for bad debt | — | — | — | (735 | ) | — | (735 | ) | |||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (48,723 | ) | — | (48,723 | ) | (41,557 | ) | 261 | (41,296 | ) | |||||||||||||
Amortization of deferred charges | 10,381 | — | 10,381 | 9,387 | — | 9,387 | |||||||||||||||||
Amortization of fair value adjustments | 10,312 | — | 10,312 | 5,518 | — | 5,518 | |||||||||||||||||
Changes in fair value - fair value option | (32,115 | ) | — | (32,115 | ) | (9,254 | ) | — | (9,254 | ) | |||||||||||||
Net incurred losses and LAE | $ | (221,366 | ) | $ | 15,476 | $ | (205,890 | ) | $ | (139,246 | ) | $ | 1,205 | $ | (138,041 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Balance as at beginning of period | $ | 234,232 | $ | 208,646 | $ | 240,873 | $ | 212,122 | |||||||
Less: reinsurance reserves recoverable | 38,253 | 29,749 | 40,531 | 30,009 | |||||||||||
Net balance as at beginning of period | 195,979 | 178,897 | 200,342 | 182,113 | |||||||||||
Net incurred losses and LAE: | |||||||||||||||
Current period | 20,033 | 37,284 | 56,514 | 66,563 | |||||||||||
Prior periods | (2,180 | ) | (2,011 | ) | (4,563 | ) | (10,613 | ) | |||||||
Total net incurred losses and LAE | 17,853 | 35,273 | 51,951 | 55,950 | |||||||||||
Net paid losses: | |||||||||||||||
Current period | (8,080 | ) | (5,139 | ) | (25,699 | ) | (14,799 | ) | |||||||
Prior periods | (8,230 | ) | (8,992 | ) | (27,488 | ) | (25,826 | ) | |||||||
Total net paid losses | (16,310 | ) | (14,131 | ) | (53,187 | ) | (40,625 | ) | |||||||
Effect of exchange rate movement | (137 | ) | 1,474 | (1,721 | ) | 4,075 | |||||||||
Net balance as at September 30 | 197,385 | 201,513 | 197,385 | 201,513 | |||||||||||
Plus: reinsurance reserves recoverable | 45,382 | 44,207 | 45,382 | 44,207 | |||||||||||
Balance as at September 30 | $ | 242,767 | $ | 245,720 | $ | 242,767 | $ | 245,720 |
Three Months Ended September 30, | |||||||||||||||||
2018 | 2017 | ||||||||||||||||
Prior Period | Current Period | Total | Prior Period | Current Period | Total | ||||||||||||
Net losses paid | 8,230 | 8,080 | 16,310 | 8,992 | 5,139 | 14,131 | |||||||||||
Net change in case and LAE reserves | (4,142 | ) | 3,596 | (546 | ) | (2,781 | ) | 3,020 | 239 | ||||||||
Net change in IBNR reserves | (5,539 | ) | 8,357 | 2,818 | (6,273 | ) | 28,798 | 22,525 | |||||||||
Increase (reduction) in estimates of net ultimate losses | (1,451 | ) | 20,033 | 18,582 | (62 | ) | 36,957 | 36,895 | |||||||||
Increase (reduction) in provisions for bad debt | — | — | — | (96 | ) | 338 | 242 | ||||||||||
Increase (reduction) in provisions for unallocated LAE | (2 | ) | — | (2 | ) | 75 | (11 | ) | 64 | ||||||||
Amortization of fair value adjustments | (727 | ) | — | (727 | ) | (1,928 | ) | — | (1,928 | ) | |||||||
Net incurred losses and LAE | (2,180 | ) | 20,033 | 17,853 | (2,011 | ) | 37,284 | 35,273 |
Nine Months Ended September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Prior Period | Current Period | Total | Prior Period | Current Period | Total | ||||||||||||||||||
Net losses paid | $ | 27,488 | $ | 25,699 | $ | 53,187 | $ | 25,826 | $ | 14,799 | $ | 40,625 | |||||||||||
Net change in case and LAE reserves | (9,695 | ) | 9,597 | (98 | ) | (7,904 | ) | 7,616 | (288 | ) | |||||||||||||
Net change in IBNR reserves | (18,254 | ) | 21,218 | 2,964 | (26,631 | ) | 43,810 | 17,179 | |||||||||||||||
Increase (reduction) in estimates of net ultimate losses | (461 | ) | 56,514 | 56,053 | (8,709 | ) | 66,225 | 57,516 | |||||||||||||||
Increase (reduction) in provisions for bad debt | — | — | — | (96 | ) | 338 | 242 | ||||||||||||||||
Amortization of fair value adjustments | (4,102 | ) | — | (4,102 | ) | (1,808 | ) | — | (1,808 | ) | |||||||||||||
Net incurred losses and LAE | $ | (4,563 | ) | $ | 56,514 | $ | 51,951 | $ | (10,613 | ) | $ | 66,563 | $ | 55,950 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Balance as at beginning of period | $ | 1,348,405 | $ | 1,115,459 | $ | 1,207,743 | $ | 1,059,382 | |||||||
Less: reinsurance reserves recoverable | 366,577 | 393,656 | 452,017 | 357,231 | |||||||||||
Net balance as at beginning of period | 981,828 | 721,803 | 755,726 | 702,151 | |||||||||||
Net incurred losses and LAE: | |||||||||||||||
Current period | 189,000 | 110,532 | 396,074 | 247,023 | |||||||||||
Prior periods | 9,899 | 789 | 24,192 | (1,708 | ) | ||||||||||
Total net incurred losses and LAE | 198,899 | 111,321 | 420,266 | 245,315 | |||||||||||
Net paid losses: | |||||||||||||||
Current period | (13,473) | (10,756 | ) | (33,840 | ) | (25,617 | ) | ||||||||
Prior periods | (95,422) | (70,200 | ) | (268,997 | ) | (207,697 | ) | ||||||||
Total net paid losses | (108,895) | (80,956 | ) | (302,837 | ) | (233,314 | ) | ||||||||
Effect of exchange rate movement | (336) | 8,158 | (4,908 | ) | 14,781 | ||||||||||
Acquired on purchase of subsidiaries | — | — | 192,981 | — | |||||||||||
Assumed business | — | — | 10,268 | 31,393 | |||||||||||
Net balance as at September 30 | 1,071,496 | 760,326 | 1,071,496 | 760,326 | |||||||||||
Plus: reinsurance reserves recoverable | 388,715 | 477,939 | 388,715 | 477,939 | |||||||||||
Balance as at September 30 | $ | 1,460,211 | $ | 1,238,265 | $ | 1,460,211 | $ | 1,238,265 |
Three Months Ended September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Prior Period | Current Period | Total | Prior Period | Current Period | Total | ||||||||||||||||||
Net losses paid | $ | 95,422 | $ | 13,473 | $ | 108,895 | $ | 70,200 | $ | 10,756 | $ | 80,956 | |||||||||||
Net change in case and LAE reserves | (19,919 | ) | 37,468 | 17,549 | (14,037 | ) | 13,103 | (934 | ) | ||||||||||||||
Net change in IBNR reserves | (63,294 | ) | 134,454 | 71,160 | (54,400 | ) | 84,573 | 30,173 | |||||||||||||||
Increase in estimates of net ultimate losses | 12,209 | 185,395 | 197,604 | 1,763 | 108,432 | 110,195 | |||||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (2,023 | ) | 3,605 | 1,582 | (853 | ) | 2,100 | 1,247 | |||||||||||||||
Amortization of fair value adjustments | (287 | ) | — | (287 | ) | (121 | ) | — | (121 | ) | |||||||||||||
Net incurred losses and LAE | $ | 9,899 | $ | 189,000 | $ | 198,899 | $ | 789 | $ | 110,532 | $ | 111,321 |
Nine Months Ended September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Prior Period | Current Period | Total | Prior Period | Current Period | Total | ||||||||||||||||||
Net losses paid | $ | 268,997 | $ | 33,840 | $ | 302,837 | $ | 207,697 | $ | 25,617 | $ | 233,314 | |||||||||||
Net change in case and LAE reserves | (55,541 | ) | 94,456 | 38,915 | (55,501 | ) | 53,353 | (2,148 | ) | ||||||||||||||
Net change in IBNR reserves | (183,422 | ) | 258,453 | 75,031 | (149,165 | ) | 162,536 | 13,371 | |||||||||||||||
Increase in estimates of net ultimate losses | 30,034 | 386,749 | 416,783 | 3,031 | 241,506 | 244,537 | |||||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (5,313 | ) | 9,325 | 4,012 | (3,984 | ) | 5,517 | 1,533 | |||||||||||||||
Amortization of fair value adjustments | (529 | ) | — | (529 | ) | (755 | ) | — | (755 | ) | |||||||||||||
Net incurred losses and LAE | $ | 24,192 | $ | 396,074 | $ | 420,266 | $ | (1,708 | ) | $ | 247,023 | $ | 245,315 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||||||
Premiums Written | Premiums Earned | Premiums Written | Premiums Earned | Premiums Written | Premiums Earned | Premiums Written | Premiums Earned | ||||||||||||||||||||||||
Non-life Run-off | |||||||||||||||||||||||||||||||
Gross | $ | 9,912 | $ | 17,746 | $ | 11,751 | $ | 9,345 | $ | 16,354 | $ | 54,044 | $ | 13,956 | $ | 15,353 | |||||||||||||||
Ceded | (5,134 | ) | (7,304 | ) | (284 | ) | (2,930 | ) | (13,137 | ) | (26,815 | ) | (503 | ) | (5,497 | ) | |||||||||||||||
Net | $ | 4,778 | $ | 10,442 | $ | 11,467 | $ | 6,415 | $ | 3,217 | $ | 27,229 | $ | 13,453 | $ | 9,856 | |||||||||||||||
Atrium | |||||||||||||||||||||||||||||||
Gross | $ | 39,995 | $ | 42,505 | $ | 36,377 | $ | 39,591 | $ | 130,997 | $ | 121,974 | $ | 117,355 | $ | 111,633 | |||||||||||||||
Ceded | (2,854 | ) | (5,528 | ) | (10,388 | ) | (6,818 | ) | (17,779 | ) | (15,252 | ) | (18,120 | ) | (14,260 | ) | |||||||||||||||
Net | $ | 37,141 | $ | 36,977 | $ | 25,989 | $ | 32,773 | $ | 113,218 | $ | 106,722 | $ | 99,235 | $ | 97,373 | |||||||||||||||
StarStone | |||||||||||||||||||||||||||||||
Gross | $ | 282,525 | $ | 281,467 | $ | 200,007 | $ | 217,833 | $ | 888,867 | $ | 761,694 | $ | 651,107 | $ | 636,137 | |||||||||||||||
Ceded | (62,799 | ) | (65,112 | ) | (102,958 | ) | (110,183 | ) | (269,339 | ) | (234,892 | ) | (319,658 | ) | (294,528 | ) | |||||||||||||||
Net | $ | 219,726 | $ | 216,355 | $ | 97,049 | $ | 107,650 | $ | 619,528 | $ | 526,802 | $ | 331,449 | $ | 341,609 | |||||||||||||||
Other | |||||||||||||||||||||||||||||||
Gross | $ | 846 | $ | 848 | $ | 2,424 | $ | 1,444 | $ | 2,858 | $ | 2,878 | $ | 4,506 | $ | 4,658 | |||||||||||||||
Ceded | (24 | ) | (25 | ) | (753 | ) | (257 | ) | 13 | (3 | ) | (860 | ) | (1,002 | ) | ||||||||||||||||
Net | $ | 822 | $ | 823 | $ | 1,671 | $ | 1,187 | $ | 2,871 | $ | 2,875 | $ | 3,646 | $ | 3,656 | |||||||||||||||
Total | |||||||||||||||||||||||||||||||
Gross | $ | 333,278 | $ | 342,566 | $ | 250,559 | $ | 268,213 | $ | 1,039,076 | $ | 940,590 | $ | 786,924 | $ | 767,781 | |||||||||||||||
Ceded | (70,811 | ) | (77,969 | ) | (114,383 | ) | (120,188 | ) | (300,242 | ) | (276,962 | ) | (339,141 | ) | (315,287 | ) | |||||||||||||||
Total | $ | 262,467 | $ | 264,597 | $ | 136,176 | $ | 148,025 | $ | 738,834 | $ | 663,628 | $ | 447,783 | $ | 452,494 |
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 January 1, 2018 | $ | 73,071 | $ | 20,487 | $ | 87,031 | $ | 180,589 | $ | 140,393 | $ | 80,192 | |||||||||||
Acquired during the period | 41,736 | — | — | 41,736 | 3,976 | 17,208 | |||||||||||||||||
Amortization | — | (3,030 | ) | — | (3,030 | ) | (6,138 | ) | (10,381 | ) | |||||||||||||
Balance as at September 30, 2018 | $ | 114,807 | $ | 17,457 | $ | 87,031 | $ | 219,295 | $ | 138,231 | $ | 87,019 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Intangible asset amortization | $ | 3,922 | $ | 3,105 | $ | 9,168 | $ | 5,353 |
September 30, 2018 | December 31, 2017 | ||||||||||||||||||||||
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 | $ | 467,944 | $ | (351,396 | ) | $ | 116,548 | $ | 462,455 | $ | (345,449 | ) | $ | 117,006 | |||||||||
Reinsurance balances recoverable | (180,732 | ) | 165,579 | (15,153 | ) | (179,219 | ) | 165,579 | (13,640 | ) | |||||||||||||
Other Assets | (48,840 | ) | 838 | (48,002 | ) | (48,840 | ) | 440 | (48,400 | ) | |||||||||||||
Other Liabilities | 85,845 | (1,007 | ) | 84,838 | 85,845 | (418 | ) | 85,427 | |||||||||||||||
Total | $ | 324,217 | $ | (185,986 | ) | $ | 138,231 | $ | 320,241 | $ | (179,848 | ) | $ | 140,393 | |||||||||
Other: | |||||||||||||||||||||||
Distribution channel | $ | 20,000 | $ | (6,443 | ) | $ | 13,557 | $ | 20,000 | $ | (5,444 | ) | $ | 14,556 | |||||||||
Technology | 15,000 | (14,716 | ) | 284 | 15,000 | (13,210 | ) | 1,790 | |||||||||||||||
Brand | 7,000 | (3,384 | ) | 3,616 | 7,000 | (2,859 | ) | 4,141 | |||||||||||||||
Total | $ | 42,000 | $ | (24,543 | ) | $ | 17,457 | $ | 42,000 | $ | (21,513 | ) | $ | 20,487 | |||||||||
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 | $ | 295,851 | $ | (208,832 | ) | $ | 87,019 | $278,643 | $ | (198,451 | ) | $80,192 |
Facility | Origination Date | Term | September 30, 2018 | December 31, 2017 | ||||||||
Senior Notes | March 10, 2017 | 5 years | $ | 350,000 | $ | 350,000 | ||||||
Less: Unamortized debt issuance costs | (2,030 | ) | (2,484 | ) | ||||||||
Total Senior Notes | 347,970 | 347,516 | ||||||||||
EGL Revolving Credit Facility | August 16, 2018 | 5 years | 46,500 | — | ||||||||
Previous EGL Revolving Credit Facility | September 16, 2014 | 5 years | — | 225,110 | ||||||||
EGL Term Loan Facility | November 18, 2016 | 3 years | — | 74,063 | ||||||||
Total debt obligations | $ | 394,470 | $ | 646,689 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Interest expense on debt obligations | $ | 4,552 | $ | 6,219 | $ | 20,822 | $ | 18,576 | |||||||
Funds withheld balances and other | 88 | 191 | 751 | 2,275 | |||||||||||
Total interest expense | $ | 4,640 | $ | 6,410 | $ | 21,573 | $ | 20,851 |
Nine Months Ended | For The Year Ended | |||||||
September 30, 2018 | December 31, 2017 | |||||||
Balance at beginning of period | $ | 479,606 | $ | 454,522 | ||||
Dividends paid | — | (27,458 | ) | |||||
Net earnings (losses) attributable to RNCI | (20,097 | ) | 19,619 | |||||
Accumulated other comprehensive earnings (losses) attributable to RNCI | (396 | ) | 1,945 | |||||
Change in redemption value of RNCI | (785 | ) | 30,978 | |||||
Balance at end of period | $ | 458,328 | $ | 479,606 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Numerator: | |||||||||||||||
Earnings (losses) attributable to Enstar Group Limited ordinary shareholders: | |||||||||||||||
Net earnings (loss) from continuing operations | $ | (15,965 | ) | $ | 35,498 | $ | (48,931 | ) | $ | 184,864 | |||||
Net earnings (loss) from discontinued operations | — | 3,495 | — | (1,005 | ) | ||||||||||
Net earnings (loss) attributable to Enstar Group Limited attributable to Enstar Group Limited ordinary shareholders | (15,965 | ) | 38,993 | (48,931 | ) | 183,859 | |||||||||
Denominator: | |||||||||||||||
Weighted average ordinary shares outstanding — basic | 21,440,914 | 19,392,120 | 20,444,634 | 19,384,897 | |||||||||||
Effect of dilutive securities: | |||||||||||||||
Share-based compensation plans | 143,833 | 90,118 | 129,313 | 58,239 | |||||||||||
Warrants | 80,609 | 76,930 | 79,597 | 72,851 | |||||||||||
Weighted average ordinary shares outstanding — diluted | 21,665,356 | 19,559,168 | 20,653,544 | 19,515,987 | |||||||||||
Earnings (losses) per ordinary share attributable to Enstar Group Limited: | |||||||||||||||
Basic: | |||||||||||||||
Net earnings (loss) from continuing operations | $ | (0.74 | ) | $ | 1.83 | $ | (2.39 | ) | $ | 9.54 | |||||
Net earnings (loss) from discontinued operations | — | 0.18 | $ | — | $ | (0.05 | ) | ||||||||
Net earnings (loss) per ordinary share | $ | (0.74 | ) | $ | 2.01 | $ | (2.39 | ) | $ | 9.49 | |||||
Diluted(1) : | |||||||||||||||
Net earnings (loss) from continuing operations | $ | (0.74 | ) | $ | 1.81 | $ | (2.39 | ) | $ | 9.47 | |||||
Net earnings (loss) from discontinued operations | — | 0.18 | $ | — | $ | (0.05 | ) | ||||||||
Net earnings (loss) per ordinary share | $ | (0.74 | ) | $ | 1.99 | $ | (2.39 | ) | $ | 9.42 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Share-based Compensation Expense | $ | 3,865 | $ | 9,234 | $ | 14,384 | $ | 19,213 | ||||||||
Employee Share Purchase Plan | $ | 115 | $ | 86 | $ | 325 | $ | 252 | ||||||||
Pension Expense | $ | 2,818 | $ | 3,998 | $ | 8,640 | $ | 9,483 |
September 30, 2018 | December 31, 2017 | ||||
Redeemable Noncontrolling Interest | 439,255 | 459,649 |
• | Investments in funds (carried within other investments) managed by Stone Point, with respect to which we recognized unrealized gains and interest income; |
• | Investments in registered investment companies affiliated with entities owned by Trident or otherwise affiliated with Stone Point, with respect to which we recognized unrealized gains and interest income; |
• | Separate accounts managed by Eagle Point Credit Management and PRIMA Capital Advisors, which are affiliates of entities owned by Trident, with respect to which we incurred management fees; |
• | Investments 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, with respect to which we recognized net unrealized gains; |
• | Sound Point Capital has acted as collateral manager for certain of our direct investments in CLO equity securities, with respect to which we recognized net unrealized gains (losses) and interest income; and |
• | A separate account managed by Sound Point Capital, with respect to which we incurred management fees. |
September 30, 2018 | December 31, 2017 | ||||||
Investments in funds managed by Stone Point | $ | 375,406 | $ | 255,905 | |||
Investments in registered investment companies affiliated with entities owned by Trident or Stone Point | 34,682 | 22,060 | |||||
Investments managed by Eagle Point Credit Management and PRIMA Capital Advisors | 252,017 | 183,448 | |||||
Investments in funds managed by Sound Point Capital | 37,254 | 27,429 | |||||
Investments in CLO equity securities with Sound Point Capital as collateral manager | 16,206 | 17,760 | |||||
Separate account managed by Sound Point Capital | 5,231 | 63,572 | |||||
Total investments | $ | 720,796 | $ | 570,174 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net unrealized gains on funds managed by Stone Point | $ | 9,598 | $ | 6,137 | $ | 11,850 | $ | 17,787 | |||||||
Net unrealized gains (losses) on registered investment companies affiliated with entities owned by Trident or Stone Point | (283 | ) | 86 | 6,267 | 5,123 | ||||||||||
Interest income on registered investment companies affiliated with entities owned by Trident | 707 | 1,138 | 2,617 | 2,412 | |||||||||||
Management fees on investments managed by Eagle Point Credit Management and PRIMA Capital Advisors | (242 | ) | (160 | ) | (696 | ) | (451 | ) | |||||||
Net unrealized gains on investments in funds managed by Sound Point Capital | 394 | 576 | 156 | 1,370 | |||||||||||
Net unrealized losses on investments in CLO equity securities with Sound Point Capital as collateral manager | (931 | ) | (1,090 | ) | (1,554 | ) | (3,584 | ) | |||||||
Interest income on investments in CLO equity securities with Sound Point Capital as collateral manager | 1,106 | 1,118 | 3,595 | 3,598 | |||||||||||
Management fees on separate account managed by Sound Point Capital | (6 | ) | (71 | ) | (167 | ) | (224 | ) | |||||||
Total investment earnings | $ | 10,343 | $ | 7,734 | $ | 22,068 | $ | 26,031 |
September 30, 2018 | December 31, 2017 | ||||||
Reinsurance balances recoverable | $ | 6,884 | $ | 7,003 |
September 30, 2018 | December 31, 2017 | ||||||
Investments in funds managed by Hillhouse, held by equity method investments | $ | — | $ | 456,660 | |||
Investment in funds managed by Hillhouse | $ | 903,568 | $ | — |
September 30, 2018 | December 31, 2017 | ||||||
Investment in Citco | $ | 49,606 | $ | — |
September 30, 2018 | December 31, 2017 | ||||||
Investment in Monument | $ | 35,587 | $ | 15,960 |
September 30, 2018 | December 31, 2017 | ||||||
Investment in Clear Spring | $ | 10,565 | $ | 10,596 |
September 30, 2018 | December 31, 2017 | ||||||
Balances under StarStone quota share: | |||||||
Reinsurance balances recoverable | $ | 19,192 | $ | 9,053 | |||
Prepaid insurance premiums | 12,215 | 13,747 | |||||
Ceded payable | 15,275 | 13,964 | |||||
Ceded acquisition costs | 2,920 | 3,186 | |||||
Balances under Cavello Bay quota share: | |||||||
Losses and LAE | 4,682 | 2,231 | |||||
Unearned reinsurance premiums | 3,054 | 3,437 | |||||
Funds held | 8,744 | 5,095 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Transactions under StarStone quota share: | |||||||||||||||
Ceded premium earned | $ | (6,926 | ) | $ | (8,393 | ) | $ | (21,564 | ) | $ | (8,393 | ) | |||
Ceded incurred losses and LAE | 3,823 | 2,068 | 12,429 | 2,068 | |||||||||||
Ceded acquisition costs | 981 | 5,540 | 4,892 | 5,540 | |||||||||||
Transactions under Cavello Bay quota share: | |||||||||||||||
Premium earned | 3,482 | 2,098 | 5,391 | 2,098 | |||||||||||
Net incurred losses and LAE | (2,346 | ) | (1,385 | ) | (3,107 | ) | (1,385 | ) | |||||||
Acquisition costs | (721 | ) | (1,198 | ) | (1,275 | ) | (1,198 | ) | |||||||
Net income statement amounts | $ | (1,707 | ) | $ | (1,270 | ) | $ | (3,234 | ) | $ | (1,270 | ) |
December 31, 2017 | |||
Reinsurance balances recoverable | $ | 357,355 | |
Prepaid reinsurance premiums | 116,356 | ||
Funds held | 174,181 | ||
Insurance and reinsurance balances payable | 232,884 | ||
Ceded acquisition costs | 36,070 |
Nine Months Ended | |||||||
September 30, | |||||||
2018 | 2017 | ||||||
Management fee income | $ | 1,453 | $ | 6,059 | |||
Transactions under KaylaRe-StarStone QS: | |||||||
Ceded premium earned | (52,651 | ) | (170,552 | ) | |||
Net incurred losses | 31,654 | 127,578 | |||||
Acquisition costs | 18,774 | 67,375 | |||||
Transactions under Fitzwilliam reinsurance agreement: | |||||||
Profit Commission | — | 11,525 | |||||
Net incurred losses | — | (12,791 | ) | ||||
Net income statement gain (loss) amounts | $ | (770 | ) | $ | 29,194 |
Three Months Ended September 30, 2018 | |||||||||||||||||||
Non-Life Run-Off | Atrium | StarStone | Other | Total | |||||||||||||||
Gross premiums written | $ | 9,912 | $ | 39,995 | $ | 282,525 | $ | 846 | $ | 333,278 | |||||||||
Net premiums written | $ | 4,778 | $ | 37,141 | $ | 219,726 | $ | 822 | $ | 262,467 | |||||||||
Net premiums earned | $ | 10,442 | $ | 36,977 | $ | 216,355 | $ | 823 | $ | 264,597 | |||||||||
Net incurred losses and LAE | 62,778 | (17,853 | ) | (198,899 | ) | — | (153,974 | ) | |||||||||||
Life and Annuity Policy Benefits | — | — | — | (423 | ) | (423 | ) | ||||||||||||
Acquisition costs | 160 | (13,215 | ) | (41,079 | ) | (108 | ) | (54,242 | ) | ||||||||||
Operating expenses | (37,473 | ) | (3,952 | ) | (38,000 | ) | — | (79,425 | ) | ||||||||||
Underwriting income (loss) | 35,907 | 1,957 | (61,623 | ) | 292 | (23,467 | ) | ||||||||||||
Net investment income | 59,247 | 1,597 | 9,504 | (918 | ) | 69,430 | |||||||||||||
Net realized and unrealized gains (losses) | (58,506 | ) | 194 | 989 | 100 | (57,223 | ) | ||||||||||||
Fees and commission income | 3,708 | 3,242 | — | — | 6,950 | ||||||||||||||
Other income (expense) | 11,423 | 7 | 117 | (4 | ) | 11,543 | |||||||||||||
Corporate expenses | (11,433 | ) | (2,770 | ) | — | (8,925 | ) | (23,128 | ) | ||||||||||
Interest income (expense) | (5,951 | ) | — | — | 1,311 | (4,640 | ) | ||||||||||||
Net foreign exchange gains (losses) | 17 | (262 | ) | (585 | ) | (210 | ) | (1,040 | ) | ||||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES | 34,412 | 3,965 | (51,598 | ) | (8,354 | ) | (21,575 | ) | |||||||||||
INCOME (TAXES) BENEFIT | (125 | ) | (737 | ) | 118 | (2 | ) | (746 | ) | ||||||||||
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS | 34,287 | 3,228 | (51,480 | ) | (8,356 | ) | (22,321 | ) | |||||||||||
Net loss (earnings) attributable to noncontrolling interest | (1,659 | ) | (1,266 | ) | 14,414 | — | 11,489 | ||||||||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED | 32,628 | 1,962 | (37,066 | ) | (8,356 | ) | (10,832 | ) | |||||||||||
Dividends on preferred shares | — | — | — | (5,133 | ) | (5,133 | ) | ||||||||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | 32,628 | $ | 1,962 | $ | (37,066 | ) | $ | (13,489 | ) | $ | (15,965 | ) | ||||||
Underwriting ratios(1): | |||||||||||||||||||
Loss ratio | 48.3 | % | 91.9 | % | |||||||||||||||
Acquisition expense ratio | 35.7 | % | 19.0 | % | |||||||||||||||
Operating expense ratio | 10.7 | % | 17.6 | % | |||||||||||||||
Combined ratio | 94.7 | % | 128.5 | % |
Nine Months Ended September 30, 2018 | |||||||||||||||||||
Non-Life Run-Off | Atrium | StarStone | Other | Total | |||||||||||||||
Gross premiums written | $ | 16,354 | $ | 130,997 | $ | 888,867 | $ | 2,858 | $ | 1,039,076 | |||||||||
Net premiums written | $ | 3,217 | $ | 113,218 | $ | 619,528 | $ | 2,871 | $ | 738,834 | |||||||||
Net premiums earned | $ | 27,229 | $ | 106,722 | $ | 526,802 | $ | 2,875 | $ | 663,628 | |||||||||
Net incurred losses and LAE | 205,890 | (51,951 | ) | (420,266 | ) | — | (266,327 | ) | |||||||||||
Life and Annuity Policy Benefits | — | — | — | (217 | ) | (217 | ) | ||||||||||||
Acquisition costs | (4,524 | ) | (37,996 | ) | (94,775 | ) | (389 | ) | (137,684 | ) | |||||||||
Operating expenses | (114,254 | ) | (12,259 | ) | (106,699 | ) | — | (233,212 | ) | ||||||||||
Underwriting income (loss) | 114,341 | 4,516 | (94,938 | ) | 2,269 | 26,188 | |||||||||||||
Net investment income | 168,189 | 4,067 | 25,950 | 4,012 | 202,218 | ||||||||||||||
Net realized and unrealized losses | (230,829 | ) | (1,889 | ) | (15,150 | ) | (6,803 | ) | (254,671 | ) | |||||||||
Fees and commission income | 13,093 | 10,540 | — | — | 23,633 | ||||||||||||||
Other income (expense) | 34,989 | 127 | (432 | ) | (207 | ) | 34,477 | ||||||||||||
Corporate expenses | (33,453 | ) | (5,083 | ) | — | (28,677 | ) | (67,213 | ) | ||||||||||
Interest income (expense) | (24,562 | ) | — | (547 | ) | 3,536 | (21,573 | ) | |||||||||||
Net foreign exchange gains (losses) | (202 | ) | (1,262 | ) | (1,063 | ) | 1,138 | (1,389 | ) | ||||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES | 41,566 | 11,016 | (86,180 | ) | (24,732 | ) | (58,330 | ) | |||||||||||
INCOME TAXES | (227 | ) | (1,756 | ) | (2,568 | ) | (13 | ) | (4,564 | ) | |||||||||
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS | 41,339 | 9,260 | (88,748 | ) | (24,745 | ) | (62,894 | ) | |||||||||||
Net loss (earnings) attributable to noncontrolling interest | (4,182 | ) | (3,798 | ) | 27,076 | — | 19,096 | ||||||||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED | 37,157 | 5,462 | (61,672 | ) | (24,745 | ) | (43,798 | ) | |||||||||||
Dividends on preferred shares | — | — | — | (5,133 | ) | (5,133 | ) | ||||||||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | 37,157 | $ | 5,462 | $ | (61,672 | ) | $ | (29,878 | ) | $ | (48,931 | ) | ||||||
Underwriting ratios(1): | |||||||||||||||||||
Loss ratio | 48.7 | % | 79.8 | % | |||||||||||||||
Acquisition expense ratio | 35.6 | % | 18.0 | % | |||||||||||||||
Operating expense ratio | 11.5 | % | 20.2 | % | |||||||||||||||
Combined ratio | 95.8 | % | 118.0 | % |
Three Months Ended September 30, 2017 | |||||||||||||||||||
Non-Life Run-Off | Atrium | StarStone | Other | Total | |||||||||||||||
Gross premiums written | $ | 11,751 | $ | 36,377 | $ | 200,007 | $ | 2,424 | $ | 250,559 | |||||||||
Net premiums written | $ | 11,467 | $ | 25,989 | $ | 97,049 | $ | 1,671 | $ | 136,176 | |||||||||
Net premiums earned | $ | 6,415 | $ | 32,773 | $ | 107,650 | $ | 1,187 | $ | 148,025 | |||||||||
Net incurred losses and LAE | 70,882 | (35,273 | ) | (111,321 | ) | — | (75,712 | ) | |||||||||||
Life and Annuity Policy Benefits | — | — | — | (1,060 | ) | (1,060 | ) | ||||||||||||
Acquisition costs | (1,001 | ) | (11,818 | ) | (11,313 | ) | (149 | ) | (24,281 | ) | |||||||||
Operating expenses | (35,657 | ) | (2,507 | ) | (32,605 | ) | — | (70,769 | ) | ||||||||||
Underwriting income (loss) | 40,639 | (16,825 | ) | (47,589 | ) | (22 | ) | (23,797 | ) | ||||||||||
Net investment income | 42,829 | 847 | 7,592 | 760 | 52,028 | ||||||||||||||
Net realized and unrealized gains (losses) | 25,016 | 285 | 5,045 | (1,045 | ) | 29,301 | |||||||||||||
Fees and commission income (expense) | 10,762 | 5,911 | — | (778 | ) | 15,895 | |||||||||||||
Other income (expense) | (4,018 | ) | 69 | 91 | 10 | (3,848 | ) | ||||||||||||
Corporate expenses | (20,326 | ) | 37 | — | (9,267 | ) | (29,556 | ) | |||||||||||
Interest income (expense) | (6,664 | ) | (23 | ) | (382 | ) | 659 | (6,410 | ) | ||||||||||
Net foreign exchange gains (losses) | (3,772 | ) | (43 | ) | 1,145 | (2,105 | ) | (4,775 | ) | ||||||||||
Loss on sale of subsidiary | — | — | — | (6,740 | ) | (6,740 | ) | ||||||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES | 84,466 | (9,742 | ) | (34,098 | ) | (18,528 | ) | 22,098 | |||||||||||
INCOME (TAXES) BENEFIT | (970 | ) | (554 | ) | 78 | 14 | (1,432 | ) | |||||||||||
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS | 83,496 | (10,296 | ) | (34,020 | ) | (18,514 | ) | 20,666 | |||||||||||
NET EARNINGS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX EXPENSE | — | — | — | 3,495 | 3,495 | ||||||||||||||
NET EARNINGS (LOSS) | 83,496 | (10,296 | ) | (34,020 | ) | (15,019 | ) | 24,161 | |||||||||||
Net loss (earnings) attributable to noncontrolling interest | (3,314 | ) | 4,223 | 13,923 | — | 14,832 | |||||||||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | 80,182 | $ | (6,073 | ) | $ | (20,097 | ) | $ | (15,019 | ) | $ | 38,993 | ||||||
Underwriting ratios(1): | |||||||||||||||||||
Loss ratio | 107.6 | % | 103.4 | % | |||||||||||||||
Acquisition expense ratio | 36.1 | % | 10.5 | % | |||||||||||||||
Operating expense ratio | 7.6 | % | 30.3 | % | |||||||||||||||
Combined ratio | 151.3 | % | 144.2 | % |
Nine Months Ended September 30, 2017 | |||||||||||||||||||
Non-Life Run-Off | Atrium | StarStone | Other | Total | |||||||||||||||
Gross premiums written | $ | 13,956 | $ | 117,355 | $ | 651,107 | $ | 4,506 | $ | 786,924 | |||||||||
Net premiums written | $ | 13,453 | $ | 99,235 | $ | 331,449 | $ | 3,646 | $ | 447,783 | |||||||||
Net premiums earned | $ | 9,856 | $ | 97,373 | $ | 341,609 | $ | 3,656 | $ | 452,494 | |||||||||
Net incurred losses and LAE | 138,041 | (55,950 | ) | (245,315 | ) | — | (163,224 | ) | |||||||||||
Life and Annuity Policy Benefits | — | — | — | (5,048 | ) | (5,048 | ) | ||||||||||||
Acquisition costs | (455 | ) | (34,647 | ) | (39,625 | ) | (730 | ) | (75,457 | ) | |||||||||
Operating expenses | (96,767 | ) | (12,227 | ) | (99,576 | ) | — | (208,570 | ) | ||||||||||
Underwriting income (loss) | 50,675 | (5,451 | ) | (42,907 | ) | (2,122 | ) | 195 | |||||||||||
Net investment income | 118,130 | 2,832 | 20,230 | 8,992 | 150,184 | ||||||||||||||
Net realized and unrealized gains (losses) | 127,130 | 1,177 | 18,953 | (7,563 | ) | 139,697 | |||||||||||||
Fees and commission income (expense) | 30,302 | 17,353 | 1,166 | (2,345 | ) | 46,476 | |||||||||||||
Other income | 18,679 | 188 | 170 | 169 | 19,206 | ||||||||||||||
Corporate expenses | (66,468 | ) | (7,404 | ) | — | (26,841 | ) | (100,713 | ) | ||||||||||
Interest income (expense) | (20,991 | ) | (559 | ) | (1,648 | ) | 2,347 | (20,851 | ) | ||||||||||
Net foreign exchange losses | (6,709 | ) | (4,355 | ) | (1,563 | ) | (2,985 | ) | (15,612 | ) | |||||||||
Loss on sale of subsidiary | — | — | — | (16,349 | ) | (16,349 | ) | ||||||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES | 250,748 | 3,781 | (5,599 | ) | (46,697 | ) | 202,233 | ||||||||||||
INCOME (TAXES) BENEFIT | (5,609 | ) | (1,278 | ) | 3,648 | 5 | (3,234 | ) | |||||||||||
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS | 245,139 | 2,503 | (1,951 | ) | (46,692 | ) | 198,999 | ||||||||||||
NET LOSS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX EXPENSE | — | — | — | (1,005 | ) | (1,005 | ) | ||||||||||||
NET EARNINGS (LOSS) | 245,139 | 2,503 | (1,951 | ) | (47,697 | ) | 197,994 | ||||||||||||
Net loss (earnings) attributable to noncontrolling interest | (13,944 | ) | (1,027 | ) | 836 | — | (14,135 | ) | |||||||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | 231,195 | $ | 1,476 | $ | (1,115 | ) | $ | (47,697 | ) | $ | 183,859 | |||||||
Underwriting ratios(1): | |||||||||||||||||||
Loss ratio | 57.5 | % | 71.8 | % | |||||||||||||||
Acquisition expense ratio | 35.6 | % | 11.6 | % | |||||||||||||||
Operating expense ratio | 12.5 | % | 29.2 | % | |||||||||||||||
Combined ratio | 105.6 | % | 112.6 | % |
September 30, | December 31, | ||||||
2018 | 2017 | ||||||
Assets by Segment: | |||||||
Non-life Run-off | $ | 11,907,196 | $ | 10,368,105 | |||
Atrium | 598,072 | 556,637 | |||||
StarStone | 3,199,238 | 3,128,725 | |||||
Other | (583,278 | ) | (447,045 | ) | |||
Total assets | $ | 15,121,228 | $ | 13,606,422 |
Section | Page | |
• | Atrium Underwriting Group Limited and its subsidiaries ("Atrium"), which manage and underwrite specialist insurance and reinsurance business for Lloyd’s Syndicate 609; and |
• | StarStone Insurance Bermuda Limited and its subsidiaries ("StarStone"), which is an A.M. Best A- rated global specialty insurance group with multiple underwriting platforms. |
September 30, 2018 | December 31, 2017 | Change | |||||||||
Numerator: | |||||||||||
Total Enstar Group Limited Shareholder's Equity | $ | 3,905,364 | $ | 3,136,684 | $ | 768,680 | |||||
Less: Series D Preferred Shares | 400,000 | — | 400,000 | ||||||||
Total Enstar Group Limited Ordinary Shareholders' Equity (A) | 3,505,364 | 3,136,684 | 368,680 | ||||||||
Proceeds from assumed conversion of warrants1 | 20,229 | 20,229 | — | ||||||||
Numerator for fully diluted book value per ordinary share calculations (B) | $ | 3,525,593 | $ | 3,156,913 | $ | 368,680 | |||||
Denominator: | |||||||||||
