HAMILTON, Bermuda, Nov. 9 /PRNewswire-FirstCall/ -- Enstar Group Limited today reported its earnings and financial position for the three and nine months ended September 30, 2007. The financial results include the consolidation of the financial results of Enstar USA, Inc. (formerly The Enstar Group, Inc.) and Inter-Ocean Holdings Ltd, both of which were acquired during the first quarter of 2007.
Enstar reported net earnings of $2.6 million for the three months ended September 30, 2007, compared to net earnings of $11.0 million for the three months ended September 30, 2006. For the nine months ended September 30, 2007, Enstar reported net earnings of $26.8 million compared to net earnings of $35.2 million for the nine months ended September 30, 2006. Included as part of net earnings for the nine months ended September 30, 2007 was an extraordinary gain of $15.7 million relating to negative goodwill compared to an extraordinary gain of $4.3 million, net of minority interest, also relating to negative goodwill, for the nine months ended September 30, 2006.
Enstar's total assets were approximately $2.5 billion at September 30, 2007 (December 31, 2006: approximately $1.8 billion), which included approximately $1.9 billion of cash and investments and $512.4 million in reinsurance balances receivable. The increase in total assets was primarily due to the completion of the merger with Enstar USA, Inc. on January 31, 2007 and the acquisition of Inter-Ocean Holdings Ltd on February 23, 2007. During the three months ended September 30, 2007, Enstar acquired a UK-based reinsurance company in run-off, and its management services company, for a purchase price of $31.2 million. Shareholders' equity was $416.6 million at September 30, 2007, up from $318.6 million at December 31, 2006. The increase in shareholders' equity was primarily a result of additional net assets of approximately $58.4 million acquired following the merger with Enstar USA, Inc., net earnings of $26.8 million, an increase in other paid-in capital arising from employee share awards of $5.9 million and an increase in net retained earnings of $4.9 million following the adoption of FIN 48 ("Accounting for Uncertainty in Income Taxes - an Interpretation of FASB 109").
Enstar filed its quarterly report on Form 10-Q with the SEC earlier today. The Form 10-Q contains a more detailed description of Enstar's business and financial results.
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.
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 Sept. 30, Dec. 31, 2007 2006 (dollars in thousands) (unaudited) Total assets $2,523,273 $1,774,252 Total liabilities $2,044,140 $ 1,400,122 Minority interest 62,534 55,520 Total shareholders' equity 416,599 318,610 Total liabilities and shareholders' equity $2,523,273 $1,774,252 ENSTAR GROUP LIMITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS Three Months Ended Nine Months Ended Sept. 30, Sept. 30, 2007 2006 2007 2006 (dollars in thousands, except per share data) (unaudited) Consulting fees $ 6,238 $ 9,350 $ 14,725 $ 20,950 Net investment income and net realized gains and losses 15,901 12,712 51,096 33,438 Net reduction (increase) in loss and loss adjustment liabilities 313 3,920 (1,392) 10,700 General and administrative expenses (19,561) (12,150) (56,311) (34,723) Interest expense (1,442) (362) (3,767) (894) Net foreign exchange gain 4,651 947 7,666 8,914 Earnings before income taxes, minority interest, share of net earnings of partly-owned company and extraordinary gain 6,100 14,417 12,017 38,385 Income taxes (expense) recovery (933) (1,034) 6,160 (239) Minority interest (2,599) (2,619) (7,014) (7,805) Share of net earnings of partly-owned company - 232 - 495 Earnings before extraordinary gain 2,568 10,996 11,163 30,836 Extraordinary gain- negative goodwill (2006: net of minority interest of $4,329) - - 15,683 4,347 Net earnings $ 2,568 $ 10,996 $ 26,846 $ 35,183 Weighted average shares outstanding - basic 11,920,393 9,910,670 11,668,402 9,839,173 Weighted average shares outstanding - diluted 12,200,514 10,002,964 11,946,281 9,954,827 Basic earnings per share $0.22 $1.11 $2.30 $3.57 Diluted earnings per share $0.21 $1.10 $2.24 $3.54
The weighted average ordinary shares outstanding shown for the three and nine months ended September 30, 2007 and September 30, 2006 reflect the conversion of Class A, B, C and D shares to ordinary shares on January 31, 2007, as part of the recapitalization completed in connection with the merger with The Enstar Group, Inc., as if the conversion occurred on January 1, 2007 and January 1, 2006. For the three and nine months ended September 30, 2007, the ordinary shares issued to acquire The Enstar Group, Inc. are reflected in the calculation of the weighted average ordinary shares outstanding from January 31, 2007, the date of issue.
