Schedule II - Condensed Financial Statements

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Disclosure [Abstract]

Schedule II - Condensed Financial Statements

SCHEDULE II

ENSTAR GROUP LIMITED

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

Balance Sheets - Parent Company Only

As of December 31, 2019 and 2018

	2019			2018
	(in thousands of U.S. dollars, except share data)
ASSETS
Cash and cash equivalents	$	4,568		$	15,213
Balances due from subsidiaries	134,897			25,091
Investments in subsidiaries	6,050,197			4,843,913
Other assets	6,391			8,596
TOTAL ASSETS	$	6,196,053		$	4,892,813
LIABILITIES
Debt obligations	$	1,191,207		$	861,539
Balances due to subsidiaries	135,532			120,397
Other liabilities	27,131			8,944
TOTAL LIABILITIES	1,353,870			990,880
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Ordinary shares (par value $1 each, issued and outstanding 2019: 21,511,505; 2018: 21,459,997):
Voting Ordinary Shares (issued and outstanding 2019: 18,001,823; 2018: 17,950,315)	18,002			17,950
Non-voting convertible ordinary Series C Shares (issued and outstanding 2019 and 2018: 2,599,672)	2,600			2,600
Non-voting convertible ordinary Series E Shares (issued and outstanding 2019 and 2018: 910,010)	910			910
Preferred Shares:
Series C Preferred Shares (issued and held in treasury 2019 and 2018: 388,571)	389			389
Series D Preferred Shares (issued and outstanding 2019 and 2018: 16,000)	400,000			400,000
Series E Preferred Shares (issued and outstanding 2019 and 2018: 4,400)	110,000			110,000
Treasury shares, at cost (Series C Preferred Shares 2019 and 2018: 388,571)	(421,559		)	(421,559		)
Additional paid-in capital	1,836,778			1,804,664
Accumulated other comprehensive income	7,171			10,440
Retained earnings	2,887,892			1,976,539
Total Enstar Group Limited Shareholders’ Equity	4,842,183			3,901,933
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,196,053		$	4,892,813

See accompanying notes to the Condensed Financial Information of Registrant

SCHEDULE II

ENSTAR GROUP LIMITED

CONDENSED FINANCIAL INFORMATION OF REGISTRANT - CONTINUED

Statements of Earnings - Parent Company Only

For the Years Ended December 31, 2019, 2018 and 2017

 

	2019			2018			2017
	(in thousands of U.S. dollars)
INCOME
Net investment income	$	3,649		$	142		$	80
Other income	—			—			1,050
Dividend income from subsidiaries	—			—			249,055
	3,649			142			250,185
EXPENSES
General and administrative expenses	44,964			68,977			87,596
Interest expense	51,508			27,353			23,138
Net foreign exchange losses (gains)	(21,516		)	7,655			6,135
	74,956			103,985			116,869
EARNINGS (LOSSES) BEFORE EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDIARIES	(71,307		)	(103,843		)	133,316
Equity in undistributed earnings (losses) of subsidiaries - continuing operations	1,009,396			(46,378		)	167,149
Equity in undistributed earnings (losses) of subsidiaries - discontinued operations	—			—			10,993
NET EARNINGS	938,089			(150,221		)	311,458
Dividends on preferred shares	(35,914		)	(12,133		)	—
NET EARNINGS (LOSS) ATTRIBUTABLE TO ENSTAR GROUP LIMITED ORDINARY SHAREHOLDERS	$	902,175		$	(162,354	)	$	311,458

See accompanying notes to the Condensed Financial Information of Registrant

Statements of Comprehensive Income - Parent Company Only

For the Years Ended December 31, 2019, 2018 and 2017

	2019			2018			2017
	(in thousands of U.S. dollars)
NET EARNINGS	$	938,089		$	(150,221	)	$	311,458
OTHER COMPREHENSIVE INCOME (LOSS) RELATING TO SUBSIDIARIES, NET OF TAX	(3,269		)	(27		)	34,016
COMPREHENSIVE INCOME	$	934,820		$	(150,248	)	$	345,474

See accompanying notes to the Condensed Financial Information of Registrant

SCHEDULE II

ENSTAR GROUP LIMITED

CONDENSED FINANCIAL INFORMATION OF REGISTRANT - CONTINUED

Statements of Cash Flows - Parent Company Only

For the Years Ended December 31, 2019, 2018 and 2017

	2019			2018			2017
	(in thousands of U.S. dollars)
OPERATING ACTIVITIES:
Net cash flows provided by (used in) operating activities	$	(128,462	)	$	(128,382	)	$	97,898
INVESTING ACTIVITIES:
Dividends and return of capital from subsidiaries	65,500			101,000			217,450
Contributions to subsidiaries	(240,382		)	(660,339		)	(465,650		)
Net cash flows used in investing activities	(174,882		)	(559,339		)	(248,200		)
FINANCING ACTIVITIES:
Net proceeds from the issuance of preferred shares	—			495,357			—
Dividends on preferred shares	(35,914		)	(12,133		)	—
Repayment of loans	(219,000		)	(898,633		)	(696,640		)
Receipt of loans	547,613			1,115,885			844,516
Net cash flows provided by financing activities	292,699			700,476			147,876
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(10,645		)	12,755			(2,426		)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	15,213			2,458			4,884
CASH AND CASH EQUIVALENTS, END OF YEAR	$	4,568		$	15,213		$	2,458

See accompanying notes to the Condensed Financial Information of Registrant

Notes to the Condensed Financial Information of Registrant

The Condensed Financial Information of Registrant should be read in conjunction with our consolidated financial statements and the accompanying notes thereto included in Part II - Item 8 of this Annual Report on Form 10-K. Our wholly owned and majority owned subsidiaries are recorded based upon our proportionate share of our subsidiaries' net assets (similar to presenting them on the equity method).

Investing activities in the Condensed Statements of Cash Flows primarily represents the flow of funds to and from subsidiaries to provide cash on hand to fund acquisitions and significant new business. Net investment income relates to interest on loans to subsidiaries. For the years ended December 31, 2019, 2018, and 2017, interest paid was $46.5 million, $25.1 million, and $17.6 million, respectively. During the years ended December 31, 2019, 2018, and 2017, non-cash investing activities included $nil, $nil and $31.6 million, respectively, for dividends and return of capital from subsidiaries and $nil, $414.8 million and $148.1 million, respectively, for contributions to subsidiaries. In 2018, these transactions represented the contribution of the acquired outstanding shares and warrants of KaylaRe Holdings, Ltd to another subsidiary company. In 2017, these transactions were to settle intercompany balances, resulting in a net reduction in balances due from subsidiaries and an increase in investments in subsidiaries.

As of December 31, 2019, parental guarantees and capital support instruments supporting subsidiaries' insurance obligations were $1,031.5 million. In addition, as of December 31, 2019 there were $252.0 million of unsecured letters of credit for Funds at Lloyd's which have a parental guarantee.

As of December 31, 2019 and 2018, retained earnings were $2,887.9 million and $1,976.5 million, respectively, an increase of $911.4 million. This increase was primarily attributable to the net earnings of $902.2 million.