Ordinary shares outstanding (C) | 21,443,789 | 19,406,722 | 2,037,067 | ||||||||
Effect of dilutive securities: | |||||||||||
Share-based compensation plans | 265,269 | 248,144 | 17,125 | ||||||||
Warrants(1) | 175,901 | 175,901 | — | ||||||||
Fully diluted ordinary shares outstanding (D) | 21,884,959 | 19,830,767 | 2,054,192 | ||||||||
Book value per ordinary share | |||||||||||
Basic book value per ordinary share = (A) / (C) | $ | 163.47 | $ | 161.63 | $ | 1.84 | |||||
Fully diluted book value per ordinary share = (B) / (D) | $ | 161.10 | $ | 159.19 | $ | 1.91 |
(1) | There are warrants outstanding to acquire 175,901 Series C Non-Voting Ordinary Shares for an exercise price of $115.00 per share, subject to certain adjustments (the "Warrants"). The Warrants were issued in April 2011 and expire in April 2021. The Warrant holder may, at its election, satisfy the exercise price of the Warrants on a cashless basis by surrender of shares otherwise issuable upon exercise of the Warrants in accordance with a formula set forth in the Warrants. |
• | Net investment income. In a rising interest rate environment, our net investment income would improve as maturities are reinvested at higher rates. Conversely, in a declining interest rate environment, our net investment income would decline as maturities are reinvested at lower rates. All else being equal, we would also expect our net investment income to grow as total investable assets increases as we acquire more business, partially offset by reductions in the investment portfolio for paid claims. |
• | Net realized and unrealized gains or losses. These arise from investments in fixed maturities, funds held, equity securities and other investments. Given the nature of our investments in fixed maturities and the average duration of our fixed maturity securities, the return of our fixed maturities investments will be impacted by changes in interest rates. In a rising rate environment, securities may experience unrealized losses prior to maturity. During the first nine months of 2018, we recognized net unrealized losses on our investments of $236.0 million, of which $159.7 million and $45.4 million related to our investments in fixed maturities, trading and funds withheld - directly managed, respectively, primarily due to rising sovereign yields and widening credit spreads. We generally account for our fixed maturity securities as "trading", whereas other companies in our industry may utilize "available-for-sale" accounting. The difference is that unrealized changes on investments classified as trading are recorded through earnings, whereas unrealized changes on investments classified as available-for-sale are recorded directly to shareholders' equity. We may experience further unrealized losses on our fixed maturity investments, depending on investment conditions and general economic conditions. Unrealized amounts would only become realized in the event of a sale of the specific securities prior to maturity or a credit default. For further information on the sensitivity of our portfolio to changes in interest rates, refer to the Interest Rate Risk section within Item 3. "Quantitative and Qualitative Disclosures About Market Risk", included within this Quarterly Report on Form 10-Q. For further discussion of our investments, see "Investable Assets" below. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(expressed in thousands of U.S. dollars, except share and per share data) | |||||||||||||||
Net earnings (loss) attributable to Enstar Group Limited ordinary shareholders | $ | (15,965 | ) | $ | 38,993 | $ | (48,931 | ) | $ | 183,859 | |||||
Adjustments: | |||||||||||||||
Net realized and unrealized (gains) losses on fixed maturity investments and funds held - directly managed (1) | 24,531 | 1,493 | 227,333 | (54,331 | ) | ||||||||||
Change in fair value of insurance contracts for which we have elected the fair value option | (9,107 | ) | (10,504 | ) | (32,115 | ) | (9,254 | ) | |||||||
Loss on sale of subsidiary | — | 6,740 | — | 16,349 | |||||||||||
Net (earnings) loss from discontinued operations | — | (3,765 | ) | — | 325 | ||||||||||
Tax effects of adjustments (2) | (1,207 | ) | 752 | (17,167 | ) | 4,170 | |||||||||
Adjustments attributable to noncontrolling interest (3) | (799 | ) | 1,083 | (9,089 | ) | 6,056 | |||||||||
Non-GAAP operating income (loss) attributable to Enstar Group Limited ordinary shareholders (4) | $ | (2,547 | ) | $ | 34,792 | $ | 120,031 | $ | 147,174 | ||||||
Diluted net earnings (loss) per ordinary share | $ | (0.74 | ) | $ | 1.99 | $ | (2.39 | ) | $ | 9.42 | |||||
Adjustments: | |||||||||||||||
Net realized and unrealized (gains) losses on fixed maturity investments and funds held - directly managed (1) | 1.14 | 0.08 | 11.02 | (2.79 | ) | ||||||||||
Change in fair value of insurance contracts, net | (0.42 | ) | (0.54 | ) | (1.55 | ) | (0.47 | ) | |||||||
Loss on sale of subsidiary | — | 0.34 | — | 0.84 | |||||||||||
Net (earnings) loss from discontinued operations | — | (0.19 | ) | — | 0.02 | ||||||||||
Tax effects of adjustments (2) | (0.06 | ) | 0.04 | (0.83 | ) | 0.21 | |||||||||
Adjustments attributable to noncontrolling interest (3) | (0.04 | ) | 0.06 | (0.44 | ) | 0.31 | |||||||||
Diluted non-GAAP operating income (loss) per ordinary share (4) | $ | (0.12 | ) | $ | 1.78 | $ | 5.81 | $ | 7.54 | ||||||
Weighted average ordinary shares outstanding - diluted | 21,665,356 | 19,559,168 | 20,653,544 | 19,515,987 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30 | September 30 | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
INCOME | |||||||||||||||||||||||
Net premiums earned | $ | 264,597 | $ | 148,025 | $ | 116,572 | $ | 663,628 | $ | 452,494 | $ | 211,134 | |||||||||||
Fees and commission income | 6,950 | 15,895 | (8,945 | ) | 23,633 | 46,476 | (22,843 | ) | |||||||||||||||
Net investment income | 69,430 | 52,028 | 17,402 | 202,218 | 150,184 | 52,034 | |||||||||||||||||
Net realized and unrealized gains (losses) | (57,223 | ) | 29,301 | (86,524 | ) | (254,671 | ) | 139,697 | (394,368 | ) | |||||||||||||
Other income (expenses) | 11,543 | (3,848 | ) | 15,391 | 34,477 | 19,206 | 15,271 | ||||||||||||||||
295,297 | 241,401 | 53,896 | 669,285 | 808,057 | (138,772 | ) | |||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Net incurred losses and LAE | 153,974 | 75,712 | 78,262 | 266,327 | 163,224 | 103,103 | |||||||||||||||||
Life and annuity policy benefits | 423 | 1,060 | (637 | ) | 217 | 5,048 | (4,831 | ) | |||||||||||||||
Acquisition costs | 54,242 | 24,281 | 29,961 | 137,684 | 75,457 | 62,227 | |||||||||||||||||
General and administrative expenses | 102,553 | 100,325 | 2,228 | 300,425 | 309,283 | (8,858 | ) | ||||||||||||||||
Interest expense | 4,640 | 6,410 | (1,770 | ) | 21,573 | 20,851 | 722 | ||||||||||||||||
Net foreign exchange losses | 1,040 | 4,775 | (3,735 | ) | 1,389 | 15,612 | (14,223 | ) | |||||||||||||||
Loss on sale of subsidiary | — | 6,740 | (6,740 | ) | — | 16,349 | (16,349 | ) | |||||||||||||||
316,872 | 219,303 | 97,569 | 727,615 | 605,824 | 121,791 | ||||||||||||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES | (21,575 | ) | 22,098 | (43,673 | ) | (58,330 | ) | 202,233 | (260,563 | ) | |||||||||||||
INCOME TAXES | (746 | ) | (1,432 | ) | 686 | (4,564 | ) | (3,234 | ) | (1,330 | ) | ||||||||||||
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS | (22,321 | ) | 20,666 | (42,987 | ) | (62,894 | ) | 198,999 | (261,893 | ) | |||||||||||||
NET EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES | — | 3,495 | (3,495 | ) | — | (1,005 | ) | 1,005 | |||||||||||||||
NET EARNINGS (LOSS) | (22,321 | ) | 24,161 | (46,482 | ) | (62,894 | ) | 197,994 | (260,888 | ) | |||||||||||||
Net loss (earnings) attributable to noncontrolling interest | 11,489 | 14,832 | (3,343 | ) | 19,096 | (14,135 | ) | 33,231 | |||||||||||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED | (10,832 | ) | 38,993 | (49,825 | ) | (43,798 | ) | 183,859 | (227,657 | ) | |||||||||||||
Dividend on preferred shares | (5,133 | ) | — | (5,133 | ) | (5,133 | ) | — | (5,133 | ) | |||||||||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | (15,965 | ) | $ | 38,993 | $ | (54,958 | ) | $ | (48,931 | ) | $ | 183,859 | $ | (232,790 | ) |
• | Consolidated net losses of $16.0 million and basic and diluted net losses per ordinary share of $0.74 |
• | Non-GAAP operating loss1 of $2.5 million and diluted non-GAAP operating loss per ordinary share1 of $0.12 |
• | Net earnings from Non-life Run-off segment of $32.6 million, including investment results |
• | Net investment income of $69.4 million and net realized and unrealized losses of $57.2 million, comprised $10.0 million of net realized losses and $47.2 million of net unrealized losses |
• | Net premiums earned of $264.6 million, including $37.0 million and $216.4 million in our Atrium and StarStone segments, respectively |
• | Combined ratios of 94.7% and 128.5% for the active underwriting operations within our Atrium and StarStone segments, respectively |
• | Consolidated net losses of $48.9 million and basic and diluted net losses per ordinary share of $2.39 |
• | Non-GAAP operating income1 of $120.0 million and diluted non-GAAP operating income per ordinary share1 of $5.81 |
• | Net earnings from Non-life Run-off segment of $37.2 million, including investment results |
• | Net investment income of $202.2 million and net realized and unrealized losses of $254.7 million, comprised of $18.6 million of net realized losses and $236.0 million of net unrealized losses |
• | Net premiums earned of $663.6 million, including $106.7 million and $526.8 million in our Atrium and StarStone segments, respectively |
• | Combined ratios of 95.8% and 118.0% for the active underwriting operations within our Atrium and StarStone segments, respectively |
• | Total investments, cash and funds held of $11,374.4 million |
• | Total reinsurance balances recoverable of $1,975.6 million |
• | Total assets of $15,121.2 million |
• | Total shareholders' equity, including preferred shares, of $3,905.4 million and redeemable noncontrolling interest of $458.3 million. Shareholders' equity includes $400.0 million of preferred shares issued in June 2018 |
• | Total gross reserves for losses and LAE of $8,535.7 million, with $2,010.9 million of gross reserves assumed in our Non-life Run-off operations during the nine months ended September 30, 2018 |
• | Diluted book value per ordinary share of $161.10, a year-to-date increase of 1.2% |
• | Non-life Run-off - Net earnings attributable to the Non-life Run-off segment were $32.6 million for the three months ended September 30, 2018 compared to $80.2 million for the three months ended September 30, 2017. The decrease in net earnings of $47.6 million was primarily due to net realized and unrealized losses of $58.5 million on our investment portfolio in the current period, partially offset by higher net investment income and higher other income; |
• | Atrium - Net earnings were $2.0 million for the three months ended September 30, 2018 compared to net losses of $6.1 million for the three months ended September 30, 2017. Net losses in the comparative period were primarily due to the large losses in the third quarter of 2017, namely those attributable to hurricanes Harvey, Irma and Maria, as well as the Mexico earthquake; |
• | StarStone - Net losses were $37.1 million for the three months ended September 30, 2018 compared to net losses of $20.1 million for the three months ended September 30, 2017. The increase in net losses was primarily attributable to higher net incurred losses and LAE and higher acquisition costs. The segment results also include the consolidation of StarStone Group's reinsurance to KaylaRe following Enstar's acquisition; |
• | Net Realized and Unrealized Losses - Net realized and unrealized losses were $57.2 million for the three months ended September 30, 2018 compared to net realized and unrealized gains of $29.3 million for the three months ended September 30, 2017. Net unrealized losses for the three months ended September 30, 2018 included net unrealized losses of $35.2 million on other investments and $13.4 million on fixed maturities investments, which are accounted for on a trading basis through net earnings. The net unrealized losses on our other investments were primarily driven by unrealized losses in our equity and hedge funds. The unrealized losses on fixed maturities were primarily driven by increased sovereign yields and widening corporate credit spreads in the current quarter. Many insurance companies use available-for-sale accounting where unrealized amounts are recorded directly to shareholders’ equity and therefore do not impact earnings. Unrealized amounts would only become realized in the event of a sale of the specific securities prior to maturity or a credit default; |
• | Net Investment Income - Net investment income was $69.4 million and $52.0 million for the three months ended September 30, 2018 and 2017, respectively. The increase was primarily due to an increase in average investable assets in our Non-Life Run-off segment due to the transactions noted above, higher reinvestment rates, an increase in duration, and portfolio rebalancing; |
• | Noncontrolling Interest - The net losses attributable to noncontrolling interest are directly related to the results from those subsidiary companies in which there are either noncontrolling interests or redeemable noncontrolling interests. The net losses attributable to noncontrolling interest were $11.5 million and $14.8 million for the three months ended September 30, 2018 and 2017, respectively. The decrease was driven by higher net losses in the Atrium segment in the third quarter of 2017 compared to 2018, primarily due to the large losses in the third quarter of 2017, namely those attributable to hurricanes Harvey, Irma and Maria, as well as the Mexico earthquake, which did not reoccur in 2018; and |
• | Our non-GAAP operating loss, which excludes the impact of unrealized losses on fixed maturity securities and other items, was $2.5 million for the three months ended September 30, 2018, a decrease of $37.3 million from non-GAAP operating income of $34.8 million for the three months ended September 30, 2017. For a reconciliation of non-GAAP operating income to net earnings (loss) calculated in accordance with GAAP, see "Non-GAAP Financial Measures" below. |
• | Non-life Run-off - Net earnings attributable to the Non-life Run-off segment were $37.2 million and $231.2 million for the nine months ended September 30, 2018 and 2017, respectively. The decrease in net earnings of $194.0 million was primarily due net realized and unrealized losses on our investment portfolio in the current period, partially offset by lower net incurred losses and LAE and higher net investment income; |
• | Net Investment Income - Net investment income was $202.2 million and $150.2 million for the nine months ended September 30, 2018 and 2017, respectively. The increase of $52.0 million was primarily attributable to an increase in average investable assets due to the transactions noted above, higher reinvestment rates, an increase in duration, and portfolio rebalancing; |
• | Net Realized and Unrealized Losses - Net realized and unrealized losses were $254.7 million for the nine months ended September 30, 2018 compared to net realized and unrealized gains of $139.7 million for the nine months ended September 30, 2017. Net unrealized losses for the nine months ended September 30, 2018 included net unrealized losses of $159.7 million on fixed maturities investments, which are accounted for on a trading basis through net earnings and $37.1 million on other investments. The unrealized losses on fixed maturities were primarily driven by increased sovereign yields and widening corporate credit spreads in the current quarter. Many insurance companies use available-for-sale accounting where unrealized |
• | Atrium - Net earnings for the nine months ended September 30, 2018 and 2017 were $5.5 million and $1.5 million, respectively. The increase was primarily attributable to a lower loss ratio in the current period; |
• | StarStone - Net losses were $61.7 million and $1.1 million for the nine months ended September 30, 2018 and 2017, respectively. The increase in net losses was primarily attributable to the increase in net incurred losses and LAE, higher acquisition costs and net realized and unrealized losses on our investment portfolio, partially offset by higher net earned premiums; |
• | Other Activities - Net losses were $29.9 million and $47.7 million for the nine months ended September 30, 2018 and 2017, respectively, with the decrease in net losses primarily attributable to the loss on sale of Laguna in the comparative period; |
• | Noncontrolling Interest - The net (earnings) losses attributable to the noncontrolling interest are directly related to the results from those subsidiary companies in which there are either noncontrolling interests or redeemable noncontrolling interests. For the nine months ended September 30, 2018 and 2017, the net losses attributable to noncontrolling interest were $19.1 million and the net earnings attributable to noncontrolling interest were $14.1 million, respectively, primarily reflecting losses from the Atrium and StarStone segments, as discussed above; and |
• | Our non-GAAP operating income, which excludes the impact of unrealized losses on fixed maturity securities and other items, was $120.0 million for the nine months ended September 30, 2018, a decrease of $27.1 million from non-GAAP operating income of $147.2 million for the nine months ended September 30, 2017. For a reconciliation of non-GAAP operating income to net earnings (loss) calculated in accordance with GAAP, see "Non-GAAP Financial Measures" below. |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Segment split of net earnings (loss) attributable to Enstar Group Limited: | |||||||||||||||||||||||
Non-life Run-off | $ | 32,628 | $ | 80,182 | $ | (47,554 | ) | $ | 37,157 | $ | 231,195 | $ | (194,038 | ) | |||||||||
Atrium | 1,962 | (6,073 | ) | 8,035 | 5,462 | 1,476 | 3,986 | ||||||||||||||||
StarStone | (37,066 | ) | (20,097 | ) | (16,969 | ) | (61,672 | ) | (1,115 | ) | (60,557 | ) | |||||||||||
Other | (13,489 | ) | (15,019 | ) | 1,530 | (29,878 | ) | (47,697 | ) | 17,819 | |||||||||||||
Net earnings (loss) attributable to Enstar Group Limited ordinary shareholders | $ | (15,965 | ) | $ | 38,993 | $ | (54,958 | ) | $ | (48,931 | ) | $ | 183,859 | $ | (232,790 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Gross premiums written | $ | 9,912 | $ | 11,751 | $ | (1,839 | ) | $ | 16,354 | $ | 13,956 | $ | 2,398 | ||||||||||
Net premiums written | $ | 4,778 | $ | 11,467 | $ | (6,689 | ) | $ | 3,217 | $ | 13,453 | $ | (10,236 | ) | |||||||||
Net premiums earned | $ | 10,442 | $ | 6,415 | $ | 4,027 | $ | 27,229 | $ | 9,856 | $ | 17,373 | |||||||||||
Net incurred losses and LAE | 62,778 | 70,882 | (8,104 | ) | 205,890 | 138,041 | 67,849 | ||||||||||||||||
Acquisition costs | 160 | (1,001 | ) | 1,161 | (4,524 | ) | (455 | ) | (4,069 | ) | |||||||||||||
Operating expenses | (37,473 | ) | (35,657 | ) | (1,816 | ) | (114,254 | ) | (96,767 | ) | (17,487 | ) | |||||||||||
Underwriting income | 35,907 | 40,639 | (4,732 | ) | 114,341 | 50,675 | 63,666 | ||||||||||||||||
Net investment income | 59,247 | 42,829 | 16,418 | 168,189 | 118,130 | 50,059 | |||||||||||||||||
Net realized and unrealized gains (losses) | (58,506 | ) | 25,016 | (83,522 | ) | (230,829 | ) | 127,130 | (357,959 | ) | |||||||||||||
Fees and commission income | 3,708 | 10,762 | (7,054 | ) | 13,093 | 30,302 | (17,209 | ) | |||||||||||||||
Other income (expenses) | 11,423 | (4,018 | ) | 15,441 | 34,989 | 18,679 | 16,310 | ||||||||||||||||
Corporate expenses | (11,433 | ) | (20,326 | ) | 8,893 | (33,453 | ) | (66,468 | ) | 33,015 | |||||||||||||
Interest expense | (5,951 | ) | (6,664 | ) | 713 | (24,562 | ) | (20,991 | ) | (3,571 | ) | ||||||||||||
Net foreign exchange gains (losses) | 17 | (3,772 | ) | 3,789 | (202 | ) | (6,709 | ) | 6,507 | ||||||||||||||
EARNINGS BEFORE INCOME TAXES | 34,412 | 84,466 | (50,054 | ) | 41,566 | 250,748 | (209,182 | ) | |||||||||||||||
INCOME TAXES | (125 | ) | (970 | ) | 845 | (227 | ) | (5,609 | ) | 5,382 | |||||||||||||
NET EARNINGS FROM CONTINUING OPERATIONS | 34,287 | 83,496 | (49,209 | ) | 41,339 | 245,139 | (203,800 | ) | |||||||||||||||
Net earnings attributable to noncontrolling interest | (1,659 | ) | (3,314 | ) | 1,655 | (4,182 | ) | (13,944 | ) | 9,762 | |||||||||||||
NET EARNINGS ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | 32,628 | $ | 80,182 | $ | (47,554 | ) | $ | 37,157 | $ | 231,195 | $ | (194,038 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30 | September 30 | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Gross premiums written | $ | 9,912 | $ | 11,751 | $ | (1,839 | ) | $ | 16,354 | $ | 13,956 | $ | 2,398 | ||||||||||
Ceded reinsurance premiums written | (5,134 | ) | (284 | ) | (4,850 | ) | (13,137 | ) | (503 | ) | (12,634 | ) | |||||||||||
Net premiums written | $ | 4,778 | $ | 11,467 | $ | (6,689 | ) | $ | 3,217 | $ | 13,453 | $ | (10,236 | ) | |||||||||
Gross premiums earned | $ | 17,746 | $ | 9,345 | $ | 8,401 | $ | 54,044 | $ | 15,353 | $ | 38,691 | |||||||||||
Ceded reinsurance premiums earned | (7,304 | ) | (2,930 | ) | (4,374 | ) | (26,815 | ) | (5,497 | ) | (21,318 | ) | |||||||||||
Net premiums earned | $ | 10,442 | $ | 6,415 | $ | 4,027 | $ | 27,229 | $ | 9,856 | $ | 17,373 |
Three Months Ended September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Prior Periods | Current Period | Total | Prior Periods | Current Period | Total | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Net losses paid | $ | 193,057 | $ | 2,713 | $ | 195,770 | $ | 135,981 | $ | 33 | $ | 136,014 | |||||||||||
Net change in case and LAE reserves (1) | (128,827 | ) | 165 | (128,662 | ) | (66,376 | ) | (16 | ) | (66,392 | ) | ||||||||||||
Net change in IBNR reserves (2) | (109,287 | ) | 7,139 | (102,148 | ) | (120,614 | ) | (152 | ) | (120,766 | ) | ||||||||||||
Increase (reduction) in estimates of net ultimate losses | (45,057 | ) | 10,017 | (35,040 | ) | (51,009 | ) | (135 | ) | (51,144 | ) | ||||||||||||
Increase (reduction) in provisions for unallocated LAE | (24,460 | ) | — | (24,460 | ) | (16,203 | ) | 165 | (16,038 | ) | |||||||||||||
Amortization of deferred charges | 1,582 | — | 1,582 | 3,311 | — | 3,311 | |||||||||||||||||
Amortization of fair value adjustments | 4,247 | — | 4,247 | 3,493 | — | 3,493 | |||||||||||||||||
Changes in fair value - fair value option | (9,107 | ) | — | (9,107 | ) | (10,504 | ) | — | (10,504 | ) | |||||||||||||
Net incurred losses and LAE | $ | (72,795 | ) | $ | 10,017 | $ | (62,778 | ) | $ | (70,912 | ) | $ | 30 | $ | (70,882 | ) |
Nine Months Ended September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Prior Periods | Current Period | Total | Prior Periods | Current Period | Total | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Net losses paid | $ | 641,361 | $ | 3,304 | $ | 644,665 | $ | 436,594 | $ | 404 | $ | 436,998 | |||||||||||
Net change in case and LAE reserves (1) | (377,735 | ) | 1,223 | (376,512 | ) | (276,903 | ) | (32 | ) | (276,935 | ) | ||||||||||||
Net change in IBNR reserves (2) | (424,847 | ) | 10,949 | (413,898 | ) | (262,296 | ) | 572 | (261,724 | ) | |||||||||||||
Increase (reduction) in estimates of net ultimate losses | (161,221 | ) | 15,476 | (145,745 | ) | (102,605 | ) | 944 | (101,661 | ) | |||||||||||||
Reduction in provisions for bad debt | — | — | — | (735 | ) | — | (735 | ) | |||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (48,723 | ) | — | (48,723 | ) | (41,557 | ) | 261 | (41,296 | ) | |||||||||||||
Amortization of deferred charges | 10,381 | — | 10,381 | 9,387 | — | 9,387 | |||||||||||||||||
Amortization of fair value adjustments | 10,312 | — | 10,312 | 5,518 | — | 5,518 | |||||||||||||||||
Changes in fair value - fair value option | (32,115 | ) | — | (32,115 | ) | (9,254 | ) | — | (9,254 | ) | |||||||||||||
Net incurred losses and LAE | $ | (221,366 | ) | $ | 15,476 | $ | (205,890 | ) | $ | (139,246 | ) | $ | 1,205 | $ | (138,041 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Operating expenses | $ | 37,473 | $ | 35,657 | $ | 1,816 | $ | 114,254 | $ | 96,767 | $ | 17,487 | |||||||||||
Corporate expenses | 11,433 | 20,326 | (8,893 | ) | 33,453 | 66,468 | (33,015 | ) | |||||||||||||||
General and administrative expenses | $ | 48,906 | $ | 55,983 | $ | (7,077 | ) | $ | 147,707 | $ | 163,235 | $ | (15,528 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Gross premiums written | $ | 39,995 | $ | 36,377 | $ | 3,618 | $ | 130,997 | $ | 117,355 | $ | 13,642 | |||||||||||
Net premiums written | $ | 37,141 | $ | 25,989 | $ | 11,152 | $ | 113,218 | $ | 99,235 | $ | 13,983 | |||||||||||
Net premiums earned | $ | 36,977 | $ | 32,773 | $ | 4,204 | $ | 106,722 | $ | 97,373 | $ | 9,349 | |||||||||||
Net incurred losses and LAE | (17,853 | ) | (35,273 | ) | 17,420 | (51,951 | ) | (55,950 | ) | 3,999 | |||||||||||||
Acquisition costs | (13,215 | ) | (11,818 | ) | (1,397 | ) | (37,996 | ) | (34,647 | ) | (3,349 | ) | |||||||||||
Operating expenses | (3,952 | ) | (2,507 | ) | (1,445 | ) | (12,259 | ) | (12,227 | ) | (32 | ) | |||||||||||
Underwriting income (losses) | 1,957 | (16,825 | ) | 18,782 | 4,516 | (5,451 | ) | 9,967 | |||||||||||||||
Net investment income | 1,597 | 847 | 750 | 4,067 | 2,832 | 1,235 | |||||||||||||||||
Net realized and unrealized gains (losses) | 194 | 285 | (91 | ) | (1,889 | ) | 1,177 | (3,066 | ) | ||||||||||||||
Fees and commission income | 3,242 | 5,911 | (2,669 | ) | 10,540 | 17,353 | (6,813 | ) | |||||||||||||||
Other income | 7 | 69 | (62 | ) | 127 | 188 | (61 | ) | |||||||||||||||
Corporate expenses | (2,770 | ) | 37 | (2,807 | ) | (5,083 | ) | (7,404 | ) | 2,321 | |||||||||||||
Interest expense | — | (23 | ) | 23 | — | (559 | ) | 559 | |||||||||||||||
Net foreign exchange gains | (262 | ) | (43 | ) | (219 | ) | (1,262 | ) | (4,355 | ) | 3,093 | ||||||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES | 3,965 | (9,742 | ) | 13,707 | 11,016 | 3,781 | 7,235 | ||||||||||||||||
INCOME TAXES | (737 | ) | (554 | ) | (183 | ) | (1,756 | ) | (1,278 | ) | (478 | ) | |||||||||||
NET EARNINGS (LOSS) | 3,228 | (10,296 | ) | 13,524 | 9,260 | 2,503 | 6,757 | ||||||||||||||||
Net loss (earnings) attributable to noncontrolling interest | (1,266 | ) | 4,223 | (5,489 | ) | (3,798 | ) | (1,027 | ) | (2,771 | ) | ||||||||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | 1,962 | $ | (6,073 | ) | $ | 8,035 | $ | 5,462 | $ | 1,476 | $ | 3,986 | ||||||||||
Underwriting ratios(1): | |||||||||||||||||||||||
Loss ratio | 48.3 | % | 107.6 | % | (59.3 | )% | 48.7 | % | 57.5 | % | (8.8 | )% | |||||||||||
Acquisition cost ratio | 35.7 | % | 36.1 | % | (0.4 | )% | 35.6 | % | 35.6 | % | — | % | |||||||||||
Operating expense ratio | 10.7 | % | 7.6 | % | 3.1 | % | 11.5 | % | 12.5 | % | (1.0 | )% | |||||||||||
Combined ratio | 94.7 | % | 151.3 | % | (56.6 | )% | 95.8 | % | 105.6 | % | (9.8 | )% |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Marine, Aviation and Transit (1) | $ | 8,696 | $ | 6,993 | $ | 1,703 | $ | 30,823 | $ | 27,504 | $ | 3,319 | |||||||||||
Binding Authorities (2) | 18,396 | 17,694 | 702 | 53,744 | 48,658 | 5,086 | |||||||||||||||||
Reinsurance | 3,375 | 3,937 | (562 | ) | 16,150 | 17,316 | (1,166 | ) | |||||||||||||||
Accident and Health | 4,551 | 3,481 | 1,070 | 16,069 | 12,206 | 3,863 | |||||||||||||||||
Non-Marine Direct and Facultative | 4,977 | 4,272 | 705 | 14,211 | 11,671 | 2,540 | |||||||||||||||||
Total | $ | 39,995 | $ | 36,377 | $ | 3,618 | $ | 130,997 | $ | 117,355 | $ | 13,642 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Marine, Aviation and Transit (1) | $ | 7,045 | $ | 6,828 | $ | 217 | $ | 22,105 | $ | 20,952 | $ | 1,153 | |||||||||||
Binding Authorities (2) | 17,675 | 15,518 | 2,157 | 50,056 | 44,454 | 5,602 | |||||||||||||||||
Reinsurance | 3,837 | 3,752 | 85 | 9,637 | 11,397 | (1,760 | ) | ||||||||||||||||
Accident and Health | 4,452 | 3,893 | 559 | 14,276 | 11,587 | 2,689 | |||||||||||||||||
Non-Marine Direct and Facultative | 3,968 | 2,782 | 1,186 | 10,648 | 8,983 | 1,665 | |||||||||||||||||
Total | $ | 36,977 | $ | 32,773 | $ | 4,204 | $ | 106,722 | $ | 97,373 | $ | 9,349 |
Three Months Ended September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Prior Periods | Current Period | Total | Prior Periods | Current Period | Total | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Net losses paid | $ | 8,230 | $ | 8,080 | $ | 16,310 | $ | 8,992 | $ | 5,139 | $ | 14,131 | |||||||||||
Net change in case and LAE reserves (1) | (4,142 | ) | 3,596 | (546 | ) | (2,781 | ) | 3,020 | 239 | ||||||||||||||
Net change in IBNR reserves (2) | (5,539 | ) | 8,357 | 2,818 | (6,273 | ) | 28,798 | 22,525 | |||||||||||||||
Increase (reduction) in estimates of net ultimate losses | (1,451 | ) | 20,033 | 18,582 | (62 | ) | 36,957 | 36,895 | |||||||||||||||
Reduction in provisions for bad debt | — | — | — | (96 | ) | 338 | 242 | ||||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (2 | ) | — | (2 | ) | 75 | (11 | ) | 64 | ||||||||||||||
Amortization of fair value adjustments | (727 | ) | — | (727 | ) | (1,928 | ) | — | (1,928 | ) | |||||||||||||
Net incurred losses and LAE | $ | (2,180 | ) | $ | 20,033 | $ | 17,853 | $ | (2,011 | ) | $ | 37,284 | $ | 35,273 |
Nine Months Ended September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Prior Periods | Current Period | Total | Prior Periods | Current Period | Total | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Net losses paid | $ | 27,488 | $ | 25,699 | $ | 53,187 | $ | 25,826 | $ | 14,799 | $ | 40,625 | |||||||||||
Net change in case and LAE reserves (1) | (9,695 | ) | 9,597 | (98 | ) | (7,904 | ) | 7,616 | (288 | ) | |||||||||||||
Net change in IBNR reserves (2) | (18,254 | ) | 21,218 | 2,964 | (26,631 | ) | 43,810 | 17,179 | |||||||||||||||
Increase (reduction) in estimates of net ultimate losses | (461 | ) | 56,514 | 56,053 | (8,709 | ) | 66,225 | 57,516 | |||||||||||||||
Reduction in provisions for bad debt | — | — | — | (96 | ) | 338 | 242 | ||||||||||||||||
Amortization of fair value adjustments | (4,102 | ) | — | (4,102 | ) | (1,808 | ) | — | (1,808 | ) | |||||||||||||
Net incurred losses and LAE | $ | (4,563 | ) | $ | 56,514 | $ | 51,951 | $ | (10,613 | ) | $ | 66,563 | $ | 55,950 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Gross premiums written | $ | 282,525 | $ | 200,007 | $ | 82,518 | $ | 888,867 | $ | 651,107 | $ | 237,760 | |||||||||||
Net premiums written | $ | 219,726 | $ | 97,049 | $ | 122,677 | $ | 619,528 | $ | 331,449 | $ | 288,079 | |||||||||||
Net premiums earned | $ | 216,355 | $ | 107,650 | $ | 108,705 | $ | 526,802 | $ | 341,609 | $ | 185,193 | |||||||||||
Net incurred losses and LAE | (198,899 | ) | (111,321 | ) | (87,578 | ) | (420,266 | ) | (245,315 | ) | (174,951 | ) | |||||||||||
Acquisition costs | (41,079 | ) | (11,313 | ) | (29,766 | ) | (94,775 | ) | (39,625 | ) | (55,150 | ) | |||||||||||
Operating expenses | (38,000 | ) | (32,605 | ) | (5,395 | ) | (106,699 | ) | (99,576 | ) | (7,123 | ) | |||||||||||
Underwriting income | (61,623 | ) | (47,589 | ) | (14,034 | ) | (94,938 | ) | (42,907 | ) | (52,031 | ) | |||||||||||
Net investment income | 9,504 | 7,592 | 1,912 | 25,950 | 20,230 | 5,720 | |||||||||||||||||
Net realized and unrealized gains (losses) | 989 | 5,045 | (4,056 | ) | (15,150 | ) | 18,953 | (34,103 | ) | ||||||||||||||
Fees and commission income | — | — | — | — | 1,166 | (1,166 | ) | ||||||||||||||||
Other income (expenses) | 117 | 91 | 26 | (432 | ) | 170 | (602 | ) | |||||||||||||||
Interest expense | — | (382 | ) | 382 | (547 | ) | (1,648 | ) | 1,101 | ||||||||||||||
Net foreign exchange gains (losses) | (585 | ) | 1,145 | (1,730 | ) | (1,063 | ) | (1,563 | ) | 500 | |||||||||||||
LOSS BEFORE INCOME TAXES | (51,598 | ) | (34,098 | ) | (17,500 | ) | (86,180 | ) | (5,599 | ) | (80,581 | ) | |||||||||||
INCOME BENEFIT (TAXES) | 118 | 78 | 40 | (2,568 | ) | 3,648 | (6,216 | ) | |||||||||||||||
NET LOSS | (51,480 | ) | (34,020 | ) | (17,460 | ) | (88,748 | ) | (1,951 | ) | (86,797 | ) | |||||||||||
