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 | ¨ |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
Ordinary shares, par value $1.00 per share | ESGR | The NASDAQ Stock Market LLC |
Depositary Shares, Each Representing a 1/1,000th Interest in a 7.00% Fixed-to-Floating Rate Perpetual Non-Cumulative Preferred Share, Series D, Par Value $1.00 Per Share | ESGRP | The NASDAQ Stock Market LLC |
Depositary Shares, Each Representing a 1/1,000th Interest in a 7.00% Perpetual Non-Cumulative Preferred Share, Series E, Par Value $1.00 Per Share | ESGRO | The NASDAQ Stock Market LLC |
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 |
March 31, 2019 | December 31, 2018 | ||||||
(expressed in thousands of U.S. dollars, except share data) | |||||||
ASSETS | |||||||
Short-term investments, trading, at fair value | $ | $ | |||||
Fixed maturities, trading, at fair value | |||||||
Fixed maturities, available-for-sale, at fair value (amortized cost: 2019 — $142,675; 2018 — $151,433) | |||||||
Funds held - directly managed | |||||||
Equities, at fair value | |||||||
Other investments, at fair value | |||||||
Equity method investments | |||||||
Cash and cash equivalents | |||||||
Restricted cash and cash equivalents | |||||||
Premiums receivable | |||||||
Deferred tax assets (Note 17) | |||||||
Prepaid reinsurance premiums | |||||||
Funds held by reinsured companies | |||||||
Deferred acquisition costs | |||||||
Goodwill and intangible assets (Note 11) | |||||||
Other assets | |||||||
TOTAL ASSETS | $ | $ | |||||
LIABILITIES | |||||||
Losses and loss adjustment expenses (Note 7) | $ | $ | |||||
Policy benefits for life and annuity contracts (Note 9) | |||||||
Unearned premiums | |||||||
Insurance and reinsurance balances payable | |||||||
Deferred tax liabilities (Note 17) | |||||||
Debt obligations (Note 12) | |||||||
Other liabilities | |||||||
TOTAL LIABILITIES | |||||||
COMMITMENTS AND CONTINGENCIES (Note 19) | |||||||
REDEEMABLE NONCONTROLLING INTEREST (Note 13) | |||||||
SHAREHOLDERS’ EQUITY (Note 14) | |||||||
Ordinary shares (par value $1 each, issued and outstanding 2019: 21,467,515; 2018: 21,459,997): | |||||||
Voting Ordinary shares (issued and outstanding 2019: 17,957,833; 2018: 17,950,315) | |||||||
Non-voting convertible ordinary Series C Shares (issued and outstanding 2019 and 2018: 2,599,672) | |||||||
Non-voting convertible ordinary Series E Shares (issued and outstanding 2019 and 2018: 910,010) | |||||||
Preferred Shares: | |||||||
Series C Preferred Shares (issued and held in treasury 2019 and 2018: 388,571) | |||||||
Series D Preferred Shares (issued and outstanding 2019 and 2018: 16,000) | |||||||
Series E Preferred Shares (issued and outstanding 2019 and 2018: 4,400) | |||||||
Treasury shares, at cost (Series C Preferred shares 2019 and 2018: 388,571) | ( | ) | ( | ) | |||
Additional paid-in capital | |||||||
Accumulated other comprehensive income | |||||||
Retained earnings | |||||||
Total Enstar Group Limited Shareholders’ Equity | |||||||
Noncontrolling interest | |||||||
TOTAL SHAREHOLDERS’ EQUITY | |||||||
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY | $ | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(expressed in thousands of U.S. dollars, except share and per share data) | |||||||
INCOME | |||||||
Net premiums earned | $ | $ | |||||
Fees and commission income | |||||||
Net investment income | |||||||
Net realized and unrealized gains (losses) | ( | ) | |||||
Other income | |||||||
EXPENSES | |||||||
Net incurred losses and loss adjustment expenses | |||||||
Life and annuity policy benefits | ( | ) | |||||
Acquisition costs | |||||||
General and administrative expenses | |||||||
Interest expense | |||||||
Net foreign exchange gains (losses) | ( | ) | |||||
EARNINGS (LOSS) BEFORE INCOME TAXES | ( | ) | |||||
Income tax expense | ( | ) | ( | ) | |||
Earnings from equity method investments | |||||||
NET EARNINGS (LOSS) | ( | ) | |||||
Net loss (earnings) attributable to noncontrolling interest | ( | ) | |||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED | ( | ) | |||||
Dividends on preferred shares | ( | ) | |||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | $ | ( | ) | |||
Earnings (Loss) per ordinary share attributable to Enstar Group Limited: | |||||||
Basic | $ | $ | ( | ) | |||
Diluted | $ | $ | ( | ) | |||
Weighted average ordinary shares outstanding: | |||||||
Basic | |||||||
Diluted |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(expressed in thousands of U.S. dollars) | |||||||
NET EARNINGS (LOSS) | $ | $ | ( | ) | |||
Other comprehensive income, net of tax: | |||||||
Unrealized holding gains (losses) on fixed income available-for-sale investments arising during the period | ( | ) | |||||
Reclassification adjustment for net realized gains included in net earnings | |||||||
Unrealized gains (losses) arising during the period, net of reclassification adjustments | ( | ) | |||||
Total cumulative translation adjustment | ( | ) | |||||
Total other comprehensive income | |||||||
Comprehensive income (loss) | ( | ) | |||||
Comprehensive (income) loss attributable to noncontrolling interest | ( | ) | |||||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ | $ | ( | ) |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(expressed in thousands of U.S. dollars) | |||||||
Share Capital — Voting Ordinary Shares | |||||||
Balance, beginning of period | $ | $ | |||||
Issue of shares | |||||||
Balance, end of period | $ | $ | |||||
Share Capital — Non-Voting Convertible Ordinary Series C Shares | |||||||
Balance, beginning and end of period | $ | $ | |||||
Share Capital — Non-Voting Convertible Ordinary Series E Shares | |||||||
Balance, beginning and end of period | $ | $ | |||||
Share Capital — Series C Convertible Participating Non-Voting Preferred Shares | |||||||
Balance, beginning and end of period | $ | $ | |||||
Share Capital — Series D Preferred Shares | |||||||
Balance, beginning and end of period | $ | $ | |||||
Share Capital — Series E Preferred Shares | |||||||
Balance, beginning and end of period | $ | $ | |||||
Treasury Shares (Series C Preferred shares) | |||||||
Balance, beginning and end of period | $ | ( | ) | $ | ( | ) | |
Additional Paid-in Capital | |||||||
Balance, beginning of period | $ | $ | |||||
Issue of voting ordinary shares | ( | ) | |||||
Amortization of share-based compensation | |||||||
Balance, end of period | $ | $ | |||||
Accumulated Other Comprehensive Income (Loss) | |||||||
Balance, beginning of period | $ | $ | |||||
Currency translation adjustment | |||||||
Balance, beginning of period | |||||||
Change in currency translation adjustment | ( | ) | |||||
Balance, end of period | |||||||
Defined benefit pension liability | |||||||
Balance, beginning and end of period | ( | ) | ( | ) | |||
Unrealized gains (losses) on available-for-sale investments | |||||||
Balance, beginning of period | |||||||
Change in unrealized gains (losses) on available-for-sale investments | ( | ) | |||||
Balance, end of period | |||||||
Balance, end of period | $ | $ | |||||
Retained Earnings | |||||||
Balance, beginning of period | $ | $ | |||||
Net earnings (losses) attributable to Enstar Group Limited | ( | ) | |||||
Net loss (earnings) attributable to noncontrolling interest | ( | ) | |||||
Dividends on preferred shares | ( | ) | |||||
Change in redemption value of redeemable noncontrolling interests | ( | ) | ( | ) | |||
Cumulative effect of change in accounting principle | ( | ) | |||||
Balance, end of period | $ | $ | |||||
Noncontrolling Interest (excludes Redeemable Noncontrolling Interest) | |||||||
Balance, beginning of period | $ | $ | |||||
Contribution of capital | |||||||
Net earnings attributable to noncontrolling interest | ( | ) | |||||
Balance, end of period | $ | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
(expressed in thousands of U.S. dollars) | |||||||
OPERATING ACTIVITIES: | |||||||
Net earnings (loss) | $ | $ | ( | ) | |||
Adjustments to reconcile net earnings (loss) to cash flows provided by (used in) operating activities: | |||||||
Realized losses (gains) on sale of investments | ( | ) | |||||
Unrealized losses (gains) on investments | ( | ) | |||||
Depreciation and other amortization | |||||||
Earnings from equity method investments | ( | ) | ( | ) | |||
Sales and maturities of trading securities | |||||||
Purchases of trading securities | ( | ) | ( | ) | |||
Other non-cash items | |||||||
Changes in: | |||||||
Reinsurance balances recoverable | ( | ) | ( | ) | |||
Funds held by reinsured companies | ( | ) | ( | ) | |||
Losses and loss adjustment expenses | |||||||
Policy benefits for life and annuity contracts | ( | ) | ( | ) | |||
Insurance and reinsurance balances payable | |||||||
Unearned premiums | |||||||
Premiums receivable | |||||||
Other operating assets and liabilities | ( | ) | |||||
Net cash flows provided by (used in) operating activities | ( | ) | |||||
INVESTING ACTIVITIES: | |||||||
Sales and maturities of available-for-sale securities | |||||||
Purchase of available-for-sale securities | ( | ) | ( | ) | |||
Purchase of other investments | ( | ) | ( | ) | |||
Proceeds from other investments | |||||||
Purchase of equity method investments | ( | ) | |||||
Other investing activities | ( | ) | ( | ) | |||
Net cash flows used in investing activities | ( | ) | ( | ) | |||
FINANCING ACTIVITIES: | |||||||
Dividends on preferred shares | ( | ) | |||||
Contribution by noncontrolling interest | |||||||
Receipt of loans | |||||||
Repayment of loans | ( | ) | ( | ) | |||
Net cash flows provided by financing activities | |||||||
EFFECT OF EXCHANGE RATE CHANGES ON FOREIGN CURRENCY CASH AND CASH EQUIVALENTS | ( | ) | |||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | ( | ) | |||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | |||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | $ | |||||
Supplemental Cash Flow Information: | |||||||
Income taxes paid, net of refunds | $ | $ | |||||
Interest paid | $ | $ | |||||
Reconciliation to Consolidated Balance Sheets: | |||||||
Cash and cash equivalents | |||||||
Restricted cash and cash equivalents | |||||||
Cash, cash equivalents and restricted cash | $ | $ |
• | liability for losses and loss adjustment expenses ("LAE"); |
• | liability for policy benefits for life contracts; |
• | reinsurance balances recoverable on paid and unpaid losses; |
• | Valuation allowances on reinsurance balances recoverable and deferred tax assets; |
• | impairment charges, including other-than-temporary impairments on investment securities classified as available-for-sale, and impairments on goodwill, intangible assets and deferred charge asset; |
• | gross and net premiums written and net premiums earned; |
• | 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 |
• |
March 31, 2019 | |||||||||||||||||||
Short-term investments, trading | Fixed maturities, trading | Fixed maturities, available-for-sale | Fixed maturities, funds held - directly managed | Total | |||||||||||||||
U.S. government and agency | $ | $ | $ | $ | $ | ||||||||||||||
U.K. government | |||||||||||||||||||
Other government | |||||||||||||||||||
Corporate | |||||||||||||||||||
Municipal | |||||||||||||||||||
Residential mortgage-backed | |||||||||||||||||||
Commercial mortgage-backed | |||||||||||||||||||
Asset-backed | |||||||||||||||||||
Total fixed maturity and short-term investments | $ | $ | $ | $ | $ |
December 31, 2018 | |||||||||||||||||||
Short-term investments, trading | Fixed maturities, trading | Fixed maturities, available-for-sale | Fixed maturities, funds held - directly managed | Total | |||||||||||||||
U.S. government and agency | $ | $ | $ | $ | $ | ||||||||||||||
U.K. government | |||||||||||||||||||
Other government | |||||||||||||||||||
Corporate | |||||||||||||||||||
Municipal | |||||||||||||||||||
Residential mortgage-backed | |||||||||||||||||||
Commercial mortgage-backed | |||||||||||||||||||
Asset-backed | |||||||||||||||||||
Total fixed maturity and short-term investments | $ | $ | $ | $ | $ |
As of March 31, 2019 | Amortized Cost | Fair Value | % of Total Fair Value | ||||||||
One year or less | $ | $ | % | ||||||||
More than one year through two years | % | ||||||||||
More than two years through five years | % | ||||||||||
More than five years through ten years | % | ||||||||||
More than ten years | % | ||||||||||
Residential mortgage-backed | % | ||||||||||
Commercial mortgage-backed | % | ||||||||||
Asset-backed | % | ||||||||||
$ | $ | % |
Amortized Cost | Fair Value | % of Total | AAA Rated | AA Rated | A Rated | BBB Rated | Non- Investment Grade | Not Rated | |||||||||||||||||||||||||||
U.S. government and agency | $ | $ | % | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
U.K. government | % | ||||||||||||||||||||||||||||||||||
Other government | % | ||||||||||||||||||||||||||||||||||
Corporate | % | ||||||||||||||||||||||||||||||||||
Municipal | % | ||||||||||||||||||||||||||||||||||
Residential mortgage-backed | % | ||||||||||||||||||||||||||||||||||
Commercial mortgage-backed | % | ||||||||||||||||||||||||||||||||||
Asset-backed | % | ||||||||||||||||||||||||||||||||||
Total | $ | $ | % | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
% of total fair value | % | % | % | % | % | % |
As of March 31, 2019 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses (Non-OTTI) | Fair Value | ||||||||||||
U.S. government and agency | $ | $ | $ | $ | ||||||||||||
Other government | ( | ) | ||||||||||||||
Corporate | ( | ) | ||||||||||||||
Municipal | ( | ) | ||||||||||||||
Residential mortgage-backed | ||||||||||||||||
$ | $ | $ | ( | ) | $ |
As of December 31, 2018 | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses (Non-OTTI) | Fair Value | ||||||||||||
U.S. government and agency | $ | $ | $ | ( | ) | $ | ||||||||||
Other government | ( | ) | ||||||||||||||
Corporate | ( | ) | ||||||||||||||
Municipal | ( | ) | ||||||||||||||
Residential mortgage-backed | ||||||||||||||||
$ | $ | $ | ( | ) | $ |
12 Months or Greater | Less Than 12 Months | Total | ||||||||||||||||||||||
As of March 31, 2019 | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||
Fixed maturity investments, at fair value | ||||||||||||||||||||||||
Other government | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Corporate | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Municipal | ( | ) | ( | ) | ||||||||||||||||||||
Total fixed maturity investments | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
12 Months or Greater | Less Than 12 Months | Total | ||||||||||||||||||||||
As of December 31, 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 | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | ||||||||||||||
Other government | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Corporate | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Municipal | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Residential mortgage-backed | ||||||||||||||||||||||||
Total fixed maturity investments | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
March 31, 2019 | December 31, 2018 | ||||||
Publicly traded equity investments in common and preferred stocks | $ | $ | |||||
Privately held equity investments in common and preferred stocks | |||||||
$ | $ |
March 31, 2019 | December 31, 2018 | |||||||
Hedge funds | $ | $ | ||||||
Fixed income funds | ||||||||
Equity funds | ||||||||
Private equity funds | ||||||||
CLO equities | ||||||||
CLO equity fund | ||||||||
Private credit funds | ||||||||
Other | ||||||||
$ | $ |
• | 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. The hedge funds in which we invest have various imposed lock-up periods of up to three years and redemption terms, predominantly |
• | 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 the funds in which we invest, with a market value of $ |
• | 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. |
• | Private equity funds invest primarily in the financial services industry. All of our investments in 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. |
• | CLO equities comprise investments in the equity tranches of term-financed securitizations of diversified pools of corporate bank loans. |
• | CLO equity fund invests primarily in the equity tranches of term-financed securitizations of diversified pools of corporate bank loans. This fund has a fair value of $ |
• | 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. |
• | Others comprise of various investments including real estate debt funds that invest primarily in European real estate, call options on equities and a fund that provides loans to educational institutions throughout the United States and its territories. |
March 31, 2019 | December 31, 2018 | ||||||||||||||||||||
Investment | Ownership % | Carrying Value | Investment | Ownership % | Carrying Value | ||||||||||||||||
Enhanzed Re | $ | % | $ | $ | % | $ | |||||||||||||||
Citco | % | % | |||||||||||||||||||
Monument | % | % | |||||||||||||||||||
Clear Spring | % | $ | % | ||||||||||||||||||
Other | ~30% | ~30% | |||||||||||||||||||
$ | $ | $ | $ |
2019 | 2018 | ||||||
Fixed maturity investments, trading | $ | $ | |||||
Other assets | |||||||
$ | $ |
March 31, 2019 | December 31, 2018 | ||||||||||||||||||||||
Funds held - Directly Managed - Fair Value Option | Funds held - Directly Managed - Variable Return | Total | Funds held - Directly Managed - Fair Value Option | Funds held - Directly Managed - Variable Return | Total | ||||||||||||||||||
Fixed maturity investments, at amortized cost | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Net unrealized gains (losses): | |||||||||||||||||||||||
Change in fair value - fair value option accounting | ( | ) | ( | ) | |||||||||||||||||||
Change in fair value - embedded derivative accounting | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Fixed maturity investments within funds held - directly managed, at fair value | $ | $ | $ | $ | $ | $ |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Fixed maturity investments | $ | $ | |||||
Short-term investments and cash and cash equivalents | |||||||
Funds held | |||||||
Funds held - directly managed | |||||||
Investment income from fixed maturities and cash and cash equivalents | |||||||
Equity investments | |||||||
Other investments | |||||||
Life settlements and other | |||||||
Investment income from equities and other investments | |||||||
Gross investment income | |||||||
Investment expenses | ( | ) | ( | ) | |||
Net investment income | $ | $ |
Three Months Ended | ||||||||
March 31, | ||||||||
2019 | 2018 | |||||||
Net realized gains (losses) on sale: | ||||||||
Gross realized gains on fixed maturity securities, available-for-sale | $ | $ | ||||||
Gross realized losses on fixed maturity securities, available-for-sale | ( | ) | ( | ) | ||||
Net realized losses on fixed maturity securities, trading | ( | ) | ( | ) | ||||
Net realized gains (losses) on funds held - directly managed | ( | ) | ||||||
Net realized gains on equity investments | ||||||||
Total net realized gains (losses) on sale | $ | $ | ( | ) | ||||
Net unrealized gains (losses): | ||||||||
Fixed maturity securities, trading | $ | $ | ( | ) | ||||
Fixed maturity securities in funds held - directly managed portfolios | ( | ) | ||||||
Equity investments | ||||||||
Other Investments | ( | ) | ||||||
Total net unrealized gains (losses) | ( | ) | ||||||
Net realized and unrealized gains (losses) | $ | $ | ( | ) |
March 31, 2019 | December 31, 2018 | |||||||
Collateral in trust for third party agreements | $ | $ | ||||||
Assets on deposit with regulatory authorities | ||||||||
Collateral for secured letter of credit facilities | ||||||||
Funds at Lloyd's (1) | ||||||||
$ | $ |
March 31, 2019 | December 31, 2018 | |||||||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||||||
Gross Notional Amount | Assets | Liabilities | Gross Notional Amount | Assets | Liabilities | |||||||||||||||||||
Foreign currency forward - AUD | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Foreign currency forward - EUR | ||||||||||||||||||||||||
Total qualifying hedges | $ | $ | $ | $ | $ | $ |
Amount of Gains (Losses) Deferred in AOCI | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2019 | 2018 | |||||||
Foreign currency forward - AUD | $ | ( | ) | $ | ||||
Foreign currency forward - EUR | ||||||||
Net gains on qualifying derivative hedges | $ | $ |
March 31, 2019 | December 31, 2018 | |||||||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||||||
Gross Notional Amount | Assets | Liabilities | Gross Notional Amount | Assets | Liabilities | |||||||||||||||||||
Foreign currency forward - AUD | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Foreign currency forward - CAD | ||||||||||||||||||||||||
Foreign currency forward - EUR | ||||||||||||||||||||||||
Foreign currency forward - GBP | ||||||||||||||||||||||||
Total non-qualifying hedges | $ | $ | $ | $ | $ | $ |
Gains (Losses) on non-qualifying-hedges included in net earnings | ||||||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Foreign currency forward - AUD | $ | ( | ) | $ | ||||
Foreign currency forward - CAD | ||||||||
Foreign currency forward - EUR | ( | ) | ||||||
Foreign currency forward - GBP | ( | ) | ( | ) | ||||
Net losses on non-qualifying hedges | $ | ( | ) | $ | ( | ) |
March 31, 2019 | ||||||||||||||||
Non-life Run-off | Atrium | StarStone | Total | |||||||||||||
Recoverable from reinsurers on unpaid: | ||||||||||||||||
Outstanding losses | $ | $ | $ | $ | ||||||||||||
IBNR | ||||||||||||||||
Fair value adjustments | ( | ) | ( | ) | ( | ) | ||||||||||
Fair value adjustments - fair value option | ( | ) | ( | ) | ||||||||||||
Total reinsurance reserves recoverable | ||||||||||||||||
Paid losses recoverable | ||||||||||||||||
$ | $ | $ | $ | |||||||||||||
Reconciliation to Consolidated Balance Sheet: | ||||||||||||||||
Reinsurance balances recoverable | $ | $ | $ | $ | ||||||||||||
Reinsurance balances recoverable - fair value option | ||||||||||||||||
Total | $ | $ | $ | $ |
December 31, 2018 | ||||||||||||||||
Non-life Run-off | Atrium | StarStone | Total | |||||||||||||
Recoverable from reinsurers on unpaid: | ||||||||||||||||
Outstanding losses | $ | $ | $ | $ | ||||||||||||
IBNR | ||||||||||||||||
Fair value adjustments | ( | ) | ( | ) | ( | ) | ||||||||||
Fair value adjustments - fair value option | ( | ) | ( | ) | ||||||||||||
Total reinsurance reserves recoverable | ||||||||||||||||
Paid losses recoverable | ( | ) | ||||||||||||||
$ | $ | $ | $ | |||||||||||||
Reconciliation to Consolidated Balance Sheet: | ||||||||||||||||
Reinsurance balances recoverable | $ | $ | $ | $ | ||||||||||||
Reinsurance balances recoverable - fair value option | ||||||||||||||||
Total | $ | $ | $ | $ |
March 31, 2019 | ||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Total | % of Total | ||||||||||||||
Top ten reinsurers | $ | $ | $ | $ | % | |||||||||||||
Other reinsurers > $1 million | % | |||||||||||||||||
Other reinsurers < $1 million | % | |||||||||||||||||
Total | $ | $ | $ | $ | % |
December 31, 2018 | ||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Total | % of Total | ||||||||||||||
Top ten reinsurers | $ | $ | $ | $ | % | |||||||||||||
Other reinsurers > $1 million | % | |||||||||||||||||
Other reinsurers < $1 million | % | |||||||||||||||||
Total | $ | $ | $ | $ | % |
March 31, 2019 | December 31, 2018 | ||||||
Information regarding top ten reinsurers: | |||||||
Number of top 10 reinsurers rated A- or better | |||||||
Number of top 10 non-rated reinsurers (1) | |||||||
Top 10 rated A- or better reinsurers recoverables | $ | $ | |||||
Top 10 collaterized non-rated reinsurers recoverables (1) | |||||||
$ | $ | ||||||
Single reinsurers that represent 10% or more of total reinsurance balance recoverables as of March 31, 2019: | |||||||
Hannover Ruck SE (2) | $ | $ | |||||
Lloyd's Syndicates (3) | $ | $ |
March 31, 2019 | December 31, 2018 | ||||||||||||||||||||||||||||
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 | $ | $ | $ | % | $ | $ | $ | % | |||||||||||||||||||||
Reinsurers rated below A-, secured | % | % | |||||||||||||||||||||||||||
Reinsurers rated below A-, unsecured | % | % | |||||||||||||||||||||||||||
Total | $ | $ | $ | % | $ | $ | $ | % |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Beginning carrying value | $ | $ | |||||
Recorded during the period | |||||||
Amortization | ( | ) | ( | ) | |||
Ending carrying value | $ | $ |
March 31, 2019 | |||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Other | Total | |||||||||||||||
Outstanding losses | $ | $ | $ | $ | $ | ||||||||||||||
IBNR | |||||||||||||||||||
Fair value adjustments | ( | ) | ( | ) | ( | ) | |||||||||||||
Fair value adjustments - fair value option | ( | ) | ( | ) | |||||||||||||||
ULAE | |||||||||||||||||||
Total | $ | $ | $ | $ | $ | ||||||||||||||
Reconciliation to Consolidated Balance Sheet: | |||||||||||||||||||
Loss and loss adjustment expenses | $ | $ | $ | $ | $ | ||||||||||||||
Loss and loss adjustment expenses, at fair value | |||||||||||||||||||
Total | $ | $ | $ | $ | $ |
December 31, 2018 | |||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Other | Total | |||||||||||||||
Outstanding losses | $ | $ | $ | $ | $ | ||||||||||||||
IBNR | |||||||||||||||||||
