HAMILTON, Bermuda, March 16 /PRNewswire-FirstCall/ -- Enstar Group Limited, formerly Castlewood Holdings Limited ("Enstar"), today reported its earnings and financial position for the year ended December 31, 2006.
Enstar reported net earnings of $82.3 million for the year ended December 31, 2006, compared to net earnings of $80.7 million for 2005. Included as part of net earnings for 2006 was an extraordinary gain of $31.0 million relating to negative goodwill, net of minority interest. As a result, net earnings before extraordinary gain for 2006 were approximately $51.3 million compared to $80.7 million in 2005. The decrease was primarily a result of a lower net reduction in loss and loss adjustment expense liabilities and higher general and administrative expenses, offset by higher consulting fee income, investment income and increased foreign exchange gains.
The Company's total assets were $1.8 billion at December 31, 2006, including $747.5 million in investments, $513.6 million in cash and cash equivalents, and $408.1 in reinsurance balances receivable. Total assets were $1.2 billion at December 31, 2005. The increase in total assets was primarily due to the acquisition of four reinsurance companies in run-off during 2006. Shareholders' equity was $318.6 million at December 31, 2006, up from $260.9 million at December 31, 2005. The increase in shareholders' equity was primarily a result of net earnings of $82.3 million and an increase in other paid-in capital arising from employee share awards of $22.4 million, offset by the redemption of shares and dividends paid totaling $50.6 million.
The financial results announced today do not include the consolidation of the financial results of The Enstar Group, Inc. On January 31, 2007, Enstar completed the merger of CWMS Subsidiary Corp., a wholly-owned subsidiary of Enstar, with and into The Enstar Group Inc. As a result of the merger, The Enstar Group, Inc., renamed Enstar USA, Inc., is now a wholly-owned subsidiary of Enstar. Prior to the merger, The Enstar Group, Inc. owned an approximately 32% economic and 50% voting interest in Enstar.
Enstar, a Bermuda company, acquires and manages insurance and reinsurance companies in run-off and provides management, consultancy and other services to the insurance and reinsurance industry. As of March 12, 2007, Enstar had approximately 11,779,335 ordinary shares outstanding.
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include statements regarding the intent, belief or current expectations of Enstar and its management team. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Important risk factors regarding Enstar may be found under the heading "Risk Factors" in Enstar's Form 10-K for the year ended December 31, 2006, and are incorporated herein by reference. Furthermore, Enstar undertakes no obligation to update any written or oral forward-looking statements or publicly announce any updates or revisions to any of the forward-looking statements contained herein, to reflect any change in its expectations with regard thereto or any change in events, conditions, circumstances or assumptions underlying such statements, except as required by law.
ENSTAR GROUP LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
Dec. 31, Dec. 31,
2006 2005
(dollars in thousands)
(unaudited)
Total assets $1,774,252 $1,199,963
Total liabilities $1,400,122 $898,513
Minority interest 55,520 40,544
Total shareholders' equity 318,610 260,906
Total liabilities and shareholders' equity $1,774,252 $1,199,963
ENSTAR GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Year Ended December 31,
2006 2005
(dollars in thousands, except
per share data)
(unaudited)
Consulting fees $33,908 $22,006
Net investment income and net realized
(losses) gains 48,001 29,504
Net reduction in loss and loss adjustment
liabilities 31,927 96,007
General and administrative expenses (58,999) (51,783)
Interest expense (1,989) --
Net foreign exchange gain (loss) 10,832 (4,602)
Earnings before income taxes, minority
interest, share of net earnings of
partly-owned company, and extraordinary gain 63,680 91,132
Income taxes 318 (914)
Minority interest (13,208) (9,700)
Share of net earnings of partly-owned company 518 192
Net earnings before extraordinary gain 51,308 80,710
Extraordinary gain- negative goodwill
(net of minority interest of $4,329) 31,038 --
Net earnings $82,346 $80,710
Weighted average shares outstanding - basic 18,612 18,352
Weighted average shares outstanding - diluted 18,858 18,751
Basic earnings per share $4,424.35 $4,397.89
Diluted earnings per share $4,366.64 $4,304.30