Net loss attributable to noncontrolling interest | 14,414 | 13,923 | 491 | 27,076 | 836 | 26,240 | |||||||||||||||||
NET LOSS ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | (37,066 | ) | $ | (20,097 | ) | $ | (16,969 | ) | $ | (61,672 | ) | $ | (1,115 | ) | $ | (60,557 | ) | |||||
Underwriting ratios(1): | |||||||||||||||||||||||
Loss ratio | 91.9 | % | 103.4 | % | (11.5 | )% | 79.8 | % | 71.8 | % | 8.0 | % | |||||||||||
Acquisition cost ratio | 19.0 | % | 10.5 | % | 8.5 | % | 18.0 | % | 11.6 | % | 6.4 | % | |||||||||||
Operating expense ratio | 17.6 | % | 30.3 | % | (12.7 | )% | 20.2 | % | 29.2 | % | (9.0 | )% | |||||||||||
Combined ratio | 128.5 | % | 144.2 | % | (15.7 | )% | 118.0 | % | 112.6 | % | 5.4 | % |
(1) | Refer to "Underwriting Ratios" for a description of how these ratios are calculated. |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, 2018 | September 30, 2018 | ||||||||||||||||||||||
StarStone Group | KaylaRe's reinsurance of StarStone | StarStone Segment | StarStone Group | KaylaRe's reinsurance of StarStone | StarStone Segment | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Net premiums earned | $ | 161,459 | $ | 54,896 | $ | 216,355 | $ | 416,395 | $ | 110,407 | $ | 526,802 | |||||||||||
Net incurred losses and LAE | (148,911 | ) | (49,988 | ) | (198,899 | ) | (329,537 | ) | (90,729 | ) | (420,266 | ) | |||||||||||
Acquisition costs | (20,773 | ) | (20,306 | ) | (41,079 | ) | (54,630 | ) | (40,145 | ) | (94,775 | ) | |||||||||||
Operating expenses | (36,952 | ) | (1,048 | ) | (38,000 | ) | (104,561 | ) | (2,138 | ) | (106,699 | ) | |||||||||||
Underwriting loss | (45,177 | ) | (16,446 | ) | (61,623 | ) | (72,333 | ) | (22,605 | ) | (94,938 | ) | |||||||||||
Net investment income | 9,504 | — | 9,504 | 25,950 | — | 25,950 | |||||||||||||||||
Net realized and unrealized gains (losses) | 989 | — | 989 | (15,150 | ) | — | (15,150 | ) | |||||||||||||||
Other income (expenses) | 117 | — | 117 | (432 | ) | — | (432 | ) | |||||||||||||||
Interest income (expenses) | (573 | ) | 573 | — | (1,592 | ) | 1,045 | (547 | ) | ||||||||||||||
Net foreign exchange loss (gain) | (120 | ) | (465 | ) | (585 | ) | 137 | (1,200 | ) | (1,063 | ) | ||||||||||||
LOSS BEFORE INCOME TAXES | (35,260 | ) | (16,338 | ) | (51,598 | ) | (63,420 | ) | (22,760 | ) | (86,180 | ) | |||||||||||
INCOME BENEFIT (TAXES) | 118 | — | 118 | (2,568 | ) | — | (2,568 | ) | |||||||||||||||
NET LOSS | (35,142 | ) | (16,338 | ) | (51,480 | ) | (65,988 | ) | (22,760 | ) | (88,748 | ) | |||||||||||
Net loss attributable to noncontrolling interest | 14,414 | — | 14,414 | 27,076 | — | 27,076 | |||||||||||||||||
NET LOSS ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | (20,728 | ) | $ | (16,338 | ) | $ | (37,066 | ) | $ | (38,912 | ) | $ | (22,760 | ) | $ | (61,672 | ) | |||||
Underwriting ratios: | |||||||||||||||||||||||
Loss ratio (1) | 92.2 | % | 91.1 | % | 91.9 | % | 79.1 | % | 82.2 | % | 79.8 | % | |||||||||||
Acquisition cost ratio (1) | 12.9 | % | 37.0 | % | 19.0 | % | 13.1 | % | 36.4 | % | 18.0 | % | |||||||||||
Operating expense ratio (1) | 22.9 | % | 1.9 | % | 17.6 | % | 25.2 | % | 1.9 | % | 20.2 | % | |||||||||||
Combined ratio (1) | 128.0 | % | 130.0 | % | 128.5 | % | 117.4 | % | 120.5 | % | 118.0 | % |
(1) | Refer to "Underwriting Ratios" for a description of how these ratios are calculated. |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Casualty | $ | 86,497 | $ | 70,264 | $ | 16,233 | $ | 254,920 | $ | 208,331 | $ | 46,589 | |||||||||||
Marine | 57,388 | 42,148 | 15,240 | 231,695 | 167,793 | 63,902 | |||||||||||||||||
Property | 93,498 | 58,725 | 34,773 | 254,734 | 158,479 | 96,255 | |||||||||||||||||
Aerospace | 20,486 | 15,821 | 4,665 | 48,375 | 42,727 | 5,648 | |||||||||||||||||
Workers' Compensation | 24,656 | 13,049 | 11,607 | 99,143 | 73,777 | 25,366 | |||||||||||||||||
Total | $ | 282,525 | $ | 200,007 | $ | 82,518 | $ | 888,867 | $ | 651,107 | $ | 237,760 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Casualty | $ | 69,122 | $ | 38,403 | $ | 30,719 | $ | 178,746 | $ | 118,239 | $ | 60,507 | |||||||||||
Marine | 62,905 | 28,686 | 34,219 | 150,663 | 89,269 | 61,394 | |||||||||||||||||
Property | 49,009 | 23,988 | 25,021 | 114,093 | 73,354 | 40,739 | |||||||||||||||||
Aerospace | 19,904 | 8,914 | 10,990 | 44,594 | 27,234 | 17,360 | |||||||||||||||||
Workers' Compensation | 15,415 | 7,659 | 7,756 | 38,706 | 33,513 | 5,193 | |||||||||||||||||
Total | $ | 216,355 | $ | 107,650 | $ | 108,705 | $ | 526,802 | $ | 341,609 | $ | 185,193 |
Three Months Ended | |||||||||||||||||||||||
September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Prior Periods | Current Period | Total | Prior Periods | Current Period | Total | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Net losses paid | $ | 95,422 | $ | 13,473 | $ | 108,895 | $ | 70,200 | $ | 10,756 | $ | 80,956 | |||||||||||
Net change in case and LAE reserves (1) | (19,919 | ) | 37,468 | 17,549 | (14,037 | ) | 13,103 | (934 | ) | ||||||||||||||
Net change in IBNR reserves (2) | (63,294 | ) | 134,454 | 71,160 | (54,400 | ) | 84,573 | 30,173 | |||||||||||||||
Increase in estimates of net ultimate losses | 12,209 | 185,395 | 197,604 | 1,763 | 108,432 | 110,195 | |||||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (2,023 | ) | 3,605 | 1,582 | (853 | ) | 2,100 | 1,247 | |||||||||||||||
Amortization of fair value adjustments | (287 | ) | — | (287 | ) | (121 | ) | — | (121 | ) | |||||||||||||
Net incurred losses and LAE | $ | 9,899 | $ | 189,000 | $ | 198,899 | $ | 789 | $ | 110,532 | $ | 111,321 |
Nine Months Ended | |||||||||||||||||||||||
September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Prior Periods | Current Period | Total | Prior Periods | Current Period | Total | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Net losses paid | $ | 268,997 | $ | 33,840 | $ | 302,837 | $ | 207,697 | $ | 25,617 | $ | 233,314 | |||||||||||
Net change in case and LAE reserves (1) | (55,541 | ) | 94,456 | 38,915 | (55,501 | ) | 53,353 | (2,148 | ) | ||||||||||||||
Net change in IBNR reserves (2) | (183,422 | ) | 258,453 | 75,031 | (149,165 | ) | 162,536 | 13,371 | |||||||||||||||
Increase in estimates of net ultimate losses | 30,034 | 386,749 | 416,783 | 3,031 | 241,506 | 244,537 | |||||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (5,313 | ) | 9,325 | 4,012 | (3,984 | ) | 5,517 | 1,533 | |||||||||||||||
Amortization of fair value adjustments | (529 | ) | — | (529 | ) | (755 | ) | — | (755 | ) | |||||||||||||
Net incurred losses and LAE | $ | 24,192 | $ | 396,074 | $ | 420,266 | $ | (1,708 | ) | $ | 247,023 | $ | 245,315 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Net premiums earned | $ | 823 | $ | 1,187 | $ | (364 | ) | $ | 2,875 | $ | 3,656 | $ | (781 | ) | |||||||||
Life and Annuity Policy Benefits | (423 | ) | (1,060 | ) | 637 | (217 | ) | (5,048 | ) | 4,831 | |||||||||||||
Acquisition costs | (108 | ) | (149 | ) | 41 | (389 | ) | (730 | ) | 341 | |||||||||||||
Underwriting income (loss) | 292 | (22 | ) | 314 | 2,269 | (2,122 | ) | 4,391 | |||||||||||||||
Net investment income | (918 | ) | 760 | (1,678 | ) | 4,012 | 8,992 | (4,980 | ) | ||||||||||||||
Net realized and unrealized gains (losses) | 100 | (1,045 | ) | 1,145 | (6,803 | ) | (7,563 | ) | 760 | ||||||||||||||
Fees and commission expense | — | (778 | ) | 778 | — | (2,345 | ) | 2,345 | |||||||||||||||
Other income (expenses) | (4 | ) | 10 | (14 | ) | (207 | ) | 169 | (376 | ) | |||||||||||||
Corporate expenses | (8,925 | ) | (9,267 | ) | 342 | (28,677 | ) | (26,841 | ) | (1,836 | ) | ||||||||||||
Interest Income | 1,311 | 659 | 652 | 3,536 | 2,347 | 1,189 | |||||||||||||||||
Net foreign exchange gains (losses) | (210 | ) | (2,105 | ) | 1,895 | 1,138 | (2,985 | ) | 4,123 | ||||||||||||||
Loss on sale of subsidiary | — | (6,740 | ) | 6,740 | — | (16,349 | ) | 16,349 | |||||||||||||||
LOSS BEFORE INCOME TAXES | (8,354 | ) | (18,528 | ) | 10,174 | (24,732 | ) | (46,697 | ) | 21,965 | |||||||||||||
INCOME BENEFIT (TAXES) | (2 | ) | 14 | (16 | ) | (13 | ) | 5 | (18 | ) | |||||||||||||
NET LOSS FROM CONTINUING OPERATIONS | (8,356 | ) | (18,514 | ) | 10,158 | (24,745 | ) | (46,692 | ) | 21,947 | |||||||||||||
NET EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES | — | 3,495 | (3,495 | ) | — | (1,005 | ) | 1,005 | |||||||||||||||
NET LOSS | (8,356 | ) | (15,019 | ) | 6,663 | (24,745 | ) | (47,697 | ) | 22,952 | |||||||||||||
Dividend on preferred shares | (5,133 | ) | — | (5,133 | ) | (5,133 | ) | — | (5,133 | ) | |||||||||||||
NET LOSS ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | (13,489 | ) | $ | (15,019 | ) | $ | 1,530 | $ | (29,878 | ) | $ | (47,697 | ) | $ | 17,819 |
September 30, 2018 | ||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Other | Total | ||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||
Short-term investments, trading, at fair value | $ | 206,578 | $ | 2,135 | $ | 23,237 | $ | — | $ | 231,950 | ||||||||||
Fixed maturities, trading, at fair value | 5,031,077 | 137,350 | 1,144,903 | — | 6,313,330 | |||||||||||||||
Fixed maturities, available-for-sale, at fair value | — | 37,421 | — | 125,723 | 163,144 | |||||||||||||||
Equities, trading, at fair value | 97,669 | 3,163 | 29,482 | — | 130,314 | |||||||||||||||
Other investments, at fair value | 1,910,959 | 6,931 | 104,331 | 14,209 | 2,036,430 | |||||||||||||||
Total investments | 7,246,283 | 187,000 | 1,301,953 | 139,932 | 8,875,168 | |||||||||||||||
Cash and cash equivalents (including restricted cash and cash equivalents) | 606,354 | 65,418 | 334,037 | 22,200 | 1,028,009 | |||||||||||||||
Funds held - directly managed | 1,217,182 | — | — | — | 1,217,182 | |||||||||||||||
Funds held by reinsured companies | 199,320 | 25,411 | 29,298 | — | 254,029 | |||||||||||||||
Total investable assets | $ | 9,269,139 | $ | 277,829 | $ | 1,665,288 | $ | 162,132 | $ | 11,374,388 | ||||||||||
Duration (in years) | 5.44 | 1.63 | 2.45 | 5.83 | 4.84 | |||||||||||||||
Average Credit Rating (1) | A+ | AA- | A+ | AA- | A+ |
December 31, 2017 | ||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Other | Total | ||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||
Short-term investments, trading, at fair value | $ | 165,388 | $ | 2,452 | $ | 12,371 | $ | — | $ | 180,211 | ||||||||||
Fixed maturities, trading, at fair value | 4,407,094 | 107,083 | 1,181,896 | — | 5,696,073 | |||||||||||||||
Fixed maturities, available-for-sale, at fair value | 44 | 79,246 | — | 130,995 | 210,285 | |||||||||||||||
Equities, trading, at fair value | 97,187 | 2,671 | 6,745 | — | 106,603 | |||||||||||||||
Other investments, at fair value | 732,482 | 6,523 | 159,239 | 15,148 | 913,392 | |||||||||||||||
Other investments, at cost | — | — | — | 125,621 | 125,621 | |||||||||||||||
Total investments | 5,402,195 | 197,975 | 1,360,251 | 271,764 | 7,232,185 | |||||||||||||||
Cash and cash equivalents (including restricted cash and cash equivalents) | 868,243 | 51,500 | 264,664 | 28,429 | 1,212,836 | |||||||||||||||
Funds held - directly managed | 1,179,940 | — | — | — | 1,179,940 | |||||||||||||||
Funds held by reinsured companies | 133,731 | 26,646 | 15,006 | — | 175,383 | |||||||||||||||
Total investable assets | $ | 7,584,109 | $ | 276,121 | $ | 1,639,921 | $ | 300,193 | $ | 9,800,344 | ||||||||||
Duration (in years) | 5.67 | 1.86 | 2.33 | 5.52 | 4.98 | |||||||||||||||
Average Credit Rating (1) | A+ | AA- | A+ | AA- | A+ |
September 30, 2018 | |||||||||||||||||||||||||||||||
Fair Value | |||||||||||||||||||||||||||||||
AAA Rated | AA Rated | A Rated | BBB Rated | Non-investment Grade | Not Rated | Total | % | ||||||||||||||||||||||||
(in thousands of U.S. dollars, except percentages) | |||||||||||||||||||||||||||||||
Fixed maturity and short-term investments, trading and available-for-sale | |||||||||||||||||||||||||||||||
U.S. government & agency | $ | 489,939 | $ | 3,839 | $ | — | $ | — | $ | — | $ | — | $ | 493,778 | 5.6 | % | |||||||||||||||
Non-U.S. government | 340,583 | 541,087 | 65,286 | 121,197 | 25,615 | — | 1,093,768 | 12.3 | % | ||||||||||||||||||||||
Corporate | 154,961 | 445,858 | 1,986,880 | 1,016,401 | 180,730 | 1,707 | 3,786,537 | 42.7 | % | ||||||||||||||||||||||
Municipal | 8,739 | 53,094 | 14,277 | 3,856 | — | — | 79,966 | 0.9 | % | ||||||||||||||||||||||
Residential mortgage-backed | 163,190 | 2,526 | 11,331 | 1,540 | 92,180 | 4,733 | 275,500 | 3.1 | % | ||||||||||||||||||||||
Commercial mortgage-backed | 210,902 | 47,118 | 70,164 | 60,296 | 9,936 | 13,159 | 411,575 | 4.7 | % | ||||||||||||||||||||||
Asset-backed | 237,239 | 46,971 | 115,349 | 73,415 | 93,918 | 408 | 567,300 | 6.4 | % | ||||||||||||||||||||||
Total | 1,605,553 | 1,140,493 | 2,263,287 | 1,276,705 | 402,379 | 20,007 | 6,708,424 | 75.7 | % | ||||||||||||||||||||||
Equities | |||||||||||||||||||||||||||||||
U.S. | 72,765 | 0.8 | % | ||||||||||||||||||||||||||||
International | 57,549 | 0.6 | % | ||||||||||||||||||||||||||||
Total | 130,314 | 1.4 | % | ||||||||||||||||||||||||||||
Other investments | |||||||||||||||||||||||||||||||
Private equity funds | 256,618 | 2.9 | % | ||||||||||||||||||||||||||||
Fixed income funds | 383,328 | 4.3 | % | ||||||||||||||||||||||||||||
Hedge funds | 879,571 | 9.9 | % | ||||||||||||||||||||||||||||
Equity funds | 381,983 | 4.3 | % | ||||||||||||||||||||||||||||
CLO equities | 48,368 | 0.5 | % | ||||||||||||||||||||||||||||
CLO equity funds | 41,501 | 0.5 | % | ||||||||||||||||||||||||||||
Private credit funds | 39,751 | 0.4 | % | ||||||||||||||||||||||||||||
Call options on equity | 4,590 | 0.1 | % | ||||||||||||||||||||||||||||
Other | 720 | — | % | ||||||||||||||||||||||||||||
Total | 2,036,430 | 22.9 | % | ||||||||||||||||||||||||||||
Total investments | $ | 1,605,553 | $ | 1,140,493 | $ | 2,263,287 | $ | 1,276,705 | $ | 402,379 | $ | 20,007 | $ | 8,875,168 | 100.0 | % |
December 31, 2017 | |||||||||||||||||||||||||||||||
Fair Value | |||||||||||||||||||||||||||||||
AAA Rated | AA Rated | A Rated | BBB Rated | Non-investment Grade | Not Rated | Total | % | ||||||||||||||||||||||||
(in thousands of U.S. dollars, except percentages) | |||||||||||||||||||||||||||||||
Fixed maturity and short-term investments, trading and available-for-sale | |||||||||||||||||||||||||||||||
U.S. government & agency | $ | 556,859 | $ | 1,364 | $ | — | $ | — | $ | — | $ | — | $ | 558,223 | 7.7 | % | |||||||||||||||
Non-U.S. government | 134,619 | 409,315 | 79,030 | 62,964 | 6,641 | — | 692,569 | 9.6 | % | ||||||||||||||||||||||
Corporate | 123,059 | 375,252 | 1,854,503 | 932,238 | 188,237 | 4,892 | 3,478,181 | 48.1 | % | ||||||||||||||||||||||
Municipal | 26,313 | 62,605 | 12,864 | 3,575 | — | — | 105,357 | 1.5 | % | ||||||||||||||||||||||
Residential mortgage-backed | 166,386 | 7,425 | 14,204 | 678 | 98,997 | 1,054 | 288,744 | 4.0 | % | ||||||||||||||||||||||
Commercial mortgage-backed | 222,656 | 38,176 | 77,811 | 59,358 | 9,555 | 13,992 | 421,548 | 5.8 | % | ||||||||||||||||||||||
Asset-backed | 272,784 | 43,539 | 68,489 | 69,116 | 88,019 | — | 541,947 | 7.4 | % | ||||||||||||||||||||||
Total | 1,502,676 | 937,676 | 2,106,901 | 1,127,929 | 391,449 | 19,938 | 6,086,569 | 84.1 | % | ||||||||||||||||||||||
Equities | |||||||||||||||||||||||||||||||
U.S. | 106,363 | 1.5 | % | ||||||||||||||||||||||||||||
International | 240 | — | % | ||||||||||||||||||||||||||||
Total | 106,603 | 1.5 | % | ||||||||||||||||||||||||||||
Other investments | |||||||||||||||||||||||||||||||
Private equity funds | 289,556 | 4.0 | % | ||||||||||||||||||||||||||||
Fixed income funds | 229,999 | 3.2 | % | ||||||||||||||||||||||||||||
Hedge funds | 63,773 | 0.9 | % | ||||||||||||||||||||||||||||
Equity funds | 249,475 | 3.4 | % | ||||||||||||||||||||||||||||
CLO equities | 56,765 | 0.8 | % | ||||||||||||||||||||||||||||
CLO equity funds | 12,840 | 0.2 | % | ||||||||||||||||||||||||||||
Private credit funds | 10,156 | 0.1 | % | ||||||||||||||||||||||||||||
Other | 828 | — | % | ||||||||||||||||||||||||||||
Total | 913,392 | 12.6 | % | ||||||||||||||||||||||||||||
Other investments | |||||||||||||||||||||||||||||||
Life settlements | 131,896 | 1.8 | % | ||||||||||||||||||||||||||||
Total investments | $ | 1,502,676 | $ | 937,676 | $ | 2,106,901 | $ | 1,127,929 | $ | 391,449 | $ | 19,938 | $ | 7,238,460 | 100.0 | % |
Fair Value | Average Credit Rating | ||||
(in thousands of U.S. dollars) | |||||
Apple Inc | $ | 82,076 | AA+ | ||
General Electric Co | 77,958 | A | |||
JPMorgan Chase & Co | 68,481 | A- | |||
Wells Fargo & Co | 67,703 | A | |||
Lloyds Banking Group PLC | 60,000 | A | |||
Bank of America Corp | 58,039 | A- | |||
Morgan Stanley | 56,800 | A- | |||
Citigroup | 54,179 | A+ | |||
Anheuser-Busch InBev SA/NV | 49,992 | A- | |||
HSBC Holdings PLC | 46,694 | A | |||
$ | 621,922 |
September 30, 2018 | |||||||||||||||||||||||||||
Fair Value | |||||||||||||||||||||||||||
AAA Rated | AA Rated | A Rated | BBB Rated | Non-investment Grade | Total | % | |||||||||||||||||||||
(in thousands of U.S. dollars, except percentages) | |||||||||||||||||||||||||||
Fixed maturity investments: | |||||||||||||||||||||||||||
U.S. government & agency | $ | 98,928 | $ | — | $ | — | $ | — | $ | — | $ | 98,928 | 8.1 | % | |||||||||||||
Non-U.S. government | — | 3,827 | 12,088 | 6,695 | — | 22,610 | 1.9 | % | |||||||||||||||||||
Corporate | 7,701 | 25,792 | 285,188 | 321,285 | 1,494 | 641,460 | 52.7 | % | |||||||||||||||||||
Municipal | — | 16,555 | 29,960 | 7,164 | — | 53,679 | 4.4 | % | |||||||||||||||||||
Residential mortgage-backed | 60,792 | — | — | — | 9,404 | 70,196 | 5.8 | % | |||||||||||||||||||
Commercial mortgage-backed | 211,747 | 6,367 | 1,963 | — | — | 220,077 | 18.1 | % | |||||||||||||||||||
Asset-backed | 75,417 | 16,289 | 4,037 | — | — | 95,743 | 7.8 | % | |||||||||||||||||||
Total | 454,585 | 68,830 | 333,236 | 335,144 | 10,898 | 1,202,693 | 98.8 | % | |||||||||||||||||||
Other assets | — | — | — | — | 14,489 | 1.2 | % | ||||||||||||||||||||
Total funds held - directly managed | $ | 454,585 | $ | 68,830 | $ | 333,236 | $ | 335,144 | $ | 10,898 | $ | 1,217,182 | 100.0 | % |
December 31, 2017 | |||||||||||||||||||||||
Fair Value | |||||||||||||||||||||||
AAA Rated | AA Rated | A Rated | BBB Rated | Total | % | ||||||||||||||||||
(in thousands of U.S. dollars, except percentages) | |||||||||||||||||||||||
Fixed maturity investments: | |||||||||||||||||||||||
U.S. government & agency | $ | 69,850 | $ | — | $ | — | $ | — | $ | 69,850 | 5.9 | % | |||||||||||
Non-U.S. government | — | — | 2,926 | — | 2,926 | 0.2 | % | ||||||||||||||||
Corporate | 7,754 | 25,418 | 315,385 | 346,933 | 695,490 | 59.0 | % | ||||||||||||||||
Municipal | — | 20,921 | 30,449 | 7,560 | 58,930 | 5.0 | % | ||||||||||||||||
Residential mortgage-backed | 29,439 | — | — | — | 29,439 | 2.5 | % | ||||||||||||||||
Commercial mortgage-backed | 202,608 | 6,576 | 2,002 | — | 211,186 | 17.9 | % | ||||||||||||||||
Asset-backed | 93,849 | 3,716 | — | — | 97,565 | 8.3 | % | ||||||||||||||||
Total | 403,500 | 56,631 | 350,762 | 354,493 | 1,165,386 | 98.8 | % | ||||||||||||||||
Other assets | — | — | — | — | 14,554 | 1.2 | % | ||||||||||||||||
Total funds held - directly managed | $ | 403,500 | $ | 56,631 | $ | 350,762 | $ | 354,493 | $ | 1,179,940 | 100.0 | % |
Fair Value | Average Credit Rating | ||||
(in thousands of U.S. dollars) | |||||
Credit Suisse Group AG | $ | 11,676 | BBB+ | ||
HSBC Holdings PLC | 11,644 | A | |||
Wells Fargo & Co | 11,488 | A | |||
Citigroup Inc | 11,341 | BBB+ | |||
Verizon Communications Inc | 11,212 | BBB+ | |||
UBS Group AG | 11,173 | A- | |||
Morgan Stanley | 11,128 | A- | |||
Comcast Corp | 10,019 | A- | |||
Barclays PLC | 9,978 | BBB | |||
Bank of America Corp | 9,746 | A- | |||
$ | 109,405 |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||||
Net investment income: | (in thousands of U.S. dollars, except percentages) | |||||||||||||||||||||||
Fixed maturity investments | $ | 48,062 | $ | 37,931 | $ | 10,131 | $ | 140,097 | $ | 102,002 | $ | 38,095 | ||||||||||||
Short-term investments and cash and cash equivalents | 3,247 | 2,048 | 1,199 | 8,425 | 7,489 | 936 | ||||||||||||||||||
Funds held | 1,502 | 247 | 1,255 | 8,651 | 597 | 8,054 | ||||||||||||||||||
Funds held – directly managed | 9,776 | 8,516 | 1,260 | 27,990 | 24,121 | 3,869 | ||||||||||||||||||
Investment income from fixed maturities and cash and cash equivalents | 62,587 | 48,742 | 13,845 | 185,163 | 134,209 | 50,954 | ||||||||||||||||||
Equity securities | 946 | 1,344 | (398 | ) | 3,788 | 3,207 | 581 | |||||||||||||||||
Other investments | 8,324 | 3,120 | 5,204 | 14,600 | 10,016 | 4,584 | ||||||||||||||||||
Life settlements and other | — | 1,443 | (1,443 | ) | 6,509 | 11,026 | (4,517 | ) | ||||||||||||||||
Investment income from equities and other investments | 9,270 | 5,907 | 3,363 | 24,897 | 24,249 | 648 | ||||||||||||||||||
Gross investment income | 71,857 | 54,649 | 17,208 | 210,060 | 158,458 | 51,602 | ||||||||||||||||||
Investment expenses | (2,427 | ) | (2,621 | ) | 194 | (7,842 | ) | (8,274 | ) | 432 | ||||||||||||||
Net investment income | $ | 69,430 | $ | 52,028 | $ | 17,402 | $ | 202,218 | $ | 150,184 | $ | 52,034 | ||||||||||||
Net realized gains (losses) on sale: | ||||||||||||||||||||||||
Net realized gains (losses) on fixed maturity securities | $ | (8,799 | ) | $ | 4,598 | $ | (13,397 | ) | $ | (19,363 | ) | $ | 3,862 | $ | (23,225 | ) | ||||||||
Net realized investment gains on equity securities, trading | 666 | 340 | 326 | 3,569 | 1,150 | 2,419 | ||||||||||||||||||
Net realized investment gains (losses) on funds held - directly managed | (1,904 | ) | 422 | (2,326 | ) | (2,849 | ) | (3,720 | ) | 871 | ||||||||||||||
Total net realized gains (losses) on sale | (10,037 | ) | 5,360 | (15,397 | ) | (18,643 | ) | 1,292 | (19,935 | ) | ||||||||||||||
Net unrealized gains (losses): | ||||||||||||||||||||||||
Fixed maturity securities, trading | (13,423 | ) | (10,747 | ) | (2,676 | ) | (159,691 | ) | 23,795 | (183,486 | ) | |||||||||||||
Equity securities, trading | 1,830 | 2,652 | (822 | ) | 6,152 | 13,209 | (7,057 | ) | ||||||||||||||||
Other investments | (35,188 | ) | 27,802 | (62,990 | ) | (37,059 | ) | 71,007 | (108,066 | ) | ||||||||||||||
Change in fair value of embedded derivative on funds held – directly managed | (182 | ) | 3,967 | (4,149 | ) | (41,107 | ) | 28,807 | (69,914 | ) | ||||||||||||||
Change in value of fair value option on funds held - directly managed | (223 | ) | 267 | (490 | ) | (4,323 | ) | 1,587 | (5,910 | ) | ||||||||||||||
Total net unrealized gains (losses) on sale | (47,186 | ) | 23,941 | (71,127 | ) | (236,028 | ) | 138,405 | (374,433 | ) | ||||||||||||||
Net realized and unrealized gains (losses) | $ | (57,223 | ) | $ | 29,301 | $ | (86,524 | ) | $ | (254,671 | ) | $ | 139,697 | $ | (394,368 | ) | ||||||||
Annualized Investment Book Yield | ||||||||||||||||||||||||
Income from cash and fixed maturities | $ | 250,348 | $ | 194,968 | $ | 55,380 | $ | 246,884 | $ | 178,945 | $ | 67,939 | ||||||||||||
Average aggregate fixed maturities and cash and cash equivalents, at cost (1) | $9,511,947 | $8,490,522 | $1,021,425 | $9,562,821 | $8,314,957 | $1,247,864 | ||||||||||||||||||
Investment book yield | 2.63 | % | 2.30 | % | 0.33 | % | 2.58 | % | 2.15 | % | 0.43 | % | ||||||||||||
Financial Statement Portfolio Return | ||||||||||||||||||||||||
Total financial statement return (2) | $ | 12,207 | $ | 81,329 | $ | (69,122 | ) | $ | (52,453 | ) | $ | 289,881 | $ | (342,334 | ) | |||||||||
Average aggregate invested assets, at fair value (1) | $11,374,468 | $9,694,224 | $1,680,244 | $11,151,922 | $9,481,369 | $1,670,553 | ||||||||||||||||||
Financial statement portfolio return | 0.11 | % | 0.84 | % | (0.73 | )% | (0.47 | )% | 3.06 | % | (3.53 | )% |
• | net realized losses on sale of investments of $10.0 million for the three months ended September 30, 2018, compared to net realized gains on sale of investments of $5.4 million for the three months ended September 30, 2017, an increase in net realized losses on sale of investments of $15.4 million; |
• | net unrealized losses on fixed maturity securities, trading, of $13.4 million for the three months ended September 30, 2018, compared to $10.7 million for the three months ended September 30, 2017, an increase in net unrealized losses of $2.7 million, primarily driven by lower valuations due to increased sovereign yields in the current period; |
• | net unrealized gains on equity securities, trading, of $1.8 million for the three months ended September 30, 2018, compared to $2.7 million for the three months ended September 30, 2017, a decrease of $0.8 million, primarily driven by a less favorable movement in international equity markets in 2018; |
• | decrease in fair value of other investments of $35.2 million for the three months ended September 30, 2018, compared to an increase of $27.8 million for the three months ended September 30, 2017, representing a decrease of $63.0 million. The decrease for the three months ended September 30, 2018 was primarily comprised of unrealized losses in our hedge funds and equity funds, partially offset by unrealized gains in our bond funds, private equities, CLO equities and private credit funds. The increase for the three months ended September 30, 2017 was primarily comprised of unrealized gains in our equity funds, fixed income funds, hedge funds, private equities and CLO equities; and |
• | decrease in fair value of embedded derivative on funds held and decrease in fair value option on funds held of $0.4 million for the three months ended September 30, 2018, compared to an increase of $4.2 million for the three months ended September 30, 2017, representing a decrease of $4.6 million, primarily driven by lower valuations due to increased sovereign yields. |
• | net realized losses on sale of investments of $18.6 million for the nine months ended September 30, 2018, compared to net realized gains of $1.3 million for the nine months ended September 30, 2017, an increase of $19.9 million; |
• | net unrealized losses on fixed maturity securities, trading of $159.7 million for the nine months ended September 30, 2018, compared to net unrealized gains of $23.8 million for the nine months ended September 30, 2017, a decrease of $183.5 million, primarily driven by lower valuations due to increased sovereign yields and widening of investment-grade corporate credit spreads in the current period; |
• | net unrealized gains on equity securities, trading of $6.2 million for the nine months ended September 30, 2018, compared to $13.2 million for the nine months ended September 30, 2017, a decrease of $7.1 million, primarily driven by a less favorable movement in equity markets in 2018; |
• | decrease in fair value of other investments of $37.1 million for the nine months ended September 30, 2018, compared to an increase in fair value of other investments of $71.0 million for the nine months ended September 30, 2017, a decrease of $108.1 million. The decrease for the nine months ended September 30, 2018 was primarily comprised of unrealized losses in our equity funds and hedge funds, offset by unrealized gains in our fixed income funds, CLO equities, private equities and private credit funds. The increase for the nine months ended September 30, 2017 was primarily comprised of unrealized gains in our equity funds, fixed income funds, hedge funds, private equities and CLO equities; and |
• | decrease in fair value of embedded derivative on funds held and decrease in fair value option on funds held of $45.4 million for the nine months ended September 30, 2018, compared to an increase of $30.4 million for the nine months ended September 30, 2017, representing a decrease of $75.8 million, primarily driven by lower valuations due to increased sovereign yields and widening of investment-grade corporate credit spreads in the current period. |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||||
Net investment income: | (in thousands of U.S. dollars, except percentages) | |||||||||||||||||||||||
Fixed maturity investments | $ | 38,592 | $ | 29,596 | $ | 8,996 | $ | 112,821 | $ | 79,057 | $ | 33,764 | ||||||||||||
Short-term investments and cash and cash equivalents | 2,147 | 1,659 | 488 | 6,096 | 6,119 | (23 | ) | |||||||||||||||||
Funds held | 1,233 | 247 | 986 | 8,234 | 597 | 7,637 | ||||||||||||||||||
Funds held – directly managed | 9,776 | 8,516 | 1,260 | 27,990 | 24,121 | 3,869 | ||||||||||||||||||
Investment income from fixed maturities and cash and cash equivalents | 51,748 | 40,018 | 11,730 | 155,141 | 109,894 | 45,247 | ||||||||||||||||||
Equity securities | 459 | 1,325 | (866 | ) | 2,719 | 3,128 | (409 | ) | ||||||||||||||||
Other investments | 8,284 | 3,054 | 5,230 | 14,348 | 9,857 | 4,491 | ||||||||||||||||||
Other | 478 | 333 | 145 | 1,379 | 1,444 | (65 | ) | |||||||||||||||||
Investment income from equities and other investments | 9,221 | 4,712 | 4,509 | 18,446 | 14,429 | 4,017 | ||||||||||||||||||
Gross investment income | 60,969 | 44,730 | 16,239 | 173,587 | 124,323 | 49,264 | ||||||||||||||||||
Investment expenses | (1,722 | ) | (1,901 | ) | 179 | (5,398 | ) | (6,193 | ) | 795 | ||||||||||||||
Net investment income | $ | 59,247 | $ | 42,829 | $ | 16,418 | $ | 168,189 | $ | 118,130 | $ | 50,059 | ||||||||||||
Net realized gains (losses) on sale: | ||||||||||||||||||||||||
Net realized gains (losses) on fixed maturity securities | $ | (7,464 | ) | $ | 4,448 | $ | (11,912 | ) | $ | (15,336 | ) | $ | 5,985 | $ | (21,321 | ) | ||||||||
Net realized investment gains on equity securities, trading | 418 | 315 | 103 | 2,813 | 1,067 | 1,746 | ||||||||||||||||||
Net realized investment gains (losses) on funds held - directly managed | (1,904 | ) | 422 | (2,326 | ) | (2,849 | ) | (3,720 | ) | 871 | ||||||||||||||
Total net realized gains (losses) on sale | (8,950 | ) | 5,185 | (14,135 | ) | (15,372 | ) | 3,332 | (18,704 | ) | ||||||||||||||
Net unrealized gains (losses): | ||||||||||||||||||||||||
Fixed maturity securities, trading | (13,094 | ) | (12,873 | ) | (221 | ) | (140,957 | ) | 12,812 | (153,769 | ) | |||||||||||||
Equity securities, trading | 1,721 | 2,420 | (699 | ) | 1,502 | 12,449 | (10,947 | ) | ||||||||||||||||
Other investments | (37,778 | ) | 26,050 | (63,828 | ) | (30,572 | ) | 68,143 | (98,715 | ) | ||||||||||||||
Change in fair value of embedded derivative on funds held – directly managed | (182 | ) | 3,967 | (4,149 | ) | (41,107 | ) | 28,807 | (69,914 | ) | ||||||||||||||
Change in value of fair value option on funds held - directly managed | (223 | ) | 267 | (490 | ) | (4,323 | ) | 1,587 | (5,910 | ) | ||||||||||||||
Total net unrealized gains (losses) | (49,556 | ) | 19,831 | (69,387 | ) | (215,457 | ) | 123,798 | (339,255 | ) | ||||||||||||||
Net realized and unrealized gains (losses) | $ | (58,506 | ) | $ | 25,016 | $ | (83,522 | ) | $ | (230,829 | ) | $ | 127,130 | $ | (357,959 | ) | ||||||||
Annualized Investment Book Yield | ||||||||||||||||||||||||
Income from cash and fixed maturities | $ | 206,992 | $ | 160,072 | $ | 46,920 | $ | 206,855 | $ | 146,525 | $ | 60,330 | ||||||||||||
Average aggregate fixed maturities and cash and cash equivalents, at cost (1) | $ | 7,548,860 | $ | 6,587,901 | $ | 960,959 | $ | 7,625,029 | $ | 6,397,769 | $ | 1,227,260 | ||||||||||||
Investment book yield | 2.74 | % | 2.43 | % | 0.31 | % | 2.71 | % | 2.29 | % | 0.42 | % | ||||||||||||
Financial Statement Portfolio Return | ||||||||||||||||||||||||
Total financial statement return (2) | $ | 741 | $ | 67,845 | $ | (67,104 | ) | $ | (62,640 | ) | $ | 245,260 | $ | (307,900 | ) | |||||||||
Average aggregate invested assets, at fair value (1) | $ | 9,274,048 | $ | 7,464,317 | $ | 1,809,731 | $ | 8,988,208 | $ | 7,252,052 | $ | 1,736,156 | ||||||||||||
Financial statement portfolio return | 0.01 | % | 0.91 | % | (0.90 | )% | (0.70 | )% | 3.38 | % | (4.08 | )% |
• | net realized losses on sale of investments of $9.0 million in 2018, compared to net realized gains of $5.2 million in 2017, a decrease of $14.1 million; |
• | net unrealized losses on fixed maturity securities, trading, of $13.1 million in 2018, compared to $12.9 million in 2017, an increase in net unrealized losses of $0.2 million, primarily driven by lower valuations due to increased sovereign yields in the current period; |