Fair value adjustments | ( | ) | ( | ) | ( | ) | |||||||||||||
Fair value adjustments - fair value option | ( | ) | ( | ) | |||||||||||||||
ULAE | |||||||||||||||||||
Total | $ | $ | $ | $ | $ | ||||||||||||||
Reconciliation to Consolidated Balance Sheet: | |||||||||||||||||||
Loss and loss adjustment expenses | $ | $ | $ | $ | $ | ||||||||||||||
Loss and loss adjustment expenses, at fair value | |||||||||||||||||||
Total | $ | $ | $ | $ | $ |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Balance as of beginning of period | $ | $ | |||||
Less: reinsurance reserves recoverable | |||||||
Less: deferred charge assets on retroactive reinsurance | |||||||
Net balance as of beginning of period | |||||||
Net incurred losses and LAE: | |||||||
Current period | |||||||
Prior periods | ( | ||||||
Total net incurred losses and LAE | |||||||
Net paid losses: | |||||||
Current period | ( | ) | ( | ||||
Prior periods | ( | ) | ( | ||||
Total net paid losses | ( | ) | ( | ||||
Effect of exchange rate movement | |||||||
Assumed business | |||||||
Net balance as of March 31 | |||||||
Plus: reinsurance reserves recoverable | |||||||
Plus: deferred charge assets on retroactive reinsurance | |||||||
Balance as of March 31 | $ | $ |
Three Months Ended | |||||||||||||||||||
March 31, 2019 | |||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Other | Total | |||||||||||||||
Net losses paid | $ | $ | $ | $ | $ | ||||||||||||||
Net change in case and LAE reserves | ( | ) | ( | ) | ( | ) | |||||||||||||
Net change in IBNR reserves | ( | ) | ( | ) | ( | ) | |||||||||||||
Increase in estimates of net ultimate losses | |||||||||||||||||||
Increase (reduction) in provisions for unallocated LAE | ( | ) | ( | ) | |||||||||||||||
Amortization of deferred charge assets | |||||||||||||||||||
Amortization of fair value adjustments | ( | ) | |||||||||||||||||
Changes in fair value - fair value option | |||||||||||||||||||
Net incurred losses and LAE | $ | $ | $ | $ | $ |
Three Months Ended | |||||||||||||||
March 31, 2018 | |||||||||||||||
Non-life Run-off | Atrium | StarStone | Total | ||||||||||||
Net losses paid | $ | $ | $ | $ | |||||||||||
Net change in case and LAE reserves | ( | ) | ( | ) | ( | ) | |||||||||
Net change in IBNR reserves | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Increase (reduction) in estimates of net ultimate losses | ( | ) | |||||||||||||
Increase (reduction) in provisions for unallocated LAE | ( | ) | ( | ) | |||||||||||
Amortization of deferred charge assets | |||||||||||||||
Amortization of fair value adjustments | ( | ) | ( | ) | ( | ) | |||||||||
Changes in fair value - fair value option | ( | ) | ( | ) | |||||||||||
Net incurred losses and LAE | $ | ( | ) | $ | $ | $ |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Balance as of beginning of period | $ | $ | |||||
Less: reinsurance reserves recoverable | |||||||
Less: deferred charge assets on retroactive insurance | |||||||
Net balance as of beginning of period | |||||||
Net incurred losses and LAE: | |||||||
Current period | |||||||
Prior periods | ( | ) | |||||
Total net incurred losses and LAE | ( | ) | |||||
Net paid losses: | |||||||
Current period | ( | ) | ( | ) | |||
Prior periods | ( | ) | ( | ) | |||
Total net paid losses | ( | ) | ( | ) | |||
Effect of exchange rate movement | |||||||
Assumed business | |||||||
Net balance as of March 31 | |||||||
Plus: reinsurance reserves recoverable | |||||||
Plus: deferred charge assets on retroactive reinsurance | |||||||
Balance as of March 31 | $ | $ |
Three Months Ended March 31, | |||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
Prior Period | Current Period | Total | Prior Period | Current Period | Total | ||||||||||||||||||
Net losses paid | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Net change in case and LAE reserves | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Net change in IBNR reserves | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Increase (reduction) in estimates of net ultimate losses | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Increase (reduction) in provisions for unallocated LAE | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Amortization of deferred charge assets | |||||||||||||||||||||||
Amortization of fair value adjustments | |||||||||||||||||||||||
Changes in fair value - fair value option | ( | ) | ( | ) | |||||||||||||||||||
Net incurred losses and LAE | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Balance as of beginning of period | $ | $ | |||||
Less: reinsurance reserves recoverable | |||||||
Net balance as of beginning of period | |||||||
Net incurred losses and LAE: | |||||||
Current period | |||||||
Prior periods | ( | ) | ( | ) | |||
Total net incurred losses and LAE | |||||||
Net paid losses: | |||||||
Current period | ( | ) | ( | ) | |||
Prior periods | ( | ) | ( | ) | |||
Total net paid losses | ( | ) | ( | ) | |||
Effect of exchange rate movement | |||||||
Net balance as of March 31 | |||||||
Plus: reinsurance reserves recoverable | |||||||
Balance as of March 31 | $ | $ |
Three Months Ended March 31, | |||||||||||||||||
2019 | 2018 | ||||||||||||||||
Prior Period | Current Period | Total | Prior Period | Current Period | Total | ||||||||||||
Net losses paid | |||||||||||||||||
Net change in case and LAE reserves | ( | ) | ( | ) | ( | ) | |||||||||||
Net change in IBNR reserves | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Increase (reduction) in estimates of net ultimate losses | ( | ) | |||||||||||||||
Amortization of fair value adjustments | ( | ) | ( | ) | |||||||||||||
Net incurred losses and LAE | ( | ) | ( | ) |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Balance as of beginning of period | $ | $ | |||||
Less: reinsurance reserves recoverable | |||||||
Net balance as of beginning of period | |||||||
Net incurred losses and LAE: | |||||||
Current period | |||||||
Prior periods | ( | ) | |||||
Total net incurred losses and LAE | |||||||
Net paid losses: | |||||||
Current period | ( | ) | ( | ) | |||
Prior periods | ( | ) | ( | ) | |||
Total net paid losses | ( | ) | ( | ) | |||
Effect of exchange rate movement | ( | ) | |||||
Assumed business | |||||||
Net balance as of March 31 | |||||||
Plus: reinsurance reserves recoverable | |||||||
Balance as of March 31 | $ | $ |
Three Months Ended March 31, | |||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
Prior Period | Current Period | Total | Prior Period | Current Period | Total | ||||||||||||||||||
Net losses paid | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Net change in case and LAE reserves | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Net change in IBNR reserves | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Increase in estimates of net ultimate losses | |||||||||||||||||||||||
Increase (reduction) in provisions for unallocated LAE | ( | ) | ( | ) | |||||||||||||||||||
Amortization of fair value adjustments | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Net incurred losses and LAE | $ | $ | $ | $ | ( | ) | $ | $ |
• | 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. |
March 31, 2019 | ||||||||||||||||||||
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 | $ | $ | $ | $ | — | $ | ||||||||||||||
U.K. government | — | |||||||||||||||||||
Other government | — | |||||||||||||||||||
Corporate | — | |||||||||||||||||||
Municipal | — | |||||||||||||||||||
Residential mortgage-backed | — | |||||||||||||||||||
Commercial mortgage-backed | — | |||||||||||||||||||
Asset-backed | — | |||||||||||||||||||
$ | $ | $ | $ | — | $ | |||||||||||||||
Other assets included within funds held - directly managed | — | |||||||||||||||||||
Equities: | ||||||||||||||||||||
Publicly traded equity investments | $ | $ | $ | $ | — | $ | ||||||||||||||
Privately held equity investments | — | |||||||||||||||||||
$ | $ | $ | $ | — | $ | |||||||||||||||
Other investments: | ||||||||||||||||||||
Hedge funds | $ | $ | $ | $ | $ | |||||||||||||||
Fixed income funds | ||||||||||||||||||||
Equity funds | ||||||||||||||||||||
Private equity funds | ||||||||||||||||||||
CLO equities | ||||||||||||||||||||
CLO equity fund | ||||||||||||||||||||
Private credit funds | ||||||||||||||||||||
Others | ||||||||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||
Total Investments | $ | $ | $ | $ | $ | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||
Reinsurance balances recoverable on paid and unpaid losses: | $ | $ | $ | $ | — | $ | ||||||||||||||
Other Assets: | ||||||||||||||||||||
Derivative Instruments | $ | $ | $ | $ | — | $ | ||||||||||||||
$ | $ | $ | $ | — | $ | |||||||||||||||
Losses and LAE: | $ | $ | $ | $ | — | $ | ||||||||||||||
Other Liabilities: | ||||||||||||||||||||
Derivative Instruments | $ | $ | $ | $ | — | $ | ||||||||||||||
$ | $ | $ | $ | — | $ |
December 31, 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 | $ | $ | $ | $ | — | $ | ||||||||||||||
U.K government | — | |||||||||||||||||||
Other government | — | |||||||||||||||||||
Corporate | — | |||||||||||||||||||
Municipal | — | |||||||||||||||||||
Residential mortgage-backed | — | |||||||||||||||||||
Commercial mortgage-backed | — | |||||||||||||||||||
Asset-backed | — | |||||||||||||||||||
$ | $ | $ | $ | — | $ | |||||||||||||||
Other assets included within funds held - directly managed | $ | $ | $ | $ | — | $ | ||||||||||||||
Equities: | ||||||||||||||||||||
Publicly traded equity investments | $ | $ | $ | $ | — | $ | ||||||||||||||
Privately held equity investments | — | |||||||||||||||||||
$ | $ | $ | $ | — | $ | |||||||||||||||
Other investments: | ||||||||||||||||||||
Hedge funds | $ | $ | $ | $ | $ | |||||||||||||||
Fixed income funds | ||||||||||||||||||||
Equity funds | ||||||||||||||||||||
Private equity funds | ||||||||||||||||||||
CLO equities | ||||||||||||||||||||
CLO equity funds | ||||||||||||||||||||
Private credit funds | ||||||||||||||||||||
Other | ||||||||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||
Total Investments | $ | $ | $ | $ | $ | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||
Reinsurance recoverable: | $ | $ | $ | $ | — | $ | ||||||||||||||
Other Assets: | ||||||||||||||||||||
Derivative Instruments | $ | $ | $ | $ | — | $ | ||||||||||||||
$ | $ | $ | $ | — | $ | |||||||||||||||
Losses and LAE: | $ | $ | $ | $ | — | $ | ||||||||||||||
Other Liabilities: | ||||||||||||||||||||
Derivative Instruments | $ | $ | $ | $ | — | $ | ||||||||||||||
$ | $ | $ | $ | — | $ |
• | 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. |
• |
• | 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. |
• | 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 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. |
• | 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 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 the CLO equity fund, we measure fair value by obtaining the most recently available NAV as advised by the external fund manager or third party administrator. The fair value of this investment is 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. |
• |
Three Months Ended March 31, 2019 | ||||||||||||||||||||||||
Fixed maturity investments | Privately-held Equities | Other Investments | Total | |||||||||||||||||||||
Corporate | Commercial mortgage-backed | Asset-backed | ||||||||||||||||||||||
Beginning fair value | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Sales | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
Total realized and unrealized gains | ||||||||||||||||||||||||
Transfer into Level 3 from Level 2 | ||||||||||||||||||||||||
Transfer out of Level 3 into Level 2 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
Ending fair value | $ | $ | $ | $ | $ | $ |
Three Months Ended March 31, 2018 | ||||||||||||||||||||||||
Fixed maturity investments | Other Investments | Total | ||||||||||||||||||||||
Corporate | Residential mortgage-backed | Commercial mortgage-backed | Asset-backed | |||||||||||||||||||||
Beginning fair value | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Purchases | ||||||||||||||||||||||||
Sales | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
Total realized and unrealized gains (losses) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Transfer into Level 3 from Level 2 | ||||||||||||||||||||||||
Transfer out of Level 3 into Level 2 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
Ending fair value | $ | $ | $ | $ | $ | $ |
Three Months Ended | |||||||||||||||||||||||
March 31, 2019 | March 31, 2018 | ||||||||||||||||||||||
Liability for losses and LAE | Reinsurance balances recoverable | Net | Liability for losses and LAE | Reinsurance balances recoverable | Net | ||||||||||||||||||
Beginning fair value | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Assumed business | |||||||||||||||||||||||
Incurred losses and LAE: | |||||||||||||||||||||||
Reduction in estimates of ultimate losses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||
Reduction in unallocated LAE | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||
Change in fair value | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Total incurred losses and LAE | ( | ) | ( | ) | ( | ) | |||||||||||||||||
Paid losses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Effect of exchange rate movements | |||||||||||||||||||||||
Ending fair value | $ | $ | $ | $ | $ | $ |
Three Months Ended | ||||||||
March 31, 2019 | March 31, 2018 | |||||||
Changes in fair value due to changes in: | ||||||||
Duration | $ | $ | ||||||
Corporate bond yield | ( | ) | ||||||
Change in fair value | $ | $ | ( | ) |
March 31, 2019 | December 31, 2018 | |||||
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) | |||||
Internal model | Risk cost of capital (U) | |||||
Internal model | Weighted average cost of capital (U) | |||||
Internal model | Duration - liability (U) | 7.40 years | 7.33 years | |||
Internal model | Duration - reinsurance balances recoverable (U) | 8.01 years | 7.98 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 on paid and unpaid losses. 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 on paid and unpaid losses. |
• | 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 on paid and unpaid losses. 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 on paid and unpaid losses. |
• | 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 on paid and unpaid losses. 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 on paid and unpaid losses. |
• | The duration of the liability and recoverable is adjusted every period to reflect actual net payments during the period and expected future payments. An acceleration of the estimated payment pattern, a decrease in duration, would result in an increase in the fair value of the liability for losses and LAE and reinsurance balances recoverable on paid and unpaid losses. Conversely, a deceleration of the estimated payment pattern, an increase in duration, would result in a decrease in the fair value of the liability for losses and LAE and reinsurance balances recoverable on paid and unpaid losses. |
Three Months Ended March 31, | |||||||||||||||
2019 | 2018 | ||||||||||||||
Premiums Written | Premiums Earned | Premiums Written | Premiums Earned | ||||||||||||
Non-life Run-off | |||||||||||||||
Gross | $ | ( | ) | $ | $ | $ | |||||||||
Ceded | ( | ) | ( | ) | ( | ) | |||||||||
Net | $ | ( | ) | $ | $ | $ | |||||||||
Atrium | |||||||||||||||
Gross | $ | $ | $ | $ | |||||||||||
Ceded | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net | $ | $ | $ | $ | |||||||||||
StarStone | |||||||||||||||
Gross | $ | $ | $ | $ | |||||||||||
Ceded | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net | $ | $ | $ | $ | |||||||||||
Other | |||||||||||||||
Gross | $ | $ | $ | $ | |||||||||||
Ceded | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net | $ | $ | $ | $ | |||||||||||
Total | |||||||||||||||
Gross | $ | $ | $ | $ | |||||||||||
Ceded | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total | $ | $ | $ | $ |
Intangible assets | |||||||||||||||||||
Goodwill | Intangible assets with a definite life | Intangible assets with an indefinite life | Total | Total | |||||||||||||||
Balance as of January 1, 2019 | $ | $ | $ | $ | $ | ||||||||||||||
Amortization | — | ( | ) | — | ( | ) | ( | ) | |||||||||||
Balance as of March 31, 2019 | $ | $ | $ | $ | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Intangible asset amortization | $ | $ |
March 31, 2019 | December 31, 2018 | ||||||||||||||||||||||
Gross Carrying Value | Accumulated Amortization | Net Carrying Value | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||||||||||||||
Intangible assets with a definite life: | |||||||||||||||||||||||
Distribution channel | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||
Technology | ( | ) | ( | ) | |||||||||||||||||||
Brand | ( | ) | ( | ) | |||||||||||||||||||
Total | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||
Intangible assets with an indefinite life: | |||||||||||||||||||||||
Lloyd’s syndicate capacity | $ | $ | — | $ | $ | $ | — | $ | |||||||||||||||
Licenses | — | — | |||||||||||||||||||||
Management contract | — | — | |||||||||||||||||||||
Total | $ | $ | — | $ | $ | $ | — | $ |
Facility | Origination Date | Term | March 31, 2019 | December 31, 2018 | ||||||||
Senior Notes | March 10, 2017 | $ | $ | |||||||||
EGL Revolving Credit Facility | August 16, 2018 | |||||||||||
2018 EGL Term Loan Facility | December 27, 2018 | |||||||||||
Total debt obligations | $ | $ |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Interest expense on debt obligations | $ | $ | |||||
Funds withheld balances and other | |||||||
Total interest expense | $ | $ |
Three Months Ended | For The Year Ended | |||||||
March 31, 2019 | December 31, 2018 | |||||||
Balance at beginning of period | $ | $ | ||||||
Capital contributions | ||||||||
Dividends paid | ( | ) | ||||||
Net losses attributable to RNCI | ( | ) | ( | ) | ||||
Accumulated other comprehensive earnings (losses) attributable to RNCI | ( | ) | ||||||
Change in redemption value of RNCI | ( | ) | ||||||
Balance at end of period | $ | $ |
Dividend per: | ||||||||||||||||||
Preferred Share Series | Date Declared | Record Date | Date Payable | Preferred Share | Depositary Share | Total dividends paid and declared in the three months ended March 31, 2019 | ||||||||||||
(in U.S. dollars) | (in thousands of U.S. dollars) | |||||||||||||||||
Series D | February 21, 2019 | February 15, 2019 | March 1, 2019 | $ | $ | $ | ||||||||||||
Series E | February 21, 2019 | February 15, 2019 | March 1, 2019 | $ | $ | |||||||||||||
Series D | May 3, 2019 | May 15, 2019 | June 1, 2019 | $ | $ | |||||||||||||
Series E | May 3, 2019 | May 15, 2019 | June 1, 2019 | $ | $ | |||||||||||||
$ |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Numerator: | |||||||
Net earnings (loss) attributable to Enstar Group Limited ordinary shareholders | $ | $ | ( | ) | |||
Denominator: | |||||||
Weighted average ordinary shares outstanding — basic | |||||||
Effect of dilutive securities: | |||||||
Share-based compensation plans | |||||||
Warrants | |||||||
Weighted average ordinary shares outstanding — diluted | |||||||
Earnings (losses) per ordinary share attributable to Enstar Group Limited: | |||||||
Basic | $ | $ | ( | ) | |||
Diluted(1) | $ | $ | ( | ) |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Share-based compensation plans: | ||||||||
Restricted shares and restricted share units | $ | $ | ||||||
Performance share units | ||||||||
Cash-settled stock appreciation rights | ||||||||
Other share-based compensation plans: | ||||||||
Northshore incentive plan | ||||||||
Deferred compensation and ordinary share plan for non-employee directors | ||||||||
Employee share purchase plan | ||||||||
Total share-based compensation | $ | $ |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Pension plans: | ||||||||
Defined contribution plans | $ | $ | ||||||
Defined benefit plan | ||||||||
Total pension costs | $ | $ |
March 31, 2019 | December 31, 2018 | ||||
Redeemable Noncontrolling Interest |
• | 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; |
• | A separate account managed by Sound Point Capital, with respect to which we incurred management fees; and |
• |
March 31, 2019 | December 31, 2018 | ||||||
Investments in funds managed by Stone Point | $ | $ | |||||
Investments in registered investment companies affiliated with entities owned by Trident or Stone Point | |||||||
Investments managed by Eagle Point Credit Management and PRIMA Capital Advisors | |||||||
Investments in funds managed by Sound Point Capital | |||||||
Investments in CLO equity securities with Sound Point Capital as collateral manager | |||||||
Separate account managed by Sound Point Capital | |||||||
Total investments | $ | $ |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Net unrealized gains (losses) on funds managed by Stone Point | $ | $ | ( | ) | |||
Net unrealized gains (losses) on registered investment companies affiliated with entities owned by Trident or Stone Point | ( | ) | |||||
Interest income on registered investment companies affiliated with entities owned by Trident | |||||||
Management fees on investments managed by Eagle Point Credit Management and PRIMA Capital Advisors | ( | ) | ( | ) | |||
Net unrealized gains (losses) on investments in funds managed by Sound Point Capital | ( | ) | |||||
Net unrealized gains (losses) on investments in CLO equity securities with Sound Point Capital as collateral manager | ( | ) | |||||
Interest income on investments in CLO equity securities with Sound Point Capital as collateral manager | |||||||
Management fees on separate account managed by Sound Point Capital | ( | ) | |||||
Total net earnings | $ | $ |
Three Months Ended | |||
March 31, | |||
2018 | |||
Management fee income | $ | ||
Transactions under KaylaRe-StarStone QS: | |||
Ceded premium earned | ( | ) | |
Net incurred losses | |||
Acquisition costs | |||
Total net earnings (loss) | $ | ( | ) |
March 31, 2019 | December 31, 2018 | ||||||
Investments in funds managed by Hillhouse Capital, held by equity method investees | $ | $ | |||||
Our ownership of equity method investments | % | % | |||||
Our indirect investment in funds managed by Hillhouse Capital | $ | $ | |||||
Direct investment in funds managed by Hillhouse Capital: | |||||||
InRe Fund | $ | $ | |||||
Other funds | |||||||
$ | $ |
March 31, 2019 | December 31, 2018 | ||||||
Investment in Monument | $ | $ |
March 31, 2019 | December 31, 2018 | ||||||
Investment in Clear Spring | $ | $ |
March 31, 2019 | December 31, 2018 | ||||||
Balances under StarStone ceding quota share: | |||||||
Reinsurance balances recoverable | $ | $ | |||||
Prepaid insurance premiums | |||||||
Ceded payable | |||||||
Ceded acquisition costs | |||||||
Balances under assuming quota share: | |||||||
Losses and LAE | |||||||
Unearned reinsurance premiums | |||||||
Funds held |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
Transactions under StarStone ceding quota share: | |||||||
Ceded premium earned | $ | ( | ) | $ | ( | ) | |
Ceded incurred losses and LAE | |||||||
Ceded acquisition costs | |||||||
Transactions under assuming quota share: | |||||||
Premium earned | |||||||
Net incurred losses and LAE | ( | ) | ( | ) | |||
Acquisition costs | ( | ) | ( | ) | |||
Total net earnings (loss) | $ | ( | ) | $ |
March 31, 2019 | December 31, 2018 | ||||||
Investment in AmTrust | $ | $ |
Three Months Ended | |||
March 31, | |||
2019 | |||
Net investment income | $ |
March 31, 2019 | December 31, 2018 | ||||||
Investment in Citco | $ | $ |
March 31, 2019 | December 31, 2018 | ||||||
Investment in EnhanzedRe | $ | $ |
March 31, 2019 | December 31, 2018 | ||||||
Other liabilities: | |||||||
Direct asbestos liabilities | $ | $ | |||||
Direct environmental liabilities | |||||||
Estimated future expenses | |||||||
Fair value adjustments | ( | ) | ( | ) | |||
Other assets: | |||||||
Insurance recoveries related to direct asbestos and environmental liabilities | |||||||
Fair value adjustments | ( | ) | ( | ) | |||
Net liabilities relating to direct asbestos and environmental exposures | $ | $ |
Three Months Ended March 31, | |||
2019 | |||
Operating lease cost | $ | ||
Sublease income | ( | ) | |
Total lease cost | $ |
Three Months Ended March 31, | |||
2019 | |||
Operating cash flow information: | |||
Cash paid for amounts included in the measurement of lease liabilities | $ | ||
Non-cash activity: | |||
Right-of-use assets obtained in exchange for lease obligations | $ |
Balance sheet classification | March 31, 2019 | ||||
Right-of-use assets | Other assets | $ | |||
Current lease liabilities | Other liabilities | ||||
Non-current lease liabilities | Other liabilities |
March 31, 2019 | |||
Weighted-average remaining lease term | |||
Weighted-average discount rate | % |
March 31, 2019 | ||||
2019 | $ | |||
2020 | ||||
2021 | ||||
2022 | ||||
2023 | ||||
2024 and beyond | ||||
Total lease payments | ||||
Less: Imputed interest | ( | ) | ||
Present value of lease liabilities | $ |
Three Months Ended March 31, 2019 | |||||||||||||||||||
Non-Life Run-Off | Atrium | StarStone | Other | Total | |||||||||||||||
Gross premiums written | $ | ( | ) | $ | $ | $ | $ | ||||||||||||
Net premiums written | $ | ( | ) | $ | $ | $ | $ | ||||||||||||
