Enstar Group Limited Reports Third Quarter Results

Rhea-AI Summary

Enstar Group Limited (Nasdaq: ESGR) reported strong financial results for the three and nine months ended September 30, 2020. Net earnings surged to $615.0 million and $896.7 million, representing significant increases from the previous year. The enhanced performance is attributed to net realized and unrealized gains of $500.0 million for the quarter and $838.6 million for the nine months. Non-GAAP operating income also rose to $574.4 million and $804.2 million. The company's ordinary shareholders' equity increased to $5,310.9 million, reflecting strong book value growth.

Positive

• Net earnings increased significantly to $615.0 million for Q3 2020, up from $117.7 million in Q3 2019.
• Non-GAAP operating income rose to $574.4 million for Q3 2020 from $32.7 million in Q3 2019.
• Total ordinary shareholders' equity increased to $5,310.9 million, up from $4,332.2 million at year-end 2019.
• Increase in fully diluted book value per share of 13.8% for the third quarter and 22.4% for the nine months.

Negative

• None.

• Net Earnings of $615.0 million and $896.7 million for the Three and Nine Months Ended September 30, 2020, primarily driven by strong investments performance 
  
• Non-GAAP Operating Income of $574.4 million and $804.2 million for the Three and Nine Months Ended September 30, 2020
• Increase in fully diluted book value per share of 13.8% and 22.4% for the Three and Nine Months Ended September 30, 2020 (non-annualized)

HAMILTON, Bermuda, Nov. 06, 2020 (GLOBE NEWSWIRE) -- Enstar Group Limited (Nasdaq: ESGR) filed its quarterly report on Form 10-Q with the SEC earlier today, reporting its earnings and financial position for the three and nine months ended September 30, 2020.

Enstar reported consolidated net earnings of $615.0 million (or $28.24 per fully diluted ordinary share) and  $896.7 million (or $41.14 per fully diluted ordinary share) for the three and nine months ended September 30, 2020, respectively, compared to consolidated net earnings of $117.7 million (or $5.42 per fully diluted ordinary share) and $708.3 million (or $32.58 per fully diluted ordinary share) for the three and nine months ended September 30, 2019, respectively.

The key drivers of net earnings were:

• Net realized and unrealized gains of $500.0 million for the three months ended September 30, 2020, including $432.7 million relating to other investments and equities and $67.3 million relating to fixed income securities;
  
  
• Net realized and unrealized gains of $838.6 million for the nine months ended September 30, 2020, including $631.5 million relating to other investments and equities and $207.1 million relating to fixed income securities;

Non-GAAP operating income¹ was $574.4 million (or $26.37 per fully diluted ordinary share¹)  and  $804.2 million (or $36.89 per fully diluted ordinary share) for the three and nine months ended September 30, 2020, respectively, compared to non-GAAP operating income of $32.7 million (or $1.51 per fully diluted ordinary share) and $341.2 million (or $15.69 per fully diluted ordinary share) for the three and nine months ended September 30, 2019, respectively.

Enstar's ordinary shareholders' equity at September 30, 2020 amounted to $5,310.9 million (or $242.36 per fully diluted ordinary share), compared to $4,332.2 million (or $197.93 per fully diluted ordinary share) at December 31, 2019. The Form 10-Q, which is available on Enstar's website, www.enstargroup.com, contains a more detailed description of Enstar's business and financial results.

_{¹ Non-GAAP operating income (loss) and non-GAAP operating income (loss) per fully diluted ordinary share are non-GAAP financial measures as defined in SEC Regulation G. The reconciliations of these non-GAAP measures to the most comparable GAAP financial measures (net earnings (loss) attributable to Enstar ordinary shareholders and diluted net earnings (loss) per ordinary share, respectively) are provided below, along with a discussion of the rationale for the presentation of these items.}

About Enstar

Enstar is a NASDAQ-listed leading global insurance group that offers innovative capital release solutions through its network of group companies in Bermuda, the United States, the United Kingdom, Continental Europe, Australia, and other international locations. A market leader in completing legacy acquisitions, Enstar has acquired over 100 companies and portfolios since its formation in 2001. For further information about Enstar, see www.enstargroup.com.

Non-GAAP Financial Measures

In addition to presenting net earnings (loss) attributable to Enstar ordinary shareholders and diluted earnings (loss) per ordinary share determined in accordance with U.S. GAAP, we believe that presenting non-GAAP operating income (loss) attributable to Enstar ordinary shareholders and diluted non-GAAP operating income (loss) per ordinary share, non-GAAP financial measures as defined in SEC Regulation G, provides investors with valuable measures of our performance.