• | net unrealized gains on equity securities, trading, of $1.7 million in 2018, compared to net unrealized gains of $2.4 million in 2017, a decrease in unrealized gains of $0.7 million, primarily driven by a less favorable movement in international equity markets in 2018; |
• | decrease in fair value of other investments of $37.8 million in 2018, compared to an increase of $26.1 million in 2017, representing a decrease of $63.8 million. The decrease for the three months ended September 30, 2018 was primarily comprised of unrealized losses in our equity funds and hedge funds, partially offset by unrealized gains in our private equities, fixed income funds, CLO equities and private credit funds. The increase for the three months ended September 30, 2017 was primarily comprised of unrealized gains in our equity funds, fixed income funds, hedge funds, private equities and CLO equities; and |
• | decrease in fair value of embedded derivative on funds held and decrease in fair value option on funds held of $0.4 million in 2018, compared to an increase of $4.2 million in 2017, representing a decrease of $4.6 million, primarily driven by lower valuations due to increased sovereign yields. |
• | net realized losses of $15.4 million in 2018, compared to net realized gains of $3.3 million in 2017, an increase in net realized losses of $18.7 million; |
• | net unrealized losses on fixed maturity securities, trading, of $141.0 million in 2018, compared to net unrealized gains of $12.8 million in 2017, a decrease of $153.8 million, primarily driven by lower valuations due to increased sovereign yields and widening of investment-grade corporate credit spreads in the current period; |
• | net unrealized gains on equity securities, trading of $1.5 million in 2018, compared to $12.4 million in 2017, a decrease of $10.9 million, primarily driven by a less favorable movement in international equity markets in 2018; |
• | decrease in fair value of other investments of $30.6 million in 2018, compared to an increase in fair value of other investments of $68.1 million in 2017, representing a decrease of $98.7 million. The decrease for the |
• | decrease in fair value of embedded derivative on funds held and decrease in fair value option on funds held of $45.4 million in 2018, compared to an increase of $30.4 million in 2017, representing a decrease of $75.8 million, primarily driven by lower valuations due to increased sovereign yields and widening of investment-grade corporate credit spreads in the current period. |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||||
Net investment income: | (in thousands of U.S. dollars, except percentages) | |||||||||||||||||||||||
Fixed maturity investments | $ | 1,017 | $ | 750 | $ | 267 | $ | 2,937 | $ | 2,080 | $ | 857 | ||||||||||||
Short-term investments and cash and cash equivalents | 171 | 74 | 97 | 397 | 278 | 119 | ||||||||||||||||||
Funds held | 269 | — | 269 | 417 | — | 417 | ||||||||||||||||||
Investment income from fixed maturities and cash and cash equivalents | 1,457 | 824 | 633 | 3,751 | 2,358 | 1,393 | ||||||||||||||||||
Equity securities | 6 | 5 | 1 | 36 | 16 | 20 | ||||||||||||||||||
Other | 196 | 82 | 114 | 477 | 653 | (176 | ) | |||||||||||||||||
Investment income from equities and other investments | 202 | 87 | 115 | 513 | 669 | (156 | ) | |||||||||||||||||
Gross investment income | 1,659 | 911 | 748 | 4,264 | 3,027 | 1,237 | ||||||||||||||||||
Investment expenses | (62 | ) | (64 | ) | 2 | (197 | ) | (195 | ) | (2 | ) | |||||||||||||
Net investment income | $ | 1,597 | $ | 847 | $ | 750 | $ | 4,067 | $ | 2,832 | $ | 1,235 | ||||||||||||
Net realized gains (losses) on sale: | ||||||||||||||||||||||||
Net realized investment gains (losses) on fixed maturity securities | $ | (4 | ) | $ | 21 | $ | (25 | ) | $ | (252 | ) | $ | 40 | $ | (292 | ) | ||||||||
Net realized investment gains on equity securities, trading | 52 | 10 | 42 | 195 | 26 | 169 | ||||||||||||||||||
Total net realized gains (losses) on sale | 48 | 31 | 17 | (57 | ) | 66 | (123 | ) | ||||||||||||||||
Net unrealized gains (losses): | ||||||||||||||||||||||||
Fixed maturity securities, trading | (6 | ) | (92 | ) | 86 | (1,714 | ) | 166 | (1,880 | ) | ||||||||||||||
Equity securities, trading | 60 | 65 | (5 | ) | (38 | ) | 169 | (207 | ) | |||||||||||||||
Other investments | 92 | 281 | (189 | ) | (80 | ) | 776 | (856 | ) | |||||||||||||||
Total net unrealized gains (losses) | 146 | 254 | (108 | ) | (1,832 | ) | 1,111 | (2,943 | ) | |||||||||||||||
Net realized and unrealized gains (losses) | $ | 194 | $ | 285 | $ | (91 | ) | $ | (1,889 | ) | $ | 1,177 | $ | (3,066 | ) | |||||||||
Annualized Investment Book Yield | ||||||||||||||||||||||||
Income from cash and fixed maturities | $ | 5,828 | $ | 3,296 | $ | 2,532 | $ | 5,001 | $ | 3,144 | $ | 1,857 | ||||||||||||
Average aggregate fixed maturities and cash and cash equivalents, at cost (1) | $ | 267,750 | $ | 251,531 | $ | 16,219 | $ | 265,920 | $ | 264,070 | $ | 1,850 | ||||||||||||
Investment book yield | 2.18 | % | 1.31 | % | 0.87 | % | 1.88 | % | 1.19 | % | 0.69 | % | ||||||||||||
Financial Statement Portfolio Return | ||||||||||||||||||||||||
Total financial statement return (2) | $ | 1,791 | $ | 1,132 | $ | 659 | $ | 2,178 | $ | 4,009 | $ | (1,831 | ) | |||||||||||
Average aggregate invested assets, at fair value(1) | $ | 274,200 | $ | 260,853 | $ | 13,347 | $ | 273,349 | $ | 268,889 | $ | 4,460 | ||||||||||||
Financial statement portfolio return | 0.65 | % | 0.43 | % | 0.22 | % | 0.80 | % | 1.49 | % | (0.69 | )% |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||||
Net investment income: | (in thousands of U.S. dollars, except percentages) | |||||||||||||||||||||||
Fixed maturity investments | $ | 8,132 | $ | 7,160 | $ | 972 | $ | 23,322 | $ | 19,572 | $ | 3,750 | ||||||||||||
Short-term investments and cash and cash equivalents | 885 | 293 | 592 | 1,831 | 973 | 858 | ||||||||||||||||||
Investment income from fixed maturities and cash and cash equivalents | 9,017 | 7,453 | 1,564 | 25,153 | 20,545 | 4,608 | ||||||||||||||||||
Equity securities | 480 | 14 | 466 | 1,033 | 63 | 970 | ||||||||||||||||||
Other investments | — | 58 | (58 | ) | — | 93 | (93 | ) | ||||||||||||||||
Other | 636 | 634 | 2 | 1,887 | 1,229 | 658 | ||||||||||||||||||
Investment income from equities and other investments | 1,116 | 706 | 410 | 2,920 | 1,385 | 1,535 | ||||||||||||||||||
Gross investment income | 10,133 | 8,159 | 1,974 | 28,073 | 21,930 | 6,143 | ||||||||||||||||||
Investment expenses | (629 | ) | (567 | ) | (62 | ) | (2,123 | ) | (1,700 | ) | (423 | ) | ||||||||||||
Net investment income | $ | 9,504 | $ | 7,592 | $ | 1,912 | $ | 25,950 | $ | 20,230 | $ | 5,720 | ||||||||||||
Net realized gains (losses) on sale: | ||||||||||||||||||||||||
Net realized investment gains (losses) on fixed maturity securities | $ | (1,331 | ) | $ | 130 | $ | (1,461 | ) | $ | (3,781 | ) | $ | (2,252 | ) | $ | (1,529 | ) | |||||||
Net realized investment gains on equity securities, trading | 196 | 15 | 181 | 561 | 57 | 504 | ||||||||||||||||||
Total net realized gains (losses) on sale | (1,135 | ) | 145 | (1,280 | ) | (3,220 | ) | (2,195 | ) | (1,025 | ) | |||||||||||||
Net unrealized gains (losses): | ||||||||||||||||||||||||
Fixed maturity securities, trading | (324 | ) | 1,976 | (2,300 | ) | (17,020 | ) | 10,933 | (27,953 | ) | ||||||||||||||
Equity securities, trading | 49 | 167 | (118 | ) | 4,688 | 591 | 4,097 | |||||||||||||||||
Other investments | 2,399 | 2,757 | (358 | ) | 402 | 9,624 | (9,222 | ) | ||||||||||||||||
Total net unrealized gains (losses) | 2,124 | 4,900 | (2,776 | ) | (11,930 | ) | 21,148 | (33,078 | ) | |||||||||||||||
Net realized and unrealized gains (losses) | $ | 989 | $ | 5,045 | $ | (4,056 | ) | $ | (15,150 | ) | $ | 18,953 | $ | (34,103 | ) | |||||||||
Annualized Investment Book Yield | ||||||||||||||||||||||||
Income from cash and fixed maturities | $ | 36,068 | $ | 29,812 | $ | 6,256 | $ | 33,537 | $ | 27,393 | $ | 6,144 | ||||||||||||
Average aggregate fixed maturities and cash and cash equivalents, at cost (1) | $ | 1,528,574 | $ | 1,492,581 | $ | 35,993 | $ | 1,508,229 | $ | 1,483,225 | $ | 25,004 | ||||||||||||
Investment book yield | 2.36 | % | 2.00 | % | 0.36 | % | 2.22 | % | 1.85 | % | 0.37 | % | ||||||||||||
Financial Statement Portfolio Return | ||||||||||||||||||||||||
Total financial statement return (2) | $ | 10,493 | $ | 12,637 | $ | (2,144 | ) | $ | 10,800 | $ | 39,183 | $ | (28,383 | ) | ||||||||||
Average aggregate invested assets, at fair value(1) | $ | 1,643,839 | $ | 1,665,618 | $ | (21,779 | ) | $ | 1,648,170 | $ | 1,649,138 | $ | (968 | ) | ||||||||||
Financial statement portfolio return | 0.64 | % | 0.76 | % | (0.12 | )% | 0.66 | % | 2.38 | % | (1.72 | )% |
• | net realized losses on sale of investments of $1.1 million in 2018, compared to net realized gains of $0.1 million in 2017, a decrease of $1.3 million; |
• | net unrealized losses on fixed maturities, trading, of $0.3 million in 2018, compared to net unrealized gains of $2.0 million in 2017, a decrease of $2.3 million, driven by lower valuations due to increased sovereign yields in the current period; and |
• | increase in fair value of other investments of $2.4 million in 2018, compared to an increase of $2.8 million in 2017, representing a decrease of $0.4 million. The increase in fair value of other investments for the three months ended September 30, 2018 and September 30, 2017 was primarily comprised of unrealized gains in our private equities, fixed income funds and equity funds. |
• | net unrealized losses on fixed maturities, trading, of $17.0 million in 2018, compared to net unrealized gains of $10.9 million in 2017, a decrease of $28.0 million, driven by lower valuations due to increased sovereign yields and widening of investment-grade corporate credit spreads in the current period; |
• | net unrealized gains on equities, trading, of $4.7 million in 2018, compared to net unrealized gains of $0.6 million in 2017, an increase of $4.1 million, primarily driven by a more favorable movement in an equity security in 2018; and |
• | increase in fair value of other investments of $0.4 million in 2018, compared to an increase of $9.6 million in 2017, a decrease of $9.2 million. The increase for the nine months ended September 30, 2018 was primarily comprised of unrealized gains in our fixed income funds and CLO equities, offset by unrealized losses in our equity funds and private equities. The increase for the nine months ended September 30, 2017 was primarily comprised of unrealized gains in our fixed income funds, equity funds and private equities. |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||||||
Net investment income (loss) | $ | (918 | ) | $ | 760 | $ | (1,678 | ) | $ | 4,012 | $ | 8,992 | $ | (4,980 | ) | |||||||||
Net realized and unrealized gains (losses) | 100 | (1,045 | ) | 1,145 | (6,803 | ) | (7,563 | ) | 760 | |||||||||||||||
Financial Statement Portfolio Return | ||||||||||||||||||||||||
Total financial statement return (1) | (818 | ) | (285 | ) | (533 | ) | (2,791 | ) | 1,429 | (4,220 | ) | |||||||||||||
Average aggregate invested assets, at fair value (2) | 182,381 | 303,436 | (121,055 | ) | 242,195 | 311,290 | (69,095 | ) | ||||||||||||||||
Financial statement portfolio return | (0.45 | )% | (0.09 | )% | (0.36 | )% | (1.15 | )% | 0.46 | % | (1.61 | )% |
September 30, 2018 | December 31, 2017 | Change | ||||||||||
(in thousands of U.S. dollars) | ||||||||||||
Ordinary shareholders' equity | $ | 3,505,364 | $ | 3,136,684 | $ | 368,680 | ||||||
Series D Preferred Shares | 400,000 | — | 400,000 | |||||||||
Total Enstar Group Limited Shareholders' Equity (A) | 3,905,364 | 3,136,684 | 768,680 | |||||||||
Noncontrolling interest | 10,313 | 9,264 | 1,049 | |||||||||
Total Shareholders' Equity (B) | 3,915,677 | 3,145,948 | 769,729 | |||||||||
Senior Notes | 347,970 | 347,516 | 454 | |||||||||
Revolving credit facility | 46,500 | 225,110 | (178,610 | ) | ||||||||
Term loan facility | — | 74,063 | (74,063 | ) | ||||||||
Total debt (C) | 394,470 | 646,689 | (252,219 | ) | ||||||||
Redeemable noncontrolling interest (D) | 458,328 | 479,606 | (21,278 | ) | ||||||||
Total capitalization = (B) + (C) + (D) | $ | 4,768,475 | $ | 4,272,243 | $ | 496,232 | ||||||
Total capitalization attributable to Enstar = (A) + (C) | $ | 4,299,834 | $ | 3,783,373 | $ | 516,461 | ||||||
Debt to total capitalization | 8.3 | % | 15.1 | % | (6.8 | )% | ||||||
Debt and Series D Preferred Shares to total capitalization | 16.7 | % | 15.1 | % | 1.6 | % | ||||||
Debt to total capitalization attributable to Enstar | 9.2 | % | 17.1 | % | (7.9 | )% | ||||||
Debt and Series D Preferred Shares to total capitalization available to Enstar | 18.5 | % | 17.1 | % | 1.4 | % |
Nine Months Ended September 30, | ||||||||||||
2018 | 2017 | Change | ||||||||||
(in thousands of U.S. dollars) | ||||||||||||
Cash provided by (used in): | ||||||||||||
Operating activities | $ | 90,955 | $ | (482,246 | ) | $ | 573,201 | |||||
Investing activities | (411,352 | ) | 164,204 | (575,556 | ) | |||||||
Financing activities | 135,338 | (57,539 | ) | 192,877 | ||||||||
Effect of exchange rate changes on cash | 232 | 6,292 | (6,060 | ) | ||||||||
Net decrease in cash and cash equivalents | (184,827 | ) | (369,289 | ) | 184,462 | |||||||
Cash and cash equivalents, beginning of period | 1,212,836 | 1,318,645 | (105,809 | ) | ||||||||
Cash and cash equivalents, end of period | $ | 1,028,009 | $ | 949,356 | $ | 78,653 |
Total | Less than 1 Year | 1 - 3 years | 3 - 5 years | 6 - 10 years | More than 10 Years | ||||||||||||||||||
(in millions of U.S. dollars) | |||||||||||||||||||||||
Operating Activities | |||||||||||||||||||||||
Estimated gross reserves for losses and LAE (1) | |||||||||||||||||||||||
Asbestos | $ | 1,712.5 | $ | 94.2 | $ | 181.4 | $ | 170.7 | $ | 308.7 | $ | 957.5 | |||||||||||
Environmental | 207.4 | 29.5 | 50.8 | 39.0 | 46.5 | 41.6 | |||||||||||||||||
General Casualty | 832.3 | 175.1 | 227.6 | 134.2 | 133.8 | 161.6 | |||||||||||||||||
Workers' compensation/personal accident | 2,173.2 | 228.4 | 363.0 | 275.9 | 391.8 | 914.1 | |||||||||||||||||
Marine, aviation and transit | 392.1 | 78.7 | 108.9 | 61.5 | 71.9 | 71.1 | |||||||||||||||||
Construction defect | 141.7 | 26.3 | 43.4 | 32.4 | 29.6 | 10.0 | |||||||||||||||||
Professional indemnity/ Directors & Officers | 904.1 | 196.7 | 274.7 | 157.6 | 153.7 | 121.4 | |||||||||||||||||
Other | 1,047.6 | 253.9 | 286.3 | 145.7 | 139.6 | 222.1 | |||||||||||||||||
Total Non-Life Run-off | 7,410.9 | 1,082.8 | 1,536.1 | 1,017.0 | 1,275.6 | 2,499.4 | |||||||||||||||||
Atrium | 238.0 | 74.6 | 100.9 | 39.1 | 19.4 | 4.0 | |||||||||||||||||
StarStone | 1,460.6 | 551.3 | 552.3 | 212.2 | 137.6 | 7.2 | |||||||||||||||||
Estimated gross reserves for losses and LAE (1) | 9,109.5 | 1,708.7 | 2,189.3 | 1,268.3 | 1,432.6 | 2,510.6 | |||||||||||||||||
Policy benefits for life and annuity contracts (2) | 124.4 | 5.7 | 12.1 | 11.6 | 29.4 | 65.6 | |||||||||||||||||
Operating lease obligations | 55.0 | 10.6 | 16.6 | 10.9 | 14.8 | 2.1 | |||||||||||||||||
Acquisition of Maiden Re North America | 307.5 | 307.5 | — | — | — | — | |||||||||||||||||
Investing Activities | |||||||||||||||||||||||
Investment commitments to private equity funds | 200.0 | 91.7 | 88.0 | 20.3 | — | — | |||||||||||||||||
Investment commitments to equity and equity method investments | 200.0 | 200.0 | — | — | — | — | |||||||||||||||||
Financing Activities | |||||||||||||||||||||||
Loan repayments (including estimated interest payments) | 470.1 | 19.7 | 39.2 | 411.2 | — | — | |||||||||||||||||
Total | $ | 10,466.5 | $ | 2,343.9 | $ | 2,345.2 | $ | 1,722.3 | $ | 1,476.8 | $ | 2,578.3 |
(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 September 30, 2018 and do not take into account corresponding reinsurance balance recoverable amounts that would be due to us. Furthermore, certain of the reserves included in the audited consolidated financial statements as of September 30, 2018 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 consolidated balance sheet as at September 30, 2018 of $107.5 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. |
• | risks associated with implementing our business strategies and initiatives; |
• | the adequacy of our loss reserves and the need to adjust such reserves as claims develop over time; |
• | 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 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; |
• | risks relating to the performance of our investment portfolio and our ability to structure our investments in a manner that recognizes our liquidity needs; |
• | 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 |
• | risks that we may require additional capital in the future, which may not be available or may be available only on unfavorable terms; |
• | risks relating to the availability and collectability of our reinsurance; |
• | 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 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 agreements, which could affect our ability to complete acquisitions; |
• | our ability to implement our strategies relating to our active underwriting businesses; |
• | 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; |
• | 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 September 30, 2018 | -100 | -50 | — | +50 | +100 | |||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||
Total Market Value | $ | 7,051 | $ | 6,874 | $ | 6,708 | $ | 6,530 | $ | 6,368 | ||||||||||
Market Value Change from Base | 5.1 | % | 2.5 | % | — | (2.7 | )% | (5.1 | )% | |||||||||||
Change in Unrealized Value | $ | 343 | $ | 166 | $ | — | $ | (178 | ) | $ | (340 | ) | ||||||||
As at December 31, 2017 | -100 | -50 | — | +50 | +100 | |||||||||||||||
Total Market Value | $ | 6,438 | $ | 6,261 | $ | 6,087 | $ | 5,919 | $ | 5,760 | ||||||||||
Market Value Change from Base | 5.8 | % | 2.9 | % | — | (2.8 | )% | (5.4 | )% | |||||||||||
Change in Unrealized Value | $ | 351 | $ | 174 | $ | — | $ | (168 | ) | $ | (327 | ) |
Interest Rate Shift in Basis Points | ||||||||||||||||||||
As at September 30, 2018 | -100 | -50 | — | +50 | +100 | |||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||
Total Market Value | $ | 1,283 | $ | 1,242 | $ | 1,203 | $ | 1,166 | $ | 1,132 | ||||||||||
Market Value Change from Base | 6.7 | % | 3.2 | % | — | (3.1 | )% | (5.9 | )% | |||||||||||
Change in Unrealized Value | $ | 80 | $ | 39 | $ | — | $ | (37 | ) | $ | (71 | ) | ||||||||
As at December 31, 2017 | -100 | -50 | — | +50 | +100 | |||||||||||||||
Total Market Value | $ | 1,247 | $ | 1,205 | $ | 1,165 | $ | 1,128 | $ | 1,092 | ||||||||||
Market Value Change from Base | 7.0 | % | 3.4 | % | — | (3.2 | )% | (6.3 | )% | |||||||||||
Change in Unrealized Value | $ | 82 | $ | 40 | $ | — | $ | (37 | ) | $ | (73 | ) |
Credit rating | As at September 30, 2018 | As at December 31, 2017 | Change | |||||
AAA | 23.9 | % | 24.7 | % | (0.8 | )% | ||
AA | 17.0 | % | 15.4 | % | 1.6 | % | ||
A | 33.8 | % | 34.6 | % | (0.8 | )% | ||
BBB | 19.0 | % | 18.6 | % | 0.4 | % | ||
Non-investment grade | 6.0 | % | 6.4 | % | (0.4 | )% | ||
Not rated | 0.3 | % | 0.3 | % | — | % | ||
Total | 100.0 | % | 100.0 | % | ||||
Average credit rating | A+ | A+ |
September 30, 2018 | December 31, 2017 | Change | |||||||||
(in millions of U.S. dollars) | |||||||||||
Equities — U.S. | $ | 72.8 | $ | 106.4 | $ | (33.6 | ) | ||||
Equities — International | 57.5 | 0.2 | 57.3 | ||||||||
Private equities funds | 256.6 | 289.6 | (33.0 | ) | |||||||
Equity Funds | 382.0 | 249.5 | 132.5 | ||||||||
Call options on equity | 4.6 | — | 4.6 | ||||||||
Fair value of equities at risk | $ | 773.5 | $ | 645.7 | $ | 127.8 | |||||
Impact of 10% decline in fair value | $ | 77.4 | $ | 64.6 | $ | 12.8 |
As at September 30, 2018 | AUD | CAD | EUR | GBP | Other | Total | ||||||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||||||
Total net foreign currency exposure | $ | (2.2 | ) | $ | 4.3 | $ | 3.4 | $ | 4.0 | $ | 2.8 | $ | 12.2 | |||||||||||
Pre-tax impact of a 10% movement of the U.S. dollar(1) | $ | (0.2 | ) | $ | 0.4 | $ | 0.3 | $ | 0.4 | $ | 0.3 | $ | 1.2 | |||||||||||
As at December 31, 2017 | AUD | CAD | EUR | GBP | Other | Total | ||||||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||||||
Total net foreign currency exposure | $ | (2.1 | ) | $ | (3.4 | ) | $ | 11.0 | $ | 7.0 | $ | 3.7 | $ | 16.2 | ||||||||||
Pre-tax impact of a 10% movement of the U.S. dollar(1) | $ | (0.2 | ) | $ | (0.3 | ) | $ | 1.1 | $ | 0.7 | $ | 0.4 | $ | 1.6 |
(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 | |||||||||
July 1, 2018 - July 31, 2018 | — | $ | — | — | — | ||||||||
August 1, 2018 - August 31, 2018 | 318 | $ | 209.10 | — | — | ||||||||
September 1, 2018 - September 30, 2018 | — | $ | — | — | — | ||||||||
Total | 318 | — | — |
(1) | Consists 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 price for the shares is their fair market value, as determined by reference to the closing price of our ordinary shares on the vesting date. |
Exhibit No. | Description | |
2.1† | Master Transaction Agreement, dated as of August 31, 2018, by and among Enstar Group Limited, Enstar Holdings (US) LLC and Maiden Holdings North America, Ltd. (incorporated by reference to Exhibit 2.1 of the Company’s Form 8-K filed on September 9, 2018). | |
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). | ||
Certificate of Designations of 7.00% fixed-to-floating rate perpetual non-cumulative preference shares, Series D (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed on June 27, 2018). | ||
Revolving Credit Agreement, dated as of August 16, 2018, among Enstar Group Limited and certain of its subsidiaries, National Australia Bank Limited, Barclays Bank PLC, Wells Fargo Securities, LLC, Wells Fargo Bank, National Association and each of the lenders party thereto (incorporated by reference to Exhibit 2.1 of the Company’s Form 8-K filed on August 21, 2018). | ||
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. |
ENSTAR GROUP LIMITED | |
By: | /S/ GUY BOWKER |
Guy Bowker Chief Financial Officer, Authorized Signatory, Principal Financial Officer and Principal Accounting 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/ 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/ GUY BOWKER |
Guy Bowker |
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/ GUY BOWKER |
Guy Bowker |
Chief Financial Officer |
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Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 05, 2018 |
|
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 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Voting Ordinary Shares | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 17,951,076 | |
Non-Voting Convertible Ordinary Shares | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 3,509,682 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands |
Total |
Ordinary Shares
Voting 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
|
Preferred Stock
Series D Preferred Stock
|
Treasury Shares (Series C Preferred shares) |
Additional Paid-in Capital |
Accumulated Other Comprehensive Income (Loss) |
Currency translation adjustment |
Defined benefit pension liability |
Unrealized gains (losses) on available-for-sale investments |
Retained Earnings |
Noncontrolling Interest (excludes Redeemable Noncontrolling Interest) |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance, beginning of period at Dec. 31, 2016 | $ 16,175 | $ 2,792 | $ 405 | $ 0 | $ 1,380,109 | $ (23,549) | $ (18,993) | $ 88 | $ 1,847,550 | $ 8,520 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Issue of shares | 24 | 0 | 0 | 647 | ||||||||||
Conversion of shares | 192 | (192) | ||||||||||||
Issuance costs of Series D preferred shares | 0 | |||||||||||||
Amortization of share-based compensation | 10,473 | |||||||||||||
Change in other comprehensive income (loss) | $ 20,235 | 8,440 | 2,508 | |||||||||||
Reclassification to earnings on disposal of subsidiary | 7,440 | |||||||||||||
Net earnings (losses) | 197,994 | 1,945 | ||||||||||||
Net loss (earnings) attributable to noncontrolling interest | (14,135) | (14,135) | ||||||||||||
Dividend on preferred shares | 0 | |||||||||||||
Change in redemption of redeemable noncontrolling interests | 760 | |||||||||||||
Contribution of capital | 22 | |||||||||||||
Balance, end of period at Sep. 30, 2017 | 16,391 | 2,600 | 405 | $ 389 | 0 | $ (421,559) | 1,391,229 | (5,161) | (3,113) | $ (4,644) | 2,596 | 2,037,051 | 10,487 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Cumulative effect of change in accounting principle | 4,882 | |||||||||||||
Balance, beginning of period at Dec. 31, 2017 | 3,145,948 | 16,402 | 2,600 | 405 | 0 | 1,395,067 | 10,468 | 11,171 | 2,440 | 2,132,912 | 9,264 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Issue of shares | 1,532 | 505 | 400,000 | 413,679 | ||||||||||
Conversion of shares | 0 | 0 | ||||||||||||
Issuance costs of Series D preferred shares | (10,781) | |||||||||||||
Amortization of share-based compensation | 14,762 | |||||||||||||
Change in other comprehensive income (loss) | (1,696) | 1,270 | (2,568) | |||||||||||
Reclassification to earnings on disposal of subsidiary | 0 | |||||||||||||
Net earnings (losses) | (62,894) | 1,000 | ||||||||||||
Net loss (earnings) attributable to noncontrolling interest | 19,096 | 19,096 | ||||||||||||
Dividend on preferred shares | (5,133) | |||||||||||||
Change in redemption of redeemable noncontrolling interests | 785 | |||||||||||||
Contribution of capital | 49 | |||||||||||||
Balance, end of period at Sep. 30, 2018 | $ 3,915,677 | $ 17,934 | $ 2,600 | $ 910 | $ 389 | $ 400,000 | $ (421,559) | $ 1,812,727 | $ 9,170 | $ 12,441 | $ (3,143) | $ (128) | 2,083,193 | $ 10,313 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||
Cumulative effect of change in accounting principle | $ (1,573) |
Significant Accounting Policies |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | 1. SIGNIFICANT ACCOUNTING POLICIES 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. 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, 2017. All significant inter-company transactions and balances have been eliminated. 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. Use of Estimates The preparation of financial statements in accordance with U.S. GAAP 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. Our 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. Accounting policies that we believe are most dependent on assumptions and estimates are considered to be our critical accounting policies and are related to the determination of:
New Accounting Standards Adopted in 2018 Accounting Standards Update ("ASU") 2017-09, Stock Compensation - Scope of Modification Accounting In May 2017, the Financial Accounting Standards Board ("FASB") issued ASU 2017-09, which amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under Accounting Standards Codification ("ASC") 718 - Compensation - Stock Compensation. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The adoption of this guidance did not have any impact on our consolidated financial statements and disclosures. 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 ASC 715 - Compensation - Retirement Benefits, 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 prior practice, under which entities capitalize the aggregate net benefit cost when applicable. The adoption of this guidance did not have any impact on our consolidated financial statements and disclosures. 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, which clarifies 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 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 adoption of this guidance did not have any impact on our consolidated financial statements and disclosures. ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory In October 2016, the FASB issued ASU 2016-16, which requires immediate recognition of the tax consequences of many intercompany asset transfers other than inventory. The adoption of this guidance did not have a material impact on our consolidated financial statements and disclosures. ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued ASU 2016-15, which amends the guidance on the classification of certain cash receipts and payments in the statement of cash flows. The adoption of this guidance did not have any impact on our consolidated financial statements and disclosures. ASU 2016-01, Recognition and Measurement of Financial Instruments In January 2016, the FASB issued ASU 2016-01, which amends the guidance on the classification and measurement of financial instruments. Although the ASU retains many of the current requirements, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities, and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. In February 2018, the FASB also issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities, which clarifies that entities should use a prospective transition approach only for equity securities they elect to measure using the new measurement alternative. The amendments also clarify that an entity that voluntarily discontinues using the measurement alternative for an equity security without a readily determinable fair value must measure that security and all identical or similar investments of the same issuer at fair value. Under this guidance, this election is irrevocable and will apply to all future purchases of identical or similar investments of the same issuer. The amendments also clarify other aspects of ASU 2016-01 on how to apply the measurement alternative and the presentation requirements for financial liabilities measured under the fair value option. The adoption of this guidance is contingent on the adoption of ASU 2016-01. We adopted ASU 2016-01 on January 1, 2018 using the modified retrospective approach and recorded a cumulative-effect adjustment of $1.6 million to reduce opening retained earnings for certain of our other investments that were previously classified as available-for-sale securities and for which changes in fair value were previously included in accumulated other comprehensive income. We also adopted ASU 2018-03 following our adoption of ASU 2016-01 and this adoption did not have any impact on our consolidated financial statements and related disclosures. ASUs 2014-09, 2016-08, 2016-10, 2016-12, Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The ASU applies to all contracts with customers except those that are within the scope of other FASB topics, primarily our premium revenues which are covered by ASC 944 - Financial Services - Insurance, and revenues from our investment portfolios which are covered by other FASB topics. While contracts within the scope of ASC 944 are excluded from the scope of the ASU, certain insurance-related contracts are within the scope of the ASU, for example contracts under which service providers charge their customers fixed fees in exchange for an agreement to provide services for an uncertain future event. Certain of the ASU’s provisions also apply to transfers of non-financial assets and include guidance on recognition and measurement. In March 2016, the FASB also issued ASU 2016-08, Revenue from Contracts with Customers - Principal versus Agent Considerations, which clarifies the implementation guidance for principal versus agent considerations in ASU 2014-09. In April 2016, the FASB then issued ASU 2016-10, Revenue from Contracts with Customers - Identifying Performance Obligations and Licensing, which amends the guidance in ASU 2014-09 related to identifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB further issued ASU 2016-12, Revenue from Contracts with Customers - Narrow-Scope Improvements and Practical Expedients, which clarifies the following aspects in ASU 2014-09 - (1a) collectability, (2) presentation of sales taxes and other similar taxes collected from customers, (3) non-cash considerations, (4) contract modifications at transition, (5) completed contracts at transition, and (6) technical correction. We adopted ASU 2014-09 and the related amendments, as codified in ASC 606 - Revenue from Contracts with Customers, on January 1, 2018 using the modified retrospective method with prior periods not being restated. Premium revenues and those related to our investment portfolios, which collectively comprise most of our total revenues, are within the scope of other FASB topics and therefore are excluded from the scope of the revenue recognition standard. For other revenue types, which are within the scope of the new guidance, we evaluated individual contracts against the provisions of the new guidance to identify any contracts where the timing and measurement of those revenues may differ based upon the new guidance. The adoption did not have a material impact on our consolidated financial statements and related disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted Note 2 - "Significant Accounting Policies" to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017 describes accounting pronouncements that were not adopted as of December 31, 2017. Those pronouncements are not yet adopted unless discussed above in "New Accounting Standards Adopted in 2018." In addition, the following relevant pronouncements were issued during the nine months ended September 30, 2018 or thereafter and are yet to be adopted. ASU 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities In October 2018, the FASB issued ASU 2018-17, which clarifies that when determining whether a decision-making fee is a variable interest, a reporting entity should consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety, as currently required in GAAP. This amendment will, (1) likely result in more decision makers not having a variable interest through their decision-making arrangements, and (2) create alignment between determining whether a decision-making fee is a variable interest and determining whether a reporting entity within a related party group is the primary beneficiary of a variable interest entity ("VIE"). The ASU is effective for interim and annual reporting periods beginning after December 15, 2019, although early adoption is permitted. All entities are required to apply this guidance retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. While some of our subsidiaries are involved in certain decision-making arrangements for which they earn fees that are considered variable interests, they do not meet the primary beneficiary definition under the VIE guidance with respect to these arrangements. Therefore, we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements and the related disclosures. ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurements In August 2018, the FASB issued ASU 2018-13, which amended the fair value measurement guidance in ASC 820 - Fair Value Measurement, by removing and modifying certain existing disclosure requirements, while also adding new disclosure requirements. The ASU is effective for interim and annual reporting periods beginning after December 15, 2019, although early adoption is permitted, with the amendments being applied either prospectively or retrospectively, as specified in the ASU. In addition, an entity may elect to early adopt the removal or modification of disclosures immediately and delay the adoption of the new disclosure requirements until the effective date. We are currently assessing the impact of adopting this guidance however we do not expect the new or modified disclosures to have a material impact on the disclosures in our consolidated financial statements. ASU 2018-12, Targeted Improvements to the Accounting for Certain Long-Duration Insurance Contracts In August 2018, the FASB issued ASU 2018-12, which amends the accounting and disclosure model for certain long-duration insurance contracts under U.S GAAP. The goal of the ASU's amendments is to improve the following aspects of financial reporting related to long-duration insurance contracts: (1) measurement of the liability for future policy benefits related to non-participating traditional and limited-payment contracts, (2) measurement and presentation of market risk benefits, (3) amortization of deferred acquisition costs, and (4) presentation and disclosures. The ASU is effective for interim and annual reporting periods beginning after December 15, 2020, although early adoption is permitted. Once the transfer of our remaining life insurance policies from our subsidiary Alpha Insurance SA to Monument Insurance Group Limited is completed, as discussed in Note 11 - "Policy Benefits for Life Contracts", we will not have any residual exposures relating to long duration insurance contracts. Therefore, the adoption of this guidance is not expected to have a material impact on our consolidated financial statements and related disclosures. ASU 2018-11, Targeted Improvements to ASC 842 - Leases and ASU 2018-10, Codification Improvements to ASC 842 - Leases In July 2018, the FASB issued ASU 2018-11, which adds a transition option for all entities and a practical expedient only for lessors to the ASU 2016-02 - Leases guidance initially issued by the FASB in February 2016 and codified in ASC 842. The transition option which we will elect, allows entities to not apply the new leases standard in the comparative periods they present in their financial statements in the year of adoption. Under the transition option, entities can opt to continue to apply the legacy guidance in ASC 840 - Leases, including its disclosure requirements, in the comparative periods presented in the year they adopt the new leases standard. This means that entities that elect this option will only provide annual disclosures for the comparative periods because ASC 840 does not require interim disclosures. Entities that elect this transition option will still be required to adopt the new leases standard using the modified retrospective transition method required by the standard, but they will recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. The practical expedient provides lessors with an option to not separate the non-lease components from the associated lease components when certain criteria are met and requires them to account for the combined component in accordance with the revenue recognition standard in ASC 606 if the associated non-lease components are the predominant components. In July 2018, the FASB also issued ASU 2018-10, which clarifies how to apply certain aspects of ASC 842. The amendments in the ASU address a number of issues in the new leases guidance, including (a) the rate implicit in the lease, (b) impairment of the net investment in the lease, (c) lessee reassessment of lease classification, (d) lessor reassessment of lease term and purchase options, (e) variable payments that depend on an index or rate, and (f) certain transition adjustments. The amendments arising from both ASU 2018-11 and ASU 2018-10 have the same effective date and transition requirements as ASC 842, which we expect to adopt on January 1, 2019, when it becomes effective. Being a financial services company, the majority of our operating leases cover office space and facilities required to conduct our operations. Therefore on adoption of the leases guidance, we do not expect the right-of-use asset and the corresponding lease liability to be recorded relating to these operating lease arrangements, to be material as a proportion of our total assets and liabilities. In addition, the leases guidance is not expected to have a significant impact on the net lease expense that we will recognize in our consolidated statements of earnings as a result of our operating lease arrangements. ASU 2018-09, Codification Improvements In July 2018, the FASB issued ASU 2018-09, which affects a wide variety of Topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. The amendments in the ASU represent changes that clarify, correct errors in, or make minor improvements to the Codification. Ultimately, the amendments make the Codification easier to understand and apply by eliminating inconsistencies and providing clarifications. Some of the amendments in this ASU do not require transition guidance and are effective upon issuance of the ASU, while many of the amendments have transition guidance with effective dates for annual periods beginning after December 15, 2018. The adoption of the amendments in this ASU are not expected to have a material impact on our consolidated financial statements and related disclosures. |
Acquisitions |
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Acquisitions | 2. ACQUISITIONS Maiden Re North America On August 31, 2018, we entered into a definitive agreement to acquire Maiden Reinsurance North America, Inc. (“Maiden Re North America”) from a subsidiary of Maiden Holdings, Ltd. Maiden Re North America is a diversified insurance company domiciled in Missouri that provides property and casualty treaty reinsurance, casualty facultative reinsurance and accident and health treaty reinsurance. As part of the transaction, we will novate and assume certain reinsurance agreements from Maiden Re North America's Bermuda reinsurer, including certain reinsurance agreements with Maiden Re North America. The net consideration payable in the transaction is $307.5 million, subject to certain closing adjustments. We will assume approximately $1.3 billion of net loss and loss adjustment expense reserves and unearned premium reserves upon closing. We will operate the business in run-off, and we expect to finance the purchase price through a combination of cash on hand and borrowings under our revolving credit facility. Completion of the transaction is conditioned on, among other things, governmental and regulatory approvals and satisfaction of various customary closing conditions. The transaction is expected to close in the fourth quarter of 2018. KaylaRe Overview On May 14, 2018, we completed the previously announced transaction to acquire all of the outstanding shares and warrants of KaylaRe Holdings, Ltd. ("KaylaRe"). In consideration for the acquired shares and warrants of KaylaRe, we issued an aggregate of 2,007,017 ordinary shares to the shareholders of KaylaRe, comprising 1,501,778 voting ordinary shares and 505,239 Series E non-voting ordinary shares. Effective May 14, 2018, we consolidated KaylaRe into our consolidated financial statements, and any balances between KaylaRe and Enstar are now eliminated upon consolidation. The completion of the KaylaRe transaction enhanced our group capital position and enabled the Company to assume full ownership of another platform from which we can provide non-life run-off solutions to our clients. Refer to Note 20 - "Related Party Transactions" for additional information relating to KaylaRe. Purchase Price The components of the consideration paid to acquire all of the outstanding shares and warrants of KaylaRe were as follows:
The purchase price was allocated to the acquired assets and liabilities of KaylaRe based on their estimated fair values at the acquisition date. We recognized goodwill of $41.7 million on the transaction, primarily attributable to (i) the capital synergies from integrating KaylaRe into our group capital structure, (ii) investment management capabilities on a total return basis, and (iii) the incremental acquired capital to be utilized for future non-life run-off transactions. Fair Value of Enstar Ordinary Shares Issued The fair value of the Enstar ordinary shares issued was based on the closing price of $206.65 as at May 14, 2018, the date the transaction closed.
Fair Value of Previously Held Equity Method Investment Prior to the close of the transaction, Enstar held a 48.2% interest in KaylaRe, which was accounted for as an equity method investment in accordance with ASC 323 - Investments - Equity Method and Joint Ventures. The acquisition of the remaining 51.8% equity interest in KaylaRe was considered a step acquisition, whereby we remeasured the previously held equity method investment to fair value. We considered multiple factors in determining the fair value of the previously held equity method investment, including, (i) the price negotiated with the selling shareholders for the 51.8% equity interest in KaylaRe, (ii) recent market transactions for similar companies, and (iii) current trading multiples for comparable companies. Based on this analysis, a valuation multiple of 1.05 to KaylaRe's carrying book value was determined to be appropriate to remeasure the previously held equity method investment at fair value. This resulted in the recognition of a gain of $16.0 million on completion of the step acquisition of KaylaRe, which was recorded in other income (loss) during the three months ended June 30, 2018.
Adjustment for the Fair Value of Preexisting Relationships Enstar had contractual preexisting relationships with KaylaRe, which were deemed to be effectively settled at fair value on the acquisition date. The differences between the carrying value and the fair value of the preexisting relationships was included as part of the purchase price in accordance with ASC 805 - Business Combinations. The fair value of the balances relating to preexisting reinsurance relationships with KaylaRe was determined using a discounted cash flow approach and, where applicable, consideration was given to stated contractual settlement provisions, when determining the loss to be recorded on the deemed settlement of these preexisting relationships. The fair values of the balances arising from the non-reinsurance preexisting relationships with KaylaRe were deemed to equal their carrying values given their short-term nature and the expectation that they would all be settled within the next twelve months. As a result of effectively settling all the contractual preexisting relationships with KaylaRe, the Company recognized a loss of $15.6 million which was recorded in other income (loss) in the three months ended June 30, 2018, as summarized below:
Fair Value of Net Assets Acquired and Liabilities Assumed The following table summarizes the fair values of the assets acquired and liabilities assumed (excluding preexisting relationships) in the KaylaRe transaction at the acquisition date, which have all been allocated to the Non-life Run-off segment.
The table below summarizes the results of the KaylaRe operations which are included in our condensed consolidated statement of earnings from the acquisition date to September 30, 2018:
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Significant New Business |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SIGNIFICANT NEW BUSINESS | 3. SIGNIFICANT NEW BUSINESS Coca-Cola On August 1, 2018, we entered into a reinsurance transaction with The Coca-Cola Company and its subsidiaries ("Coca-Cola"), pursuant to which we reinsured certain of Coca-Cola's retention and deductible risks under its subsidiaries' U.S. workers' compensation, auto liability, general liability and product liability insurance coverage. We assumed total gross reserves of $120.8 million for cash consideration of $103.6 million and recorded a deferred charge of $17.2 million, included in other assets. We transferred the cash consideration received of $103.6 million into a trust to support our obligations under the reinsurance agreement. Zurich Australia On February 23, 2018, we entered into a reinsurance agreement with Zurich Australian Insurance Limited, a subsidiary of Zurich Insurance Group ("Zurich") to reinsure its New South Wales Vehicle Compulsory Third Party ("CTP") insurance business. Under the agreement, which was effective as of January 1, 2018, we assumed gross loss reserves of AUD$359.4 million ($280.8 million) in exchange for a reinsurance premium consideration of AUD$343.9 million ($268.7 million). We elected the fair value option for this reinsurance contract and recorded an initial fair value adjustment of AUD$15.5 million ($12.1 million) on the assumed gross loss reserves. Refer to Note 7 - "Fair Value Measurements" for a description of the fair value process and the assumptions made. Following the initial reinsurance transaction, which transferred the economics of the CTP insurance business, we and Zurich are pursuing a portfolio transfer of the CTP insurance business under Division 3A Part III of Australia's Insurance Act 1973 (Cth), which will provide legal finality for Zurich's obligations. The transfer is subject to court, regulatory and other approvals. Neon RITC Transaction On February 16, 2018, we completed a reinsurance-to-close (“RITC”) transaction with Neon Underwriting Limited ("Neon"), under which we reinsured to close the 2015 and prior underwriting years of account (comprising underwriting years 2008 to 2015) of Neon's Syndicate 2468, with effect from January 1, 2018. We assumed gross loss reserves of £403.9 million ($546.3 million) and net loss reserves of £342.1 million ($462.6 million) relating to the portfolio in exchange for a reinsurance premium consideration of £329.1 million ($445.1 million). We elected the fair value option for this reinsurance contract and recorded initial fair value adjustments of $20.6 million and $17.5 million on the gross and net loss reserves assumed, respectively. Refer to Note 7 - "Fair Value Measurements" for a description of the fair value process and the assumptions made. Following the closing of the transaction, we have taken responsibility for claims handling and provided complete finality to Neon's obligations. Novae RITC Transaction On January 29, 2018, we entered into an RITC transaction with AXIS Managing Agency Limited, under which we reinsured to close the 2015 and prior underwriting years of account of Novae Syndicate 2007 ("Novae"), with effect from January 1, 2018. We assumed gross loss reserves of £860.1 million ($1,163.2 million) and net loss reserves of £630.7 million ($853.0 million) relating to the portfolio in exchange for a reinsurance premium consideration of £594.1 million ($803.5 million). We elected the fair value option for this reinsurance contract and recorded initial fair value adjustments of $67.5 million and $49.5 million on the gross and net loss reserves assumed, respectively. Refer to Note 7 - "Fair Value Measurements" for a description of the fair value process and the assumptions made. Following the closing of the transaction, we have taken responsibility for claims handling and provided complete finality to Novae's obligations. |
Divestitures, Held-For-Sale Businesses and Discontinued Operations |
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DIVESTITURES, HELD-FOR-SALE BUSINESSES AND DISCONTINUED OPERATIONS | 4. DIVESTITURES, HELD-FOR-SALE BUSINESSES AND DISCONTINUED OPERATIONS Pavonia On December 29, 2017, we completed the previously announced sale of our subsidiary, Pavonia Holdings (US) Inc. ("Pavonia"), to Southland National Holdings, Inc. ("Southland"), a Delaware corporation and a subsidiary of Global Bankers Insurance Group, LLC. The aggregate purchase price was $120.0 million. We used the proceeds to make repayments under its revolving credit facility. Pavonia owns Pavonia Life Insurance Company of Michigan (“PLIC MI”) and Enstar Life (US), Inc. Pursuant to the amended stock purchase agreement between us and Southland, which partially restructured the transaction, Southland has agreed to acquire Pavonia Life Insurance Company of New York ("PLIC NY") for $13.1 million in a second closing that is subject to regulatory approval. In the event that the second closing has not occurred by December 29, 2018 (unless further extended by the parties), we will evaluate strategic alternatives for PLIC NY, which may include the pursuit of an alternative sale transaction or a plan to retain the business. The additional purchase price represents the cash consideration we paid to PLIC MI when we acquired PLIC NY from PLIC MI as a result of the restructuring of the first closing of the transaction. Pavonia was a substantial portion of our previously reported Life and Annuities segment. We 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 December 31, 2017:
As at December 31, 2017, included in the table above were restricted investments of $1.4 million. As at September 30, 2018, included within Other assets and Other liabilities on our consolidated balance sheet were amounts of $23.3 million and $10.3 million, respectively, relating to PLIC NY. The Pavonia business qualified as a discontinued operation during the three and nine months ended September 30, 2017. The following table summarizes the components of net earnings from discontinued operations on the unaudited condensed consolidated statements of earnings for the three and nine months ended September 30, 2017:
The following table presents the cash flows of Pavonia for the nine months ended September 30, 2017:
Laguna On August 29, 2017, we completed a transaction to sell Laguna Life DAC (“Laguna”) for total consideration of €25.6 million (approximately $30.8 million) to a subsidiary of Monument Re Limited ("Monument"). We have an investment in Monument, as described further in Note 20 - "Related Party Transactions". Laguna was classified as held-for-sale during 2017 prior to its sale. The net losses relating to Laguna for the three and nine months ended September 30, 2017 were $0.9 million and $1.1 million, respectively. These amounts were not significant to our consolidated operations and therefore we did not classify Laguna as a discontinued operation for prior periods. Following the closing of the sale of Laguna, we recorded a loss on sale of subsidiary of $6.7 million and $16.3 million for the three and nine months ended September 30, 2017, respectively, which was included in earnings from continuing operations before income taxes in our consolidated statement of earnings. The total loss recorded on the sale of Laguna of $16.3 million included a cumulative currency translation adjustment balance of $6.3 million, which upon completion of the sale during the third quarter of 2017 was reclassified from accumulated other comprehensive income and included in earnings as a component of the loss on sale of Laguna. |
Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS | 5. 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 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 September 30, 2018 were securities issued by U.S. governmental agencies with a fair value of $147.3 million (as at December 31, 2017: $152.4 million). Included within corporate securities as at September 30, 2018 were senior secured loans of $24.3 million (as at December 31, 2017: $68.9 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 investments classified as available-for-sale were as follows:
The contractual maturities of our fixed maturity 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 investments classified as available-for-sale that are in a gross unrealized loss position:
As at September 30, 2018 and December 31, 2017, the number of securities classified as available-for-sale in an unrealized loss position was 103 and 96, respectively. Of these securities, the number of securities that had been in an unrealized loss position for twelve months or longer was 33 and 37, respectively. Other-Than-Temporary Impairment For the nine months ended September 30, 2018 and 2017, 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 September 30, 2018 or December 31, 2017. A description of our other-than-temporary impairment process is included in Note 2 - "Significant Accounting Policies" to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017. There were no changes to our process during the nine months ended September 30, 2018. Credit Ratings The following table sets forth the credit ratings of our fixed maturity (including both trading and available-for-sale investments) and short-term investments as at September 30, 2018:
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 7 - "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:
The increase in our other investments carried at fair value between December 31, 2017 and September 30, 2018 was primarily attributable to $626.5 million of other investments acquired as part of the KaylaRe acquisition and net additional subscriptions of $538.1 million. As at September 30, 2018, we had unfunded commitments to private equity funds of $200.0 million. Other Investments, at cost During the three months ended June 30, 2018, we sold our investments in life settlement contracts, which were carried at cost. During the nine months ended September 30, 2018 and 2017, net investment income included $6.5 million and $10.6 million, respectively, related to investments in life settlements. There were impairment charges of $6.6 million and $7.5 million recognized in net realized and unrealized gains/losses during the nine months ended September 30, 2018 and 2017, respectively, related to investments in life settlements. Net Investment Income Major categories of net investment income for the three and nine months ended September 30, 2018 and 2017 are summarized as follows:
Net Realized and Unrealized Gains and Losses Components of net realized and unrealized gains and losses for the three and nine months ended September 30, 2018 and 2017 were as follows:
The gross realized gains and losses on available-for-sale securities included in the table above resulted from sales of $0.4 million and $5.9 million for the three months ended September 30, 2018 and 2017, respectively, and $10.9 million and $27.5 million for the nine months ended September 30, 2018 and 2017, respectively. 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 $474.6 million and $257.7 million, as at September 30, 2018 and December 31, 2017, 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. On February 8, 2018, we amended and restated our unsecured letter of credit agreement for Funds at Lloyd's purposes ("FAL Facility") to issue up to $325.0 million letters of credit, with a provision to increase the facility up to $400.0 million, subject to lenders approval. The FAL Facility is available to satisfy our Funds at Lloyd's requirements and expires in 2022. As at September 30, 2018, our combined Funds at Lloyd's were comprised of cash and investments of $422.7 million and unsecured letters of credit of $295.0 million. The increase in the collateral in trust for third-party agreements and Funds at Lloyd's was primarily due to the loss portfolio transfer reinsurance transactions as described in Note 3 - "Significant New Business". |
Funds Held - Directly Managed |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FUNDS HELD - DIRECTLY MANAGED | 6. 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 September 30, 2018 and December 31, 2017:
The contractual maturities of the 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 the fixed maturity investments underlying the funds held - directly managed account as at September 30, 2018:
Net Investment Income Major categories of net investment income underlying the funds held - directly managed for the three and nine months ended September 30, 2018 and 2017 are summarized as follows:
Net Realized Gains (Losses) and Change in Fair Value due to Embedded Derivative and Fair Value Option Net realized gains (losses) and change in fair value for the three and nine months ended September 30, 2018 and 2017 are summarized as follows:
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | 7. 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:
In addition, certain of our other investments are measured at fair value using net asset value ("NAV") per share (or its equivalent) as a practical expedient and have not been classified within the fair value hierarchy above. We have categorized our investments that are recorded at fair value on a recurring basis among levels based on the observability of inputs, or at fair value using NAV per share (or its equivalent) as follows:
Valuation Methodologies of Financial Instruments Measured at Fair Value Fixed Maturity Investments and Funds Held - Directly Managed 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 our publicly quoted equity securities as Level 1 within the fair value hierarchy because their fair values are based on unadjusted quoted prices for identical securities in active markets. Other equity securities have been categorized as either Level 2 if their fair values are based on observable market data or Level 3 if their fair values are based on unobservable inputs where there is minimal or no market activity. 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 balances 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. Derivative Instruments The fair values of our foreign currency exchange contracts, as described in Note 8 - "Derivative and Hedging Instruments" are classified as Level 2. The fair values are based upon prices in active markets for identical contracts. 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 The following tables present 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 and nine months ended September 30, 2018 and 2017:
Net realized and unrealized gains related to Level 3 assets in the tables above are included in net realized and unrealized gains (losses) in our unaudited condensed consolidated statements of earnings. The securities transferred from Level 2 to Level 3 were transferred due to insufficient market observable inputs for the valuation of the specific assets. The transfers from Level 3 to Level 2 were based upon us obtaining market observable information regarding the valuations of the specific assets. Insurance Contracts - Fair Value Option The following tables present 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 and nine months ended September 30, 2018 and 2017:
Changes in fair value related to Level 3 assets and liabilities in the tables 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 September 30, 2018 and December 31, 2017:
The fair value of the liability for losses and LAE and reinsurance balances 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 as described below:
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 balances 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 balances recoverable. Disclosure of Fair Values for Financial Instruments Carried at Cost During the three months ended June 30, 2018, we sold our investments in life settlement contracts, which were carried at cost. As at December 31, 2017, investments in life settlement contracts were carried at cost of $125.6 million, and their fair values were $131.9 million. The fair value of investments in life settlement contracts was 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 included our estimates of premiums necessary to keep the policies in-force, and our assumptions for mortality and discount rates. Our mortality assumptions were 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 were used to develop an estimate of future net cash flows that, after discounting, was intended to be reflective of the asset's value in the life settlement market. As at September 30, 2018, our 4.5% Senior Notes due 2022 were carried at amortized cost of $348.0 million while the fair value based on observable market pricing from a third party pricing service was $351.5 million. The Senior Notes are classified as Level 2. Disclosure of fair value of amounts relating to insurance contracts is not required, except those for which we elected the fair value option, as described above. Our remaining assets and liabilities were generally carried at cost or amortized cost, which due to their short-term nature approximates fair value as of September 30, 2018 and December 31, 2017. |
Derivative and Hedging Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE AND HEDGING INSTRUMENTS | 8. DERIVATIVE AND HEDGING INSTRUMENTS Foreign Currency Hedging of Net Investments in Foreign Operations 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 September 30, 2018 and December 31, 2017, we had forward currency contracts in place, which we had designated as hedges of our net investments in foreign operations. The following table presents the gross notional amounts and estimated fair values recorded within other assets and liabilities related to our qualifying foreign currency forward exchange rate contracts as at September 30, 2018 and December 31, 2017.