Net premiums earned | $ | $ | $ | $ | $ | ||||||||||||||
Net incurred losses and LAE | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Life and Annuity Policy Benefits | ( | ) | ( | ) | |||||||||||||||
Acquisition costs | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Underwriting income (loss) | ( | ) | ( | ) | ( | ) | |||||||||||||
Net investment income (loss) | ( | ) | |||||||||||||||||
Net realized and unrealized gains | |||||||||||||||||||
Fees and commission income | |||||||||||||||||||
Other income | |||||||||||||||||||
Corporate expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Interest income (expense) | ( | ) | ( | ) | ( | ) | |||||||||||||
Net foreign exchange gains (losses) | ( | ) | |||||||||||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES | ( | ) | ( | ) | |||||||||||||||
Income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Earnings from equity method investments | |||||||||||||||||||
NET EARNINGS (LOSS) FROM CONTINUING OPERATIONS | ( | ) | ( | ) | |||||||||||||||
Net loss (earnings) attributable to noncontrolling interest | ( | ) | ( | ) | |||||||||||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED | ( | ) | ( | ) | |||||||||||||||
Dividends on preferred shares | ( | ) | ( | ) | |||||||||||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||
Underwriting ratios: | |||||||||||||||||||
Loss ratio | % | % | |||||||||||||||||
Acquisition expense ratio | % | % | |||||||||||||||||
Operating expense ratio | % | % | |||||||||||||||||
Combined ratio | % | % |
Three Months Ended March 31, 2018 | |||||||||||||||||||
Non-Life Run-Off | Atrium | StarStone | Other | Total | |||||||||||||||
Gross premiums written | $ | $ | $ | $ | $ | ||||||||||||||
Net premiums written | $ | $ | $ | $ | $ | ||||||||||||||
Net premiums earned | $ | $ | $ | $ | $ | ||||||||||||||
Net incurred losses and LAE | ( | ) | ( | ) | ( | ) | |||||||||||||
Life and Annuity Policy Benefits | |||||||||||||||||||
Acquisition costs | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Underwriting income | |||||||||||||||||||
Net investment income | |||||||||||||||||||
Net realized and unrealized losses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
Fees and commission income | |||||||||||||||||||
Other income (expense) | ( | ) | |||||||||||||||||
Corporate expenses | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Interest income (expense) | ( | ) | ( | ) | ( | ) | |||||||||||||
Net foreign exchange gains (losses) | ( | ) | ( | ) | ( | ) | |||||||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Income tax benefit (expense) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Earnings from equity method investments | |||||||||||||||||||
NET EARNINGS (LOSS) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Net loss (earnings) attributable to noncontrolling interest | ( | ) | ( | ) | ( | ) | |||||||||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
Underwriting ratios: | |||||||||||||||||||
Loss ratio | % | % | |||||||||||||||||
Acquisition expense ratio | % | % | |||||||||||||||||
Operating expense ratio | % | % | |||||||||||||||||
Combined ratio | % | % |
March 31, | December 31, | ||||||
2019 | 2018 | ||||||
Assets by Segment: | |||||||
Non-life Run-off | $ | $ | |||||
Atrium | |||||||
StarStone | |||||||
Other | ( | ) | ( | ) | |||
Total assets | $ | $ |
Section | Page | |
March 31, 2019 | December 31, 2018 | Change | |||||||||
Numerator: | |||||||||||
Total Enstar Group Limited Shareholder's Equity | $ | 4,267,712 | $ | 3,901,933 | $ | 365,779 | |||||
Less: Series D and E Preferred Shares | 510,000 | 510,000 | — | ||||||||
Total Enstar Group Limited Ordinary Shareholders' Equity (A) | 3,757,712 | 3,391,933 | 365,779 | ||||||||
Proceeds from assumed conversion of warrants1 | 20,229 | 20,229 | — | ||||||||
Numerator for fully diluted book value per ordinary share calculations (B) | $ | 3,777,941 | $ | 3,412,162 | $ | 365,779 | |||||
Denominator: | |||||||||||
Ordinary shares outstanding (C) | 21,467,515 | 21,459,997 | 7,518 | ||||||||
Effect of dilutive securities: | |||||||||||
Share-based compensation plans | 292,885 | 245,165 | 47,720 | ||||||||
Warrants(1) | 175,901 | 175,901 | — | ||||||||
Fully diluted ordinary shares outstanding (D) | 21,936,301 | 21,881,063 | 55,238 | ||||||||
Book value per ordinary share: | |||||||||||
Basic book value per ordinary share = (A) / (C) | $ | 175.04 | $ | 158.06 | $ | 16.98 | |||||
Fully diluted book value per ordinary share = (B) / (D) | $ | 172.22 | $ | 155.94 | $ | 16.28 |
• | a loss portfolio transfer reinsurance agreement with Amerisure Mutual Insurance Company ("Amerisure"), whereby we assumed net reserves of $60.0 million. This transaction closed in the second quarter of 2019; |
• | a master agreement with Maiden Holdings, Ltd. ("Maiden Holdings") and Maiden Reinsurance Ltd. (“Maiden Re Bermuda”), under which we have agreed to enter into an Adverse Development Agreement ("ADC Agreement") pursuant to which Maiden Re Bermuda will cede and Enstar will reinsure 100% of the liability of Maiden Re Bermuda, as reinsurer, under Maiden Re Bermuda’s two existing quota share agreements with certain insurance companies owned directly or indirectly by AmTrust Financial Services, Inc. (“AmTrust”) for losses incurred on or prior to December 31, 2018 in excess of a $2.44 billion retention, as such figure may be adjusted based upon Maiden Re Bermuda’s final year end reserves for the underlying business, up to a $675 million limit. The premium payable by Maiden Re Bermuda to Enstar under the ADC Agreement will be $500 million. Completion of the transaction is subject to, among other things, regulatory approvals and satisfaction of various closing conditions. |
• | a reinsurance transaction with Zurich Insurance Group ("Zurich"), pursuant to which we will reinsure approximately $500.0 million of asbestos and environmental reserves relating to 1986 and prior years. Completion is expected to occur in 2019. |
• | 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 three months of 2019, we recognized net unrealized gains on our investments of $460.5 million, of which $209.5 million and $39.0 million related to our investments in fixed maturities, trading and funds withheld - directly managed, respectively, primarily due to declining sovereign yields and tightening 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 in shareholders' equity. We may experience further unrealized gains and losses on our fixed maturity investments, depending on investment market 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. During the first three months of 2019, we recognized net unrealized gains on our other investments of $204.7 million, compared to net unrealized losses of $164.0 million for the year ended 2018. We believe our other investments provide diversification against our fixed income investments and an opportunity for improved risk-adjusted returns, however, the returns of these investments may be more volatile and we may experience significant unrealized gains or losses in a particular quarter or year. |
Three Months Ended | |||||||||||
March 31 | |||||||||||
2019 | 2018 | Change | |||||||||
(in thousands of U.S. dollars) | |||||||||||
INCOME | |||||||||||
Net premiums earned | $ | 335,287 | $ | 170,219 | $ | 165,068 | |||||
Fees and commission income | 6,681 | 8,331 | (1,650 | ) | |||||||
Net investment income | 78,696 | 66,319 | 12,377 | ||||||||
Net realized and unrealized gains (losses) | 460,791 | (143,030 | ) | 603,821 | |||||||
Other income | 5,812 | 1,943 | 3,869 | ||||||||
887,267 | 103,782 | 783,485 | |||||||||
EXPENSES | |||||||||||
Net incurred losses and LAE | 312,404 | 19,534 | 292,870 | ||||||||
Life and annuity policy benefits | 96 | (46 | ) | 142 | |||||||
Acquisition costs | 93,788 | 30,108 | 63,680 | ||||||||
General and administrative expenses | 112,074 | 95,260 | 16,814 | ||||||||
Interest expense | 11,036 | 8,011 | 3,025 | ||||||||
Net foreign exchange gains (losses) | (3,850 | ) | 5,868 | (9,718 | ) | ||||||
525,548 | 158,735 | 366,813 | |||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES | 361,719 | (54,953 | ) | 416,672 | |||||||
Income tax expense | (4,749 | ) | (172 | ) | (4,577 | ) | |||||
Earnings from equity method investments | 8,772 | 14,697 | (5,925 | ) | |||||||
NET EARNINGS (LOSS) | 365,742 | (40,428 | ) | 406,170 | |||||||
Net loss (earnings) attributable to noncontrolling interest | 2,148 | (782 | ) | 2,930 | |||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED | 367,890 | (41,210 | ) | 409,100 | |||||||
Dividends on preferred shares | (9,139 | ) | — | (9,139 | ) | ||||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | 358,751 | $ | (41,210 | ) | $ | 399,961 |
• | Consolidated net earnings of $358.8 million and basic and diluted net earnings per ordinary share of $16.71 and $16.57, respectively. |
• | Non-GAAP operating income of $199.7 million and diluted non-GAAP operating income per ordinary share of $9.22. For a reconciliation of non-GAAP operating income to net earnings (loss) calculated in accordance with GAAP and diluted non-GAAP operating income per ordinary share to diluted net earnings (loss) per ordinary share calculated in accordance with GAAP, see "Non-GAAP Financial Measures" below. |
• | Net earnings from Non-life Run-off segment of $400.7 million, including investment results. |
• | Net investment income of $78.7 million and net realized and unrealized gains of $460.8 million comprised $0.3 million of net realized gains and $460.5 million of net unrealized gains. |
• | Net premiums earned of $335.3 million, including $38.8 million and $213.3 million in our Atrium and StarStone segments, respectively. |
• | Combined ratios of 87.7% and 132.6% for the active underwriting operations within our Atrium and StarStone segments, respectively. |
• | Total investments, cash and funds held of $13,839.1 million. |
• | Total reinsurance balances recoverable of $2,286.4 million. |
• | Total assets of $18,058.3 million. |
• | Total gross reserves for losses and LAE of $10,096.0 million, with $897.1 million of gross reserves assumed in our Non-life Run-off operations during the three months ended March 31, 2019. |
• | Total shareholders' equity, including preferred shares, of $4,267.7 million and redeemable noncontrolling interest of $456.3 million. Shareholders' equity includes $510.0 million of preferred shares issued in 2018. |
• | Diluted book value per ordinary share of $172.22, an increase of 10.4% since December 31, 2018. |
• | Non-life Run-off - Net earnings attributable to the Non-life Run-off segment were $400.7 million for the three months ended March 31, 2019 compared to net losses of $36.9 million for the three months ended March 31, 2018. The increase in net earnings of $437.6 million was primarily due to net realized and unrealized gains of $436.2 million on our investment portfolio in the current period compared to net losses in the comparative period, higher net investment income, partially offset by net incurred losses and LAE in the current period compared to a reduction in net incurred losses and LAE in the comparative period; |
• | Atrium - Net earnings were $4.5 million for the three months ended March 31, 2019 compared to $2.0 million for the three months ended March 31, 2018. The increase in net earnings was primarily due to net realized and unrealized gains on our investment portfolio and improved underwriting income due to lower loss and other expense ratios; |
• | StarStone - Net losses were $31.0 million for the three months ended March 31, 2019 compared to net losses of $3.1 million for the three months ended March 31, 2018. The increase in net losses was primarily attributable to higher net incurred losses and LAE partially offset by increased net realized and unrealized gains on our investment portfolio. The increase in net incurred losses and LAE was primarily due to prior year adverse development primarily across discontinued lines. The segment results in 2019 also include the consolidation of StarStone Group's reinsurance to KaylaRe following Enstar's acquisition of the portion of KaylaRe it did not already own, and the results of a loss portfolio transfer on discontinued lines; |
• | Net Realized and Unrealized Gains - Net realized and unrealized gains were $460.8 million for the three months ended March 31, 2019 compared to net realized and unrealized losses of $143.0 million for the three months ended March 31, 2018. Net unrealized gains for the three months ended March 31, 2019 included net unrealized gains of $209.5 million on fixed maturities investments, which are accounted for on a trading basis through net earnings, and gains of $204.7 million on other investments. The unrealized gains on fixed maturities were primarily driven by tightening corporate credit spreads, partially offset by increased sovereign yields 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. The net unrealized gains on our other investments were primarily driven by unrealized gains in our equity, fixed income and hedge funds, as a result of a broad recovery in the global equity and fixed income markets in the first quarter of 2019; |
• | Net Investment Income - Net investment income was $78.7 million and $66.3 million for the three months ended March 31, 2019 and 2018, 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, and higher reinvestment rates; |
• | Noncontrolling Interest - The net losses attributable to noncontrolling interest were $2.1 million for the three months ended March 31, 2019 compared to net earnings attributable to noncontrolling interest of $0.8 million for the three months ended March 31, 2018, respectively. The net losses attributable to noncontrolling interest were primarily driven by the losses in the StarStone segment, as discussed above, partially offset by the net earnings in our Non-life Run-off and Atrium segments; |
• | Our non-GAAP operating income, which excludes the impact of unrealized gains and losses on fixed maturity securities and other items, was $199.7 million for the three months ended March 31, 2019, an increase of $160.0 million from non-GAAP operating income of $39.6 million for the three months ended March 31, 2018. For a reconciliation of non-GAAP operating income to net earnings (loss) calculated in accordance with GAAP, see "Non-GAAP Financial Measures" below. The increase primarily related to unrealized gains on other investments during the three months ended March 31, 2019. |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2019 | 2018 | Change | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Segment split of net earnings (loss) attributable to Enstar Group Limited: | |||||||||||
Non-life Run-off | $ | 400,745 | $ | (36,861 | ) | $ | 437,606 | ||||
Atrium | 4,497 | 1,969 | 2,528 | ||||||||
StarStone | (31,001 | ) | (3,088 | ) | (27,913 | ) | |||||
Other | (15,490 | ) | (3,230 | ) | (12,260 | ) | |||||
Net earnings (loss) attributable to Enstar Group Limited ordinary shareholders | $ | 358,751 | $ | (41,210 | ) | $ | 399,961 |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2019 | 2018 | Change | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Gross premiums written | $ | (20,877 | ) | $ | 7,380 | $ | (28,257 | ) | |||
Net premiums written | $ | (19,178 | ) | $ | 100 | $ | (19,278 | ) | |||
Net premiums earned | $ | 76,674 | $ | 7,178 | $ | 69,496 | |||||
Net incurred losses and LAE | (95,182 | ) | 72,978 | (168,160 | ) | ||||||
Acquisition costs | (28,155 | ) | (1,470 | ) | (26,685 | ) | |||||
Operating expenses | (43,992 | ) | (38,403 | ) | (5,589 | ) | |||||
Underwriting income | (90,655 | ) | 40,283 | (130,938 | ) | ||||||
Net investment income | 66,728 | 51,651 | 15,077 | ||||||||
Net realized and unrealized gains (losses) | 436,186 | (126,296 | ) | 562,482 | |||||||
Fees and commission income | 4,832 | 4,898 | (66 | ) | |||||||
Other income | 5,504 | 2,558 | 2,946 | ||||||||
Corporate expenses | (16,570 | ) | (8,633 | ) | (7,937 | ) | |||||
Interest expense | (12,116 | ) | (8,530 | ) | (3,586 | ) | |||||
Net foreign exchange gains (losses) | 3,618 | (7,177 | ) | 10,795 | |||||||
EARNINGS (LOSS) BEFORE INCOME TAXES | 397,527 | (51,246 | ) | 448,773 | |||||||
Income tax benefit (expense) | (2,720 | ) | 1,117 | (3,837 | ) | ||||||
Earnings from equity method investments | 8,584 | 14,697 | (6,113 | ) | |||||||
NET EARNINGS (LOSS) | 403,391 | (35,432 | ) | 438,823 | |||||||
Net earnings attributable to noncontrolling interest | (2,646 | ) | (1,429 | ) | (1,217 | ) | |||||
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | 400,745 | $ | (36,861 | ) | $ | 437,606 |
Three Months Ended | |||||||||||
March 31 | |||||||||||
2019 | 2018 | Change | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Gross premiums written | $ | (20,877 | ) | $ | 7,380 | $ | (28,257 | ) | |||
Ceded reinsurance premiums written | 1,699 | (7,280 | ) | 8,979 | |||||||
Net premiums written | $ | (19,178 | ) | $ | 100 | $ | (19,278 | ) | |||
Gross premiums earned | $ | 83,966 | $ | 13,110 | $ | 70,856 | |||||
Ceded reinsurance premiums earned | (7,292 | ) | (5,932 | ) | (1,360 | ) | |||||
Net premiums earned | $ | 76,674 | $ | 7,178 | $ | 69,496 |
Three Months Ended March 31, | |||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
Prior Periods | Current Period | Total | Prior Periods | Current Period | Total | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Net losses paid | $ | 331,055 | $ | 18,014 | $ | 349,069 | $ | 252,583 | $ | 1 | $ | 252,584 | |||||||||||
Net change in case and LAE reserves (1) | (97,573 | ) | 19,872 | (77,701 | ) | (123,492 | ) | 6 | (123,486 | ) | |||||||||||||
Net change in IBNR reserves (2) | (243,815 | ) | 10,920 | (232,895 | ) | (154,450 | ) | 339 | (154,111 | ) | |||||||||||||
Increase (reduction) in estimates of net ultimate losses | (10,333 | ) | 48,806 | 38,473 | (25,359 | ) | 346 | (25,013 | ) | ||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (15,440 | ) | 265 | (15,175 | ) | (14,952 | ) | — | (14,952 | ) | |||||||||||||
Amortization of deferred charge assets | 7,064 | — | 7,064 | 5,081 | — | 5,081 | |||||||||||||||||
Amortization of fair value adjustments | 8,779 | — | 8,779 | 2,147 | — | 2,147 | |||||||||||||||||
Changes in fair value - fair value option | 56,041 | — | 56,041 | (40,241 | ) | — | (40,241 | ) | |||||||||||||||
Net incurred losses and LAE | $ | 46,111 | $ | 49,071 | $ | 95,182 | $ | (73,324 | ) | $ | 346 | $ | (72,978 | ) |
Three Months Ended March 31, | |||||||||||
2019 | 2018 | Change | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Operating expenses | $ | 43,992 | $ | 38,403 | $ | 5,589 | |||||
Corporate expenses | 16,570 | 8,633 | 7,937 | ||||||||
General and administrative expenses | $ | 60,562 | $ | 47,036 | $ | 13,526 |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2019 | 2018 | Change | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Gross premiums written | $ | 53,985 | $ | 49,442 | $ | 4,543 | |||||
Net premiums written | $ | 46,499 | $ | 41,494 | $ | 5,005 | |||||
Net premiums earned | $ | 38,753 | $ | 35,223 | $ | 3,530 | |||||
Net incurred losses and LAE | (17,214 | ) | (17,172 | ) | (42 | ) | |||||
Acquisition costs | (13,742 | ) | (12,065 | ) | (1,677 | ) | |||||
Operating expenses | (3,033 | ) | (4,177 | ) | 1,144 | ||||||
Underwriting income | 4,764 | 1,809 | 2,955 | ||||||||
Net investment income | 1,711 | 1,185 | 526 | ||||||||
Net realized and unrealized gains (losses) | 2,913 | (1,403 | ) | 4,316 | |||||||
Fees and commission income | 1,849 | 3,433 | (1,584 | ) | |||||||
Other income | 36 | 64 | (28 | ) | |||||||
Corporate expenses | (3,788 | ) | (475 | ) | (3,313 | ) | |||||
Net foreign exchange gains (losses) | 825 | (953 | ) | 1,778 | |||||||
EARNINGS BEFORE INCOME TAXES | 8,310 | 3,660 | 4,650 | ||||||||
Income tax expense | (685 | ) | (280 | ) | (405 | ) | |||||
NET EARNINGS | 7,625 | 3,380 | 4,245 | ||||||||
Net earnings attributable to noncontrolling interest | (3,128 | ) | (1,411 | ) | (1,717 | ) | |||||
NET EARNINGS ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | 4,497 | $ | 1,969 | $ | 2,528 | |||||
Underwriting ratios(1): | |||||||||||
Loss ratio | 44.4 | % | 48.8 | % | (4.4 | )% | |||||
Acquisition cost ratio | 35.5 | % | 34.3 | % | 1.2 | % | |||||
Operating expense ratio | 7.8 | % | 11.8 | % | (4.0 | )% | |||||
Combined ratio | 87.7 | % | 94.9 | % | (7.2 | )% |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2019 | 2018 | Change | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Marine, Aviation and Transit | $ | 13,014 | $ | 12,387 | $ | 627 | |||||
Binding Authorities | 18,575 | 17,709 | 866 | ||||||||
Reinsurance | 8,475 | 8,932 | (457 | ) | |||||||
Accident and Health | 9,212 | 6,140 | 3,072 | ||||||||
Non-Marine Direct and Facultative | 4,709 | 4,274 | 435 | ||||||||
Total | $ | 53,985 | $ | 49,442 | $ | 4,543 |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2019 | 2018 | Change | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Marine, Aviation and Transit | $ | 8,399 | $ | 7,594 | $ | 805 | |||||
Binding Authorities | 19,195 | 16,621 | 2,574 | ||||||||
Reinsurance | 3,064 | 3,298 | (234 | ) | |||||||
Accident and Health | 3,919 | 4,407 | (488 | ) | |||||||
Non-Marine Direct and Facultative | 4,176 | 3,303 | 873 | ||||||||
Total | $ | 38,753 | $ | 35,223 | $ | 3,530 |
Three Months Ended March 31, | |||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
Prior Periods | Current Period | Total | Prior Periods | Current Period | Total | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Net losses paid | $ | 14,420 | $ | 7,893 | $ | 22,313 | $ | 10,376 | $ | 7,154 | $ | 17,530 | |||||||||||
Net change in case and LAE reserves (1) | (6,342 | ) | 5,929 | (413 | ) | (2,384 | ) | 6,274 | 3,890 | ||||||||||||||
Net change in IBNR reserves (2) | (10,232 | ) | 4,415 | (5,817 | ) | (5,587 | ) | 3,878 | (1,709 | ) | |||||||||||||
Increase (reduction) in estimates of net ultimate losses | (2,154 | ) | 18,237 | 16,083 | 2,405 | 17,306 | 19,711 | ||||||||||||||||
Amortization of fair value adjustments | 1,131 | — | 1,131 | (2,539 | ) | — | (2,539 | ) | |||||||||||||||
Net incurred losses and LAE | $ | (1,023 | ) | $ | 18,237 | $ | 17,214 | $ | (134 | ) | $ | 17,306 | $ | 17,172 |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2019 | 2018 | Change | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Gross premiums written | $ | 251,373 | $ | 304,989 | $ | (53,616 | ) | ||||
Net premiums written | $ | 194,601 | $ | 180,563 | $ | 14,038 | |||||
Net premiums earned | $ | 213,262 | $ | 126,826 | $ | 86,436 | |||||
Net incurred losses and LAE | (195,052 | ) | (75,340 | ) | (119,712 | ) | |||||
Acquisition costs | (51,659 | ) | (16,425 | ) | (35,234 | ) | |||||
Operating expenses | (35,994 | ) | (34,557 | ) | (1,437 | ) | |||||
Underwriting income (loss) | (69,443 | ) | 504 | (69,947 | ) | ||||||
Net investment income | 11,942 | 7,701 | 4,241 | ||||||||
Net realized and unrealized gains (losses) | 20,658 | (12,958 | ) | 33,616 | |||||||
Other income | 60 | 51 | 9 | ||||||||
Interest expense | (475 | ) | (541 | ) | 66 | ||||||
Net foreign exchange gains (losses) | (594 | ) | 1,095 | (1,689 | ) | ||||||
LOSS BEFORE INCOME TAXES | (37,852 | ) | (4,148 | ) | (33,704 | ) | |||||
Income tax expense | (1,259 | ) | (998 | ) | (261 | ) | |||||
Earnings from equity method investments | 188 | — | 188 | ||||||||
NET LOSS | (38,923 | ) | (5,146 | ) | (33,777 | ) | |||||
Net loss attributable to noncontrolling interest | 7,922 | 2,058 | 5,864 | ||||||||
NET LOSS ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | (31,001 | ) | $ | (3,088 | ) | $ | (27,913 | ) | ||
Underwriting ratios(1): | |||||||||||
Loss ratio | 91.5 | % | 59.4 | % | 32.1 | % | |||||
Acquisition cost ratio | 24.2 | % | 13.0 | % | 11.2 | % | |||||
Operating expense ratio | 16.9 | % | 27.2 | % | (10.3 | )% | |||||
Combined ratio | 132.6 | % | 99.6 | % | 33.0 | % |
Three Months Ended | |||||||||||
March 31, 2019 | |||||||||||
StarStone Group | StarStone Intra-Group Cessions | StarStone Segment | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Net premiums earned | $ | 175,382 | $ | 37,880 | $ | 213,262 | |||||
Net incurred losses and LAE | (144,764 | ) | (50,288 | ) | (195,052 | ) | |||||
Acquisition costs | (34,548 | ) | (17,111 | ) | (51,659 | ) | |||||
Operating expenses | (35,617 | ) | (377 | ) | (35,994 | ) | |||||
Underwriting loss | (39,547 | ) | (29,896 | ) | (69,443 | ) | |||||
Net investment income | 11,853 | 89 | 11,942 | ||||||||
Net realized and unrealized gains | 18,710 | 1,948 | 20,658 | ||||||||
Other income | 60 | — | 60 | ||||||||
Interest income (expenses) | (2,792 | ) | 2,317 | (475 | ) | ||||||
Net foreign exchange gain | (242 | ) | (352 | ) | (594 | ) | |||||
LOSS BEFORE INCOME TAXES | (11,958 | ) | (25,894 | ) | (37,852 | ) | |||||
Income tax expense | (1,259 | ) | — | (1,259 | ) | ||||||
Earnings from equity method investments | 188 | — | 188 | ||||||||
NET LOSS | (13,029 | ) | (25,894 | ) | (38,923 | ) | |||||
Net loss attributable to noncontrolling interest | 5,346 | 2,576 | 7,922 | ||||||||
NET LOSS ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | (7,683 | ) | $ | (23,318 | ) | $ | (31,001 | ) | ||
Underwriting ratios: | |||||||||||
Loss ratio (1) | 82.5 | % | 132.8 | % | 91.5 | % | |||||