Non-GAAP operating income (loss) excludes: (i) net realized and unrealized (gains) losses on fixed maturity investments and funds held - directly managed included in net earnings (loss), (ii) change in fair value of insurance contracts for which we have elected the fair value option, (iii) gain (loss) on sale of subsidiaries, if any, (vi) net earnings (loss) from discontinued operations, if any, (v) tax effect of these adjustments where applicable, and (vi) attribution of share of adjustments to noncontrolling interest where applicable. We eliminate the impact of net realized and unrealized (gains) losses on fixed maturity investments and funds held - directly managed and change in fair value of insurance contracts for which we have elected the fair value option because these items are subject to significant fluctuations in fair value from period to period, driven primarily by market conditions and general economic conditions, and therefore their impact on our earnings is not reflective of the performance of our core operations. When applicable, we eliminate the impact of gain (loss) on sale of subsidiaries and net earnings (loss) from discontinued operations because these are not reflective of the performance of our core operations. Diluted Non-GAAP operating income (loss) per ordinary share is diluted net earnings per ordinary share excluding the per diluted share amounts of each of the adjustments used to calculate non-GAAP operating income.

We believe these non-GAAP measures enable readers of our consolidated financial statements to analyze our results in a way that is more aligned with the manner in which our management measures our underlying performance. We believe that presenting these non-GAAP financial measures, which may be defined and calculated differently by other companies, improves the understanding of our consolidated results of operations. These measures should not be viewed as substitutes for those calculated in accordance with U.S. GAAP.

Reconciliation of Non-GAAP Financial Measures

Non-GAAP operating income attributable to Enstar ordinary shareholders is calculated by the addition or subtraction of certain items from within our consolidated statements of earnings to or from net earnings attributable to Enstar ordinary shareholders, the most directly comparable GAAP financial measure, as illustrated in the table below:

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2020				2019				2020				2019
	(expressed in thousands of U.S. dollars, except share and per share data)
Net earnings attributable to Enstar ordinary shareholders	$	615,013			$	117,743			$	896,745			$	708,336
Adjustments:
Net realized and unrealized (gains) on fixed maturity investments and funds held - directly managed (1)	(67,294		)		(135,005		)		(207,097		)		(558,755		)
Change in fair value of insurance contracts for which we have elected the fair value option	21,042				41,374				96,848				135,377
Net (earnings) loss from discontinued operations	(4,031		)		(7,916		)		(810		)		(12,041		)
Tax effects of adjustments (2)	5,771				12,042				19,070				50,841
Adjustments attributable to noncontrolling interest (3)	3,881				4,500				(536		)		17,397
Non-GAAP operating income  attributable to Enstar ordinary shareholders (4)	$	574,382			$	32,738			$	804,220			$	341,155
Diluted net earnings per ordinary share	$	28.24			$	5.42			$	41.14			$	32.58
Adjustments:
Net realized and unrealized (gains) on fixed maturity investments and funds held - directly managed (1)	(3.09		)		(6.21		)		(9.50		)		(25.71		)
Change in fair value of insurance contracts for which we have elected the fair value option	0.97				1.90				4.44				6.23
Net (earnings) loss from discontinued operations	(0.19		)		(0.36		)		(0.04		)		(0.55		)
Tax effects of adjustments (2)	0.26				0.55				0.87				2.34
Adjustments attributable to noncontrolling interest (3)	0.18				0.21				(0.02		)		0.80
Diluted non-GAAP operating income per ordinary share (4)	$	26.37			$	1.51			$	36.89			$	15.69
Weighted average ordinary shares outstanding:
Basic	21,578,106				21,488,216				21,564,447				21,476,586
Diluted	21,778,729				21,720,497		�

FAQ

What were Enstar's net earnings for Q3 2020?

Enstar reported net earnings of $615.0 million for the three months ended September 30, 2020.

How did Enstar's non-GAAP operating income change in Q3 2020?

Non-GAAP operating income for Q3 2020 was $574.4 million, significantly up from $32.7 million in Q3 2019.

What was the increase in fully diluted book value per share for Enstar?

Enstar's fully diluted book value per share increased by 13.8% for Q3 2020.

How much did ordinary shareholders' equity increase for Enstar?

Enstar's ordinary shareholders' equity increased to $5,310.9 million as of September 30, 2020.

What were the realized gains for Enstar in Q3 2020?

Enstar realized a net gain of $500.0 million for the three months ended September 30, 2020.