The Canadian Dollar ("CAD") foreign currency contract that we had in place to hedge the net investment in our CAD denominated operations was discontinued effective December 31, 2017 following the disposal of those operations. The following table presents the amounts of the net gains and losses deferred in the currency translation adjustment ("CTA") account, which is a component of accumulated other comprehensive income (loss) ("AOCI"), in shareholders' equity, relating to our foreign currency forward exchange rate contracts for the three and nine months ended September 30, 2018 and 2017.
Non-derivative Hedging Instruments of Net Investments in Foreign Operations As at September 30, 2018 and December 31, 2017, there were borrowings of €nil and €50.0 million ($60.1 million), respectively, under our revolving credit facilities in effect as of such dates that were designated as non-derivative hedges of our net investment in certain subsidiaries whose functional currency is denominated in Euros. Our borrowings under our previous revolving credit facility that we had designated as non-derivative hedges of our net investment in certain subsidiaries whose functional currency is denominated in Euros were repaid in full during the three months ended September 30, 2018 and replaced by a Euro-denominated foreign currency forward exchange rate contract in a qualifying hedging arrangement. The following table presents the amounts of the net gains and losses deferred in the CTA account in AOCI relating to these qualifying Euro-loan non-derivative hedging instruments for the three and nine months ended September 30, 2018 and 2017.
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 in non-qualifying hedging relationships. We may also utilize equity call option instruments either to obtain exposure to a particular equity instrument or for yield enhancement in non-qualifying hedging relationships. Foreign Currency Forward Contracts The following table presents the gross notional amounts and the estimated fair values recorded within other assets and liabilities related to our non-qualifying foreign currency forward exchange rate hedging relationships as at September 30, 2018 and December 31, 2017.
The following table presents the amounts of the net gains (losses) included in earnings related to our non-qualifying foreign currency forward exchange rate contracts during the three and nine months ended September 30, 2018 and 2017.
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. During the nine months ended September 30, 2018, we purchased call options on equities at a cost of $10.0 million and recorded unrealized losses in net earnings of $0.4 million and $5.4 million on the call options for the three and nine months ended September 30, 2018, respectively. We did not have any equity derivative instruments during the nine months ended September 30, 2017 or as at December 31, 2017. |
Reinsurance Balances Recoverable |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REINSURANCE BALANCES RECOVERABLE | 9. REINSURANCE BALANCES RECOVERABLE The following tables provide the total reinsurance balances recoverable as at September 30, 2018 and December 31, 2017:
Our insurance and reinsurance run-off subsidiaries and assumed portfolios, 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 balances 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 7 - "Fair Value Measurements". As at September 30, 2018 and December 31, 2017, we had reinsurance balances recoverable of $1,975.6 million and $2,021.0 million, respectively. The decrease of $45.5 million in reinsurance balances recoverable was primarily a result of KaylaRe becoming a wholly-owned subsidiary and reserve reductions in our Non-life Run-off segment and cash collections and commutations made during the nine months ended September 30, 2018, partially offset by the Neon and Novae reinsurance transactions, which closed during the first quarter of 2018, as well as reserve increases in StarStone. Top Ten Reinsurers
(1) For the three non-rated reinsurers at as September 30, 2018 and four non-rated reinsurers as at December 31, 2017, 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. (2) Hannover Ruck SE is rated AA- by Standard & Poor’s and A+ by A.M. Best. (3) Lloyd's Syndicates are rated A+ by Standard & Poor's and A by A.M. Best. Provisions for Uncollectible Reinsurance Balances Recoverable We evaluate and monitor concentration of credit risk among our reinsurers, and 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 September 30, 2018 and December 31, 2017. The provisions for bad debt all relate to the Non-life Run-off segment.
12. PREMIUMS WRITTEN AND EARNED The following table provides a summary of net premiums written and earned in our Non-life Run-off, Atrium and StarStone segments and Other activities for the three and nine months ended September 30, 2018 and 2017:
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Losses and Loss Adjustment Expenses |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOSSES AND LOSS ADJUSTMENT EXPENSES | 10. LOSSES AND LOSS ADJUSTMENT EXPENSES The liability for losses and loss adjustment expenses ("LAE"), also referred to as loss reserves, represents our gross estimates before reinsurance for unpaid reported losses and includes losses that have been incurred but not reported ("IBNR") for our Non-life Run-off, Atrium and StarStone segments using a variety of actuarial methods. We recognize an asset for the portion of the liability that we expect to recover from reinsurers. LAE reserves include allocated loss adjustment expenses ("ALAE"), and unallocated loss adjustment expenses ("ULAE"). ALAE are linked to the settlement of an individual claim or loss, whereas ULAE are based on our estimates of future costs to administer the claims. IBNR represents reserves for loss and LAE that have been incurred but not yet reported to us. This includes amounts for unreported claims, development on known claims and reopened claims. 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 - "Losses and Loss Adjustment Expenses" to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017 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 September 30, 2018 and December 31, 2017:
The overall increase in the liability for losses and LAE between December 31, 2017 and September 30, 2018 was primarily attributable to the assumed reinsurance agreements with Zurich Australia, Neon, Novae and Coca-Cola in our Non-life Run-off segment, as described in Note 3 - "Significant New Business", and the acquisition of KaylaRe, as described in Note 2 - "Acquisitions". The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three and nine months ended September 30, 2018 and 2017:
The tables below provide the net incurred losses and LAE by segment for the three and nine months ended September 30, 2018 and 2017:
Non-Life Run-off Segment The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three and nine months ended September 30, 2018 and 2017 for the Non-life Run-off segment:
Net incurred losses and LAE in the Non-life Run-off segment for the three months ended September 30, 2018 and 2017 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 September 30, 2018 The reduction in net incurred losses and LAE for the three months ended September 30, 2018 of $62.8 million included net incurred losses and LAE of $10.0 million related to current period net earned premium. Excluding current period net incurred losses and LAE of $10.0 million, the reduction in net incurred losses and LAE liabilities relating to prior periods was $72.8 million, which was attributable to a reduction in estimates of net ultimate losses of $45.1 million, a reduction in provisions for unallocated LAE of $24.5 million relating to 2018 run-off activity and a reduction in the fair value of liabilities of $9.1 million related to our assumed retroactive reinsurance agreements for which we have elected the fair value option, partially offset by amortization of fair value adjustments over the estimated payout period relating to companies acquired of $4.2 million and the amortization of the deferred charges of $1.6 million. The reduction in estimates of net ultimate losses of $45.1 million for the three months ended September 30, 2018 included a net reduction in case and IBNR reserves of $238.1 million, partially offset by net losses paid of $193.1 million. Three Months Ended September 30, 2017 The reduction in net incurred losses and LAE for the three months ended September 30, 2017 of $70.9 million included net incurred losses and LAE of $30 thousand 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 $30 thousand, the reduction in net incurred losses and LAE liabilities relating to prior periods was $70.9 million, which was attributable to a reduction in estimates of net ultimate losses of $51.0 million, and a reduction in provisions for unallocated LAE of $16.2 million, relating to 2017 run-off activity and a reduction in the fair value of liabilities of $10.5 million related to our assumed retroactive reinsurance agreements for which we have elected the fair value option, partially offset by the amortization of fair value adjustments over the estimated payout period relating to companies acquired amounting to $3.5 million and the amortization of the deferred charges of $3.3 million. The reduction in estimates of net ultimate losses of $51.0 million for the three months ended September 30, 2017 included a net change in case and IBNR reserves of $187.0 million, partially offset by net losses paid of $136.0 million. Net incurred losses and LAE in the Non-life Run-off segment for the nine months ended September 30, 2018 and 2017 were as follows:
Nine Months Ended September 30, 2018 The reduction in net incurred losses and LAE for the nine months ended September 30, 2018 of $205.9 million included net incurred losses and LAE of $15.5 million related to current period net earned premium. Excluding current period net incurred losses and LAE of $15.5 million, net incurred losses and LAE liabilities relating to prior periods were reduced by $221.4 million, which was attributable to a reduction in estimates of net ultimate losses of $161.2 million, a reduction in provisions for unallocated LAE of $48.7 million and a reduction in the fair value of liabilities of $32.1 million related to our assumed retroactive reinsurance agreements for which we have elected the fair value option, partially offset by amortization of the deferred charges of $10.4 million and amortization of fair value adjustments over the estimated payout period relating to companies acquired of $10.3 million. The reduction in estimates of net ultimate losses of $161.2 million for the nine months ended September 30, 2018 included a net change in case and IBNR reserves of $802.6 million, partially offset by net losses paid of $641.4 million. Nine Months Ended September 30, 2017 The reduction in net incurred losses and LAE for the nine months ended September 30, 2017 of $138.0 million included net incurred losses and LAE of $1.2 million related to current period net earned premium, related to the run-off business acquired with Sussex. Excluding current period net incurred losses and LAE of $1.2 million, net incurred losses and LAE liabilities relating to prior periods were reduced by $139.2 million, which was attributable to a reduction in estimates of net ultimate losses of $102.6 million, a reduction in provisions for unallocated LAE of $41.6 million, a reduction in the fair value of liabilities of $9.3 million related to our assumed retroactive reinsurance agreements for which we have elected the fair value option and a reduction in provisions for bad debt of $0.7 million, partially offset by amortization of the deferred charges of $9.4 million and amortization of fair value adjustments over the estimated payout period relating to companies acquired amounting to $5.5 million. The reduction in estimates of net ultimate losses of $102.6 million for the nine months ended September 30, 2017 included a net change in case and IBNR reserves of $539.2 million, partially offset by net losses paid of $436.6 million. Atrium The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three and nine months ended September 30, 2018 and 2017 for the Atrium segment:
Net incurred losses and LAE in the Atrium segment for the three and nine months ended September 30, 2018 and 2017 were as follows:
StarStone The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three and nine months ended September 30, 2018 and 2017 for our StarStone segment:
Net incurred losses and LAE in the StarStone segment for the three and nine months ended September 30, 2018 and 2017 were as follows:
11. POLICY BENEFITS FOR LIFE CONTRACTS We have acquired long duration contracts that subject us to mortality, longevity and morbidity risks and which are accounted for as life and annuity premiums earned. Life benefit reserves are established using assumptions for investment yields, mortality, morbidity, lapse and expenses, including a provision for adverse deviation. We establish and review our life reserves regularly based upon cash flow projections. We establish and maintain our life reinsurance reserves at a level that we estimate will, when taken together with future premium payments and investment income expected to be earned on associated premiums, be sufficient to support all future cash flow benefit obligations and third-party servicing obligations as they become payable. Policy benefits for life contracts as at September 30, 2018 and December 31, 2017 were $107.5 million and $117.2 million, respectively. 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, 2017 for a description of the assumptions used and the process for establishing our assumptions and estimates. On October 10, 2018, we entered into a Business Transfer Agreement between our wholly-owned subsidiary Alpha Insurance SA and a subsidiary of Monument Insurance Group Limited ("Monument"). This agreement will transfer our remaining life assurance policies to Monument, via a Portfolio Transfer, subject to regulatory approval. The transaction is expected to close in the first half of 2019. Our policy benefits operations do not qualify for inclusion in our reportable segments and are therefore included within other activities. The related assets, as well as the results from these operations, were not significant to our consolidated operations and therefore they have not been classified as a discontinued operation. In addition, our proposed transfer of these life assurance polices to Monument was not classified as a held-for-sale business transaction since the underlying contracts do not meet the definition of a business. |
Policy Benefits for Life Contracts |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
POLICY BENEFITS FOR LIFE CONTRACTS | 10. LOSSES AND LOSS ADJUSTMENT EXPENSES The liability for losses and loss adjustment expenses ("LAE"), also referred to as loss reserves, represents our gross estimates before reinsurance for unpaid reported losses and includes losses that have been incurred but not reported ("IBNR") for our Non-life Run-off, Atrium and StarStone segments using a variety of actuarial methods. We recognize an asset for the portion of the liability that we expect to recover from reinsurers. LAE reserves include allocated loss adjustment expenses ("ALAE"), and unallocated loss adjustment expenses ("ULAE"). ALAE are linked to the settlement of an individual claim or loss, whereas ULAE are based on our estimates of future costs to administer the claims. IBNR represents reserves for loss and LAE that have been incurred but not yet reported to us. This includes amounts for unreported claims, development on known claims and reopened claims. 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 - "Losses and Loss Adjustment Expenses" to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017 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 September 30, 2018 and December 31, 2017:
The overall increase in the liability for losses and LAE between December 31, 2017 and September 30, 2018 was primarily attributable to the assumed reinsurance agreements with Zurich Australia, Neon, Novae and Coca-Cola in our Non-life Run-off segment, as described in Note 3 - "Significant New Business", and the acquisition of KaylaRe, as described in Note 2 - "Acquisitions". The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three and nine months ended September 30, 2018 and 2017:
The tables below provide the net incurred losses and LAE by segment for the three and nine months ended September 30, 2018 and 2017:
Non-Life Run-off Segment The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three and nine months ended September 30, 2018 and 2017 for the Non-life Run-off segment:
Net incurred losses and LAE in the Non-life Run-off segment for the three months ended September 30, 2018 and 2017 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 September 30, 2018 The reduction in net incurred losses and LAE for the three months ended September 30, 2018 of $62.8 million included net incurred losses and LAE of $10.0 million related to current period net earned premium. Excluding current period net incurred losses and LAE of $10.0 million, the reduction in net incurred losses and LAE liabilities relating to prior periods was $72.8 million, which was attributable to a reduction in estimates of net ultimate losses of $45.1 million, a reduction in provisions for unallocated LAE of $24.5 million relating to 2018 run-off activity and a reduction in the fair value of liabilities of $9.1 million related to our assumed retroactive reinsurance agreements for which we have elected the fair value option, partially offset by amortization of fair value adjustments over the estimated payout period relating to companies acquired of $4.2 million and the amortization of the deferred charges of $1.6 million. The reduction in estimates of net ultimate losses of $45.1 million for the three months ended September 30, 2018 included a net reduction in case and IBNR reserves of $238.1 million, partially offset by net losses paid of $193.1 million. Three Months Ended September 30, 2017 The reduction in net incurred losses and LAE for the three months ended September 30, 2017 of $70.9 million included net incurred losses and LAE of $30 thousand 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 $30 thousand, the reduction in net incurred losses and LAE liabilities relating to prior periods was $70.9 million, which was attributable to a reduction in estimates of net ultimate losses of $51.0 million, and a reduction in provisions for unallocated LAE of $16.2 million, relating to 2017 run-off activity and a reduction in the fair value of liabilities of $10.5 million related to our assumed retroactive reinsurance agreements for which we have elected the fair value option, partially offset by the amortization of fair value adjustments over the estimated payout period relating to companies acquired amounting to $3.5 million and the amortization of the deferred charges of $3.3 million. The reduction in estimates of net ultimate losses of $51.0 million for the three months ended September 30, 2017 included a net change in case and IBNR reserves of $187.0 million, partially offset by net losses paid of $136.0 million. Net incurred losses and LAE in the Non-life Run-off segment for the nine months ended September 30, 2018 and 2017 were as follows:
Nine Months Ended September 30, 2018 The reduction in net incurred losses and LAE for the nine months ended September 30, 2018 of $205.9 million included net incurred losses and LAE of $15.5 million related to current period net earned premium. Excluding current period net incurred losses and LAE of $15.5 million, net incurred losses and LAE liabilities relating to prior periods were reduced by $221.4 million, which was attributable to a reduction in estimates of net ultimate losses of $161.2 million, a reduction in provisions for unallocated LAE of $48.7 million and a reduction in the fair value of liabilities of $32.1 million related to our assumed retroactive reinsurance agreements for which we have elected the fair value option, partially offset by amortization of the deferred charges of $10.4 million and amortization of fair value adjustments over the estimated payout period relating to companies acquired of $10.3 million. The reduction in estimates of net ultimate losses of $161.2 million for the nine months ended September 30, 2018 included a net change in case and IBNR reserves of $802.6 million, partially offset by net losses paid of $641.4 million. Nine Months Ended September 30, 2017 The reduction in net incurred losses and LAE for the nine months ended September 30, 2017 of $138.0 million included net incurred losses and LAE of $1.2 million related to current period net earned premium, related to the run-off business acquired with Sussex. Excluding current period net incurred losses and LAE of $1.2 million, net incurred losses and LAE liabilities relating to prior periods were reduced by $139.2 million, which was attributable to a reduction in estimates of net ultimate losses of $102.6 million, a reduction in provisions for unallocated LAE of $41.6 million, a reduction in the fair value of liabilities of $9.3 million related to our assumed retroactive reinsurance agreements for which we have elected the fair value option and a reduction in provisions for bad debt of $0.7 million, partially offset by amortization of the deferred charges of $9.4 million and amortization of fair value adjustments over the estimated payout period relating to companies acquired amounting to $5.5 million. The reduction in estimates of net ultimate losses of $102.6 million for the nine months ended September 30, 2017 included a net change in case and IBNR reserves of $539.2 million, partially offset by net losses paid of $436.6 million. Atrium The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three and nine months ended September 30, 2018 and 2017 for the Atrium segment:
Net incurred losses and LAE in the Atrium segment for the three and nine months ended September 30, 2018 and 2017 were as follows:
StarStone The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three and nine months ended September 30, 2018 and 2017 for our StarStone segment:
Net incurred losses and LAE in the StarStone segment for the three and nine months ended September 30, 2018 and 2017 were as follows:
11. POLICY BENEFITS FOR LIFE CONTRACTS We have acquired long duration contracts that subject us to mortality, longevity and morbidity risks and which are accounted for as life and annuity premiums earned. Life benefit reserves are established using assumptions for investment yields, mortality, morbidity, lapse and expenses, including a provision for adverse deviation. We establish and review our life reserves regularly based upon cash flow projections. We establish and maintain our life reinsurance reserves at a level that we estimate will, when taken together with future premium payments and investment income expected to be earned on associated premiums, be sufficient to support all future cash flow benefit obligations and third-party servicing obligations as they become payable. Policy benefits for life contracts as at September 30, 2018 and December 31, 2017 were $107.5 million and $117.2 million, respectively. 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, 2017 for a description of the assumptions used and the process for establishing our assumptions and estimates. On October 10, 2018, we entered into a Business Transfer Agreement between our wholly-owned subsidiary Alpha Insurance SA and a subsidiary of Monument Insurance Group Limited ("Monument"). This agreement will transfer our remaining life assurance policies to Monument, via a Portfolio Transfer, subject to regulatory approval. The transaction is expected to close in the first half of 2019. Our policy benefits operations do not qualify for inclusion in our reportable segments and are therefore included within other activities. The related assets, as well as the results from these operations, were not significant to our consolidated operations and therefore they have not been classified as a discontinued operation. In addition, our proposed transfer of these life assurance polices to Monument was not classified as a held-for-sale business transaction since the underlying contracts do not meet the definition of a business. |
Premiums Written and Earned |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PREMIUMS WRITTEN AND EARNED | 9. REINSURANCE BALANCES RECOVERABLE The following tables provide the total reinsurance balances recoverable as at September 30, 2018 and December 31, 2017:
Our insurance and reinsurance run-off subsidiaries and assumed portfolios, 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 balances 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 7 - "Fair Value Measurements". As at September 30, 2018 and December 31, 2017, we had reinsurance balances recoverable of $1,975.6 million and $2,021.0 million, respectively. The decrease of $45.5 million in reinsurance balances recoverable was primarily a result of KaylaRe becoming a wholly-owned subsidiary and reserve reductions in our Non-life Run-off segment and cash collections and commutations made during the nine months ended September 30, 2018, partially offset by the Neon and Novae reinsurance transactions, which closed during the first quarter of 2018, as well as reserve increases in StarStone. Top Ten Reinsurers
(1) For the three non-rated reinsurers at as September 30, 2018 and four non-rated reinsurers as at December 31, 2017, 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. (2) Hannover Ruck SE is rated AA- by Standard & Poor’s and A+ by A.M. Best. (3) Lloyd's Syndicates are rated A+ by Standard & Poor's and A by A.M. Best. Provisions for Uncollectible Reinsurance Balances Recoverable We evaluate and monitor concentration of credit risk among our reinsurers, and 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 September 30, 2018 and December 31, 2017. The provisions for bad debt all relate to the Non-life Run-off segment.