Acquisition cost ratio (1) | 19.7 | % | 45.2 | % | 24.2 | % | |||||
Operating expense ratio (1) | 20.3 | % | 1.0 | % | 16.9 | % | |||||
Combined ratio (1) | 122.5 | % | 178.9 | % | 132.6 | % |
(1) | Refer to "Underwriting Ratios" for a description of how these ratios are calculated. |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2019 | 2018 | Change | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Casualty | $ | 95,405 | $ | 74,869 | $ | 20,536 | |||||
Marine | 88,541 | 100,926 | (12,385 | ) | |||||||
Property | 28,153 | 82,242 | (54,089 | ) | |||||||
Aerospace | 9,112 | 10,008 | (896 | ) | |||||||
Workers' Compensation | 30,162 | 36,944 | (6,782 | ) | |||||||
Total | $ | 251,373 | $ | 304,989 | $ | (53,616 | ) |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2019 | 2018 | Change | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Casualty | $ | 81,717 | $ | 39,767 | $ | 41,950 | |||||
Marine | 56,753 | 39,224 | 17,529 | ||||||||
Property | 44,339 | 24,192 | 20,147 | ||||||||
Aerospace | 13,520 | 11,608 | 1,912 | ||||||||
Workers' Compensation | 16,933 | 12,035 | 4,898 | ||||||||
Total | $ | 213,262 | $ | 126,826 | $ | 86,436 |
Three Months Ended | |||||||||||||||||||||||
March 31, | |||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||
Prior Periods | Current Period | Total | Prior Periods | Current Period | Total | ||||||||||||||||||
(in thousands of U.S. dollars) | |||||||||||||||||||||||
Net losses paid | $ | 113,625 | $ | 1,792 | $ | 115,417 | $ | 87,687 | $ | 948 | $ | 88,635 | |||||||||||
Net change in case and LAE reserves (1) | (8,824 | ) | 10,880 | 2,056 | (14,217 | ) | 9,742 | (4,475 | ) | ||||||||||||||
Net change in IBNR reserves (2) | (52,834 | ) | 129,258 | 76,424 | (73,390 | ) | 64,519 | (8,871 | ) | ||||||||||||||
Increase in estimates of net ultimate losses | 51,967 | 141,930 | 193,897 | 80 | 75,209 | 75,289 | |||||||||||||||||
Increase (reduction) in provisions for unallocated LAE | (1,672 | ) | 3,020 | 1,348 | (2,101 | ) | 2,293 | 192 | |||||||||||||||
Amortization of fair value adjustments | (193 | ) | — | (193 | ) | (141 | ) | — | (141 | ) | |||||||||||||
Net incurred losses and LAE | $ | 50,102 | $ | 144,950 | $ | 195,052 | $ | (2,162 | ) | $ | 77,502 | $ | 75,340 |
Three Months Ended | |||||||||||
March 31, | |||||||||||
2019 | 2018 | Change | |||||||||
(in thousands of U.S. dollars) | |||||||||||
Net premiums earned | $ | 6,598 | $ | 992 | $ | 5,606 | |||||
Net incurred losses and LAE | (4,956 | ) | — | (4,956 | ) | ||||||
Life and Annuity Policy Benefits | (96 | ) | 46 | (142 | ) | ||||||
Acquisition costs | (232 | ) | (148 | ) | (84 | ) | |||||
Underwriting income | 1,314 | 890 | 424 | ||||||||
Net investment income | (1,685 | ) | 5,782 | (7,467 | ) | ||||||
Net realized and unrealized gains (losses) | 1,034 | (2,373 | ) | 3,407 | |||||||
Other income (expenses) | 212 | (730 | ) | 942 | |||||||
Corporate expenses | (8,697 | ) | (9,015 | ) | 318 | ||||||
Interest Income | 1,555 | 1,060 | 495 | ||||||||
Net foreign exchange gains | 1 | 1,167 | (1,166 | ) | |||||||
LOSS BEFORE INCOME TAXES | (6,266 | ) | (3,219 | ) | (3,047 | ) | |||||
Income tax expense | (85 | ) | (11 | ) | (74 | ) | |||||
NET LOSS ATTRIBUTABLE TO ENSTAR GROUP LIMITED | (6,351 | ) | (3,230 | ) | (3,121 | ) | |||||
Dividend on preferred shares | (9,139 | ) | — | (9,139 | ) | ||||||
NET LOSS ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS | $ | (15,490 | ) | $ | (3,230 | ) | $ | (12,260 | ) |
March 31, 2019 | ||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Other | Total | ||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||
Short-term investments, trading, at fair value | $ | 67,959 | $ | 300 | $ | 7,801 | $ | — | $ | 76,060 | ||||||||||
Fixed maturities, trading, at fair value | 5,907,269 | 134,560 | 1,275,225 | — | 7,317,054 | |||||||||||||||
Fixed maturities, available-for-sale, at fair value | — | 25,989 | — | 120,586 | 146,575 | |||||||||||||||
Funds held - directly managed | 1,288,210 | — | — | — | 1,288,210 | |||||||||||||||
Equities, at fair value | 370,591 | 3,624 | 26,205 | — | 400,420 | |||||||||||||||
Other investments, at fair value | 2,186,611 | 7,838 | 116,801 | 13,095 | 2,324,345 | |||||||||||||||
Equity method investments | 220,618 | — | 405 | 221,023 | ||||||||||||||||
Total investments | 10,041,258 | 172,311 | 1,426,437 | 133,681 | 11,773,687 | |||||||||||||||
Cash and cash equivalents (including restricted cash) | 694,488 | 76,176 | 338,169 | 36,818 | 1,145,651 | |||||||||||||||
Funds held by reinsured companies | 857,685 | 26,853 | 25,358 | 9,842 | 919,738 | |||||||||||||||
Total investable assets | $ | 11,593,431 | $ | 275,340 | $ | 1,789,964 | $ | 180,341 | $ | 13,839,076 | ||||||||||
Duration (in years) (1) | 5.52 | 1.64 | 2.52 | 5.20 | 4.93 | |||||||||||||||
Average credit rating (2) | A+ | AA+ | A+ | AA- | A+ |
December 31, 2018 | ||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Other | Total | ||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||
Short-term investments, trading, at fair value | $ | 106,375 | $ | 541 | $ | 7,200 | $ | — | $ | 114,116 | ||||||||||
Fixed maturities, trading, at fair value | 5,790,219 | 139,121 | 1,319,453 | — | 7,248,793 | |||||||||||||||
Fixed maturities, available-for-sale, at fair value | — | 29,975 | — | 121,634 | 151,609 | |||||||||||||||
Funds held - directly managed | 1,198,154 | — | — | — | 1,198,154 | |||||||||||||||
Equities, at fair value | 335,632 | 3,193 | 28,300 | — | 367,125 | |||||||||||||||
Other investments, at fair value | 1,825,307 | 7,166 | 113,024 | 12,260 | 1,957,757 | |||||||||||||||
Equity method investments | 204,507 | — | — | — | 204,507 | |||||||||||||||
Total investments | 9,460,194 | 179,996 | 1,467,977 | 133,894 | 11,242,061 | |||||||||||||||
Cash and cash equivalents (including restricted cash) | 585,956 | 54,679 | 318,811 | 23,138 | 982,584 | |||||||||||||||
Funds held by reinsured companies | 263,713 | 26,489 | 20,823 | 10,242 | 321,267 | |||||||||||||||
Total investable assets | $ | 10,309,863 | $ | 261,164 | $ | 1,807,611 | $ | 167,274 | $ | 12,545,912 | ||||||||||
Duration (in years) (1) | 5.41 | 1.70 | 2.66 | 5.70 | 4.86 | |||||||||||||||
Average credit rating (2) | A+ | AA- | A+ | AA- | A+ |
March 31, 2019 | |||||||||||||||||||||||||||||||
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 and funds held - directly managed | |||||||||||||||||||||||||||||||
U.S. government & agency | $ | 417,243 | $ | 63 | $ | — | $ | — | $ | — | $ | — | $ | 417,306 | 3.5 | % | |||||||||||||||
U.K. government | 644 | 277,799 | — | — | — | — | 278,443 | 2.4 | % | ||||||||||||||||||||||
Other government | 308,413 | 198,228 | 55,991 | 171,579 | 35,765 | — | 769,976 | 6.5 | % | ||||||||||||||||||||||
Corporate | 132,282 | 506,434 | 2,517,323 | 1,737,171 | 197,543 | 13,262 | 5,104,015 | 43.4 | % | ||||||||||||||||||||||
Municipal | 12,284 | 81,059 | 49,814 | 16,909 | — | — | 160,066 | 1.4 | % | ||||||||||||||||||||||
Residential mortgage-backed | 309,100 | 55,819 | 2,054 | 3,119 | 51,372 | 7,541 | 429,005 | 3.6 | % | ||||||||||||||||||||||
Commercial mortgage-backed | 641,337 | 87,319 | 77,117 | 61,139 | 6,514 | 10,698 | 884,124 | 7.5 | % | ||||||||||||||||||||||
Asset-backed | 302,491 | 99,371 | 164,249 | 110,806 | 18,111 | 1,340 | 696,368 | 5.9 | % | ||||||||||||||||||||||
Total | 2,123,794 | 1,306,092 | 2,866,548 | 2,100,723 | 309,305 | 32,841 | 8,739,303 | 74.2 | % | ||||||||||||||||||||||
Other assets included within funds held - directly managed | 88,596 | 0.7 | % | ||||||||||||||||||||||||||||
Equities | |||||||||||||||||||||||||||||||
Publicly traded equities | 171,710 | 1.5 | % | ||||||||||||||||||||||||||||
Privately held equities | 228,710 | 1.9 | % | ||||||||||||||||||||||||||||
Total | 400,420 | 3.4 | % | ||||||||||||||||||||||||||||
Other investments | |||||||||||||||||||||||||||||||
Hedge funds | 979,270 | 8.3 | % | ||||||||||||||||||||||||||||
Equity funds | 374,249 | 3.2 | % | ||||||||||||||||||||||||||||
Fixed income funds | 587,093 | 5.0 | % | ||||||||||||||||||||||||||||
Private equity funds | 235,538 | 2.0 | % | ||||||||||||||||||||||||||||
CLO equities | 41,434 | 0.4 | % | ||||||||||||||||||||||||||||
CLO equity funds | 40,348 | 0.3 | % | ||||||||||||||||||||||||||||
Private credit funds | 53,258 | 0.5 | % | ||||||||||||||||||||||||||||
Other | 13,155 | 0.1 | % | ||||||||||||||||||||||||||||
Total | 2,324,345 | 19.8 | % | ||||||||||||||||||||||||||||
Equity method investments | 221,023 | 1.9 | % | ||||||||||||||||||||||||||||
Total investments | $ | 2,123,794 | $ | 1,306,092 | $ | 2,866,548 | $ | 2,100,723 | $ | 309,305 | $ | 32,841 | $ | 11,773,687 | 100.0 | % |
December 31, 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 and funds held - directly managed | ||||||||||||||||||||||||||||||
U.S. government & agency | $ | 502,819 | $ | 7,426 | $ | — | $ | — | $ | — | $ | — | $ | 510,245 | 4.5 | % | ||||||||||||||
U.K. government | 2,144 | 298,487 | — | — | — | — | 300,631 | 2.7 | % | |||||||||||||||||||||
Other government | 322,606 | 213,639 | 69,601 | 154,800 | 32,592 | 572 | 793,810 | 7.1 | % | |||||||||||||||||||||
Corporate | 129,059 | 470,571 | 2,306,532 | 1,731,398 | 197,822 | 4,458 | 4,839,840 | 43.1 | % | |||||||||||||||||||||
Municipal | 7,934 | 69,270 | 41,666 | 11,395 | — | — | 130,265 | 1.2 | % | |||||||||||||||||||||
Residential mortgage-backed | 644,418 | 51,729 | 8,658 | 10,495 | 54,727 | 3,530 | 773,557 | 6.9 | % | |||||||||||||||||||||
Commercial mortgage-backed | 487,054 | 70,620 | 77,538 | 60,879 | 7,297 | 9,675 | 713,063 | 6.3 | % | |||||||||||||||||||||
Asset-backed | 358,574 | 68,174 | 125,644 | 66,136 | 17,573 | 380 | 636,481 | 5.7 | % | |||||||||||||||||||||
Total | 2,454,608 | 1,249,916 | 2,629,639 | 2,035,103 | 310,011 | 18,615 | 8,697,892 | 77.5 | % | |||||||||||||||||||||
Other assets included within funds held - directly managed | 14,780 | 0.1 | % | |||||||||||||||||||||||||||
Equities | ||||||||||||||||||||||||||||||
Publicly traded equities | 138,415 | 1.2 | % | |||||||||||||||||||||||||||
Privately held equities | 228,710 | 2.0 | % | |||||||||||||||||||||||||||
Total | 367,125 | 3.2 | % | |||||||||||||||||||||||||||
Other investments | ||||||||||||||||||||||||||||||
Hedge funds | 852,584 | 7.6 | % | |||||||||||||||||||||||||||
Fixed income funds | 403,858 | 3.6 | % | |||||||||||||||||||||||||||
Equity funds | 333,681 | 3.0 | % | |||||||||||||||||||||||||||
Private equity funds | 248,628 | 2.2 | % | |||||||||||||||||||||||||||
CLO equities | 39,052 | 0.3 | % | |||||||||||||||||||||||||||
CLO equity funds | 37,260 | 0.3 | % | |||||||||||||||||||||||||||
Private credit funds | 33,381 | 0.3 | % | |||||||||||||||||||||||||||
Other | 9,313 | 0.1 | % | |||||||||||||||||||||||||||
Total | 1,957,757 | 17.4 | % | |||||||||||||||||||||||||||
Equity method investments | 204,507 | 1.8 | % | |||||||||||||||||||||||||||
Total investments | $ | 2,454,608 | $ | 1,249,916 | $ | 2,629,639 | $ | 2,035,103 | $ | 310,011 | $ | 18,615 | $ | 11,242,061 | 100.0 | % |
March 31, 2019 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses Non-OTTI | Fair Value | |||||||||||||
U.S. government and agency | $ | 415,689 | $ | 3,273 | $ | (1,656 | ) | $ | 417,306 | |||||||
U.K. government | 261,213 | 17,820 | (590 | ) | 278,443 | |||||||||||
Other government | 769,300 | 14,412 | (13,736 | ) | 769,976 | |||||||||||
Corporate | 5,079,783 | 85,637 | (61,405 | ) | 5,104,015 | |||||||||||
Municipal | 156,818 | 4,019 | (771 | ) | 160,066 | |||||||||||
Residential mortgage-backed | 424,195 | 6,719 | (1,909 | ) | 429,005 | |||||||||||
Commercial mortgage-backed | 884,640 | 8,496 | (9,012 | ) | 884,124 | |||||||||||
Asset-backed | 698,724 | 1,792 | (4,148 | ) | 696,368 | |||||||||||
$ | 8,690,362 | $ | 142,168 | $ | (93,227 | ) | $ | 8,739,303 |
December 31, 2018 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses Non-OTTI | Fair Value | |||||||||||||
U.S. government and agency | $ | 512,360 | $ | 1,904 | $ | (4,019 | ) | $ | 510,245 | |||||||
U.K. government | 301,749 | 6,526 | (7,644 | ) | 300,631 | |||||||||||
Other government | 814,614 | 5,261 | (26,065 | ) | 793,810 | |||||||||||
Corporate | 5,019,018 | 12,195 | (191,373 | ) | 4,839,840 | |||||||||||
Municipal | 132,928 | 494 | (3,157 | ) | 130,265 | |||||||||||
Residential mortgage-backed | 772,457 | 5,846 | (4,746 | ) | 773,557 | |||||||||||
Commercial mortgage-backed | 729,232 | 2,613 | (18,782 | ) | 713,063 | |||||||||||
Asset-backed | 642,618 | 1,032 | (7,169 | ) | 636,481 | |||||||||||
$ | 8,924,976 | $ | 35,871 | $ | (262,955 | ) | $ | 8,697,892 |
Fair Value | Average Credit Rating | ||||
(in thousands of U.S. dollars) | |||||
JPMorgan Chase & Co | $ | 111,341 | A | ||
Apple Inc | 96,179 | AA+ | |||
Citigroup Inc | 90,123 | A | |||
Bank of America Corp | 90,042 | A | |||
Morgan Stanley | 84,229 | A- | |||
General Electric Co | 80,534 | BBB+ | |||
Wells Fargo & Co | 79,211 | A | |||
HSBC Holdings PLC | 66,532 | A | |||
Anheuser-Busch InBev SA/NV | 61,917 | BBB+ | |||
Comcast Corp | 60,772 | A- | |||
$ | 820,880 |
Three Months Ended March 31, 2019 | ||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Other | Total | ||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||
Net investment income: | ||||||||||||||||||||
Fixed maturities and cash and cash equivalents | $ | 64,249 | $ | 1,467 | $ | 11,382 | $ | 380 | $ | 77,478 | ||||||||||
Equity securities | 2,878 | 15 | 487 | — | 3,380 | |||||||||||||||
Other | 3,054 | 297 | 784 | (2,021 | ) | 2,114 | ||||||||||||||
Gross investment income | 70,181 | 1,779 | 12,653 | (1,641 | ) | 82,972 | ||||||||||||||
Investment expenses | (3,453 | ) | (68 | ) | (711 | ) | (44 | ) | (4,276 | ) | ||||||||||
Net investment income (expense) | $ | 66,728 | $ | 1,711 | $ | 11,942 | $ | (1,685 | ) | $ | 78,696 | |||||||||
Net realized and unrealized gains and losses: | ||||||||||||||||||||
Fixed maturity securities | 222,277 | 2,130 | 21,808 | (64 | ) | 246,151 | ||||||||||||||
Equity securities | 11,798 | 356 | (2,223 | ) | — | 9,931 | ||||||||||||||
Other investments | 202,111 | 427 | 1,073 | 1,098 | 204,709 | |||||||||||||||
Net realized and unrealized gains and losses | $ | 436,186 | $ | 2,913 | $ | 20,658 | $ | 1,034 | $ | 460,791 | ||||||||||
Annualized income from cash and fixed maturities | $ | 256,996 | $ | 5,868 | $ | 45,528 | $ | 1,520 | $ | 309,912 | ||||||||||
Average aggregate fixed maturities and cash and cash equivalents, at cost (1) | 8,460,668 | 260,350 | 1,664,717 | 158,239 | 10,543,974 | |||||||||||||||
Annualized Investment Book Yield | 3.04 | % | 2.25 | % | 2.73 | % | 0.96 | % | 2.94 | % | ||||||||||
Total financial statement return (2) | $ | 502,914 | $ | 4,624 | $ | 32,600 | $ | (651 | ) | $ | 539,487 | |||||||||
Average aggregate invested assets, at fair value (1) | 10,739,085 | 268,250 | 1,798,585 | 173,807 | 12,979,727 | |||||||||||||||
Financial Statement Portfolio Return | 4.68 | % | 1.72 | % | 1.81 | % | (0.37 | )% | 4.16 | % |
Three Months Ended March 31, 2018 | ||||||||||||||||||||||||
Non-life Run-off | Atrium | StarStone | Other | Total | ||||||||||||||||||||
(in thousands of U.S. dollars) | ||||||||||||||||||||||||
Net investment income: | ||||||||||||||||||||||||
Fixed maturities and cash and cash equivalents | $ | 48,537 | $ | 1,060 | $ | 7,758 | $ | 370 | $ | 57,725 | ||||||||||||||
Equity securities | 1,203 | 13 | 274 | — | 1,490 | |||||||||||||||||||
Other investments and other | 3,713 | 168 | 622 | 5,470 | 9,973 | |||||||||||||||||||
Gross investment income | 53,453 | 1,241 | 8,654 | 5,840 | 69,188 | |||||||||||||||||||
Investment expenses | (1,802 | ) | (56 | ) | (953 | ) | (58 | ) | (2,869 | ) | ||||||||||||||
Net investment income | $ | 51,651 | — | $ | 1,185 | — | $ | 7,701 | — | $ | 5,782 | — | $ | 66,319 | ||||||||||
Net realized and unrealized gains and losses: | ||||||||||||||||||||||||
Fixed maturity securities | $ | (122,526 | ) | $ | (1,300 | ) | $ | (14,285 | ) | $ | 5 | $ | (138,106 | ) | ||||||||||
Equity securities | 220 | (40 | ) | 4,559 | (1 | ) | 4,738 | |||||||||||||||||
Other investments | (3,990 | ) | (63 | ) | (3,232 | ) | (2,377 | ) | (9,662 | ) | ||||||||||||||
Net realized and unrealized losses | $ | (126,296 | ) | $ | (1,403 | ) | $ | (12,958 | ) | $ | (2,373 | ) | $ | (143,030 | ) | |||||||||
Annualized income from cash and fixed maturities | $ | 194,148 | $ | 4,240 | $ | 31,032 | $ | 1,480 | $ | 230,900 | ||||||||||||||
Average aggregate fixed maturities and cash and cash equivalents, at cost (1) | 7,396,161 | 265,725 | 1,487,722 | 154,700 | 9,304,308 | |||||||||||||||||||
Annualized Investment Book Yield | 2.62 | % | 1.60 | % | 2.09 | % | 0.96 | % | 2.48 | % | ||||||||||||||
Total financial statement return (2) | $ | (74,645 | ) | $ | (218 | ) | $ | (5,257 | ) | $ | 3,409 | $ | (76,711 | ) | ||||||||||
Average aggregate invested assets, at fair value (1) | 8,408,239 | 274,312 | 1,654,718 | 298,061 | 10,635,330 | |||||||||||||||||||
Financial Statement Portfolio Return | (0.89 | )% | (0.08 | )% | (0.32 | )% | 1.14 | % | (0.72 | )% |
• | net realized and unrealized gains (losses) on fixed income securities, including fixed income securities within our fund held portfolios, of $246.2 million for the three months ended March 31, 2019, compared to net realized and unrealized losses of $138.1 million for the three months ended March 31, 2018, a change of $384.3 million, primarily driven by higher valuations due to tightening credit spreads in the current period, compared to lower valuations in the comparative period due to increased sovereign yields; |
• | net realized and unrealized gains on equity securities of $9.9 million for the three months ended March 31, 2019, compared to $4.7 million for the three months ended March 31, 2018, an increase of $5.2 million, primarily driven by a more favorable movement in international equity markets in 2019 compared to declines in global markets in the comparative period; |
• | net realized and unrealized gains on other investments and other items of $204.7 million for the three months ended March 31, 2019, compared to realized and unrealized losses of $9.7 million for the three months ended March 31, 2018, representing an increase of $214.4 million. The unrealized gains for the three months ended March 31, 2019 primarily comprised unrealized gains in our hedge funds, equity funds, fixed income funds and private equity funds, principally driven by tightening credit spreads and a more favorable movement in international equity markets in 2019. The unrealized losses for the three months ended March 31, 2018 primarily comprised unrealized losses in our private equity funds, equity funds and call options on equity partially offset by unrealized gains on hedge funds. |
March 31, 2019 | December 31, 2018 | Change | ||||||||||
(in thousands of U.S. dollars) | ||||||||||||
Ordinary shareholders' equity | $ | 3,757,712 | $ | 3,391,933 | $ | 365,779 | ||||||
Series D and E Preferred Shares | 510,000 | 510,000 | — | |||||||||
Total Enstar Group Limited Shareholders' Equity (A) | 4,267,712 | 3,901,933 | 365,779 | |||||||||
Noncontrolling interest | 12,452 | 12,056 | 396 | |||||||||
Total Shareholders' Equity (B) | 4,280,164 | 3,913,989 | 366,175 | |||||||||
Senior Notes | 348,180 | 348,054 | 126 | |||||||||
Revolving credit facility | 257,000 | 15,000 | 242,000 | |||||||||
Term loan facility | 498,610 | 498,485 | 125 | |||||||||
Total debt (C) | 1,103,790 | 861,539 | 242,251 | |||||||||
Redeemable noncontrolling interest (D) | 456,346 | 458,543 | (2,197 | ) | ||||||||
Total capitalization = (B) + (C) + (D) | $ | 5,840,300 | $ | 5,234,071 | $ | 606,229 | ||||||
Total capitalization attributable to Enstar = (A) + (C) | $ | 5,371,502 | $ | 4,763,472 | $ | 608,030 | ||||||
Debt to total capitalization | 18.9 | % | 16.5 | % | 2.4 | % | ||||||
Debt and Series D and E Preferred Shares to total capitalization | 27.6 | % | 26.2 | % | 1.4 | % | ||||||
Debt to total capitalization attributable to Enstar | 20.5 | % | 18.1 | % | 2.4 | % | ||||||
Debt and Series D and E Preferred Shares to total capitalization available to Enstar | 30.0 | % | 28.8 | % | 1.2 | % |
Dividend per: | ||||||||||||||||||
Preferred Share Series | Date Declared | Record Date | Date Payable | Preferred Share | Depositary Share | Total dividends paid and declared in the three months ended March 31, 2019 | ||||||||||||
(in U.S. dollars) | (in thousands of U.S. dollars) | |||||||||||||||||
Series D | February 21, 2019 | February 15, 2019 | March 1, 2019 | $ | 437.50 | $ | 0.43750 | $ | 7,000 | |||||||||
Series E | February 21, 2019 | February 15, 2019 | March 1, 2019 | $ | 486.11 | $ | 0.48611 | 2,139 | ||||||||||
Series D | May 3, 2019 | May 15, 2019 | June 1, 2019 | $ | 437.50 | $ | 0.43750 | — | ||||||||||
Series E | May 3, 2019 | May 15, 2019 | June 1, 2019 | $ | 437.50 | $ | 0.43750 | — | ||||||||||
$ | 9,139 |
Three Months Ended March 31, | ||||||||||||
2019 | 2018 | Change | ||||||||||
(in thousands of U.S. dollars) | ||||||||||||
Cash provided by (used in): | ||||||||||||
Operating activities | $ | 107,138 | $ | (74,214 | ) | $ | 181,352 | |||||
Investing activities | (173,007 | ) | (230,229 | ) | 57,222 | |||||||
Financing activities | 232,861 | 212,511 | 20,350 | |||||||||
Effect of exchange rate changes on cash | (3,925 | ) | 15,059 | (18,984 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | 163,067 | (76,873 | ) | 239,940 | ||||||||
Cash and cash equivalents, beginning of period | 982,584 | 1,212,836 | (230,252 | ) | ||||||||
Cash and cash equivalents, end of period | $ | 1,145,651 | $ | 1,135,963 | $ | 9,688 |
Debt Obligations | Origination Date | Term | March 31, 2019 | December 31, 2018 | ||||||||
Senior Notes | March 10, 2017 | 5 years | $ | 348,180 | $ | 348,054 | ||||||
EGL Revolving Credit Facility | August 16, 2018 | 5 years | 257,000 | 15,000 | ||||||||
2018 EGL Term Loan Facility | December 27, 2018 | 3 years | 498,610 | 498,485 | ||||||||
Total debt obligations | $ | 1,103,790 | $ | 861,539 |
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 | $ | 1,604.2 | $ | 97.0 | $ | 179.5 | $ | 167.7 | $ | 299.3 | $ | 860.7 | |||||||||||
Environmental | 220.3 | 20.2 | 37.3 | 33.1 | 52.2 | 77.5 | |||||||||||||||||
General Casualty | 1,031.3 | 256.5 | 315.1 | 165.7 | 144.8 | 149.2 | |||||||||||||||||
Workers' compensation/personal accident | 2,234.9 | 257.2 | 368.0 | 277.6 | 399.7 | 932.4 | |||||||||||||||||
Marine, aviation and transit | 505.8 | 152.4 | 165.6 | 70.6 | 61.2 | 56.0 | |||||||||||||||||
Construction defect | 112.3 | 24.7 | 38.1 | 23.3 | 17.7 | 8.5 | |||||||||||||||||
Professional indemnity/ Directors & Officers | 1,082.8 | 286.4 | 361.4 | 185.4 | 149.2 | 100.4 | |||||||||||||||||
Motor | 907.6 | 309.6 | 276.9 | 108.8 | 85.4 | 126.9 | |||||||||||||||||
Property | 265.7 | 105.6 | 89.1 | 34.8 | 21.5 | 14.7 | |||||||||||||||||
Other | 354.2 | 88.7 | 97.3 | 51.9 | 55.6 | 60.7 | |||||||||||||||||
Total Non-Life Run-off | 8,319.1 | 1,598.3 | 1,928.3 | 1,118.9 | 1,286.6 | 2,387.0 | |||||||||||||||||
Atrium | 222.4 | 91.3 | 80.3 | 30.7 | 16.8 | 3.3 | |||||||||||||||||
StarStone | 1,664.7 | 594.1 | 595.6 | 240.5 | 167.9 | 66.6 | |||||||||||||||||
Other | 21.0 | 3.3 | 8.4 | 4.0 | 3.6 | 1.7 | |||||||||||||||||
ULAE | 374.9 | 70.3 | 88.2 | 51.5 | 59.2 | 105.7 | |||||||||||||||||
Estimated gross reserves for losses and LAE (1) | 10,602.1 | 2,357.3 | 2,700.8 | 1,445.6 | 1,534.1 | 2,564.3 | |||||||||||||||||
Policy benefits for life and annuity contracts (2) | 117.8 | 6.0 | 11.3 | 12.0 | 28.1 | 60.4 | |||||||||||||||||
Operating lease obligations | 64.2 | 9.2 | 21.0 | 13.9 | 18.0 | 2.1 | |||||||||||||||||
Investing Activities | |||||||||||||||||||||||
Investment commitments to private equity funds | 210.8 | 98.9 | 95.8 | 16.1 | — | — | |||||||||||||||||
Investment commitments to equity method investments | 152.3 | 152.3 | — | — | — | — | |||||||||||||||||
Financing Activities | |||||||||||||||||||||||
Loan repayments (including estimated interest payments) | 1,266.7 | 50.2 | 943.6 | 272.9 | — | — | |||||||||||||||||
Total | $ | 12,413.9 | $ | 2,673.9 | $ | 3,772.5 | $ | 1,760.5 | $ | 1,580.2 | $ | 2,626.8 |
(1) | The reserves for losses and LAE represent management’s estimate of the ultimate cost of settling losses. The estimation of losses is based on various complex and subjective judgments. Actual losses paid may differ, perhaps significantly, from the reserve estimates reflected in our financial statements. Similarly, the timing of payment of our estimated losses is not fixed and there may be significant changes in actual payment activity. The assumptions used in estimating the likely payments due by period are based on our historical claims payment experience and industry payment patterns, but due to the inherent uncertainty in the process of estimating the timing of such payments, there is a risk that the amounts paid in any such period can be significantly different from the amounts disclosed above. The amounts in the above table represent our estimates of known liabilities as of March 31, 2019 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 unaudited condensed consolidated financial statements as of March 31, 2019 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 of March 31, 2019 of $100.7 million are computed on a discounted basis, whereas the expected payments by period in the table above are the estimated payments at a future time and do not reflect a discount of the amount payable. |
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2018 | ||||||
(expressed in thousands of U.S. dollars, except share and per share data) | |||||||
Net earnings (loss) attributable to Enstar Group Limited ordinary shareholders | $ | 358,751 | $ | (41,210 | ) | ||
Adjustments: | |||||||
Net realized and unrealized (gains) losses on fixed maturity investments and funds held - directly managed (1) | (246,151 | ) | 138,106 | ||||
Change in fair value of insurance contracts for which we have elected the fair value option | 56,041 | (40,241 | ) | ||||
Tax effects of adjustments (2) | 21,849 | (11,226 | ) | ||||
Adjustments attributable to noncontrolling interest (3) | 9,170 | (5,802 | ) | ||||
Non-GAAP operating income (loss) attributable to Enstar Group Limited ordinary shareholders (4) | $ | 199,660 | $ | 39,627 | |||
Diluted net earnings (loss) per ordinary share | $ | 16.57 | $ | (2.12 | ) | ||
Adjustments: | |||||||
Net realized and unrealized (gains) losses on fixed maturity investments and funds held - directly managed (1) | (11.37 | ) | 7.06 | ||||
Change in fair value of insurance contracts for which we have elected the fair value option | 2.59 | (2.05 | ) | ||||
Tax effects of adjustments (2) | 1.01 | (0.57 | ) | ||||
Adjustments attributable to noncontrolling interest (3) | 0.42 | (0.30 | ) | ||||
Diluted non-GAAP operating income (loss) per ordinary share (4) | $ | 9.22 | $ | 2.02 | |||
Weighted average ordinary shares outstanding - diluted | 21,645,862 | 19,602,512 |
• | 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 evaluate opportunities, 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 industry practices in ways that increase our costs, decrease our revenues or require us to alter aspects of the way we do business; |
• | risks relating to the variability of statutory capital requirements and the risk 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 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 of March 31, 2019 | -100 | -50 | — | +50 | +100 | |||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||
Total Market Value | $ | 9,167 | $ | 8,952 | $ | 8,739 | $ | 8,522 | $ | 8,316 | ||||||||||
Market Value Change from Base | 4.9 | % | 2.4 | % | — | (2.5 | )% | (4.8 | )% | |||||||||||
Change in Unrealized Value | $ | 428 | $ | 213 | $ | — | $ | (217 | ) | $ | (423 | ) | ||||||||
As of December 31, 2018 | -100 | -50 | — | +50 | +100 | |||||||||||||||
Total Market Value | $ | 9,147 | $ | 8,920 | $ | 8,698 | $ | 8,484 | $ | 8,279 | ||||||||||
Market Value Change from Base | 5.2 | % | 2.6 | % | — | (2.5 | )% | (4.8 | )% | |||||||||||
Change in Unrealized Value | $ | 449 | $ | 222 | $ | — | $ | (214 | ) | $ | (419 | ) |
Credit Spread Shift in Basis Points | ||||||||||||
As at March 31, 2019 | — | +50 | +100 | |||||||||
(in millions of U.S. dollars) | ||||||||||||
Total Market Value | $ | 8,739 | $ | 8,529 | $ | 8,327 | ||||||
Market Value Change from Base | — | (2.4 | )% | (4.7 | )% | |||||||
Change in Unrealized Value | $ | — | $ | (210 | ) | $ | (412 | ) | ||||
As at December 31, 2018 | — | +50 | +100 | |||||||||
Total Market Value | $ | 8,698 | $ | 8,502 | $ | 8,314 | ||||||
Market Value Change from Base | — | (2.3 | )% | (4.4 | )% | |||||||
Change in Unrealized Value | $ | — | $ | (196 | ) | $ | (384 | ) |
Credit rating | March 31, 2019 | December 31, 2018 | Change | |||||
AAA | 24.3 | % | 28.2 | % | (3.9 | )% | ||
AA | 14.9 | % | 14.4 | % | 0.5 | % | ||
A | 32.9 | % | 30.2 | % | 2.7 | % | ||
BBB | 24.0 | % | 23.4 | % | 0.6 | % | ||
Non-investment grade | 3.5 | % | 3.6 | % | (0.1 | )% | ||
Not rated | 0.4 | % | 0.2 | % | 0.2 | % | ||
Total | 100.0 | % | 100.0 | % | ||||
Average credit rating | A+ | A+ |
March 31, 2019 | December 31, 2018 | Change | |||||||||
(in millions of U.S. dollars) | |||||||||||
Publicly traded equity investments in common and preferred stocks | $ | 171.7 | $ | 138.4 | $ | 33.3 | |||||
Privately held equity investments in common and preferred stocks | 228.7 | 228.7 | — | ||||||||
Private equity funds | 235.5 | 248.6 | (13.1 | ) | |||||||
Equity funds | 374.2 | 333.7 | 40.5 | ||||||||
Fair value of equities at risk | $ | 1,010.1 | $ | 949.4 | $ | 60.7 | |||||
Impact of 10% decline in fair value | $ | 101.0 | $ | 94.9 | $ | 6.1 |
As of March 31, 2019 | AUD | CAD | EUR | GBP | Other | Total | ||||||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||||||
Total net foreign currency exposure | $ | (20.7 | ) | $ | 12.6 | $ | 30.5 | $ | 56.5 | $ | (1.8 | ) | $ | 77.1 | ||||||||||
Pre-tax impact of a 10% movement of the U.S. dollar(1) | $ | (2.1 | ) | $ | 1.3 | $ | 3.1 | $ | 5.7 | $ | (0.2 | ) | $ | 7.7 | ||||||||||
As of December 31, 2018 | AUD | CAD | EUR | GBP | Other | Total | ||||||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||||||
Total net foreign currency exposure | $ | 17.5 | $ | 20.2 | $ | 17.2 | $ | (35.8 | ) | $ | 1.7 | $ | 20.7 | |||||||||||
Pre-tax impact of a 10% movement of the U.S. dollar(1) | $ | 1.8 | $ | 2.0 | $ | 1.7 | $ | (3.6 | ) | $ | 0.2 | $ | 2.1 |
(1) | Assumes 10% change in the U.S. dollar relative to other currencies |
Period | Total Number of Shares Purchased(1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Program | |||||||||
January 1, 2019 - January 31, 2019 | 167 | $ | 169.28 | — | — | ||||||||
February 1, 2019 - February 28, 2019 | — | $ | — | — | — | ||||||||
March 1, 2019 - March 31, 2019 | 811 | $ | 174.00 | — | — | ||||||||
Total | 978 | — | — |
Exhibit No. | Description | |
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). | ||
Certificate of Designations of 7.00% perpetual non-cumulative preference shares, Series E (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed on November 21, 2018). | ||
Second Supplemental Indenture, dated as of March 26, 2019, between the Company and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 of the Company's Form 8-K filed March 26, 2019. | ||
10.1* | Employment Agreement, dated January 8, 2018, by and between Enstar Group Limited and Paul M.J. Brockman. | |
10.2* | Master Agreement, dated March 1, 2019, by and among Maiden Holdings, Ltd., Maiden Reinsurance Ltd. and Enstar Group Limited. | |
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 |
ARTICLE I | DEFINITIONS............................................................................................................. 1 |
Section 1.1 | Definitions........................................................................................................... 1 |
ARTICLE II | CLOSING AND RETROCESSION PREMIUM ........................................................... 5 |
Section 2.1 | Closing................................................................................................................ 5 |
Section 2.2 | Closing Deliveries............................................................................................... 6 |
Section 2.3 | Payment at Closing............................................................................................. 6 |
ARTICLE III | REPRESENTATIONS AND WARRANTIES OF MAIDEN........................................... 7 |
Section 3.1 | Organization, Standing and Corporate Power.................................................... 7 |
Section 3.2 | Authority.............................................................................................................. 7 |
Section 3.3 | No Conflict or Violation....................................................................................... 7 |
Section 3.4 | Consents............................................................................................................ 7 |
Section 3.5 | Compliance........................................................................................................ 7 |
Section 3.6 | Broker................................................................................................................. 8 |
Section 3.7 | Taxes and Encumbrances.................................................................................. 8 |
Section 3.8 | Claims Data........................................................................................................ 8 |
Section 3.9 | Reports on Underlying Business ........................................................................ 8 |
Section 3.10 | Absence of Certain Changes.............................................................................. 8 |
Section 3.11 | Orders and Proceedings..................................................................................... 8 |
Section 3.12 | Reinsured Policies.............................................................................................. 8 |
Section 3.13 | Ceded Reinsurance............................................................................................ 8 |
ARTICLE IV | REPRESENTATIONS AND WARRANTIES OF ENSTAR.......................................... 9 |
Section 4.1 | Organization, Standing and Corporate Power.................................................... 9 |
Section 4.2 | Authority.............................................................................................................. 9 |
Section 4.3 | No Conflict or Violation....................................................................................... 9 |
Section 4.4 | Consents............................................................................................................ 10 |
Section 4.5 | Compliance........................................................................................................ 10 |
Section 4.6 | Broker................................................................................................................. 10 |
Section 5.1 | Conduct of Maiden Insurance............................................................................. 10 |
Section 5.2 | Access to Information.......................................................................................... 10 |
Section 5.3 | Commercially Reasonable Efforts....................................................................... 11 |
Section 5.4 | Consents, Approvals and Filings......................................................................... 11 |
Section 5.5 | Public Announcements........................................................................................ 11 |
Section 5.6 | Further Assurances.............................................................................................. 12 |
Section 5.7 | Confidentiality....................................................................................................... 12 |
Section 5.8 | Burdensome Condition........................................................................................ 12 |
Section 5.9 | Transfer Taxes.................................................................................................... 12 |
Section 5.10 | Existing Trust Agreements.................................................................................. 12 |
Section 5.11 | Inspection of Books and Records....................................................................... 12 |
Section 5.12 | Termination of 2018 Master Agreement; Release............................................... 12 |
Section 5.13 | Existing Master Agreement................................................................................. 13 |
Section 6.1 | Conditions to Each Party’s Obligations............................................................... 13 |
Section 6.2 | Conditions to Obligations of Enstar..................................................................... 14 |
Section 6.3 | Conditions to Obligations of Maiden and Maiden Insurance............................... 14 |
Section 7.1 | Survival of Representations and Warranties....................................................... 15 |
Section 8.1 | Termination of Agreement................................................................................... 15 |
Section 8.2 | Effect of Termination............................................................................................ 16 |
Section 9.1 | Fees and Expenses............................................................................................. 16 |
Section 9.2 | Notices................................................................................................................. 16 |
Section 9.3 | Construction......................................................................................................... 17 |
Section 9.4 | Entire Agreement................................................................................................. 18 |
Section 9.5 | Third Party Beneficiaries...................................................................................... 18 |
Section 9.6 | Governing Law..................................................................................................... 18 |
Section 9.7 | Jurisdiction; Enforcement; Specific Performance................................................ 18 |
Section 9.8 | Assignment.......................................................................................................... 19 |
Section 9.9 | Amendments........................................................................................................ 19 |
Section 9.10 | Severability........................................................................................................... 19 |
Section 9.11 | Waiver.................................................................................................................. 19 |
Section 9.12 | Certain Limitations............................................................................................... 19 |
Section 9.13 | Currency............................................................................................................... 20 |
Section 9.14 | Limited Offset....................................................................................................... 20 |
Section 9.15 | Counterparts........................................................................................................ 20 |
Term | Section |
2018 Master Agreement | Recitals |
ADC Agreement | Recitals |
Agreement | Preamble |
AmTrust | Recitals |
Closing | 2.1(a) |
Closing Date | 2.1(b) |
Closing Statement | 2.3 |
Enforceability Exceptions | 3.2 |
Enstar | Preamble |
Enstar Parties | 5.12(b) |
Extended Deadline Date | 8.1(b)(i) |
Final Deadline Date | 8.1(b)(ii) |
Maiden | Preamble |
Maiden Insurance | Preamble |
Maiden Parties | 5.12(b) |
Material Third Party Reinsurance Agreements | 3.13(a) |
New York Court | 9.7(a) |
Original Cedents | Recitals |
Party | Recitals |
Released Claims | 5.12(b) |
Retrocessionaire | Recitals |
(i) | if all conditions set forth in Article VI have been satisfied or waived in accordance with this Agreement (other than those conditions that by their terms are to be satisfied at the Closing but subject to the satisfaction or waiver of such conditions) on or prior to the Deadline Date, on the earlier of (A) the fifth Business Day following the date on which all such conditions have been so satisfied or waived and (B) the Deadline Date; or |
(ii) | if (1) the Deadline Date has been extended pursuant to Section 8.1(b)(i) and (2) all conditions set forth in Article VI have been satisfied or waived in accordance with this Agreement (other than those conditions that by their terms are to be satisfied at the Closing but subject to the satisfaction or waiver of such conditions) after the Deadline Date and on or prior to the Extended Deadline Date, on the earlier of (A) the fifth Business Day following the date on which all such conditions have been so satisfied or waived and (B) the Extended Deadline Date; or |
(iii) | if (1) the Extended Deadline Date has been extended pursuant to Section 8.1(b)(ii) and (2) all conditions set forth in Article VI have been satisfied or waived in accordance with this Agreement (other than those conditions that by their terms are to be satisfied at the Closing but subject to the satisfaction or waiver of such conditions) after the Extended Deadline Date and on or prior to the Final Deadline Date, on the earlier of (A) the fifth Business Day following the date on which all such conditions have been so satisfied or waived and (B) the Final Deadline Date; |
(i) | a certificate duly executed by an authorized officer of Maiden and Maiden Insurance, dated as of the Closing Date, certifying as to Maiden’s and Maiden Insurance’s compliance with the conditions set forth in Section 6.2(a) and Section 6.2(b); |
(ii) | counterparts of the ADC Agreement, duly executed by Maiden Insurance; and |
(iii) | evidence reasonably satisfactory to Enstar, including duly executed copies of the Trust Agreement Amendments, that sub-accounts have been created in the trust accounts under the Existing Trust Agreements and the Existing Quota Share Agreements related to the Subject Business and that Enstar or its designee has been granted investment control over such sub-accounts, which will be managed pursuant to the Investment Guidelines. |
(i) | a certificate duly executed by an authorized officer of Enstar, dated as of the Closing Date, certifying as to Enstar’s compliance with the conditions set forth in Section 6.3(a) and Section 6.3(b); |
(ii) | counterparts of the ADC Agreement, duly executed by the Retrocessionaire; and |
(iii) | the letters of credit, if any, contemplated by Section 2.3. |
(i) | if on the Deadline Date the condition set forth in Section 6.1(a) or the condition set forth in Section 6.1(b) has not been satisfied, the Deadline Date shall be automatically extended (and without the requirement of any further action by the Parties hereunder) to 5:00 p.m., New York City time, on May 31, 2019 (the “Extended Deadline Date”); and |
(ii) | if on the Extended Deadline Date the condition set forth in Section 6.1(a) or the condition set forth in Section 6.1(b) has not been satisfied, the Extended Deadline Date shall be automatically extended (and without the requirement of any further action by the Parties hereunder) to 5:00 p.m., New York City time, on June 30, 2019 (the “Final Deadline Date”); |
Item | Description |
Parties | Maiden Reinsurance and Retrocessionaire |
Business Reinsured | Retrocessionaire would reinsure 100% of Maiden Reinsurance’s quota share of losses (“Covered Losses”) incurred under the Reinsured Policies on or prior to December 31, 2018 excess of the Retention up to the Limit. Retrocessionaire would follow the fortunes of Maiden Reinsurance with respect to Covered Losses which would include all amounts payable by Maiden Reinsurance with respect to the Reinsured Policies under the Existing Quota Share Agreements, including, as applicable, allocated loss adjustment expenses, extra contractual obligations and excess of loss payments. Covered Losses would exclude amounts paid prior to the Effective Time, amounts paid after the Effective Time in satisfaction of liabilities due but unpaid under the Existing Quota Share Agreements with respect to cession statements for periods ending prior to the Effective Time, unallocated loss adjustment expense and similar unallocated expenses, assessments, transfer taxes and other taxes imposed on Maiden Reinsurance (except taxes that are the obligation of Maiden Reinsurance pursuant to the Existing Quota Share Agreements). Covered Losses would be net of inuring reinsurance, whether or not collected. |
Retention and Limit | The retention would be the greater of (i) $2,441,358,809 or (ii) the amount equal to (A) the amount of reserves reported by Maiden with respect to the Underlying Business on its audited consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles as of December 31, 2018, minus (B) $500,000,000 (“Retention”). Other than existing inuring reinsurance, Maiden Reinsurance would not reinsure all or any portion of its risk below the Retention without the Retrocessionaire’s consent, and Maiden Reinsurance will provide Enstar a right of first refusal with respect to any reinsurance Maiden Reinsurance seeks to acquire for all or any portion of its risk above the Limit. The limit would be $675,000,000 (“Limit”). |
Effective Time | The Effective Time would be 12:01 a.m. Eastern time on the January 1, 2019. |
Territory | The territory would be coextensive with the territory of the Reinsured Policies. |
Reinsurance Premium | Maiden Reinsurance would pay to Retrocessionaire a premium equal to $500,000,000 plus a credited interest rate, compounded monthly, of 2.64% per annum from January 1, 2019 through the Closing (the “Reinsurance Premium”). As set forth in the Master Agreement and in the “Security” section below, on Retrocessionaire’s behalf, at Closing, Maiden Reinsurance would deposit/retain the Reinsurance Premium in sub-accounts created in the trust accounts under the Existing Trust Agreements and the Existing Quota Share Agreements, subject to the substitution of letters of credit as provided below and in the Master Agreement. Retrocessionaire would also be entitled to all salvage and subrogation actually collected, in each case by or on behalf of Maiden Reinsurance and attributable to Covered Losses, for periods on and after December 31, 2018, to the extent it relates to a Covered Loss above the Retention and below the Limit. |
Reports and Settlement | Maiden Reinsurance would provide to Retrocessionaire periodic accounting and other reports with respect to the subject business and Covered Losses as Retrocessionaire may reasonably require. Retrocessionaire would settle amounts due by direct payment of Covered Losses to the ceding companies under the Existing Quota Share Agreements. |
Duration and Term | The ADC Agreement would commence on the Closing and terminate on the earlier of date on which (1) Retrocessionaire has paid aggregate Covered Losses excess of the Retention equal to the Limit, (2) Maiden Reinsurance’s liability under the Reinsured Policies for Covered Losses is terminated or extinguished and all amounts due under the ADC Agreement are paid, or (3) the Parties mutually agree to terminate the ADC Agreement. Upon termination, Retrocessionaire would receive all remaining assets in the Trust Account and all uncollected recoverables. |
Claims Administration | Maiden Reinsurance would administer reinsurance claims, salvage and subrogation and inuring reinsurance, subject to granting to Retrocessionaire a right of first refusal in the event Maiden Reinsurance determined to use a third party administrator for all or any portion of the administration. The parties would enter into an agreement with the underlying cedents with respect to the management and oversight of claims. |
Insolvency | Standard insolvency provisions to be included. |
Security | Retrocessionaire would provide security to Maiden Reinsurance in the form of a trust account (“Trust Account”) established pursuant to a new or modified trust agreement to be entered into on the Closing date (“Trust Agreement”) or, as contemplated in the Master Agreement, letters of credit in an amount not to exceed $500,000,000 on the Closing date. The Trust Account will be one or more of the existing trust accounts (or a replacement therefor) that Maiden Reinsurance maintains pursuant to the Existing Quota Share Agreements, with the related trust agreements to be modified to take into the account the transactions contemplated by the Master Agreement and this Term Sheet, including the segregation of assets in such trust accounts into sub-accounts and the delegation to the Retrocessionaire of investment control over the relevant sub-accounts, as contemplated by the Master Agreement. Retrocessionaire would ensure the Trust Account holds assets with a market value greater than or equal to the trust funding amount, which shall be equal to the net reserves of Maiden Reinsurance attributable to Covered Losses in excess of the Retention up to the Limit (which trust funding amount the Parties acknowledge is equal to $500,000,000 as of the Closing Date) minus the amount of any collateral posted in the form of a letter of credit. The trust funding amount shall be determined on a quarterly basis, with year-end determinations being made by a Maiden Reinsurance’s BMA approved independent actuary and each other quarterly determination being made by Maiden Reinsurance. Quarterly and year-end determinations will be subject to customary dispute resolution by a mutually acceptable independent actuary. The Trust Account would be initially funded by Maiden Reinsurance and Retrocessionaire as set forth in the Master Agreement. Maiden Reinsurance would provide quarterly reporting specifying the trust required amount and any overfunding or underfunding of the Trust Account. Retrocessionaire would deposit into the Trust Account any required underfunding (or provide additional letters of credit, including up to the $175,000,000 limit above the Initial Funds Withheld Account Balance if required), and would be entitled to withdraw from the Trust Account any overfunding. Maiden Reinsurance would be permitted to withdraw assets from the Trust Account solely for the purposes of paying Covered Losses, and would be required to return to the Trust Accounts withdrawals not used for the specified purposes. All amounts withdrawn and not immediately used to pay Covered Losses would be held in a segregated account in trust of the sole and exclusive benefit of Retrocessionaire. All assets in the Trust Account would comply with and be invested in assets permitted under the Existing Quota Share Agreements with respect to the trusts created by the Existing Trust Agreements or under the Existing Quota Share Agreements. The Trust Agreement would terminate promptly following termination of the ADC Agreement, with payment from the Trust Account of any amounts due to Maiden Reinsurance and any excess amounts to Retrocessionaire. |