12. PREMIUMS WRITTEN AND EARNED The following table provides a summary of net premiums written and earned in our Non-life Run-off, Atrium and StarStone segments and Other activities for the three and nine months ended September 30, 2018 and 2017:
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Goodwill, Intangible Assets, Intangible Assets Arising from Insurance Contracts Acquired in Business Combination, and Deferred Charges Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | 13. GOODWILL AND INTANGIBLE ASSETS The following table presents a reconciliation of the beginning and ending goodwill, intangible assets and the deferred charges during the nine months ended September 30, 2018:
Refer to Note 2 - "Acquisitions" for further details on the goodwill acquired during the period. Refer to Note 3 - "Significant New Business" for further details on the new deferred charges recorded during the period. Refer to Note 14 - "Goodwill, Intangible assets and Deferred Charges" to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017 for more information on goodwill, intangible assets and the deferred charges. The following table provides a summary of the amortization recorded on the intangible assets for the three and nine months ended September 30, 2018 and 2017:
The gross carrying value, accumulated amortization and net carrying value of intangible assets by type and the deferred charges as at September 30, 2018 and December 31, 2017 were as follows:
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Debt Obligations |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT OBLIGATIONS | 14. DEBT OBLIGATIONS We utilize debt arrangements primarily for acquisitions and, from time to time, for general corporate purposes. Debt obligations as at September 30, 2018 and December 31, 2017 were as follows:
The table below provides a summary of the total interest expense for the three and nine months ended September 30, 2018 and 2017:
Senior Notes On March 10, 2017, we issued Senior Notes (the "Notes") for an aggregate principal amount of $350.0 million. The Notes pay 4.5% interest semi-annually and mature on March 10, 2022. The Notes are unsecured and unsubordinated obligations that rank equal to any of our other unsecured and unsubordinated obligations, senior to any future obligations that are expressly subordinated to the 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 Notes are redeemable at our option on a make whole basis at any time prior to the date that is one month prior to the maturity of the Notes. 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 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 Notes and are included in interest expense in our unaudited condensed consolidated statements of earnings. EGL Revolving Credit Facility On August 16, 2018, we and certain of our subsidiaries, as borrowers and guarantors, entered into a new five-year unsecured $600.0 million revolving credit agreement. The credit agreement expires in August 2023 and we have the option to increase the commitments under the facility by up to an aggregate of $400.0 million. Borrowings under the facility will bear interest at a rate based on the Company's long term senior unsecured debt ratings. In connection with our entry into the credit agreement described above, we terminated and fully repaid our previous revolving credit agreement, which was originated on September 16, 2014 and was most recently amended on July 17, 2018. As at September 30, 2018, we were permitted to borrow up to an aggregate of $600.0 million under the facility. As at September 30, 2018, there was $553.5 million of available unutilized capacity under the facility. Subsequent to September 30, 2018, we repaid $10.0 million, bringing the unutilized capacity under this facility to $563.5 million. Financial and business covenants imposed on us, in relation to the new revolving credit facility, include certain limitations on mergers and consolidations, acquisitions, indebtedness and guarantees, restrictions as to dispositions of stock and assets, and limitations on liens. Generally, the financial covenants require us to maintain a gearing ratio of consolidated indebtedness to total capitalization of not greater than 0.35 to 1.0 and to maintain a consolidated net worth of not less than the aggregate of (i) $2.3 billion, (ii) 50% of the net income available for distribution to the Company’s ordinary shareholders at any time after June 30, 2018, and (iii) 50% of the proceeds of any common stock issuance by the Company. In addition, we must maintain eligible capital in excess of the enhanced capital requirement imposed on us by the Bermuda Monetary Authority pursuant to the Insurance (Group Supervision) Rules 2011 of Bermuda. We are in compliance with the covenants of the EGL Revolving Credit Facility. As at September 30, 2018 and December 31, 2017, there were borrowings of €nil and €50.0 million ($60.1 million), respectively, under our revolving credit facilities in effect as of such dates that were designated as non-derivative hedges of our net investment in certain subsidiaries whose functional currency is denominated in Euros. These borrowings were repaid in full during the three months ended September 30, 2018 and the non-derivative hedge was replaced by a Euro-denominated foreign currency forward exchange rate contract in a qualifying hedging arrangement. Refer to Note 8 - "Derivative and Hedging Instruments" for more information on our derivative and non-derivative hedging instruments. EGL Term Loan Facility On November 18, 2016, we entered into and fully utilized a three-year $75.0 million unsecured term loan (the "EGL Term Loan Facility"). A portion of the proceeds from the issuance of our Series D Preferred Shares was used to fully repay this facility and the facility was terminated in the three months ended June 30, 2018. Refer to Note 15 - "Debt Obligations" of the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017 for further information on the terms of the above facilities. |
Noncontrolling Interests |
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NONCONTROLLING INTERESTS | 15. NONCONTROLLING INTERESTS Redeemable Noncontrolling Interest Redeemable noncontrolling interest ("RNCI") as at September 30, 2018 and December 31, 2017 comprises the ownership interests held by the Trident V Funds ("Trident") (39.3%) and Dowling Capital Partners, L.P. ("Dowling") (1.7%) in our subsidiary North Bay Holdings Limited ("North Bay"). North Bay owns our investments in StarStone and Atrium. The following is a reconciliation of the beginning and ending carrying amount of the equity attributable to the RNCI as at September 30, 2018 and December 31, 2017:
We carried the RNCI at its estimated redemption value, which is fair value, as of September 30, 2018. The decrease was primarily attributable to a decrease in the net assets due to net losses relating to StarStone during the nine months ended September 30, 2018. Refer to Note 20 - "Related Party Transactions" and Note 21 - "Commitments and Contingencies" for additional information regarding RNCI. Noncontrolling Interest As at September 30, 2018 and December 31, 2017, we had $10.3 million and $9.3 million, respectively, of noncontrolling interest ("NCI") related to external interests in two of our non-life run-off subsidiaries. |
Share Capital |
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Equity [Abstract] | |
SHARE CAPITAL | 16. SHARE CAPITAL Issue of Voting ordinary shares and Series E non-voting ordinary shares On May 14, 2018, an aggregate of 2,007,017 of our ordinary shares were issued to the shareholders of KaylaRe, comprising 1,501,778 voting ordinary shares and 505,239 Series E non-voting ordinary shares. The shares were consideration for the acquisition of KaylaRe Holdings Ltd, as described in Note 2 - "Acquisitions". Issue of Series D Preferred Shares On June 28, 2018, the Company raised $400.0 million through the public offering of 16,000 shares of its 7.00% non-cumulative fixed-to-floating rate Series D perpetual preferred shares ("Series D Preferred Shares") (equivalent to 16,000,000 depositary shares, each of which represents a 1/1,000th interest in a Series D Preferred Share), $1.00 par value and $25,000 liquidation preference (the "Liquidation Preference") per share (equivalent to $25.00 per Depositary Share). After underwriting discounts and other expenses, the Company received net proceeds of $389.2 million which was used to repay a portion of amounts outstanding under the EGL Revolving Credit Facility and repaid in full the EGL Term Loan Facility. The Series D Preferred Shares are not redeemable prior to September 1, 2028, except in specified circumstances relating to certain tax, corporate, capital or rating agency events as described in the prospectus supplement relating to the offering. On and after September 1, 2028, the Series D Preferred Shares, represented by the depositary shares, will be redeemable at the Company’s option, in whole or from time to time in part, at a redemption price equal to $25,000 per Series D Preferred Share (equivalent to $25.00 per depositary share), plus any declared and unpaid dividends. Holders of Series D Preferred Shares will be entitled to receive, only when, as and if declared, non-cumulative cash dividends, paid quarterly in arrears on the 1st day of March, June, September and December of each year, commencing on September 1, 2018, in an amount per share equal to 7.00% of the Liquidation Preference per annum (equivalent to $1,750.00 per Series D Preferred Share and $1.75 per depositary share per annum) up to but excluding September 1, 2028. Commencing on September 1, 2028, which is the commencement date of the floating rate period, quarterly dividends on the Series D Preferred Shares will be payable, on a non-cumulative basis, when, as and if declared, at a floating rate equal to three-month LIBOR plus 4.015% of the Liquidation Preference per annum. Dividends that are not declared will not accumulate and will not be payable. On July 31, 2018, our Board of Directors declared a cash dividend of $320.83 per Series D Preferred share (equivalent to $0.32083 per depositary share), paid on September 1, 2018 to shareholders of record on August 15, 2018. On November 6, 2018 our Board of Directors declared a cash dividend of $437.50 per Series D Preferred share (equivalent to $0.43750 per depositary share), which is payable on December 1, 2018 to shareholders of record on November 15, 2018. Refer to Note 17 - "Share Capital" of the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017 for additional information on our share capital. |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | 17. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted net earnings per ordinary share for the three and nine months ended September 30, 2018 and 2017:
(1) During a period of loss, the basic weighted average ordinary shares outstanding is used in the denominator of the diluted loss per ordinary share computation as the effect of including potentially dilutive securities would be anti-dilutive. |
Share-Based Compensation and Pensions |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION AND PENSIONS | 18. 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 - "Share-Based Compensation and Pensions" to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017. The table below provides the expenses related to the share-based compensation plans, employee share purchase plan, and pension plans for the three and nine months ended September 30, 2018 and 2017:
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Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
TAXATION | 19. 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 The effective tax rates on income for the three and nine months ended September 30, 2018 were (3.5)% and (7.8)%, respectively, as compared to 6.5% and 1.6%, respectively for the comparative periods in 2017. 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 Asset 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 than likely than not" standard in determining the amount of the valuation allowance. During the three and nine months ended September 30, 2018, 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 September 30, 2018 and December 31, 2017. 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 |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS | 20. RELATED PARTY TRANSACTIONS Stone Point Capital LLC Through several private transactions occurring from May 2012 to July 2012 and an additional private transaction that closed in May 2018, investment funds managed by Stone Point have acquired an aggregate of 1,635,986 of our Voting Ordinary Shares (which now constitutes approximately 9.1% 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 September 6, 2018 and April 1, 2019, respectively, and at any time following September 6, 2020 and April 1, 2021, 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 September 6, 2020 and April 1, 2021, respectively. 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 September 30, 2018 and December 31, 2017, the RNCI on our balance sheet relating to these Trident co-investment transactions was as follows:
As at September 30, 2018, we had the following relationships with Stone Point and its affiliates:
The following table presents the amounts included in our consolidated balance sheet related to our related party transactions with Stone Point and its affiliated entities:
The following table presents the amounts included in net earnings related to our related party transactions with Stone Point and its affiliated entities:
CPPIB Canada Pension Plan Investment Board ("CPPIB") owns approximately 8.4% of our voting ordinary shares and additional non-voting shares that, together with its voting ordinary shares held indirectly, represented an economic interest of approximately 17.9% as of September 30, 2018. Poul Winslow, of CPPIB, was appointed to our Board on September 29, 2015 in connection with CPPIB's shareholder rights agreement with us. Approximately 4.1% of our voting ordinary shares are held indirectly by CPPIB through CPPIB Epsilon Ontario Limited Partnership ("CPPIB LP"). CPPIB is the sole limited partner of CPPIB LP. CPPIB Epsilon Ontario Trust ("CPPIB Trust") is the general partner of CPPIB LP, and Mr. Winslow is a trustee of CPPIB Trust. By virtue of his role as a trustee of CPPIB Trust, in its capacity as general partner of CPPIB LP, Mr. Winslow has shared voting and shared dispositive power over the shares, but has no pecuniary interest in the shares. We also have a pre-existing reinsurance balances recoverable based on normal commercial terms from Continental Assurance Company, a company acquired by Wilton Re Ltd. ("Wilton Re"). CPPIB, together with management of Wilton Re, owns 100% of the common stock of Wilton Re. The reinsurance balances recoverable on our consolidated balance sheet as at September 30, 2018 and December 31, 2017 was as follows:
Hillhouse Gaoling Fund, L.P., YHG Investment, L.P. and Hillhouse Fund III L.P., investment funds managed by Hillhouse Capital, collectively own approximately 9.7% of Enstar’s voting ordinary shares. These funds also own non-voting ordinary shares and warrants to purchase additional non-voting ordinary shares, which together with their voting ordinary shares, represent an approximate 17.1% economic interest in Enstar. In February 2017, Jie Liu, a Managing Director of Hillhouse Capital, was appointed to our Board. In connection with Hillhouse Capital's investment in KaylaRe, Mr. Liu also served as a director of KaylaRe until resigning from that board in connection with the transaction described above. As at December 31, 2017, KaylaRe had investments in a fund managed by Hillhouse. On May 14, 2018, KaylaRe was acquired (refer to Note 2 - "Acquisitions" for further details), at which point KaylaRe was consolidated and KaylaRe's investment in Hillhouse InRe Fund, L.P. was recorded within other investments on our consolidated balance sheet. As at September 30, 2018, we had investments in each of Gaoling Fund, L.P., China Value Fund, L.P. and Hillhouse InRe Fund, L.P., which are funds managed by Hillhouse, with respect to which we recognized unrealized losses. Our consolidated balance sheet as at September 30, 2018 and December 31, 2017 included the following balances related to transactions between us and Hillhouse and its affiliated entities:
The increase in the investment in funds managed by Hillhouse was primarily due to consolidation of the Hillhouse InRe Fund, L.P. which was previously held by KaylaRe, our equity method investee, and additional subscriptions of $445.5 million. We incurred fees of approximately $8.5 million for the nine months ended September 30, 2018 to Hillhouse and its affiliated entities in relation to the management of the funds described above. Citco In June 2018, our subsidiary made a $50.0 million indirect investment in the shares of Citco III Limited ("Citco"), a fund administrator with global operations. Pursuant to an investment agreement and in consideration for participation therein, a related party of Hillhouse Capital provides investment support to our subsidiary. In a private transaction that preceded our co-investment opportunity, certain Citco shareholders, including Trident, agreed to sell all or a portion of their interests in Citco. As of September 30, 2018, Trident owned an approximate 3.4% interest in Citco. Mr. Carey currently serves as an observer to the board of directors of Citco in connection with Trident's investment therein.
Monument Monument was established in October 2016 and Enstar has invested a total of $26.6 million in the common and preferred shares of Monument. We have approximately a 26.6% interest in Monument. In connection with our investment in Monument, we entered into a Shareholders Agreement with the other shareholders. We recorded the investment in Monument using the equity method basis of accounting, as we concluded that we are not required to consolidate based on the guidance in ASC 810 - Consolidation. On August 29, 2017, we sold our wholly-owned subsidiary Laguna to a subsidiary of Monument, for a total consideration of €25.6 million (approximately $30.8 million). The total loss recorded on the sale of Laguna, for the year ended December 31, 2017 was $16.3 million, which included a cumulative currency translation adjustment balance of $6.3 million, which upon completion of the sale during the third quarter of 2017 was reclassified from accumulated other comprehensive income and included in earnings as a component of the loss on sale of Laguna. On October 10, 2018, we entered into a Business Transfer Agreement between our wholly-owned subsidiary Alpha Insurance SA and a subsidiary of Monument. This agreement will transfer our remaining life assurance policies to Monument, via a Portfolio Transfer, subject to regulatory approval. The transaction is expected to close in the first half of 2019. Our investment in the common and preferred shares of Monument, carried in other assets on our consolidated balance sheet, as at September 30, 2018 and December 31, 2017 was as follows:
Clear Spring (formerly SeaBright) Effective January 1, 2017, we sold SeaBright Insurance Company (“SeaBright Insurance”) and its licenses to Delaware Life Insurance Company ("Delaware Life"), a subsidiary of Guggenheim Partners, LLC. Following the sale, SeaBright Insurance was renamed Clear Spring Property and Casualty Company (“Clear Spring”). Clear Spring was subsequently capitalized with $56.0 million of equity, with Enstar retaining a 20% indirect equity interest in Clear Spring. We have recorded the investment in Clear Spring 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 of Clear Spring, carried in other assets on our consolidated balance sheet, as at September 30, 2018 and December 31, 2017 was as follows:
Effective January 1, 2017, StarStone National Insurance Company (“StarStone National”) entered into a quota share treaty with Clear Spring pursuant to which Clear Spring reinsures 33.3% of core workers compensation business written by StarStone National. Effective January 1, 2017, Cavello Bay Reinsurance Limited ("Cavello Bay") entered into a quota share treaty with Clear Spring pursuant to which Cavello Bay reinsures 25% of all workers compensation business written by Clear Spring. Our consolidated balance sheet as at September 30, 2018 and December 31, 2017 included the following balances related to transactions between us and Clear Spring:
Our consolidated statement of earnings for the three and nine months ended September 30, 2018 and September 30, 2017 included the following amounts related to transactions between us and Clear Spring:
AmTrust Effective July 23, 2018 the Company entered into a Subscription Agreement with Evergreen Parent L.P. ("Evergreen"), K-Z Evergreen, LLC and Trident Pine Acquisition LP ("Trident Pine"). Evergreen is an entity formed by private equity funds managed by Stone Point and the Karfunkel-Zyskind family that intends to acquire approximately 45% of the issued and outstanding shares of common stock of AmTrust Financial Services, Inc. ("AmTrust") that the Karfunkel-Zyskind Family and certain of its affiliates and related parties do not presently own or control. The transaction was approved by AmTrust’s stockholders on June 21, 2018, and is expected to close during the fourth quarter of 2018, subject to the satisfaction of customary closing conditions, including approval by regulatory authorities. Pursuant to the Subscription Agreement, and subject to the conditions therein, we agreed to purchase equity in Evergreen in the aggregate amount of $200.0 million. The equity interest will be in the form of three separate classes of equity securities issued at the same price and in the same proportion as the equity interest to be purchased by Trident Pine. Following the closing of the transaction, Enstar is expected to own approximately 7.4% of the capital units of Evergreen. Among other conditions, the closing under the Subscription Agreement is contingent on the closing of Evergreen’s transaction with respect to AmTrust. KaylaRe On May 14, 2018, the Company completed the previously announced transaction to acquire all of the outstanding shares and warrants of KaylaRe, following the receipt of all required regulatory approvals. In consideration for the acquired shares and warrants of KaylaRe, the Company issued an aggregate of 2,007,017 ordinary shares, comprising 1,501,778 voting ordinary shares and 505,239 Series E non-voting ordinary shares to the shareholders of KaylaRe as follows: (i) 1,204,353 voting ordinary shares and 505,239 Series E Shares to a fund managed by Hillhouse Capital; (ii) 285,986 voting ordinary shares to Trident; and (iii) 11,439 voting ordinary shares to the minority shareholder. In addition, the Shareholders Agreement between Enstar and the other KaylaRe shareholders was effectively terminated. Effective May 14, 2018 we consolidated KaylaRe into our consolidated financial statements and any balances between KaylaRe and Enstar are now eliminated upon consolidation. Refer to Note 2 - "Acquisitions" for additional information. On December 15, 2016, KaylaRe completed an initial capital raise of $620.0 million. We originally owned approximately 48.2% of KaylaRe's common shares and recorded our investment in KaylaRe using the equity method basis of accounting, pursuant to the conclusion that we were 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 $320.1 million and $309.8 million in other assets on our consolidated balance sheet as at May 14, 2018 and December 31, 2017, respectively. Our subsidiary, Enstar Limited, acts as insurance and reinsurance manager to KaylaRe's subsidiary, KaylaRe Ltd., for which it received fee income. Affiliates of Enstar have also entered into various reinsurance agreements with KaylaRe Ltd. We 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. As of January 1, 2018, the reinsurance of StarStone's U.S. entities was non-renewed. In addition, Fitzwilliam Insurance Limited ("Fitzwilliam"), one of our non-life run-off subsidiaries, ceded $177.2 million of loss reserves to KaylaRe Ltd. in 2016. Under the terms of this reinsurance agreement, Fitzwilliam is entitled to receive a profit commission calculated with reference to reserve savings made during the currency of this agreement. Our Non-life Run-off subsidiaries did not cede any additional business to KaylaRe Ltd. during three and nine months ended September 30, 2018 and 2017. Our consolidated balance sheet as at December 31, 2017 included the following balances related to transactions between us and KaylaRe and KaylaRe Ltd.:
Our consolidated statement of earnings for the nine months ended September 30, 2018 (prior to consolidation) and September 30, 2017 included the following amounts related to transactions between us and KaylaRe and KaylaRe Ltd.:
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Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 21. 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 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 9 - "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 $1,037.6 million 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 at September 30, 2018. Our credit exposure to the U.S. government was $787.9 million as at September 30, 2018. 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 September 30, 2018, we had total unfunded investment commitments to private equity funds of $200.0 million and commitments of $200.0 million related to our investment in AmTrust as discussed in Note 20 - "Related Party Transactions". Guarantees As at September 30, 2018 and December 31, 2017, parental guarantees and capital instruments supporting subsidiaries' policyholder obligations were $620.0 million and $630.7 million, respectively. On February 8, 2018, we amended and restated the FAL Facility to issue up to $325.0 million of letters of credit, with a provision to increase the facility up to $400.0 million. The FAL Facility is available to satisfy our Funds at Lloyd’s requirements and expires in 2022. As at September 30, 2018, there were $295.0 million in letters of credit issued under this facility which have a parental guarantee. 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, 2017. Dana continues to process asbestos personal injury claims in the normal course of business and is separately managed. Other liabilities included $187.9 million and $205.7 million for indemnity and defense costs for pending and future claims at September 30, 2018 and December 31, 2017, respectively, determined using standard actuarial techniques for asbestos-related exposures. Other liabilities also included $2.1 million and $2.2 million for environmental liabilities associated with Dana properties at September 30, 2018 and December 31, 2017, respectively. Other assets included $114.8 million and $122.3 million at September 30, 2018 and December 31, 2017, 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 20 - "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 | 22. SEGMENT INFORMATION In the second half of 2017, following the completion of the sale of our Laguna and Pavonia businesses, which significantly reduced the size of our life and annuities business, we undertook a review of our reportable segments. Following this review we determined that we have three reportable segments of business that are each managed, operated and reported on separately: (i) Non-life Run-off; (ii) Atrium; and (iii) StarStone. Our other activities, which do not qualify as a reportable segment, include our corporate expenses, debt servicing costs, holding company income and expenses, foreign exchange, our remaining life business and other miscellaneous items. The change in reportable segments had no impact on our previously reported historical consolidated financial positions, results of operations or cash flows. These segments are described in Note 1 - "Description of Business" and Note 24 - "Segment Information" to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017. The following tables set forth selected and unaudited condensed consolidated statement of earnings results by segment for the three and nine months ended September 30, 2018 and 2017:
(1)Refer to "Underwriting Ratios" for a description of how these ratios are calculated.
(1)Refer to "Underwriting Ratios" for a description of how these ratios are calculated.
(1)Refer to "Underwriting Ratios" for a description of how these ratios are calculated.
(1)Refer to "Underwriting Ratios" for a description of how these ratios are calculated. 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 September 30, 2018 and December 31, 2017 by segment were as follows:
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Significant Accounting Policies (Policies) |
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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, 2017. All significant inter-company transactions and balances have been eliminated. 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 financial statements in accordance with U.S. GAAP 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. Our 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. Accounting policies that we believe are most dependent on assumptions and estimates are considered to be our critical accounting policies and are related to the determination of:
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New Accounting Standards Adopted and Recently Issued Accounting Pronouncements Not Yet Adopted | New Accounting Standards Adopted in 2018 Accounting Standards Update ("ASU") 2017-09, Stock Compensation - Scope of Modification Accounting In May 2017, the Financial Accounting Standards Board ("FASB") issued ASU 2017-09, which amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under Accounting Standards Codification ("ASC") 718 - Compensation - Stock Compensation. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The adoption of this guidance did not have any impact on our consolidated financial statements and disclosures. 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 ASC 715 - Compensation - Retirement Benefits, 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 prior practice, under which entities capitalize the aggregate net benefit cost when applicable. The adoption of this guidance did not have any impact on our consolidated financial statements and disclosures. 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, which clarifies 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 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 adoption of this guidance did not have any impact on our consolidated financial statements and disclosures. ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory In October 2016, the FASB issued ASU 2016-16, which requires immediate recognition of the tax consequences of many intercompany asset transfers other than inventory. The adoption of this guidance did not have a material impact on our consolidated financial statements and disclosures. ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments In August 2016, the FASB issued ASU 2016-15, which amends the guidance on the classification of certain cash receipts and payments in the statement of cash flows. The adoption of this guidance did not have any impact on our consolidated financial statements and disclosures. ASU 2016-01, Recognition and Measurement of Financial Instruments In January 2016, the FASB issued ASU 2016-01, which amends the guidance on the classification and measurement of financial instruments. Although the ASU retains many of the current requirements, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities, and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. In February 2018, the FASB also issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments - Recognition and Measurement of Financial Assets and Financial Liabilities, which clarifies that entities should use a prospective transition approach only for equity securities they elect to measure using the new measurement alternative. The amendments also clarify that an entity that voluntarily discontinues using the measurement alternative for an equity security without a readily determinable fair value must measure that security and all identical or similar investments of the same issuer at fair value. Under this guidance, this election is irrevocable and will apply to all future purchases of identical or similar investments of the same issuer. The amendments also clarify other aspects of ASU 2016-01 on how to apply the measurement alternative and the presentation requirements for financial liabilities measured under the fair value option. The adoption of this guidance is contingent on the adoption of ASU 2016-01. We adopted ASU 2016-01 on January 1, 2018 using the modified retrospective approach and recorded a cumulative-effect adjustment of $1.6 million to reduce opening retained earnings for certain of our other investments that were previously classified as available-for-sale securities and for which changes in fair value were previously included in accumulated other comprehensive income. We also adopted ASU 2018-03 following our adoption of ASU 2016-01 and this adoption did not have any impact on our consolidated financial statements and related disclosures. ASUs 2014-09, 2016-08, 2016-10, 2016-12, Revenue from Contracts with Customers In May 2014, the FASB issued ASU 2014-09, which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The ASU applies to all contracts with customers except those that are within the scope of other FASB topics, primarily our premium revenues which are covered by ASC 944 - Financial Services - Insurance, and revenues from our investment portfolios which are covered by other FASB topics. While contracts within the scope of ASC 944 are excluded from the scope of the ASU, certain insurance-related contracts are within the scope of the ASU, for example contracts under which service providers charge their customers fixed fees in exchange for an agreement to provide services for an uncertain future event. Certain of the ASU’s provisions also apply to transfers of non-financial assets and include guidance on recognition and measurement. In March 2016, the FASB also issued ASU 2016-08, Revenue from Contracts with Customers - Principal versus Agent Considerations, which clarifies the implementation guidance for principal versus agent considerations in ASU 2014-09. In April 2016, the FASB then issued ASU 2016-10, Revenue from Contracts with Customers - Identifying Performance Obligations and Licensing, which amends the guidance in ASU 2014-09 related to identifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB further issued ASU 2016-12, Revenue from Contracts with Customers - Narrow-Scope Improvements and Practical Expedients, which clarifies the following aspects in ASU 2014-09 - (1a) collectability, (2) presentation of sales taxes and other similar taxes collected from customers, (3) non-cash considerations, (4) contract modifications at transition, (5) completed contracts at transition, and (6) technical correction. We adopted ASU 2014-09 and the related amendments, as codified in ASC 606 - Revenue from Contracts with Customers, on January 1, 2018 using the modified retrospective method with prior periods not being restated. Premium revenues and those related to our investment portfolios, which collectively comprise most of our total revenues, are within the scope of other FASB topics and therefore are excluded from the scope of the revenue recognition standard. For other revenue types, which are within the scope of the new guidance, we evaluated individual contracts against the provisions of the new guidance to identify any contracts where the timing and measurement of those revenues may differ based upon the new guidance. The adoption did not have a material impact on our consolidated financial statements and related disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted Note 2 - "Significant Accounting Policies" to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017 describes accounting pronouncements that were not adopted as of December 31, 2017. Those pronouncements are not yet adopted unless discussed above in "New Accounting Standards Adopted in 2018." In addition, the following relevant pronouncements were issued during the nine months ended September 30, 2018 or thereafter and are yet to be adopted. ASU 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities In October 2018, the FASB issued ASU 2018-17, which clarifies that when determining whether a decision-making fee is a variable interest, a reporting entity should consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety, as currently required in GAAP. This amendment will, (1) likely result in more decision makers not having a variable interest through their decision-making arrangements, and (2) create alignment between determining whether a decision-making fee is a variable interest and determining whether a reporting entity within a related party group is the primary beneficiary of a variable interest entity ("VIE"). The ASU is effective for interim and annual reporting periods beginning after December 15, 2019, although early adoption is permitted. All entities are required to apply this guidance retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. While some of our subsidiaries are involved in certain decision-making arrangements for which they earn fees that are considered variable interests, they do not meet the primary beneficiary definition under the VIE guidance with respect to these arrangements. Therefore, we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements and the related disclosures. ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurements In August 2018, the FASB issued ASU 2018-13, which amended the fair value measurement guidance in ASC 820 - Fair Value Measurement, by removing and modifying certain existing disclosure requirements, while also adding new disclosure requirements. The ASU is effective for interim and annual reporting periods beginning after December 15, 2019, although early adoption is permitted, with the amendments being applied either prospectively or retrospectively, as specified in the ASU. In addition, an entity may elect to early adopt the removal or modification of disclosures immediately and delay the adoption of the new disclosure requirements until the effective date. We are currently assessing the impact of adopting this guidance however we do not expect the new or modified disclosures to have a material impact on the disclosures in our consolidated financial statements. ASU 2018-12, Targeted Improvements to the Accounting for Certain Long-Duration Insurance Contracts In August 2018, the FASB issued ASU 2018-12, which amends the accounting and disclosure model for certain long-duration insurance contracts under U.S GAAP. The goal of the ASU's amendments is to improve the following aspects of financial reporting related to long-duration insurance contracts: (1) measurement of the liability for future policy benefits related to non-participating traditional and limited-payment contracts, (2) measurement and presentation of market risk benefits, (3) amortization of deferred acquisition costs, and (4) presentation and disclosures. The ASU is effective for interim and annual reporting periods beginning after December 15, 2020, although early adoption is permitted. Once the transfer of our remaining life insurance policies from our subsidiary Alpha Insurance SA to Monument Insurance Group Limited is completed, as discussed in Note 11 - "Policy Benefits for Life Contracts", we will not have any residual exposures relating to long duration insurance contracts. Therefore, the adoption of this guidance is not expected to have a material impact on our consolidated financial statements and related disclosures. ASU 2018-11, Targeted Improvements to ASC 842 - Leases and ASU 2018-10, Codification Improvements to ASC 842 - Leases In July 2018, the FASB issued ASU 2018-11, which adds a transition option for all entities and a practical expedient only for lessors to the ASU 2016-02 - Leases guidance initially issued by the FASB in February 2016 and codified in ASC 842. The transition option which we will elect, allows entities to not apply the new leases standard in the comparative periods they present in their financial statements in the year of adoption. Under the transition option, entities can opt to continue to apply the legacy guidance in ASC 840 - Leases, including its disclosure requirements, in the comparative periods presented in the year they adopt the new leases standard. This means that entities that elect this option will only provide annual disclosures for the comparative periods because ASC 840 does not require interim disclosures. Entities that elect this transition option will still be required to adopt the new leases standard using the modified retrospective transition method required by the standard, but they will recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. The practical expedient provides lessors with an option to not separate the non-lease components from the associated lease components when certain criteria are met and requires them to account for the combined component in accordance with the revenue recognition standard in ASC 606 if the associated non-lease components are the predominant components. In July 2018, the FASB also issued ASU 2018-10, which clarifies how to apply certain aspects of ASC 842. The amendments in the ASU address a number of issues in the new leases guidance, including (a) the rate implicit in the lease, (b) impairment of the net investment in the lease, (c) lessee reassessment of lease classification, (d) lessor reassessment of lease term and purchase options, (e) variable payments that depend on an index or rate, and (f) certain transition adjustments. The amendments arising from both ASU 2018-11 and ASU 2018-10 have the same effective date and transition requirements as ASC 842, which we expect to adopt on January 1, 2019, when it becomes effective. Being a financial services company, the majority of our operating leases cover office space and facilities required to conduct our operations. Therefore on adoption of the leases guidance, we do not expect the right-of-use asset and the corresponding lease liability to be recorded relating to these operating lease arrangements, to be material as a proportion of our total assets and liabilities. In addition, the leases guidance is not expected to have a significant impact on the net lease expense that we will recognize in our consolidated statements of earnings as a result of our operating lease arrangements. ASU 2018-09, Codification Improvements In July 2018, the FASB issued ASU 2018-09, which affects a wide variety of Topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. The amendments in the ASU represent changes that clarify, correct errors in, or make minor improvements to the Codification. Ultimately, the amendments make the Codification easier to understand and apply by eliminating inconsistencies and providing clarifications. Some of the amendments in this ASU do not require transition guidance and are effective upon issuance of the ASU, while many of the amendments have transition guidance with effective dates for annual periods beginning after December 15, 2018. The adoption of the amendments in this ASU are not expected to have a material impact on our consolidated financial statements and related disclosures. |
Acquisitions (Tables) |
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Schedule of Acquisitions |
Purchase Price The components of the consideration paid to acquire all of the outstanding shares and warrants of KaylaRe were as follows:
As a result of effectively settling all the contractual preexisting relationships with KaylaRe, the Company recognized a loss of $15.6 million which was recorded in other income (loss) in the three months ended June 30, 2018, as summarized below:
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Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the fair values of the assets acquired and liabilities assumed (excluding preexisting relationships) in the KaylaRe transaction at the acquisition date, which have all been allocated to the Non-life Run-off segment.
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Results of Operations of Acquiree | The table below summarizes the results of the KaylaRe operations which are included in our condensed consolidated statement of earnings from the acquisition date to September 30, 2018:
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Divestitures, Held-For-Sale Businesses and Discontinued Operations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Information of Held-For-Sale Business | The following table summarizes the components of assets and liabilities held-for-sale on our consolidated balance sheet as at December 31, 2017:
The following table summarizes the components of net earnings from discontinued operations on the unaudited condensed consolidated statements of earnings for the three and nine months ended September 30, 2017:
The following table presents the cash flows of Pavonia for the nine months ended September 30, 2017:
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Investments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 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 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 investments classified as available-for-sale that are 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 (including both trading and available-for-sale investments) and short-term investments as at September 30, 2018:
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Other Investments | The following table summarizes our other investments carried at fair value:
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Major Categories of Net Investment Income | Major categories of net investment income for the three and nine months ended September 30, 2018 and 2017 are summarized as follows:
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Realized Gain (Loss) on Investments | Components of net realized and unrealized gains and losses for the three and nine months ended September 30, 2018 and 2017 were as follows:
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Unrealized Gain (Loss) on Investments | Components of net realized and unrealized gains and losses for the three and nine months ended September 30, 2018 and 2017 were as follows:
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Schedule of Restricted Assets | The carrying value of our restricted assets, including restricted cash of $474.6 million and $257.7 million, as at September 30, 2018 and December 31, 2017, 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. On February 8, 2018, we amended and restated our unsecured letter of credit agreement for Funds at Lloyd's purposes ("FAL Facility") to issue up to $325.0 million letters of credit, with a provision to increase the facility up to $400.0 million, subject to lenders approval. The FAL Facility is available to satisfy our Funds at Lloyd's requirements and expires in 2022. As at September 30, 2018, our combined Funds at Lloyd's were comprised of cash and investments of $422.7 million and unsecured letters of credit of $295.0 million. |
Funds Held - Directly Managed (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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 September 30, 2018 and December 31, 2017:
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Contractual Maturities of Fixed Maturity Investments Underlying Funds Held - Directly Managed | The contractual maturities of the 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 | Credit Ratings The following table sets forth the credit ratings of the fixed maturity investments underlying the funds held - directly managed account as at September 30, 2018:
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Net Investment Income | Net Investment Income Major categories of net investment income underlying the funds held - directly managed for the three and nine months ended September 30, 2018 and 2017 are summarized as follows:
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Net Realized and Unrealized Investment (Losses) Gains | Net realized gains (losses) and change in fair value for the three and nine months ended September 30, 2018 and 2017 are summarized as follows:
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Categorized Investments Recorded at Fair Value among Levels |
We have categorized our investments that are recorded at fair value on a recurring basis among levels based on the observability of inputs, or at fair value using NAV per share (or its equivalent) as follows:
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Reconciliation for Assets Measured at Fair Value on a Recurring Basis | The following tables present 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 and nine months ended September 30, 2018 and 2017:
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Reconciliation for Liabilities Measured at Fair Value on a Recurring Basis | The following tables present 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 and nine months ended September 30, 2018 and 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 September 30, 2018 and December 31, 2017:
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Derivative and Hedging Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Value and Unrealized Gains (Losses) on Derivative Instruments | The following table presents the amounts of the net gains and losses deferred in the CTA account in AOCI relating to these qualifying Euro-loan non-derivative hedging instruments for the three and nine months ended September 30, 2018 and 2017.
The Canadian Dollar ("CAD") foreign currency contract that we had in place to hedge the net investment in our CAD denominated operations was discontinued effective December 31, 2017 following the disposal of those operations. The following table presents the amounts of the net gains and losses deferred in the currency translation adjustment ("CTA") account, which is a component of accumulated other comprehensive income (loss) ("AOCI"), in shareholders' equity, relating to our foreign currency forward exchange rate contracts for the three and nine months ended September 30, 2018 and 2017.
The following table presents the gross notional amounts and the estimated fair values recorded within other assets and liabilities related to our non-qualifying foreign currency forward exchange rate hedging relationships as at September 30, 2018 and December 31, 2017.
The following table presents the amounts of the net gains (losses) included in earnings related to our non-qualifying foreign currency forward exchange rate contracts during the three and nine months ended September 30, 2018 and 2017.
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Reinsurance Balances Recoverable (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Reinsurance Reserves Recoverable and Uncollectible Reinsurance Balances Recoverable | The following tables provide the total reinsurance balances recoverable as at September 30, 2018 and December 31, 2017:
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 September 30, 2018 and December 31, 2017. 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 and StarStone segments and Other activities for the three and nine months ended September 30, 2018 and 2017:
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Reinsurance Balances Recoverable by Reinsurer |
(1) For the three non-rated reinsurers at as September 30, 2018 and four non-rated reinsurers as at December 31, 2017, 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. (2) Hannover Ruck SE is rated AA- by Standard & Poor’s and A+ by A.M. Best. (3) Lloyd's Syndicates are rated A+ by Standard & Poor's and A by A.M. Best. |
Losses and Loss Adjustment Expenses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Losses and Loss Adjustment Expense Liabilities, and Reconciliation of Beginning and Ending Balances | The following table summarizes the liability for losses and LAE by segment as at September 30, 2018 and December 31, 2017:
The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three and nine months ended September 30, 2018 and 2017:
The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three and nine months ended September 30, 2018 and 2017 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 and nine months ended September 30, 2018 and 2017 for the Atrium segment:
The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the three and nine months ended September 30, 2018 and 2017 for our StarStone segment:
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Schedule of Incurred Losses | The tables below provide the net incurred losses and LAE by segment for the three and nine months ended September 30, 2018 and 2017:
Net incurred losses and LAE in the Non-life Run-off segment for the three months ended September 30, 2018 and 2017 were as follows:
Net incurred losses and LAE in the Non-life Run-off segment for the nine months ended September 30, 2018 and 2017 were as follows:
Net incurred losses and LAE in the Atrium segment for the three and nine months ended September 30, 2018 and 2017 were as follows:
Net incurred losses and LAE in the StarStone segment for the three and nine months ended September 30, 2018 and 2017 were as follows:
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Premiums Written and Earned (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Premiums Written and Earned | The following tables provide the total reinsurance balances recoverable as at September 30, 2018 and December 31, 2017:
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 September 30, 2018 and December 31, 2017. 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 and StarStone segments and Other activities for the three and nine months ended September 30, 2018 and 2017:
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Goodwill and Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill, Intangible Assets, Intangible Assets Arising from Insurance Contracts Acquired in Business Combination, and Deferred Charges Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill and Intangible Assets | The following table presents a reconciliation of the beginning and ending goodwill, intangible assets and the deferred charges during the nine months ended September 30, 2018:
The gross carrying value, accumulated amortization and net carrying value of intangible assets by type and the deferred charges as at September 30, 2018 and December 31, 2017 were as follows:
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Intangible Assets Amortization | The following table provides a summary of the amortization recorded on the intangible assets for the three and nine months ended September 30, 2018 and 2017:
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Debt Obligations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts of Loans Payable Outstanding, and Accrued Interest | Debt obligations as at September 30, 2018 and December 31, 2017 were as follows:
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Interest Expense | The table below provides a summary of the total interest expense for the three and nine months ended September 30, 2018 and 2017:
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Noncontrolling Interests (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 at September 30, 2018 and December 31, 2017:
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Earnings Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comparison of Basic and Diluted Earnings per Share | The following table sets forth the computation of basic and diluted net earnings per ordinary share for the three and nine months ended September 30, 2018 and 2017:
(1) During a period of loss, the basic weighted average ordinary shares outstanding is used in the denominator of the diluted loss per ordinary share computation as the effect of including potentially dilutive securities would be anti-dilutive. |
Share-Based Compensation and Pensions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compensation Cost for Share-based Compensation Plans | The table below provides the expenses related to the share-based compensation plans, employee share purchase plan, and pension plans for the three and nine months ended September 30, 2018 and 2017:
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Related Party Transactions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | As at September 30, 2018 and December 31, 2017, the RNCI on our balance sheet relating to these Trident co-investment transactions was as follows:
The following table presents the amounts included in our consolidated balance sheet related to our related party transactions with Stone Point and its affiliated entities:
The following table presents the amounts included in net earnings related to our related party transactions with Stone Point and its affiliated entities:
The reinsurance balances recoverable on our consolidated balance sheet as at September 30, 2018 and December 31, 2017 was as follows:
Our consolidated balance sheet as at September 30, 2018 and December 31, 2017 included the following balances related to transactions between us and Hillhouse and its affiliated entities:
Our investment in the common and preferred shares of Monument, carried in other assets on our consolidated balance sheet, as at September 30, 2018 and December 31, 2017 was as follows:
Our investment in the common shares of Clear Spring, carried in other assets on our consolidated balance sheet, as at September 30, 2018 and December 31, 2017 was as follows:
Our consolidated balance sheet as at September 30, 2018 and December 31, 2017 included the following balances related to transactions between us and Clear Spring:
Our consolidated statement of earnings for the three and nine months ended September 30, 2018 and September 30, 2017 included the following amounts related to transactions between us and Clear Spring:
Our consolidated balance sheet as at December 31, 2017 included the following balances related to transactions between us and KaylaRe and KaylaRe Ltd.:
Our consolidated statement of earnings for the nine months ended September 30, 2018 (prior to consolidation) and September 30, 2017 included the following amounts related to transactions between us and KaylaRe and KaylaRe Ltd.:
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Operations by Segment | The following tables set forth selected and unaudited condensed consolidated statement of earnings results by segment for the three and nine months ended September 30, 2018 and 2017:
(1)Refer to "Underwriting Ratios" for a description of how these ratios are calculated.
(1)Refer to "Underwriting Ratios" for a description of how these ratios are calculated.
(1)Refer to "Underwriting Ratios" for a description of how these ratios are calculated.
(1)Refer to "Underwriting Ratios" for a description of how these ratios are calculated. |
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Summary of Company's 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 September 30, 2018 and December 31, 2017 by segment were as follows:
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Significant Accounting Policies (Details) - Retained Earnings - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative effect of change in accounting principle | $ (1,573) | $ 4,882 | |
Accounting Standards Update 2016-01 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative effect of change in accounting principle | $ (1,600) |
Acquisitions - Fair Values of Assets Acquired and Liabilities Assumed (Detail) - Kayla Re $ in Thousands |
May 14, 2018
USD ($)
|
---|---|
ASSETS | |
Fixed maturities, trading, at fair value | $ 126,393 |
Other investments | 626,476 |
Total investments | 752,869 |
Cash and cash equivalents | 5,657 |
Premiums receivable | 10,965 |
Deferred acquisition costs | 275 |
Other assets | 614 |
TOTAL ASSETS | 770,380 |
LIABILITIES | |
Losses and LAE | 4,059 |
Unearned premium | 10,984 |
Insurance and reinsurance balances payable | 13 |
Other liabilities | 9,004 |
TOTAL LIABILITIES | 24,060 |
NET ASSETS ACQUIRED AT FAIR VALUE | $ 746,320 |
Acquisitions - Results of Operations of Acquiree (Details) - Kayla Re $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Business Acquisition [Line Items] | |
Premiums earned | $ 10,188 |
Incurred losses and LAE | (9,190) |
Acquisition costs | (332) |
Underwriting income | 666 |
Net investment income | 1,972 |
Net unrealized gains | (6,621) |
General and administrative expenses | (573) |
Earnings of acquiree since acquisition date | $ (4,556) |
Significant New Business - Additional Information (Detail) $ in Thousands, £ in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 01, 2018
USD ($)
|
Feb. 23, 2018
AUD ($)
|
Feb. 23, 2018
USD ($)
|
Feb. 16, 2018
AUD ($)
|
Feb. 16, 2018
USD ($)
|
Feb. 16, 2018
GBP (£)
|
Jan. 29, 2018
USD ($)
|
Jan. 29, 2018
GBP (£)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
|
Feb. 23, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Guarantor Obligations [Line Items] | |||||||||||||||||
Assumed business | $ 103,615 | $ 0 | $ 1,631,166 | $ 1,432,412 | |||||||||||||
Deferred charge | $ 87,019 | $ 85,164 | $ 87,019 | $ 85,164 | $ 71,393 | $ 80,192 | $ 88,475 | $ 94,551 | |||||||||
Coca-Cola | |||||||||||||||||
Guarantor Obligations [Line Items] | |||||||||||||||||
Assumed business | $ 120,800 | ||||||||||||||||
Reinsurance premium consideration | 103,600 | ||||||||||||||||
Deferred charge | $ 17,200 | ||||||||||||||||
Zurich | |||||||||||||||||
Guarantor Obligations [Line Items] | |||||||||||||||||
Assumed business | $ 359.4 | $ 280,800 | |||||||||||||||
Reinsurance premium consideration | 343.9 | $ 268,700 | |||||||||||||||
Fair value adjustment on gross reserves | $ 15.5 | $ 12,100 | |||||||||||||||
Neon | |||||||||||||||||
Guarantor Obligations [Line Items] | |||||||||||||||||
Assumed business | $ 546,300 | £ 403.9 | |||||||||||||||
Net insurance reserves assumed | 462,600 | 342.1 | |||||||||||||||
Reinsurance premium consideration | $ 445.1 | £ 329.1 | |||||||||||||||
Fair value adjustment on gross reserves | 20,600 | ||||||||||||||||
Fair value adjustment of net reserves | $ 17,500 | ||||||||||||||||
Novae | |||||||||||||||||
Guarantor Obligations [Line Items] | |||||||||||||||||
Assumed business | $ 1,163,200 | £ 860.1 | |||||||||||||||
Net insurance reserves assumed | 853,000 | 630.7 | |||||||||||||||
Reinsurance premium consideration | 803,500 | £ 594.1 | |||||||||||||||
Fair value adjustment on gross reserves | 67,500 | ||||||||||||||||
Fair value adjustment of net reserves | $ 49,500 |
Investments - Other Than Temporary Impairment (Details) - USD ($) |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
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 - Other Investments, at Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Other Investments [Line Items] | ||||
Amount of net investment income included in earnings attributable to investments in life settlements | $ 69,430 | $ 52,028 | $ 202,218 | $ 150,184 |
Life Settlements | ||||
Other Investments [Line Items] | ||||
Amount of net investment income included in earnings attributable to investments in life settlements | 6,500 | 10,600 | ||
Impairment charges recognized in the period | $ 6,600 | $ 7,500 |
Investments - Restricted Assets (Detail) |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2018
USD ($)
Segment
|
Feb. 08, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
|
|
Line of Credit Facility [Line Items] | ||||
Restricted cash and cash equivalents | $ 474,590,000 | $ 257,686,000 | $ 324,905,000 | |
Collateral in trust for third party agreements | 3,354,994,000 | 3,118,892,000 | ||
Assets on deposit with regulatory authorities | 563,139,000 | 599,829,000 | ||
Funds at Lloyd's | 422,657,000 | 234,833,000 | ||
Restricted assets, total | $ 4,475,076,000 | 4,105,021,000 | ||
Number of syndicates | Segment | 3 | |||
Cash and investments | $ 422,700,000 | |||
FAL Facility | Line of Credit | Letters of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | 295,000,000 | $ 325,000,000 | ||
Higher borrowing capacity option | $ 400,000,000 | |||
Asset Pledged as Collateral | ||||
Line of Credit Facility [Line Items] | ||||
Collateral for secured letter of credit facilities | $ 134,286,000 | $ 151,467,000 |
Funds Held - Directly Managed - Additional Information (Details) - Allianz - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Schedule of Funds Held, Directly Managed [Line Items] | ||
Funds held - directly managed, at cost, carrying value | $ 1,074.1 | $ 994.8 |
Funds held - directly managed, fair value of embedded derivative | (36.3) | 4.7 |
Funds held - directly managed | $ 1,037.8 | $ 999.5 |
Funds Held - Directly Managed - Net Investment Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Net Investment Income [Line Items] | ||||
Gross investment income | $ 71,857 | $ 54,649 | $ 210,060 | $ 158,458 |
Investment expenses | (2,427) | (2,621) | (7,842) | (8,274) |
Net investment income | 69,430 | 52,028 | 202,218 | 150,184 |
Funds held - directly managed | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 10,056 | 8,791 | 28,828 | 25,220 |
Investment expenses | (280) | (275) | (838) | (1,099) |
Net investment income | 9,776 | 8,516 | 27,990 | 24,121 |
Funds held - directly managed | Fixed maturity investments | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | 10,014 | 8,702 | 28,649 | 25,004 |
Funds held - directly managed | Short-term investments and cash and cash equivalents | ||||
Net Investment Income [Line Items] | ||||
Gross investment income | $ 42 | $ 89 | $ 179 | $ 216 |
Funds Held - Directly Managed - Net Realized and Unrealized Investment (Losses) Gains (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Gain (Loss) on Securities [Line Items] | ||||
Net realized and unrealized gains | $ (57,223) | $ 29,301 | $ (254,671) | $ 139,697 |
Funds held - directly managed | ||||
Gain (Loss) on Securities [Line Items] | ||||
Net realized gains (losses) on fixed maturity securities | (1,904) | 422 | (2,849) | (3,720) |
Change in fair value of embedded derivative | (182) | 3,967 | (41,107) | 28,807 |
Change in value of fair value option on funds held - directly managed | (223) | 267 | (4,323) | 1,587 |
Net realized and unrealized gains | $ (2,309) | $ 4,656 | $ (48,279) | $ 26,674 |
Fair Value Measurements - Insurance Contracts (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Reinsurance balances recoverable | ||||
Beginning fair value | $ 145,927 | $ 175,466 | $ 176,723 | $ 178,317 |
Assumed business | 18,180 | 18,277 | 64,129 | 46,575 |
Changes in fair value: | ||||
Ending fair value | 118,688 | 177,708 | 118,688 | 177,708 |
Losses and LAE liabilities | ||||
Liability for losses and LAE | ||||
Beginning fair value | 3,221,366 | 1,892,297 | 1,794,669 | 0 |
Assumed business | 0 | 0 | 1,890,061 | 1,966,843 |
Changes in nominal amounts: | ||||
Net incurred losses and LAE | (19,973) | (22,711) | (75,169) | (55,356) |
Paid losses | (149,132) | (36,466) | (453,180) | (136,519) |
Changes in fair value: | ||||
Discounted cash flows | (2,811) | (6,826) | (23,674) | 10,187 |
Risk margin | (7,762) | (3,845) | (26,508) | (12,897) |
Effect of exchange rate movements | (21,967) | 32,803 | (86,478) | 82,994 |
Ending fair value | 3,019,721 | 1,855,252 | 3,019,721 | 1,855,252 |
Reinsurance balances recoverable | ||||
Reinsurance balances recoverable | ||||
Beginning fair value | 837,373 | 554,759 | 542,224 | 0 |
Assumed business | 0 | 0 | 372,780 | 565,824 |
Changes in nominal amounts: | ||||
Net incurred losses and LAE | 1,085 | (3,181) | 3,469 | (5,276) |
Paid losses | (41,819) | (9,453) | (95,354) | (30,947) |
Changes in fair value: | ||||
Discounted cash flows | 483 | 730 | (13,399) | 9,143 |
Risk margin | (1,949) | (897) | (4,668) | (2,599) |
Effect of exchange rate movements | (2,620) | 3,790 | (12,499) | 9,603 |
Ending fair value | $ 792,553 | $ 545,748 | $ 792,553 | $ 545,748 |
Fair Value Measurements - Observable and Unobservable Inputs (Details) - Internal Model - Recurring |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Losses and LAE liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Weighted average cost of capital | 8.50% | 8.50% |
Duration | 8 years 19 days | 11 years 4 months 27 days |
Reinsurance balances recoverable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Risk cost of capital | 5.00% | 5.00% |
Duration | 9 years 11 days | 11 years 7 months 29 days |
Measurement Input, Entity Credit Risk | Losses and LAE liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Credit spread for non-performance risk | 0.20% | 0.20% |
Fair Value Measurements - Additional Information (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
Mar. 10, 2017 |
---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt, amortized cost | $ 394,470 | $ 646,689 | |
Carrying Value | Life Settlement | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Life settlements | 125,600 | ||
Fair Value | Life Settlement | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Life settlements | 131,900 | ||
Senior Notes Due 2022 | Senior Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Stated interest rate | 4.50% | 4.50% | |
Debt, amortized cost | $ 347,970 | $ 347,516 | |
Debt, fair value | $ 351,500 |
Derivative and Hedging Instruments - Investments in Call Options on Equities (Details) - Call options on equity $ in Millions |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2018
USD ($)
derivative_instrument
|
Sep. 30, 2018
USD ($)
derivative_instrument
|
Dec. 31, 2017
derivative_instrument
|
|
Derivative [Line Items] | |||
Number of equity derivative instruments | derivative_instrument | 0 | 0 | 0 |
Not designated as hedging instrument | |||
Derivative [Line Items] | |||
Cost | $ 10.0 | $ 10.0 | |
Unrealized gain (loss) on equity securities | $ (0.4) | $ (5.4) |
Reinsurance Balances Recoverable - Additional Information (Detail) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Effects of Reinsurance [Line Items] | |||
Reinsurance balances recoverable | $ 1,975,556 | $ 2,021,030 | |
Increase (decrease) in reinsurance recoverable | 305,434 | $ 628,654 | |
Non-Life Run-Off and StarStone Segment | |||
Effects of Reinsurance [Line Items] | |||
Increase (decrease) in reinsurance recoverable | $ (45,500) |
Reinsurance Balances Recoverable - Summary of Provisions for Uncollectible Reinsurance Balances Recoverable by Rating of Reinsurer (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Effects of Reinsurance [Line Items] | ||
Gross | $ 2,133,982 | $ 2,186,243 |
Provisions for Bad Debt | 158,426 | 165,213 |
Net | $ 1,975,556 | $ 2,021,030 |
Provisions as a % of Gross | 7.40% | 7.60% |
Reinsurers rated A- or above | ||
Effects of Reinsurance [Line Items] | ||
Gross | $ 1,600,220 | $ 1,252,887 |
Provisions for Bad Debt | 54,960 | 51,115 |
Net | $ 1,545,260 | $ 1,201,772 |
Provisions as a % of Gross | 3.40% | 4.10% |
Secured | Reinsurers rated below A- | ||
Effects of Reinsurance [Line Items] | ||
Gross | $ 397,775 | $ 771,097 |
Provisions for Bad Debt | 0 | 0 |
Net | $ 397,775 | $ 771,097 |
Provisions as a % of Gross | 0.00% | 0.00% |
Unsecured | Reinsurers rated below A- | ||
Effects of Reinsurance [Line Items] | ||
Gross | $ 135,987 | $ 162,259 |
Provisions for Bad Debt | 103,466 | 114,098 |
Net | $ 32,521 | $ 48,161 |
Provisions as a % of Gross | 76.10% | 70.30% |
Losses and Loss Adjustment Expenses - Reconciliation of Beginning and Ending Reserves for Losses and Loss Adjustment Expenses (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Balance as at beginning of period | $ 8,608,387 | $ 7,641,384 | $ 7,398,088 | $ 5,987,867 |
Less: reinsurance reserves recoverable | 1,870,049 | |||
Less: deferred charges on retroactive reinsurance | 71,393 | 88,475 | 80,192 | 94,551 |
Net balance as at beginning of period | 6,670,025 | 5,628,947 | 5,447,863 | 4,505,123 |
Net incurred losses and LAE: | ||||
Current period | 219,050 | 147,846 | 468,064 | 314,791 |
Prior periods | (65,076) | (72,134) | (201,737) | (151,567) |
Total net incurred losses and LAE | 153,974 | 75,712 | 266,327 | 163,224 |
Net paid losses: | ||||
Current period | (24,266) | (15,928) | (62,843) | (40,820) |
Prior periods | (296,709) | (215,173) | (937,846) | (670,117) |
Net losses paid | (320,975) | (231,101) | (1,000,689) | (710,937) |
Effect of exchange rate movement | (26,825) | 55,712 | (108,659) | 139,448 |
Acquired on purchase of subsidiaries | 22,713 | 3,282 | 366,519 | 3,282 |
Assumed business | 103,615 | 0 | 1,631,166 | 1,432,412 |
Net balance as at September 30 | 6,602,527 | 5,532,552 | 6,602,527 | 5,532,552 |
Plus: reinsurance reserves recoverable | 1,846,187 | 1,998,001 | 1,846,187 | 1,998,001 |
Plus: deferred charges on retroactive reinsurance | 87,019 | 85,164 | 87,019 | 85,164 |
Balance as at September 30 | 8,535,733 | 7,615,717 | 8,535,733 | 7,615,717 |
Non-Life Run-off Segment, Atrium Segment, and Starstone Segment | ||||
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Less: reinsurance reserves recoverable | 1,866,969 | 1,923,962 | 1,870,033 | 1,388,193 |
Non-life Run-off | ||||
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Balance as at beginning of period | 7,025,750 | 6,317,279 | 5,949,472 | 4,716,363 |
Less: reinsurance reserves recoverable | 1,462,139 | 1,500,557 | 1,377,485 | 1,000,953 |
Less: deferred charges on retroactive reinsurance | 71,393 | 88,475 | 80,192 | 94,551 |
Net balance as at beginning of period | 5,492,218 | 4,728,247 | 4,491,795 | 3,620,859 |
Net incurred losses and LAE: | ||||
Current period | 10,017 | 30 | 15,476 | 1,205 |
Prior periods | (72,795) | (70,912) | (221,366) | (139,246) |
Total net incurred losses and LAE | (62,778) | (70,882) | (205,890) | (138,041) |
Net paid losses: | ||||
Current period | (2,713) | (33) | (3,304) | (404) |
Prior periods | (193,057) | (135,981) | (641,361) | (436,594) |
Net losses paid | (195,770) | (136,014) | (644,665) | (436,998) |
Effect of exchange rate movement | (26,352) | 46,080 | (102,030) | 120,592 |
Acquired on purchase of subsidiaries | 22,713 | 3,282 | 173,538 | 3,282 |
Assumed business | 103,615 | 0 | 1,620,898 | 1,401,019 |
Net balance as at September 30 | 5,333,646 | 4,570,713 | 5,333,646 | 4,570,713 |
Plus: reinsurance reserves recoverable | 1,412,090 | 1,475,855 | 1,412,090 | 1,475,855 |
Plus: deferred charges on retroactive reinsurance | 87,019 | 85,164 | 87,019 | 85,164 |
Balance as at September 30 | 6,832,755 | 6,131,732 | 6,832,755 | 6,131,732 |
Atrium | ||||
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Balance as at beginning of period | 234,232 | 208,646 | 240,873 | 212,122 |
Less: reinsurance reserves recoverable | 38,253 | 29,749 | 40,531 | 30,009 |
Net balance as at beginning of period | 195,979 | 178,897 | 200,342 | 182,113 |
Net incurred losses and LAE: | ||||
Current period | 20,033 | 37,284 | 56,514 | 66,563 |
Prior periods | (2,180) | (2,011) | (4,563) | (10,613) |
Total net incurred losses and LAE | 17,853 | 35,273 | 51,951 | 55,950 |
Net paid losses: | ||||
Current period | (8,080) | (5,139) | (25,699) | (14,799) |
Prior periods | (8,230) | (8,992) | (27,488) | (25,826) |
Net losses paid | (16,310) | (14,131) | (53,187) | (40,625) |
Effect of exchange rate movement | (137) | 1,474 | (1,721) | 4,075 |
Net balance as at September 30 | 197,385 | 201,513 | 197,385 | 201,513 |
Plus: reinsurance reserves recoverable | 45,382 | 44,207 | 45,382 | 44,207 |
Balance as at September 30 | 242,767 | 245,720 | 242,767 | 245,720 |
StarStone | ||||
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||||
Balance as at beginning of period | 1,348,405 | 1,115,459 | 1,207,743 | 1,059,382 |
Less: reinsurance reserves recoverable | 366,577 | 393,656 | 452,017 | 357,231 |
Net balance as at beginning of period | 981,828 | 721,803 | 755,726 | 702,151 |
Net incurred losses and LAE: | ||||
Current period | 189,000 | 110,532 | 396,074 | 247,023 |
Prior periods | 9,899 | 789 | 24,192 | (1,708) |
Total net incurred losses and LAE | 198,899 | 111,321 | 420,266 | 245,315 |
Net paid losses: | ||||
Current period | (13,473) | (10,756) | (33,840) | (25,617) |
Prior periods | (95,422) | (70,200) | (268,997) | (207,697) |
Net losses paid | (108,895) | (80,956) | (302,837) | (233,314) |
Effect of exchange rate movement | (336) | 8,158 | (4,908) | 14,781 |
Acquired on purchase of subsidiaries | 0 | 0 | 192,981 | 0 |
Assumed business | 0 | 0 | 10,268 | 31,393 |
Net balance as at September 30 | 1,071,496 | 760,326 | 1,071,496 | 760,326 |
Plus: reinsurance reserves recoverable | 388,715 | 477,939 | 388,715 | 477,939 |
Balance as at September 30 | $ 1,460,211 | $ 1,238,265 | $ 1,460,211 | $ 1,238,265 |
Policy Benefits for Life Contracts (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Insurance [Abstract] | ||
Policy benefits for life contracts | $ 107,466 | $ 117,207 |
Premiums Written and Earned - Schedule of Net Premiums Written and Earned (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Effects of Reinsurance [Line Items] | ||||
Gross, premiums written | $ 333,278 | $ 250,559 | $ 1,039,076 | $ 786,924 |
Ceded, premiums written | (70,811) | (114,383) | (300,242) | (339,141) |
Net, premiums written | 262,467 | 136,176 | 738,834 | 447,783 |
Gross, premiums earned | 342,566 | 268,213 | 940,590 | 767,781 |
Ceded premium earned | (77,969) | (120,188) | (276,962) | (315,287) |
Net, premiums earned | 264,597 | 148,025 | 663,628 | 452,494 |
Operating Segments | Non-life Run-off | ||||
Effects of Reinsurance [Line Items] | ||||
Gross, premiums written | 9,912 | 11,751 | 16,354 | 13,956 |
Ceded, premiums written | (5,134) | (284) | (13,137) | (503) |
Net, premiums written | 4,778 | 11,467 | 3,217 | 13,453 |
Gross, premiums earned | 17,746 | 9,345 | 54,044 | 15,353 |
Ceded premium earned | (7,304) | (2,930) | (26,815) | (5,497) |
Net, premiums earned | 10,442 | 6,415 | 27,229 | 9,856 |
Operating Segments | Atrium | ||||
Effects of Reinsurance [Line Items] | ||||
Gross, premiums written | 39,995 | 36,377 | 130,997 | 117,355 |
Ceded, premiums written | (2,854) | (10,388) | (17,779) | (18,120) |
Net, premiums written | 37,141 | 25,989 | 113,218 | 99,235 |
Gross, premiums earned | 42,505 | 39,591 | 121,974 | 111,633 |
Ceded premium earned | (5,528) | (6,818) | (15,252) | (14,260) |
Net, premiums earned | 36,977 | 32,773 | 106,722 | 97,373 |
Operating Segments | StarStone | ||||
Effects of Reinsurance [Line Items] | ||||
Gross, premiums written | 282,525 | 200,007 | 888,867 | 651,107 |
Ceded, premiums written | (62,799) | (102,958) | (269,339) | (319,658) |
Net, premiums written | 219,726 | 97,049 | 619,528 | 331,449 |
Gross, premiums earned | 281,467 | 217,833 | 761,694 | 636,137 |
Ceded premium earned | (65,112) | (110,183) | (234,892) | (294,528) |
Net, premiums earned | 216,355 | 107,650 | 526,802 | 341,609 |
Other | ||||
Effects of Reinsurance [Line Items] | ||||
Gross, premiums written | 846 | 2,424 | 2,858 | 4,506 |
Ceded, premiums written | (24) | (753) | 13 | (860) |
Net, premiums written | 822 | 1,671 | 2,871 | 3,646 |
Gross, premiums earned | 848 | 1,444 | 2,878 | 4,658 |
Ceded premium earned | (25) | (257) | (3) | (1,002) |
Net, premiums earned | $ 823 | $ 1,187 | $ 2,875 | $ 3,656 |
Goodwill and Intangible Assets - Intangible Asset Amortization (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Goodwill, Intangible Assets, Intangible Assets Arising from Insurance Contracts Acquired in Business Combination, and Deferred Charges Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 3,922 | $ 3,105 | $ 9,168 | $ 5,353 |
Debt Obligations - Amounts Outstanding and Accrued Interest (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 16, 2014 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
Mar. 10, 2017 |
|
Debt Instrument [Line Items] | |||||||
Total debt obligations | $ 394,470,000 | $ 394,470,000 | $ 646,689,000 | ||||
Interest expense on debt obligations | 4,552,000 | $ 6,219,000 | 20,822,000 | $ 18,576,000 | |||
Funds withheld balances and other | 88,000 | 191,000 | 751,000 | 2,275,000 | |||
Total interest expense | 4,640,000 | $ 6,410,000 | $ 21,573,000 | $ 20,851,000 | |||
Senior Notes | Senior Notes Due 2022 | |||||||
Debt Instrument [Line Items] | |||||||
Term | 5 years | ||||||
Senior Notes | 350,000,000 | $ 350,000,000 | 350,000,000 | $ 350,000,000 | |||
Less: Unamortized debt issuance costs | (2,030,000) | (2,030,000) | (2,484,000) | ||||
Total debt obligations | 347,970,000 | $ 347,970,000 | 347,516,000 | ||||
Line of Credit | EGL Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Term | 5 years | 5 years | |||||
Total debt obligations | 46,500,000 | $ 46,500,000 | 0 | ||||
Line of Credit | Previous EGL Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Term | 5 years | ||||||
Total debt obligations | 0 | $ 0 | 225,110,000 | ||||
Line of Credit | EGL Term Loan Facility | |||||||
Debt Instrument [Line Items] | |||||||
Term | 3 years | ||||||
Total debt obligations | $ 0 | $ 0 | $ 74,063,000 |
Noncontrolling Interests - Additional Information (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Noncontrolling Interest [Line Items] | ||
Noncontrolling interest | $ 10,313 | $ 9,264 |
Trident | Subsidiaries | ||
Noncontrolling Interest [Line Items] | ||
Interest owned by an entity (percent) | 39.30% | 39.30% |
Dowling | Subsidiaries | ||
Noncontrolling Interest [Line Items] | ||
Interest owned by an entity (percent) | 1.70% | 1.70% |
Noncontrolling Interests - Carrying Amount of Equity Attributable to Noncontrolling Interest (Detail) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Increase (Decrease) in Redeemable Noncontrolling Interest [Roll Forward] | ||
Balance at beginning of period | $ 479,606 | $ 454,522 |
Dividends paid | 0 | (27,458) |
Net earnings (losses) attributable to RNCI | (20,097) | 19,619 |
Accumulated other comprehensive earnings (losses) attributable to RNCI | (396) | 1,945 |
Change in redemption value of RNCI | (785) | 30,978 |
Balance at end of period | $ 458,328 | $ 479,606 |
Share-Based Compensation and Pensions (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Pension expense | $ 2,818 | $ 3,998 | $ 8,640 | $ 9,483 |
Restricted Stock And Stock Appreciation Rights SARS | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | 3,865 | 9,234 | 14,384 | 19,213 |
Employee Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | $ 115 | $ 86 | $ 325 | $ 252 |
Taxation - Additional Information (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | |||||
Effective tax rate | (3.50%) | 6.50% | (7.80%) | 1.60% | |
Statutory rate | 0.00% | ||||
Unrecognized tax benefits | $ 0 | $ 0 | $ 0 |
Related Party Transactions - CPPIB (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Affiliated Entity | CPPIB LP | ||
Related Party Transaction [Line Items] | ||
Ownership percentage | 4.10% | |
Affiliated Entity | CPPIB and Management of Wilton Re | ||
Related Party Transaction [Line Items] | ||
Reinsurance recoverables | $ 6,884 | $ 7,003 |
Canada Pension Plan Investment Board | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Ownership percentage | 8.40% | |
Economic interest percentage | 17.90% | |
CPPIB and Management of Wilton Re | Wilton Re | ||
Related Party Transaction [Line Items] | ||
Ownership percentage by parent | 100.00% |
Related Party Transactions - Monument (Details) $ in Thousands, € in Millions |
3 Months Ended | 9 Months Ended | 21 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Aug. 29, 2017
USD ($)
|
Aug. 29, 2017
EUR (€)
|
|
Related Party Transaction [Line Items] | ||||||||
Loss on sale of subsidiary | $ 0 | $ 6,740 | $ 0 | $ 16,349 | ||||
Cumulative CTA adjustment | $ 0 | 7,440 | $ 0 | 7,440 | ||||
Laguna | Disposed of by sale | ||||||||
Related Party Transaction [Line Items] | ||||||||
Loss on sale of subsidiary | 6,700 | $ 16,300 | ||||||
Cumulative CTA adjustment | $ 6,300 | |||||||
Laguna | Monument | Disposed of by sale | Affiliated Entity | ||||||||
Related Party Transaction [Line Items] | ||||||||
Disposal, consideration | $ 30,800 | € 25.6 | ||||||
Monument | ||||||||
Related Party Transaction [Line Items] | ||||||||
Contributed amount of common and preferred shares | $ 26,600 | |||||||
Ownership percentage | 26.60% | 26.60% | ||||||
Carrying value of previously held equity method investment prior to the close of the transaction | $ 35,587 | $ 35,587 | $ 15,960 |
Related Party Transactions - AmTrust (Details) - Affiliated Entity $ in Millions |
Jul. 23, 2018
USD ($)
|
---|---|
Evergreen Parent L.P. | AmTrust Financial Services, Inc. | |
Related Party Transaction [Line Items] | |
Ownership percentage | 45.00% |
Evergreen Parent L.P. | |
Related Party Transaction [Line Items] | |
Purchase amount of equity interest | $ 200.0 |
Capital units ownership percentage | 7.40% |
Related Party Transactions - Citco (Details) - USD ($) $ in Thousands |
1 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Related Party Transaction [Line Items] | ||||
Indirect investment acquired | $ 784,316 | $ 98,203 | ||
Other investments | $ 2,036,430 | $ 913,392 | ||
Trident | Citco III Limited | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Indirect investment acquired | $ 50,000 | |||
Ownership percentage | 3.40% | |||
Citco III Limited | ||||
Related Party Transaction [Line Items] | ||||
Other investments | $ 49,606 | $ 0 |
Segment Information - Additional Information (Detail) |
9 Months Ended |
---|---|
Sep. 30, 2018
Segment
| |
Segment Reporting [Abstract] | |
Number of segments | 3 |
Segment Information - Summary of Company's Assets by Segment (Detail) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 15,121,228 | $ 13,606,422 |
Operating Segments | Non-life Run-off | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 11,907,196 | 10,368,105 |
Operating Segments | Atrium | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 598,072 | 556,637 |
Operating Segments | StarStone | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 3,199,238 | 3,128,725 |
Other | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ (583,278) | $ (447,045) |
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