Additional Collateral; Underlying Agreements | Maiden Reinsurance would not utilize any assets in the Trust Account to post additional collateral in connection with the Reinsured Policies, and would not amend or permit amendment of any underlying agreements, including the Existing Quota Share Agreements, Existing Quota Share Trust Agreement and Existing Underlying Trust Agreements, without the written consent of the Retrocessionaire. |
Currency | U.S. Dollars |
Other Terms and Conditions | The ADC Agreement would contain further customary terms and conditions for agreements of this type. |
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 |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
May 07, 2019 |
|
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 | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Voting Ordinary Shares | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 17,971,679 | |
Non-Voting Convertible Ordinary Shares | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 3,509,682 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
NET EARNINGS (LOSS) | $ 365,742 | $ (40,428) |
Other comprehensive income, net of tax: | ||
Unrealized holding gains (losses) on fixed income available-for-sale investments arising during the period | 3,663 | (346) |
Reclassification adjustment for net realized gains included in net earnings | 61 | 30 |
Unrealized gains (losses) arising during the period, net of reclassification adjustments | 3,724 | (316) |
Total cumulative translation adjustment | (801) | 1,225 |
Total other comprehensive income | 2,923 | 909 |
Comprehensive income (loss) | 368,665 | (39,519) |
Comprehensive (income) loss attributable to noncontrolling interest | 2,064 | (756) |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED | $ 370,729 | $ (40,275) |
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
|
Preferred Stock
Series E 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, 2017 | $ 16,402 | $ 2,600 | $ 405 | $ 389 | $ 0 | $ 0 | $ (421,559) | $ 1,395,067 | $ 10,468 | $ 11,171 | $ 2,440 | $ 2,132,912 | $ 9,264 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Issue of shares | 11 | (94) | |||||||||||||
Amortization of share-based compensation | 5,651 | ||||||||||||||
Change in other comprehensive income (loss) | $ 909 | 1,229 | (294) | ||||||||||||
Net earnings (losses) attributable to Enstar Group Limited | (41,210) | (40,428) | |||||||||||||
Net loss (earnings) attributable to noncontrolling interest | (782) | (782) | (37) | ||||||||||||
Dividend on preferred shares | 0 | ||||||||||||||
Change in redemption value of redeemable noncontrolling interests | (369) | ||||||||||||||
Contribution of capital | 49 | ||||||||||||||
Balance, end of period at Mar. 31, 2018 | 16,413 | 2,600 | 405 | 389 | 0 | 0 | (421,559) | 1,400,624 | 11,403 | 12,400 | $ (3,143) | 2,146 | 2,089,760 | 9,276 | |
Balance, beginning of period at Dec. 31, 2018 | 3,913,989 | 17,950 | 2,600 | 910 | 389 | 400,000 | 110,000 | (421,559) | 1,804,664 | 10,440 | 10,986 | 441 | 1,976,539 | 12,056 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Issue of shares | 8 | 466 | |||||||||||||
Amortization of share-based compensation | 3,977 | ||||||||||||||
Change in other comprehensive income (loss) | 2,923 | (803) | 3,642 | ||||||||||||
Net earnings (losses) attributable to Enstar Group Limited | 358,751 | 365,742 | |||||||||||||
Net loss (earnings) attributable to noncontrolling interest | 2,148 | 2,148 | 396 | ||||||||||||
Dividend on preferred shares | (9,139) | ||||||||||||||
Change in redemption value of redeemable noncontrolling interests | (262) | ||||||||||||||
Contribution of capital | 0 | ||||||||||||||
Balance, end of period at Mar. 31, 2019 | $ 4,280,164 | $ 17,958 | $ 2,600 | $ 910 | $ 389 | $ 400,000 | $ 110,000 | $ (421,559) | $ 1,809,107 | $ 13,279 | $ 10,183 | $ (987) | $ 4,083 | $ 2,335,028 | $ 12,452 |
Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||
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, 2018. 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:
• redeemable noncontrolling interests.New Accounting Standards Adopted in 2019Accounting Standards Update ("ASU") 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the Financial Accounting Standards Board (the "FASB") issued ASU 2018-02, which gives entities the option to reclassify to retained earnings tax effects related to items in accumulated other comprehensive income (“AOCI”) that are deemed stranded in AOCI as a result of the Tax Cuts and Jobs Act (the "Tax Act") enacted in the United States at the end of 2017. The amendments in this guidance eliminate the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. We adopted the new standard on January 1, 2019, and that adoption did not have a material impact on our consolidated financial statements and related disclosures. ASUs 2016-02, 2018-10, 2018-11 and 2019-01, Leases In February 2016, the FASB issued ASU 2016-02, which is codified in Accounting Standards Codification ("ASC") 842 - Leases, amending the guidance on the classification, measurement and disclosure of leases for both lessors and lessees. The ASU requires lessees to recognize a right-of-use asset and an offsetting lease liability on the balance sheet and to disclose qualitative and quantitative information about leasing arrangements. Subsequently, in July 2018, the FASB 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 (1) the rate implicit in the lease, (2) impairment of the net investment in the lease, (3) lessee reassessment of lease classification, (4) lessor reassessment of lease term and purchase options, (5) variable payments that depend on an index or rate, and (6) certain transition adjustments. In July 2018, the FASB also issued ASU 2018-11, which adds a transition option for all entities and a practical expedient only for lessors to ASU 2016-02. The transition option, which we elected on adoption of the guidance, allows entities to choose not to 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 instead 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 are still required to adopt the new leases standard using the modified retrospective transition method, 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 addition, in March 2019, the FASB issued ASU 2019-01 to clarify that in the year of initial adoption of ASC 842, entities are not subject to the transition disclosure requirements in ASC 250-10-50-3 related to the effect of an accounting change on certain interim period financial information. Prior to this clarification, the transition guidance in ASC 842 only excluded the annual disclosures required in ASC 250-10-50-1(b)(2). We adopted ASU 2016-02 and the related amendments on January 1, 2019 using the modified retrospective transition method as required by the standard and recognized a right-of-use asset and an offsetting lease liability of $51.6 million on our consolidated balance sheet, relating primarily to office space and facilities that we have leased to conduct our business operations. Refer to Note 19 - "Commitments and Contingencies" for further details.Recently Issued Accounting Pronouncements Not Yet AdoptedNote 2 - "Significant Accounting Policies" to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018 describes accounting pronouncements that were not adopted as of December 31, 2018. Those pronouncements have not yet been adopted unless discussed above in "New Accounting Standards Adopted in 2019". In addition, the following relevant accounting pronouncement was issued by the FASB subsequent to the three months ended March 31, 2019 and is yet to be adopted. ASU 2019-04 - Codification Improvements to ASC 326 - Financial Instruments - Credit Losses, ASC 815 - Derivatives and Hedging and ASC 825 - Financial Instruments In April 2019, the FASB issued ASU 2019-04, which amends, (1) ASU 2016-13 on credit losses as codified in ASC 326, (2) ASU 2017-12 on hedging activities as codified in ASC 815, and (3) ASU 2016-01 on recognizing and measuring financial instruments as codified in ASC 825-10. The amendments in ASU 2019-04 clarify the scope and also address certain implementation issues related to these three standards. Specifically, the amendments clarify the scope of the credit losses standard and addresses issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayments. With respect to the hedge accounting standard, the amendments address partial-term fair value hedges, fair value hedge basis adjustments and certain transition requirements. On recognizing and measuring financial instruments, the ASU addresses the scope of ASC 825, the requirement for re-measurement under ASC 820 when using the measurement alternative, certain disclosure requirements and which equity securities have to be remeasured at historical exchange rates. The amendments to the credit losses and hedging standards have the same effective dates and transition requirements as the initial standards, unless an entity has already adopted those standards. For entities that have already adopted the credit losses standard, the amendments are effective for interim and annual reporting periods beginning after December 15, 2019, although early adoption is permitted, and the amendments should be applied on a modified retrospective basis. For entities that have already adopted ASU 2017-12, which we did during the quarter ended September 30, 2017, the amendments are effective as of the beginning of the next annual period which is January 1, 2020 for us, although early adoption is permitted. The ASU requires entities to either retrospectively apply the amendments as of the date they adopted ASU 2017-12, or prospectively, as of the date they adopt the amendments, with certain exceptions. The amendments on recognizing and measuring financial instruments are effective for interim and annual reporting periods beginning after December 15, 2019 although early adoption is permitted for entities that have already adopted ASU 2016-01 which we did on January 1, 2018. The ASU requires entities to apply these amendments on a modified retrospective basis, except for those related to equity securities without readily determinable fair values that are measured using the measurement alternative, which entities are required to apply prospectively. We expect to adopt ASU 2019-04 on January 1, 2020 using the modified retrospective approach required by the standard however, we do not expect that adoption to have a material impact on our consolidated financial statements and related disclosures in view of the composition of our current balance sheet, specifically our financial instruments within the scope of ASU 2016-01 and ASU 2016-13 as well as our existing hedging strategies which largely relate to net investment and cash flow hedging activities.
|
Significant New Business |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SIGNIFICANT NEW BUSINESS | 2. SIGNIFICANT NEW BUSINESSZurichOn April 16, 2019, we entered into a reinsurance transaction with Zurich Insurance Group ("Zurich"), pursuant to which we will reinsure certain of Zurich's U.S. asbestos and environmental liability insurance portfolios. In the transaction we will assume approximately $0.5 billion of gross reserves, relating to 1986 and prior year business. Completion of the transaction, which is expected to occur in 2019, is subject to, among other things, regulatory approvals and satisfaction of various other customary closing conditions.MaidenOn March 1, 2019, we entered into a Master Agreement with Maiden Holdings, Ltd. ("Maiden Holdings") and Maiden Reinsurance Ltd. (“Maiden Re Bermuda”). Under the Master Agreement, Enstar and Maiden Re Bermuda agreed to enter into an Adverse Development Cover Reinsurance Agreement (“ADC Agreement”) pursuant to which Maiden Re Bermuda will cede and Enstar will reinsure 100% of the liability of Maiden Re Bermuda, as reinsurer, under Maiden Re Bermuda’s two existing quota share agreements with certain insurance companies owned directly or indirectly by AmTrust Financial Services, Inc. (“AmTrust”) for losses incurred on or prior to December 31, 2018 in excess of a $2.44 billion retention, as such figure may be adjusted based upon Maiden Re Bermuda’s final year end reserves for the underlying business, up to a $675 million limit. The premium payable by Maiden Re Bermuda to Enstar under the ADC Agreement will be $500 million. Completion of the transaction is subject to, among other things, regulatory approvals and satisfaction of various closing conditions. The transaction is expected to close in the second quarter of 2019.AmerisureOn February 15, 2019, we entered into a loss portfolio transfer reinsurance agreement with Amerisure Mutual Insurance Company ("Amerisure") and Allianz Risk Transfer (Bermuda) Limited (“ART Bermuda”). In the transaction, Amerisure has agreed to cede, and each of Enstar and ART Bermuda has agreed to severally assume, a 50% quota share of the construction defect losses incurred by Amerisure and certain of its subsidiaries on or before December 31, 2012. At closing, Amerisure paid Enstar and ART Bermuda an aggregate premium of $125.0 million, which was adjusted for a broker commission and paid claims and recoveries from April 1, 2018, and Enstar's subsidiary assumed $60.0 million of net reserves in the transaction. This transaction closed in the second quarter.AmTrust RITC TransactionsOn February 14, 2019, we completed four RITC transactions with Syndicates 1206, 1861, 2526 and 5820 (collectively the "AmTrust RITC Transactions"), managed by AmTrust Syndicates Limited, under which we reinsured to close the 2016 and prior underwriting years. We assumed, among other items, gross loss reserves of £703.8 million ($897.1 million) and net loss reserves of £486.8 million ($620.4 million) relating to the portfolios in exchange for consideration of £539.9 million ($688.2 million) and recorded a deferred charge asset of $20.6 million. We have an investment in AmTrust, as described further in Note 18 - "Related Party Transactions". |
Investments |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS | 3. 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 investments, carried at fair value; (iii) other investments, carried at fair value; (iv) equity method investments; and (v) funds held - directly managed.Fixed Maturity Investments Asset Types The fair values of the underlying asset types of our short-term investments and fixed maturity investments, classified as trading and available-for-sale, and the fixed maturity investments included within our funds held - directly managed balance were as follows:
The contractual maturities of our short-term investments and fixed maturity investments, classified as trading and available-for-sale, and the fixed maturity investments included within our funds held - directly managed balance 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 following table sets forth the credit ratings of our short-term investments and fixed maturity investments, classified as trading and available-for-sale, and the fixed maturity investments included within our funds held - directly managed balance as of March 31, 2019:
The amortized cost and fair values of our fixed maturity investments classified as available-for-sale were as follows:
The following tables summarize our fixed maturity investments classified as available-for-sale that are in a gross unrealized loss position:
The following table summarizes our equity investments:
Our publicly traded equity investments in common and preferred stocks predominantly trade on major exchanges and are managed by our external advisors. Our publicly traded equity investments are widely diversified, and there is no significant concentration in any specific industry. Our privately held equity investments in common and preferred stocks are direct investments in companies that we believe offer attractive risk adjusted returns and/or offer other strategic advantages. Each investment may have its own unique terms and conditions and there may be restrictions on disposals. The market for these investments is illiquid, and there is no active market. Included within the above balance as of March 31, 2019 and December 31, 2018 is an indirect investment in AmTrust, with a fair value of $200.0 million and $200.0 million, respectively. Refer to Note 18 - "Related Party Transactions" for further information.Other Investments, at fair valueThe following table summarizes our other investments carried at fair value:
The valuation of our other investments is described in Note 8 - "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 March 31, 2019 and December 31, 2018 was primarily attributable to unrealized gains of $204.7 million and net additional subscriptions of $167.0 million to hedge funds, equity funds and fixed income funds. As of March 31, 2019, we had unfunded commitments of $210.8 million to private equity funds.Equity Method InvestmentsThe following table summarizes our equity method investments:
Refer to Note 18 - "Related Party Transactions" for further information regarding our investments in Enhanzed Re, Citco, Monument and Clear Spring. As of March 31, 2019, we had unfunded commitments of $152.3 million related to equity method investments.Funds HeldUnder funds held arrangements, the reinsured company has retained funds that would otherwise have been remitted to our reinsurance subsidiaries. We either have (i) funds held by reinsured companies, which are carried at amortized cost and on which we receive a fixed crediting rate, or (ii) funds held - directly managed, which are carried at fair value and on which we receive the underlying return on the portfolio. The investment returns on both categories of funds held are recognized in net investment income and net realized and unrealized gains (losses). The funds held balance is credited with investment income and losses payable are deducted. Funds Held - Directly Managed Funds held - directly managed, where we receive the underlying return on the investment portfolio, are carried at fair value, either because we elected the fair value option at the inception of the reinsurance contract, or because it represents the aggregate of funds held at amortized cost and the fair value of an embedded derivative. The embedded derivative relates to our contractual right to receive the return on the underlying investment portfolio supporting the reinsurance contract. We include the estimated fair value of these embedded derivatives in the consolidated balance sheets with the host contract in order to reflect the expected settlement of these features with the host contract. The change in the fair value of the embedded derivative is included in net unrealized gains (losses). The following table summarizes the components of the funds held - directly managed as of March 31, 2019 and December 31, 2018:
The following table summarizes the fixed maturity investment components of funds held - directly managed as of March 31, 2019 and December 31, 2018:
Refer to the sections above for details of the fixed maturity investments within our funds held - directly managed portfolios. Funds Held by Reinsured Companies Funds held by reinsured companies, where we received a fixed crediting rate, are carried at cost on our consolidated balance sheets. As of March 31, 2019 and December 31, 2018, we had funds held by reinsured companies of $919.7 million and $321.3 million, respectively. In connection with the AmTrust RITC transactions, we have recorded in aggregate $601.9 million as funds held, which is expected to be received in the second quarter of 2019 and subsequently invested in accordance with our investment guidelines.Net Investment IncomeMajor categories of net investment income are summarized as follows:
Components of net realized and unrealized gains and losses were as follows:
We utilize trust accounts to collateralize business with our insurance and reinsurance counterparties. We are also required to maintain investments and cash and cash equivalents on deposit with regulatory authorities and Lloyd's to support our insurance and reinsurance operations. The investments and cash and cash equivalents on deposit are available to settle insurance and reinsurance liabilities. Collateral generally takes the form of assets held in trust, letters of credit or funds held. The assets used as collateral are primarily highly rated fixed maturity securities. The carrying value of our restricted assets, including restricted cash of $427.6 million and $380.5 million, as of March 31, 2019 and December 31, 2018, respectively, was as follows:
(1) Our businesses include three Lloyd's syndicates. Lloyd's determines the required capital principally through the annual business plan of each syndicate. This capital is referred to as "Funds at Lloyd's" and will be drawn upon in the event that a syndicate has a loss that cannot be funded from other sources. We also utilize unsecured letters of credit for Funds at Lloyd's, as described in Note 12 - "Debt Obligations and Credit Facilities". The increase in the Funds at Lloyd's was primarily due to the loss portfolio transfer reinsurance transactions as described in Note 2 - "Significant New Business".
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Derivative and Hedging Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE AND HEDGING INSTRUMENTS | 4. DERIVATIVES AND HEDGING INSTRUMENTSForeign Currency Hedging of Net Investments in Foreign Operations We use foreign currency forward contracts in qualifying hedging relationships to hedge the foreign currency exchange rate risk associated with certain of our net investments in foreign operations. As of March 31, 2019 and December 31, 2018, 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 other liabilities related to our qualifying foreign currency forward exchange rate contracts as of March 31, 2019 and December 31, 2018.
The following table presents the amounts of the net gains and losses deferred in the cumulative 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 months ended March 31, 2019 and 2018.
Non-derivative Hedging Instruments of Net Investments in Foreign Operations As of March 31, 2018 there were borrowings of €60.0 million ($73.7 million) under our revolving credit facility that were designated as non-derivative hedges of our net investment in certain subsidiaries whose functional currency is denominated in Euros. These Euro-denominated borrowings were repaid in full and replaced by a Euro-denominated foreign currency forward contract in a qualifying hedging arrangement during the year ended December 31, 2018. The net losses deferred in the CTA account in AOCI relating to these qualifying Euro-loan derivative hedging instruments for the three months ended March 31, 2018 was $1.2 million.Derivatives Not Designated or Not Qualifying as Hedging InstrumentsFrom 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 ContractsThe following table presents the gross notional amounts and estimated fair values recorded within other assets and other liabilities related to our non-qualifying foreign currency forward hedging relationships as of March 31, 2019 and December 31, 2018.
The following table presents the amounts of the net gains (losses) included in earnings related to our non-qualifying foreign currency forward contracts during the three months ended March 31, 2019 and 2018.
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Reinsurance Balances Recoverable on Paid and Unpaid Losses |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REINSURANCE BALANCES RECOVERABLE ON PAID AND UNPAID LOSSES | 5. REINSURANCE BALANCES RECOVERABLE ON PAID AND UNPAID LOSSESThe following tables provide the total reinsurance balances recoverable:
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 recoverable 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 8 - "Fair Value Measurements". As of March 31, 2019 and December 31, 2018, we had reinsurance balances recoverable of $2,286.4 million and $2,029.7 million, respectively. The increase of $256.8 million in reinsurance balances recoverable was primarily related to the AmTrust RITC transactions, which closed during the first quarter of 2019.Top Ten Reinsurers
(1) For the two non-rated reinsurers as of March 31, 2019 and three non-rated reinsurers as of December 31, 2018, 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 RecoverableWe 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"). The majority of the provisions for bad debt relate to the Non-life Run-off segment.
The following table provides a summary of premiums written and earned in our Non-life Run-off, Atrium and StarStone segments and Other activities:
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Deferred Charge Assets |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEFERRED CHARGE ASSETS | 6. DEFERRED CHARGE ASSETS Deferred charge assets relate to retroactive reinsurance policies providing indemnification of losses and LAE with respect to past loss events in the Non-life Run-off segment. For insurance and reinsurance contracts for which we do not elect the fair value option, a deferred charge asset is recorded for the excess, if any, of the estimated ultimate losses payable over the premiums received at the initial measurement. Deferred charge assets are included in other assets on our consolidated balance sheets. The following table presents a reconciliation of the deferred charge assets:
Deferred charge assets are amortized over the estimated claim payment period of the related contract with the periodic amortization reflected in earnings as a component of losses and LAE. Deferred charge assets amortization is adjusted at each reporting period to reflect new estimates of the amount and timing of remaining loss payments. Changes in the estimated amount and the timing of payments of unpaid losses may have an effect on the unamortized deferred charge assets and the amount of periodic amortization. Deferred charge assets are assessed at each reporting period for impairment. If the asset is determined to be impaired, it is written down in the period in which the determination is made. For the three months ended March 31, 2019 we completed our assessment for impairment of deferred charge assets and concluded that there had been no impairment of our carried deferred charge assets amount. Further information on deferred charge assets recorded during the three months ended March 31, 2019, is included in Note 2 - "Significant New Business".
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Losses and Loss Adjustment Expenses |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOSSES AND LOSS ADJUSTMENT EXPENSES | 7. 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, property, motor and other non-life lines of business. Refer to Note 10 - "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, 2018 for more information on establishing the liability for losses and LAE.The following table summarizes the liability for losses and LAE by segment:
The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the Non-life Run-off segment:
Net change in case and LAE reserves comprises the movement during the period in specific case reserve liabilities as a result of claims settlements or changes advised to us by our policyholders and attorneys, less changes in case reserves recoverable advised by us to our reinsurers as a result of the settlement or movement of assumed claims. Net change in IBNR represents the gross change in our actuarial estimates of IBNR, less amounts recoverable. Three Months Ended March 31, 2019 The increase in net incurred losses and LAE for the three months ended March 31, 2019 of $95.2 million included net incurred losses and LAE of $49.1 million related to current period net earned premium, primarily for the run-off business acquired with the AmTrust RITC Transactions and the acquisition of Maiden Reinsurance North America, Inc. ("Maiden Re North America"). Excluding current period net incurred losses and LAE of $49.1 million, the increase in net incurred losses and LAE liabilities relating to prior periods was $46.1 million, which was attributable to an increase in the fair value of liabilities of $56.0 million related to our assumed retroactive reinsurance agreements for which we have elected the fair value option primarily as a result of a decrease in corporate bond yields, amortization of fair value adjustments over the estimated payout period relating to companies acquired of $8.8 million and the amortization of the deferred charge assets of $7.1 million, partially offset by a reduction in estimates of net ultimate losses of $10.3 million and a reduction in provisions for unallocated LAE of $15.4 million relating to 2019 run-off activity. The reduction in estimates of net ultimate losses of $10.3 million for the three months ended March 31, 2019 included a net reduction in case and IBNR reserves of $341.4 million, partially offset by net losses paid of $331.1 million. Three Months Ended March 31, 2018 The reduction in net incurred losses and LAE for the three months ended March 31, 2018 of $73.0 million included net incurred losses and LAE of $0.3 million related to current period net earned premium. Excluding current period net incurred losses and LAE of $0.3 million, the reduction in net incurred losses and LAE liabilities relating to prior periods was $73.3 million, which was attributable to a reduction in estimates of net ultimate losses of $25.4 million, a reduction in provisions for unallocated LAE of $15.0 million, relating to 2018 run-off activity, and a reduction in the fair value of liabilities of $40.2 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 $2.1 million and the amortization of the deferred charge assets of $5.1 million. The reduction in estimates of net ultimate losses of $25.4 million for the three months ended March 31, 2018 included a net change in case and IBNR reserves of $277.9 million, partially offset by net losses paid of $252.6 million.Atrium The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the Atrium segment:
The table below provides a reconciliation of the beginning and ending liability for losses and LAE for our StarStone segment:
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 of March 31, 2019 and December 31, 2018 were $100.7 million and $105.1 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, 2018 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 and a subsidiary of Monument. This agreement will transfer our remaining life assurance policies written by Alpha to Monument, via a Portfolio Transfer, subject to regulatory approval. The transaction is expected to close during 2019. Our life and annuities 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. We have an equity method investment in Monument, as described further in Note 18 - "Related Party Transactions".
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | 8. FAIR VALUE MEASUREMENTSFair 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:
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.
• 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 market observable. Where significant inputs are unable to be corroborated with market observable information, we classify the securities as Level 3.EquitiesOur investments in equities consist of a combination of publicly and privately traded investments. Our publicly traded equity investments in common and preferred stocks predominantly trade on the major exchanges and are managed by our external advisors. Our publicly traded equities are widely diversified and there is no significant concentration in any specific industry. We use an internationally recognized pricing service to estimate the fair value of our publicly traded equities. We have categorized the majority of our publicly traded equity investments other than preferred stock as Level 1 investments because the fair values of these investments are based on unadjusted quoted prices in active markets for identical assets. One equity security is trading in an inactive market and, as a result has been classified as Level 2. The fair value estimates of our investments in publicly traded preferred stock are based on observable market data and, as a result, have been categorized as Level 2. Our privately held equity investments in common and preferred stocks are direct investments in companies that we believe offer attractive risk adjusted returns and/or offer other strategic advantages. Each investment may have its own unique terms and conditions and there may be restrictions on disposals. The market for these investments is illiquid and there is no active market. The Company uses a combination of cost, internal models, reported values from co-investors/managers and observable inputs, such as capital raises and capital transactions between new and existing shareholders to calculate the fair value of the privately held equity investments. The fair value estimates of our investments in privately held equities are based on unobservable market data and, as a result, have been categorized as Level 3.Other investments, at fair valueWe 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.
• Included within other are investments in real estate debt funds, for which we measure fair value by obtaining the most recently available NAV from the external fund manager or third-party administrator. The fair value of these investments are measured using the NAV as a practical expedient and therefore have not been categorized within the fair value hierarchy.Insurance Contracts - Fair Value OptionThe Company uses an internal model to calculate the fair value of the liability for losses and loss adjustment expenses and reinsurance balances recoverable on paid and unpaid losses 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 InstrumentsThe fair values of our foreign currency exchange contracts, as described in Note 4 - "Derivatives 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 LevelingTransfers 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.InvestmentsThe 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:
Changes in fair value in the table above are included in net incurred losses and LAE in our consolidated statements of earnings. The following table presents the components of the net change in fair value:
The fair value of the liability for losses and LAE and reinsurance balances recoverable on paid and unpaid losses 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:
As of March 31, 2019, our 4.5% Senior Notes due 2022 (the "Senior Notes") were carried at amortized cost of $348.2 million while the fair value based on observable market pricing from a third party pricing service was $356.3 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 March 31, 2019 and December 31, 2018.
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Policy Benefits for Life Contracts |
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POLICY BENEFITS FOR LIFE CONTRACTS | 7. 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, property, motor and other non-life lines of business. Refer to Note 10 - "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, 2018 for more information on establishing the liability for losses and LAE.The following table summarizes the liability for losses and LAE by segment:
The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the Non-life Run-off segment:
Net change in case and LAE reserves comprises the movement during the period in specific case reserve liabilities as a result of claims settlements or changes advised to us by our policyholders and attorneys, less changes in case reserves recoverable advised by us to our reinsurers as a result of the settlement or movement of assumed claims. Net change in IBNR represents the gross change in our actuarial estimates of IBNR, less amounts recoverable. Three Months Ended March 31, 2019 The increase in net incurred losses and LAE for the three months ended March 31, 2019 of $95.2 million included net incurred losses and LAE of $49.1 million related to current period net earned premium, primarily for the run-off business acquired with the AmTrust RITC Transactions and the acquisition of Maiden Reinsurance North America, Inc. ("Maiden Re North America"). Excluding current period net incurred losses and LAE of $49.1 million, the increase in net incurred losses and LAE liabilities relating to prior periods was $46.1 million, which was attributable to an increase in the fair value of liabilities of $56.0 million related to our assumed retroactive reinsurance agreements for which we have elected the fair value option primarily as a result of a decrease in corporate bond yields, amortization of fair value adjustments over the estimated payout period relating to companies acquired of $8.8 million and the amortization of the deferred charge assets of $7.1 million, partially offset by a reduction in estimates of net ultimate losses of $10.3 million and a reduction in provisions for unallocated LAE of $15.4 million relating to 2019 run-off activity. The reduction in estimates of net ultimate losses of $10.3 million for the three months ended March 31, 2019 included a net reduction in case and IBNR reserves of $341.4 million, partially offset by net losses paid of $331.1 million. Three Months Ended March 31, 2018 The reduction in net incurred losses and LAE for the three months ended March 31, 2018 of $73.0 million included net incurred losses and LAE of $0.3 million related to current period net earned premium. Excluding current period net incurred losses and LAE of $0.3 million, the reduction in net incurred losses and LAE liabilities relating to prior periods was $73.3 million, which was attributable to a reduction in estimates of net ultimate losses of $25.4 million, a reduction in provisions for unallocated LAE of $15.0 million, relating to 2018 run-off activity, and a reduction in the fair value of liabilities of $40.2 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 $2.1 million and the amortization of the deferred charge assets of $5.1 million. The reduction in estimates of net ultimate losses of $25.4 million for the three months ended March 31, 2018 included a net change in case and IBNR reserves of $277.9 million, partially offset by net losses paid of $252.6 million.Atrium The table below provides a reconciliation of the beginning and ending liability for losses and LAE for the Atrium segment:
The table below provides a reconciliation of the beginning and ending liability for losses and LAE for our StarStone segment:
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 of March 31, 2019 and December 31, 2018 were $100.7 million and $105.1 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, 2018 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 and a subsidiary of Monument. This agreement will transfer our remaining life assurance policies written by Alpha to Monument, via a Portfolio Transfer, subject to regulatory approval. The transaction is expected to close during 2019. Our life and annuities 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. We have an equity method investment in Monument, as described further in Note 18 - "Related Party Transactions".
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PREMIUMS WRITTEN AND EARNED | 5. REINSURANCE BALANCES RECOVERABLE ON PAID AND UNPAID LOSSESThe following tables provide the total reinsurance balances recoverable:
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 recoverable 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 8 - "Fair Value Measurements". As of March 31, 2019 and December 31, 2018, we had reinsurance balances recoverable of $2,286.4 million and $2,029.7 million, respectively. The increase of $256.8 million in reinsurance balances recoverable was primarily related to the AmTrust RITC transactions, which closed during the first quarter of 2019.Top Ten Reinsurers
(1) For the two non-rated reinsurers as of March 31, 2019 and three non-rated reinsurers as of December 31, 2018, 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 RecoverableWe 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"). The majority of the provisions for bad debt relate to the Non-life Run-off segment.
The following table provides a summary of premiums written and earned in our Non-life Run-off, Atrium and StarStone segments and Other activities:
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS | 11. GOODWILL AND INTANGIBLE ASSETS The following table presents a reconciliation of the beginning and ending goodwill and intangible assets during the three months ended March 31, 2019:
Refer to Note 14 - "Goodwill and Intangible Assets" to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018 for more information on goodwill and intangible assets. The following table provides a summary of the amortization recorded on the intangible assets:
The gross carrying value, accumulated amortization and net carrying value of intangible assets by type was as follows:
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Debt Obligations |
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DEBT OBLIGATIONS | 12. DEBT OBLIGATIONS AND CREDIT FACILITIES We primarily utilize debt facilities for acquisitions and significant new business and, from time to time, for general corporate purposes. Debt obligations as of March 31, 2019 and December 31, 2018 were as follows:
The table below provides a summary of the total interest expense:
On March 10, 2017, we issued Senior Notes for an aggregate principal amount of $350.0 million. The Senior Notes pay 4.5% interest semi-annually and mature on March 10, 2022. The Senior Notes are unsecured and unsubordinated obligations that rank equal to any of our other unsecured and unsubordinated obligations, senior to any future obligations that are expressly subordinated to the Senior Notes, effectively subordinate to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally subordinate to all liabilities of our subsidiaries. The Senior Notes are rated BBB- and 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 Senior Notes. On or after the date that is one month prior to the maturity of the Senior Notes, the Notes are redeemable at a redemption price equal to 100% of the principal amount of the Notes to be redeemed. We incurred costs of $2.9 million in issuing the Senior Notes. These costs included underwriters’ fees, legal and accounting fees, and other fees, and are capitalized and presented as a direct deduction from the principal amount of debt obligations in the consolidated balance sheets. These costs are amortized over the term of the Senior Notes and are included in interest expense in our consolidated statements of earnings. The unamortized costs as of March 31, 2019 and December 31, 2018 were $1.8 million and $1.9 million, respectively.EGL Revolving Credit FacilityOn August 16, 2018, we and certain of our subsidiaries, as borrowers and guarantors, entered into a 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, 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 of March 31, 2019, we were permitted to borrow up to an aggregate of $600.0 million under the facility. As of March 31, 2019, there was $343.0 million of available unutilized capacity under the facility. Subsequent to March 31, 2019, we repaid $42.0 million, bringing the unutilized capacity under this facility to $385.0 million.2018 EGL Term Loan FacilityOn December 27, 2018, we entered into and fully utilized a three-year $500.0 million unsecured term loan (the "2018 EGL Term Loan Facility"). The proceeds were partially used to fund the acquisition of Maiden Re North America. We have the option to increase the principal amount of the term loan credit facility up to an aggregate amount of $150 million from the existing lenders or through the addition of new lenders, subject to the terms of the term loan credit agreement. Interest is payable at least every three months at either ABR or LIBOR plus a margin set forth in the term loan credit agreement. The margin could vary based upon any change in our long term senior unsecured debt rating assigned by S&P or Fitch. During the existence of an event of default, the interest rate may increase and the agent may, and at the request of the required lenders shall, demand early repayment. We incurred costs of $1.5 million associated with closing the 2018 EGL Term Loan Facility. These costs included bank, 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 facility and are included in interest expense in our consolidated statements of earnings. The unamortized costs as of March 31, 2019 and December 31, 2018 were $1.4 million and $1.5 million, respectively. Refer to Note 15 - "Debt Obligations and Credit Facilities" of the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018 for further information on the terms of the above facilities.Unsecured Letters of CreditWe also utilize unsecured letters of credit for Funds at Lloyd's. On February 8, 2018, we amended and restated our unsecured letter of credit agreement for Funds at Lloyd's ("FAL Facility") to issue up to $325.0 million of letters of credit, with provision to increase the facility up to $400.0 million, subject to lenders approval. On February 12, 2019, we increased the facility up to $375.0 million and maintained the provision to increase the facility to $400.0 million. The FAL Facility is available to satisfy our Funds at Lloyd's requirements and expires in 2022. As of March 31, 2019, our combined Funds at Lloyd's were comprised of cash and investments of $642.1 million and unsecured letters of credit of $368.0 million.
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NONCONTROLLING INTERESTS | 13. NONCONTROLLING INTERESTSRedeemable Noncontrolling Interest Redeemable noncontrolling interest ("RNCI") as of March 31, 2019 and December 31, 2018 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:
We carried the RNCI at its estimated redemption value, which is fair value, as of March 31, 2019. The decrease was primarily attributable to a decrease in the net assets due to net losses related to StarStone during the three months ended March 31, 2019. Refer to Note 18 - "Related Party Transactions" and Note 19 - "Commitments and Contingencies" for additional information regarding RNCI.Noncontrolling InterestAs of March 31, 2019 and December 31, 2018, we had $12.5 million and $12.1 million, respectively, of noncontrolling interest ("NCI") related to external interests in two of our non-life run-off subsidiaries. A reconciliation of the beginning and ending carrying amount of the equity attributable to NCI is included in the unaudited condensed consolidated statement of changes in shareholders equity.
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Share Capital |
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SHARE CAPITAL | 14. SHARE CAPITAL Refer to Note 17 - "Share Capital" in the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018 for additional information on our share capital. Dividends Declared and Paid The following table details the dividends that have been declared and paid on our Series D and E Preferred Shares for the period from January 1, 2019 to May 7, 2019:
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EARNINGS PER SHARE | 15. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted net earnings per ordinary share:
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION AND PENSIONS | 16. 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" in the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018. The table below provides the expenses related to the share-based compensation plans and other share-based compensation plans and pension plans:
The table below provides the expenses related to our pension plans:
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Income Taxation |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXATION | 17. INCOME TAXATIONInterim Tax Calculation MethodWe 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 months ended March 31, 2019 and 2018 were 1.3% and (0.4)%, respectively. The effective tax rate on income differs from the statutory rate of 0% due to tax on foreign operations, primarily the United States and the United Kingdom. We have foreign operating subsidiaries and branch operations principally located in the United States, United Kingdom, Continental Europe and Australia that are subject to federal, foreign, state and local taxes in those jurisdictions. Deferred income tax liabilities have not been accrued with respect to the undistributed earnings of our foreign subsidiaries. If the earnings were to be distributed, as dividends or other distributions, withholding taxes may be imposed by the jurisdiction of the paying subsidiary. For our U.S. subsidiaries, we have not currently accrued any withholding taxes with respect to un-remitted earnings as management has no current intention of remitting these earnings. For our United Kingdom subsidiaries, there are no withholding taxes imposed. For our other foreign subsidiaries, it would not be practicable to compute such amounts due to a variety of factors, including the amount, timing, and manner of any repatriation. Because we operate in many jurisdictions, our net earnings are subject to risk due to changing tax laws and tax rates around the world. The current, rapidly changing economic environment may increase the likelihood of substantial changes to tax laws in the jurisdictions in which we operate.Assessment of Valuation Allowance on Deferred Tax AssetWe 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 months ended March 31, 2019, we had no change in our assessment of our valuation allowance on deferred tax assets.Accounting for Uncertainty in Income TaxesThere were no unrecognized tax benefits relating to uncertain tax positions as of March 31, 2019 and December 31, 2018.Tax ExaminationsOur 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 2014. |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS | 18. RELATED PARTY TRANSACTIONSStone Point Capital LLCThrough 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 Capital LLC ("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, 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 StarStone transaction in cash at fair market value within the 90 days following April 1, 2019 (ii) our right to redeem Trident’s equity interest in the Atrium/Arden and StarStone transactions in cash at fair market value at any time following September 6, 2020 and April 1, 2021, respectively; and (iii) Trident’s right to have its equity interest 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. On December 26, 2018, the shareholders of North Bay completed a transaction to provide capital support to StarStone in the form of a contribution to its contributed surplus account and a loss portfolio transfer of certain discontinued and discontinuing lines of business. To fund the transaction, the North Bay shareholders contributed an aggregate amount of $135.0 million to North Bay in proportion to their ownership interests. Trident’s proportionate contribution of $53.1 million was temporarily funded by North Bay and was reimbursed in the first quarter of 2019. The RNCI on our balance sheet relating to these Trident co-investment transactions was as follows:
• In the fourth quarter of 2018, we invested $25.0 million in Mitchell TopCo Holdings, the parent company of Mitchell International and Genex Services, as a co-investor alongside Stone Point.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:
Through a Quota Share Agreement dated December 15, 2016 (the "KaylaRe-StarStone QS"), several of our StarStone affiliates 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. The reinsurance of StarStone's U.S. and U.K. affiliates was non-renewed as of January 1, 2018 and January 1, 2019, respectively. 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 months ended March 31, 2019 and 2018.Our consolidated statement of earnings included the following amounts related to transactions between us and KaylaRe and KaylaRe Ltd.:
We have recorded the investment in Clear Spring 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. Our investment in the common shares of Clear Spring, carried in equity method investments on our consolidated balance sheet, as of March 31, 2019 and December 31, 2018 was as follows:
Our consolidated statement of earnings included the following amounts related to transactions between us and Clear Spring:
We recorded the following amounts, related to dividend income, included in net earnings related to our investment in AmTrust:
Our indirect investment in the shares of Citco, carried in equity method investments on our consolidated balance sheet, was as follows:
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COMMITMENTS AND CONTINGENCIES | 19. COMMITMENTS AND CONTINGENCIESConcentrations 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 5 - "Reinsurance Balances Recoverable on Paid and Unpaid Losses". 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 $1,101.9 million to one reinsured company which has financial strength credit ratings of A+ from A.M. Best and AA from Standard & Poor's. In connection with the AmTrust RITC transactions, we have recorded, in aggregate $601.9 million as funds held, which is expected to be received in the second quarter of 2019 and subsequently invested in accordance with our investment guidelines. We limit the amount of credit exposure to any one counterparty, and none of our counterparty credit exposures, excluding U.S. government instruments and the funds held counterparty noted above, exceeded 10% of shareholders’ equity as of March 31, 2019. Our credit exposure to the U.S. government was $711.8 million as of March 31, 2019.Legal ProceedingsWe 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 CommitmentsAs of March 31, 2019, we had unfunded commitments of $210.8 million and $152.3 million to private equity funds and equity method investments, respectively.GuaranteesAs of March 31, 2019 and December 31, 2018, parental guarantees and capital instruments supporting subsidiaries' insurance obligations were $669.6 million and $614.5 million, respectively. We also have a FAL facility, which on February 12, 2019, we increased to issue up to $375.0 million of letters of credit, and maintained the 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 of March 31, 2019 there were $368.0 million letters of credit issued under this facility which have a parental guarantee.Asbestos Personal Injury LiabilitiesWe acquired DCo LLC ("DCo") 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, 2018. DCo continues to process asbestos personal injury claims in the normal course of business and is separately managed. Other liabilities on our consolidated balance sheets include amounts for indemnity and defense costs for pending and future claims, determined using standard actuarial techniques for asbestos-related exposures. Other liabilities also include amounts for environmental liabilities associated with DCo's properties. Other assets on our consolidated balance sheets include 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. Included within other assets and other liabilities are the fair value adjustments that were initially recognized when DCo was acquired. These fair value adjustments continue to be amortized in proportion to the original expected payout patterns for the future claims and recoveries. The carrying value of the asbestos and environmental liabilities, insurance recoveries, future estimated expenses and the fair value adjustments related to DCo was as follows:
We adopted the new leasing standard and the related amendments on January 1, 2019 using the modified retrospective transition method as required by the standard, and based on the detailed analysis of our operating lease arrangements we have recognized a right-of-use asset and an offsetting lease liability on our consolidated balance sheet, relating primarily to office space and facilities that we have leased to conduct our business operations. On an ongoing basis we determine whether an arrangement is a lease or contains a lease at inception and also complete an assessment to determine the classification of each lease as either a finance lease or an operating lease. Our leases are all currently classified as operating leases. Our leases have remaining lease terms of one year to 38 years, some of which include options to extend the lease term for up to five years and some of which include options to terminate the lease within one year. We consider these options in determining the lease term used to establish our right-of-use assets and lease liabilities. Only those renewal options that we believe we are reasonably certain to exercise are taken into account when determining lease terms. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. As most of our leases do not provide an implicit discount rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We have lease agreements that contain both lease and non-lease components. For real estate leases, we account for lease components together with non-lease components such as common-area maintenance costs as a single lease component. As part of our adoption of the new leasing standard, we elected the practical expedient package as well as the hindsight practical expedient permitted by the FASB in ASC 842. The practical expedient package covers the application of the new leasing standard to leases that commenced before January 1, 2019, the effective date of the standard and gives an entity the option of not reassessing, (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) initial direct costs for any existing leases. The hindsight practical expedient permits an entity to consider changes in facts and circumstances from commencement through to the effective date of the new standard when determining the lease term and assessing any potential impairment of the recorded right-of-use asset. All these practical expedients were consistently applied to our leases as required by the leasing standard. The table below provides a summary of the components of our lease cost including the gross sublease income received under sublease arrangements related to certain office spaces that we have leased to conduct our business operations:
The table below provides a summary of the cash flow information and non-cash activity related to our operating leases:
The table below provides a summary of the leases recorded on our consolidated balance sheets:
Weighted-average remaining lease term and discount rate used for our operating leases are as follows:
The table below provides a summary of the maturity of the operating lease liabilities:
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | 20. SEGMENT INFORMATION We have three reportable segments of business that are each managed, operated and separately reported: (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. These segments are described in Note 1 - "Description of Business" to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018. The following tables set forth selected and unaudited condensed consolidated statement of earnings results 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 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. | ||||||||||||||||||||||||||||||||||||
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, 2018. 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. | ||||||||||||||||||||||||||||||||||||
Reclassifications | 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:
• redeemable noncontrolling interests.
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New Accounting Standards Adopted and Recently Issued Accounting Pronouncements Not Yet Adopted | New Accounting Standards Adopted in 2019 Accounting Standards Update ("ASU") 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In February 2018, the Financial Accounting Standards Board (the "FASB") issued ASU 2018-02, which gives entities the option to reclassify to retained earnings tax effects related to items in accumulated other comprehensive income (“AOCI”) that are deemed stranded in AOCI as a result of the Tax Cuts and Jobs Act (the "Tax Act") enacted in the United States at the end of 2017. The amendments in this guidance eliminate the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. We adopted the new standard on January 1, 2019, and that adoption did not have a material impact on our consolidated financial statements and related disclosures. ASUs 2016-02, 2018-10, 2018-11 and 2019-01, Leases In February 2016, the FASB issued ASU 2016-02, which is codified in Accounting Standards Codification ("ASC") 842 - Leases, amending the guidance on the classification, measurement and disclosure of leases for both lessors and lessees. The ASU requires lessees to recognize a right-of-use asset and an offsetting lease liability on the balance sheet and to disclose qualitative and quantitative information about leasing arrangements. Subsequently, in July 2018, the FASB 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 (1) the rate implicit in the lease, (2) impairment of the net investment in the lease, (3) lessee reassessment of lease classification, (4) lessor reassessment of lease term and purchase options, (5) variable payments that depend on an index or rate, and (6) certain transition adjustments. In July 2018, the FASB also issued ASU 2018-11, which adds a transition option for all entities and a practical expedient only for lessors to ASU 2016-02. The transition option, which we elected on adoption of the guidance, allows entities to choose not to 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 instead 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 are still required to adopt the new leases standard using the modified retrospective transition method, 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 addition, in March 2019, the FASB issued ASU 2019-01 to clarify that in the year of initial adoption of ASC 842, entities are not subject to the transition disclosure requirements in ASC 250-10-50-3 related to the effect of an accounting change on certain interim period financial information. Prior to this clarification, the transition guidance in ASC 842 only excluded the annual disclosures required in ASC 250-10-50-1(b)(2). We adopted ASU 2016-02 and the related amendments on January 1, 2019 using the modified retrospective transition method as required by the standard and recognized a right-of-use asset and an offsetting lease liability of $51.6 million on our consolidated balance sheet, relating primarily to office space and facilities that we have leased to conduct our business operations. Refer to Note 19 - "Commitments and Contingencies" for further details.Recently Issued Accounting Pronouncements Not Yet AdoptedNote 2 - "Significant Accounting Policies" to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018 describes accounting pronouncements that were not adopted as of December 31, 2018. Those pronouncements have not yet been adopted unless discussed above in "New Accounting Standards Adopted in 2019". In addition, the following relevant accounting pronouncement was issued by the FASB subsequent to the three months ended March 31, 2019 and is yet to be adopted. ASU 2019-04 - Codification Improvements to ASC 326 - Financial Instruments - Credit Losses, ASC 815 - Derivatives and Hedging and ASC 825 - Financial Instruments In April 2019, the FASB issued ASU 2019-04, which amends, (1) ASU 2016-13 on credit losses as codified in ASC 326, (2) ASU 2017-12 on hedging activities as codified in ASC 815, and (3) ASU 2016-01 on recognizing and measuring financial instruments as codified in ASC 825-10. The amendments in ASU 2019-04 clarify the scope and also address certain implementation issues related to these three standards. Specifically, the amendments clarify the scope of the credit losses standard and addresses issues related to accrued interest receivable balances, recoveries, variable interest rates and prepayments. With respect to the hedge accounting standard, the amendments address partial-term fair value hedges, fair value hedge basis adjustments and certain transition requirements. On recognizing and measuring financial instruments, the ASU addresses the scope of ASC 825, the requirement for re-measurement under ASC 820 when using the measurement alternative, certain disclosure requirements and which equity securities have to be remeasured at historical exchange rates. The amendments to the credit losses and hedging standards have the same effective dates and transition requirements as the initial standards, unless an entity has already adopted those standards. For entities that have already adopted the credit losses standard, the amendments are effective for interim and annual reporting periods beginning after December 15, 2019, although early adoption is permitted, and the amendments should be applied on a modified retrospective basis. For entities that have already adopted ASU 2017-12, which we did during the quarter ended September 30, 2017, the amendments are effective as of the beginning of the next annual period which is January 1, 2020 for us, although early adoption is permitted. The ASU requires entities to either retrospectively apply the amendments as of the date they adopted ASU 2017-12, or prospectively, as of the date they adopt the amendments, with certain exceptions. The amendments on recognizing and measuring financial instruments are effective for interim and annual reporting periods beginning after December 15, 2019 although early adoption is permitted for entities that have already adopted ASU 2016-01 which we did on January 1, 2018. The ASU requires entities to apply these amendments on a modified retrospective basis, except for those related to equity securities without readily determinable fair values that are measured using the measurement alternative, which entities are required to apply prospectively. We expect to adopt ASU 2019-04 on January 1, 2020 using the modified retrospective approach required by the standard however, we do not expect that adoption to have a material impact on our consolidated financial statements and related disclosures in view of the composition of our current balance sheet, specifically our financial instruments within the scope of ASU 2016-01 and ASU 2016-13 as well as our existing hedging strategies which largely relate to net investment and cash flow hedging activities.
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Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities | The fair values of the underlying asset types of our short-term investments and fixed maturity investments, classified as trading and available-for-sale, and the fixed maturity investments included within our funds held - directly managed balance 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 short-term investments and fixed maturity investments, classified as trading and available-for-sale, and the fixed maturity investments included within our funds held - directly managed balance 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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Credit Ratings Company's Fixed Maturity and Short-Term Investments Available-for-Sale | The following table sets forth the credit ratings of our short-term investments and fixed maturity investments, classified as trading and available-for-sale, and the fixed maturity investments included within our funds held - directly managed balance as of March 31, 2019:
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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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Schedule Of Equity Securities, FV-NI | The following table summarizes our equity investments:
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Other Investments | The following table summarizes our other investments carried at fair value:
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Equity Method Investments | The following table summarizes our equity method investments:
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Funds Held, Directly Managed, Carrying Values of Assets | The following table summarizes the components of the funds held - directly managed as of March 31, 2019 and December 31, 2018:
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Funds Held, Directly Managed, Fair Value To Amortized Cost | The following table summarizes the fixed maturity investment components of funds held - directly managed as of March 31, 2019 and December 31, 2018:
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Major Categories of Net Investment Income | Major categories of net investment income are summarized as follows:
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Realized Gain (Loss) on Investments | Components of net realized and unrealized gains and losses were as follows:
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Unrealized Gain (Loss) on Investments | Components of net realized and unrealized gains and losses were as follows:
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Schedule of Restricted Assets | The carrying value of our restricted assets, including restricted cash of $427.6 million and $380.5 million, as of March 31, 2019 and December 31, 2018, respectively, was as follows:
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Derivative and Hedging Instruments (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Fair Value and Unrealized Gains (Losses) on Derivative Instruments | The following table presents the gross notional amounts and estimated fair values recorded within other assets and other liabilities related to our qualifying foreign currency forward exchange rate contracts as of March 31, 2019 and December 31, 2018.
The following table presents the amounts of the net gains and losses deferred in the cumulative 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 months ended March 31, 2019 and 2018.
The following table presents the amounts of the net gains (losses) included in earnings related to our non-qualifying foreign currency forward contracts during the three months ended March 31, 2019 and 2018.
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Reinsurance Balances Recoverable on Paid and Unpaid Losses (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Reinsurance Reserves Recoverable and Uncollectible Reinsurance Balances Recoverable | The following tables provide the total reinsurance balances recoverable:
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Reinsurance Balances Recoverable by Reinsurer |
(1) For the two non-rated reinsurers as of March 31, 2019 and three non-rated reinsurers as of December 31, 2018, 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.
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Deferred Charge Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Policy Acquisition Costs | The following table presents a reconciliation of the deferred charge assets:
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Losses and Loss Adjustment Expenses (Tables) |
3 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:
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Schedule of Incurred Losses | The tables below provide the net incurred losses and LAE by segment:
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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:
Changes in fair value in the table above are included in net incurred losses and LAE in our consolidated statements of earnings. The following table presents the components of the net change in fair value:
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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:
Changes in fair value in the table above are included in net incurred losses and LAE in our consolidated statements of earnings. The following table presents the components of the net change in fair value:
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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:
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Premiums Written and Earned (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Premiums Written and Earned | The following tables provide the total reinsurance balances recoverable:
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Goodwill and Intangible Assets (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets and Goodwill | The following table presents a reconciliation of the beginning and ending goodwill and intangible assets during the three months ended March 31, 2019:
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Intangible Assets Amortization | The following table provides a summary of the amortization recorded on the intangible assets:
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Schedule of Finite-Lived Intangible Assets | The gross carrying value, accumulated amortization and net carrying value of intangible assets by type was as follows:
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Schedule of Indefinite-Lived Intangible Assets | The gross carrying value, accumulated amortization and net carrying value of intangible assets by type was as follows:
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Debt Obligations (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amounts of Loans Payable Outstanding, and Accrued Interest | Debt obligations as of March 31, 2019 and December 31, 2018 were as follows:
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Interest Expense | The table below provides a summary of the total interest expense:
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Noncontrolling Interests (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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Share Capital (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends Declared | The following table details the dividends that have been declared and paid on our Series D and E Preferred Shares for the period from January 1, 2019 to May 7, 2019:
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Earnings Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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Share-Based Compensation and Pensions (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 and other share-based compensation plans and pension plans:
The table below provides the expenses related to our pension plans:
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Related Party Transactions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | The RNCI on our balance sheet relating to these Trident co-investment transactions was as follows:
The following table presents the amounts included in net earnings related to our related party transactions with Stone Point and its affiliated entities:
Our consolidated statement of earnings included the following amounts related to transactions between us and Clear Spring:
We recorded the following amounts, related to dividend income, included in net earnings related to our investment in AmTrust:
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Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Asbestos And Environmental Liabilities, Insurance Recoveries, Future Estimated Expenses And Fair Value Adjustments | The carrying value of the asbestos and environmental liabilities, insurance recoveries, future estimated expenses and the fair value adjustments related to DCo was as follows:
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Lease, Cost | The table below provides a summary of the components of our lease cost including the gross sublease income received under sublease arrangements related to certain office spaces that we have leased to conduct our business operations:
The table below provides a summary of the cash flow information and non-cash activity related to our operating leases:
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Assets And Liabilities, Lessee | The table below provides a summary of the leases recorded on our consolidated balance sheets:
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Lessee, Lease Terms | Weighted-average remaining lease term and discount rate used for our operating leases are as follows:
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Lessee, Operating Lease, Liability, Maturity | The table below provides a summary of the maturity of the operating lease liabilities:
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Operations by Segment |
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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 by segment were as follows:
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Significant Accounting Policies (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Jan. 01, 2019 |
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of-use assets | $ 48,870 | |
Present value of lease liabilities | $ 49,333 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right-of-use assets | $ 51,600 | |
Present value of lease liabilities | $ 51,600 |
Investments - Other Than Temporary Impairment (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
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 - Equities - Equity Investments (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Investment [Line Items] | ||
Equities, at fair value | $ 400,420 | $ 367,125 |
Publicly traded equity investments in common and preferred stocks | ||
Investment [Line Items] | ||
Equities, at fair value | 171,710 | 138,415 |
Privately held equity investments in common and preferred stocks | ||
Investment [Line Items] | ||
Equities, at fair value | 228,710 | 228,710 |
AmTrust Financial Services, Inc. | ||
Investment [Line Items] | ||
Fair value of indirect investment | $ 200,000 | $ 200,000 |
Investments - Funds Held Directly Managed Components (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Schedule of Funds Held, Directly Managed [Line Items] | ||
Debt securities, trading | $ 8,739,303 | |
Funds held - directly managed | 1,288,210 | $ 1,198,154 |
Funds held - directly managed | ||
Schedule of Funds Held, Directly Managed [Line Items] | ||
Debt securities, trading | 1,199,614 | 1,183,374 |
Funds held - directly managed, other assets | $ 88,596 | $ 14,780 |
Investments - Funds Held Directly Managed Narrative (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Investment [Line Items] | ||
Funds held by reinsured companies | $ 919,738 | $ 321,267 |
AmTrust RITC | ||
Investment [Line Items] | ||
Funds held by reinsured companies | $ 601,900 |
Investments - Restricted Assets (Detail) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019
USD ($)
Segment
|
Dec. 31, 2018
USD ($)
|
Mar. 31, 2018
USD ($)
|
|
Line of Credit Facility [Line Items] | |||
Restricted cash and cash equivalents | $ 427,601 | $ 380,488 | $ 483,136 |
Collateral in trust for third party agreements | 4,276,436 | 4,336,752 | |
Assets on deposit with regulatory authorities | 583,780 | 579,048 | |
Funds at Lloyd's | 642,068 | 354,589 | |
Restricted assets, total | $ 5,626,860 | 5,398,230 | |
Number of syndicates | Segment | 3 | ||
Asset Pledged as Collateral | |||
Line of Credit Facility [Line Items] | |||
Collateral for secured letter of credit facilities | $ 124,576 | $ 127,841 |
Derivative and Hedging Instruments - Investments in Call Options on Equities (Details) - Not designated as hedging instrument - Call options on equity - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Derivative [Line Items] | |||
Unrealized gain (loss) on equity securities | $ (0.2) | $ (2.5) | |
Cost | 10.0 | ||
Fair value of derivatives | $ 0.2 | $ 0.4 |
Reinsurance Balances Recoverable on Paid and Unpaid Losses - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Effects of Reinsurance [Line Items] | |||
Reinsurance balances recoverable | $ 2,286,447 | $ 2,029,663 | |
Increase (decrease) in reinsurance recoverable | 256,706 | $ 347,798 | |
Non-Life Run-Off and StarStone Segment | |||
Effects of Reinsurance [Line Items] | |||
Increase (decrease) in reinsurance recoverable | $ 256,800 |
Reinsurance Balances Recoverable on Paid and Unpaid Losses - Summary of Provisions for Uncollectible Reinsurance Balances Recoverable by Rating of Reinsurer (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Effects of Reinsurance [Line Items] | ||
Gross | $ 2,447,926 | $ 2,186,395 |
Provisions for Bad Debt | 161,479 | 156,732 |
Net | $ 2,286,447 | $ 2,029,663 |
Provisions as a % of Gross | 6.60% | 7.20% |
Reinsurers rated A- or above | ||
Effects of Reinsurance [Line Items] | ||
Gross | $ 1,883,418 | $ 1,612,464 |
Provisions for Bad Debt | 54,048 | 51,519 |
Net | $ 1,829,370 | $ 1,560,945 |
Provisions as a % of Gross | 2.90% | 3.20% |
Secured | Reinsurers rated below A- | ||
Effects of Reinsurance [Line Items] | ||
Gross | $ 421,205 | $ 430,852 |
Provisions for Bad Debt | 0 | 0 |
Net | $ 421,205 | $ 430,852 |
Provisions as a % of Gross | 0.00% | 0.00% |
Unsecured | Reinsurers rated below A- | ||
Effects of Reinsurance [Line Items] | ||
Gross | $ 143,303 | $ 143,079 |
Provisions for Bad Debt | 107,431 | 105,213 |
Net | $ 35,872 | $ 37,866 |
Provisions as a % of Gross | 75.00% | 73.50% |
Deferred Charge Assets - Reconciliation of Deferred Charge Assets (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Movement Analysis of Deferred Policy Acquisition Costs [Roll Forward] | ||
Beginning carrying value | $ 86,585,000 | $ 80,192,000 |
Recorded during the period | 20,632,000 | 0 |
Amortization | (7,063,000) | (5,081,000) |
Ending carrying value | 100,154,000 | $ 75,111,000 |
Impairment loss of deferred charge assets | $ 0 |
Fair Value Measurements - Observable and Unobservable Inputs (Details) - Internal Model - Recurring |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
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 | 7 years 4 months 24 days | 7 years 3 months 29 days |
Reinsurance balances recoverable | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Risk cost of capital | 5.10% | 5.00% |
Duration | 8 years 3 days | 7 years 11 months 22 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 |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 10, 2017 |
---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt, amortized cost | $ 1,103,790 | $ 861,539 | |
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 | $ 348,180 | $ 348,054 | |
Debt, fair value | $ 356,300 |
Policy Benefits for Life Contracts (Detail) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Insurance [Abstract] | ||
Policy benefits for life contracts | $ 100,682 | $ 105,080 |
Premiums Written and Earned - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Insurance [Abstract] | ||
Gross, premiums written | $ 285,345 | $ 362,848 |
Decrease in gross premiums written | $ 77,500 |
Goodwill and Intangible Assets - Intangible Asset Amortization (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 565 | $ 1,266 |
Debt Obligations - Amounts Outstanding and Accrued Interest (Detail) - USD ($) $ in Thousands |
3 Months Ended | ||||
---|---|---|---|---|---|
Dec. 27, 2018 |
Sep. 16, 2014 |
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Debt Instrument [Line Items] | |||||
Debt, amortized cost | $ 1,103,790 | $ 861,539 | |||
Interest expense on debt obligations | 10,726 | $ 7,439 | |||
Funds withheld balances and other | 310 | 572 | |||
Total interest expense | $ 11,036 | $ 8,011 | |||
Senior Notes | Senior Notes Due 2022 | |||||
Debt Instrument [Line Items] | |||||
Term | 5 years | ||||
Debt, amortized cost | $ 348,180 | 348,054 | |||
Line of Credit | EGL Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Term | 5 years | 5 years | |||
Debt, amortized cost | $ 257,000 | 15,000 | |||
Line of Credit | 2018 EGL Term Loan Facility | |||||
Debt Instrument [Line Items] | |||||
Term | 3 years | 3 years | |||
Debt, amortized cost | $ 498,610 | $ 498,485 |
Noncontrolling Interests - Additional Information (Detail) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Noncontrolling Interest [Line Items] | ||
Noncontrolling interest | $ 12,452 | $ 12,056 |
Trident | Subsidiaries | ||
Noncontrolling Interest [Line Items] | ||
Interest owned by an entity (percent) | 39.30% | |
Dowling | Subsidiaries | ||
Noncontrolling Interest [Line Items] | ||
Interest owned by an entity (percent) | 1.70% | |
Trident | Subsidiaries | ||
Noncontrolling Interest [Line Items] | ||
Interest owned by an entity (percent) | 39.30% | |
Dowling | Subsidiaries | ||
Noncontrolling Interest [Line Items] | ||
Interest owned by an entity (percent) | 1.70% |
Noncontrolling Interests - Carrying Amount of Equity Attributable to Noncontrolling Interest (Detail) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Increase (Decrease) in Redeemable Noncontrolling Interest [Roll Forward] | ||
Balance at beginning of period | $ 458,543 | $ 479,606 |
Capital contributions | 0 | 55,377 |
Dividends paid | 0 | (3,852) |
Net losses attributable to RNCI | (2,544) | (64,794) |
Accumulated other comprehensive earnings (losses) attributable to RNCI | 85 | (240) |
Change in redemption value of RNCI | 262 | (7,554) |
Balance at end of period | $ 456,346 | $ 458,543 |
Earnings Per Share - Comparison of Basic and Diluted Earnings per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Numerator: | ||
Net earnings (losses) attributable to Enstar Group Limited | $ 358,751 | $ (41,210) |
Denominator: | ||
Weighted-average ordinary shares outstanding — basic (in shares) | 21,463,499 | 19,409,021 |
Effect of dilutive securities: | ||
Share-based compensation plans (in shares) | 122,980 | 115,630 |
Warrants (in shares) | 59,383 | 77,861 |
Weighted-average ordinary shares outstanding — diluted (in shares) | 21,645,862 | 19,602,512 |
Earnings (Loss) per ordinary share attributable to Enstar Group Limited: | ||
Basic (in dollars per share) | $ 16.71 | $ (2.12) |
Diluted (in dollars per share) | $ 16.57 | $ (2.12) |
Income Taxation - Additional Information (Detail) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Income Tax Disclosure [Abstract] | |||
Effective tax rate | 1.30% | (0.40%) | |
Statutory rate | 0.00% | ||
Unrecognized tax benefits | $ 0 | $ 0 |
Related Party Transactions - Monument (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Oct. 31, 2016 |
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Related Party Transaction [Line Items] | ||||
Contributed amount of common and preferred shares | $ 9,762 | $ 0 | ||
Ownership percentage | 47.40% | 47.40% | ||
Carrying value of previously held equity method investment prior to the close of the transaction | $ 221,023 | $ 204,507 | ||
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 | $ 47,746 | $ 42,193 |
Related Party Transactions - Citco (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Related Party Transaction [Line Items] | ||||
Indirect investment acquired | $ 225,961 | $ 275,862 | ||
Other investments | $ 2,324,345 | $ 1,957,757 | ||
Trident | Citco | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Indirect investment acquired | $ 50,000 | |||
Ownership percentage | 3.40% | |||
Citco | ||||
Related Party Transaction [Line Items] | ||||
Other investments | $ 50,917 | $ 50,812 |
Related Party Transactions - Enhanced Re Header (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2018 |
Dec. 31, 2018 |
Mar. 31, 2019 |
|
Related Party Transaction [Line Items] | |||
Management fee income | $ 1,397 | ||
Equity method investments | $ 204,507 | $ 221,023 | |
Ownership percentage | 47.40% | 47.40% | |
Enstar | Enhanzed Re | |||
Related Party Transaction [Line Items] | |||
Equity method investments | $ 94,800 | ||
Ownership percentage | 47.40% | ||
Uncalled amount of investment | $ 128,000 | ||
Allianz | Enhanzed Re | |||
Related Party Transaction [Line Items] | |||
Ownership percentage | 24.90% | ||
Hillhouse | Enhanzed Re | |||
Related Party Transaction [Line Items] | |||
Ownership percentage | 27.70% | ||
Enhanzed Re | |||
Related Party Transaction [Line Items] | |||
Equity method investments | $ 94,800 | $ 91,883 | |
Ownership percentage | 47.40% | 47.40% | |
Enhanzed Re | Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Management fee income | $ 100 | ||
Equity method investments | $ 470,000 |
Commitments and Contingencies - Asbestos and Environmental Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Other liabilities: | ||
TOTAL LIABILITIES | $ 13,321,741 | $ 12,183,738 |
Other assets: | ||
TOTAL ASSETS | 18,058,251 | 16,556,270 |
Dana properties | ||
Other liabilities: | ||
Estimated future expenses | 17,717 | 19,843 |
Fair value adjustments | (84,350) | (84,650) |
TOTAL LIABILITIES | 197,511 | 203,320 |
Other assets: | ||
Insurance recoveries related to direct asbestos and environmental liabilities | 178,100 | 183,676 |
Fair value adjustments | (47,669) | (47,868) |
TOTAL ASSETS | 130,431 | 135,808 |
Net liabilities relating to direct asbestos and environmental exposures | (67,080) | (67,512) |
Direct Asbestos Liabilities | Dana properties | ||
Other liabilities: | ||
Liability for asbestos and environmental claims | 262,098 | 265,975 |
Direct Environmental Liabilities | Dana properties | ||
Other liabilities: | ||
Liability for asbestos and environmental claims | $ 2,046 | $ 2,152 |
Commitments and Contingencies - Leases - Lease Cost (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease cost | $ 3,487 |
Sublease income | (131) |
Total lease cost | $ 3,356 |
Commitments and Contingencies - Leases - Cash Flow Information (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Operating cash flow information: | |
Cash paid for amounts included in the measurement of lease liabilities | $ 3,024 |
Non-cash activity: | |
Right-of-use assets obtained in exchange for lease obligations | $ 51,609 |
Commitments and Contingencies - Leases - Balance Sheet Information (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Right-of-use assets | $ 48,870 |
Current lease liabilities | 9,063 |
Non-current lease liabilities | $ 40,270 |
Commitments and Contingencies - Leases - Lease Terms (Details) |
Mar. 31, 2019 |
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Weighted-average remaining lease term | 6 years 7 months 6 days |
Weighted-average discount rate | 6.20% |
Commitments and Contingencies - Leases - Operating Lease Liabilities (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Operating Lease Liabilities, Payments Due [Abstract] | |
2019 | $ 8,223 |
2020 | 12,469 |
2021 | 9,022 |
2022 | 7,454 |
2023 | 6,605 |
2024 and beyond | 18,010 |
Total lease payments | 61,783 |
Less: Imputed interest | (12,450) |
Present value of lease liabilities | $ 49,333 |
Segment Information - Additional Information (Detail) |
3 Months Ended |
---|---|
Mar. 31, 2019
Segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Segment Information - Summary of Company's Assets by Segment (Detail) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ 18,058,251 | $ 16,556,270 |
Operating Segments | Non-life Run-off | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 14,661,681 | 13,362,749 |
Operating Segments | Atrium | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 588,126 | 591,722 |
Operating Segments | StarStone | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 3,464,379 | 3,416,132 |
Other | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | $ (655,935) | $ (814,333) |
Label | Element | Value |
---|---|---|
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 0 |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (1,573,000) |
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