Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
September 30, 2022 | September 30, 2021 | $ / pp / bp Change | September 30, 2022 | September 30, 2021 | $ / pp / bp Change | ||||||||||||||||||||||||||||||
(in millions of U.S. dollars, except per share data) | |||||||||||||||||||||||||||||||||||
Key Earnings Metrics | |||||||||||||||||||||||||||||||||||
Net (loss) earnings attributable to Enstar ordinary shareholders | $ | (444) | $ | (196) | $ | (248) | $ | (1,219) | $ | 365 | $ | (1,584) | |||||||||||||||||||||||
Adjusted operating (loss) income attributable to Enstar ordinary shareholders* | $ | (148) | $ | (174) | $ | 26 | $ | (371) | $ | 417 | $ | (788) | |||||||||||||||||||||||
ROE | (10.6) | % | (2.9) | % | (7.7) | pp | (21.8) | % | 5.9 | % | (27.7) | pp | |||||||||||||||||||||||
Annualized ROE | (29.1) | % | 7.9 | % | (37.0) | pp | |||||||||||||||||||||||||||||
Adjusted ROE* | (2.9) | % | (2.8) | % | (0.1) | pp | (7.0) | % | 7.7 | % | (14.7) | pp | |||||||||||||||||||||||
Annualized Adjusted ROE* | (9.4) | % | 10.2 | % | (19.6) | pp | |||||||||||||||||||||||||||||
Key Run-off Metrics | |||||||||||||||||||||||||||||||||||
Prior period development | $ | 109 | $ | 69 | $ | 40 | $ | 331 | $ | 189 | $ | 142 | |||||||||||||||||||||||
Adjusted prior period development* | $ | 14 | $ | 53 | $ | (39) | $ | 42 | $ | 103 | $ | (61) | |||||||||||||||||||||||
Annualized RLE | 3.8 | % | 2.5 | % | 1.3 | pp | |||||||||||||||||||||||||||||
Annualized Adjusted RLE* | 0.5 | % | 1.4 | % | (0.9) | pp | |||||||||||||||||||||||||||||
Key Investment Return Metrics | |||||||||||||||||||||||||||||||||||
Total investable assets | $ | 19,310 | $ | 21,855 | $ | (2,545) | |||||||||||||||||||||||||||||
Adjusted total investable assets* | $ | 21,238 | $ | 21,529 | $ | (291) | |||||||||||||||||||||||||||||
Annualized investment book yield | 2.32 | % | 1.73 | % | 59 | bp | 2.15 | % | 1.91 | % | 24 | bp | |||||||||||||||||||||||
Annualized TIR | (8.7) | % | 2.8 | % | (11.5) | pp | |||||||||||||||||||||||||||||
Annualized Adjusted TIR* | (1.0) | % | 4.1 | % | (5.1) | pp | |||||||||||||||||||||||||||||
As of | |||||||||||||||||||||||||||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
Key Shareholder Metrics | |||||||||||||||||||||||||||||||||||
Book value per ordinary share | $ | 208.60 | $ | 316.34 | $ | (107.74) | |||||||||||||||||||||||||||||
Adjusted book value per ordinary share* | $ | 206.25 | $ | 310.80 | $ | (104.55) | |||||||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
September 30, | $ Change | September 30, | $ Change | ||||||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
INCOME | (in millions of U.S. dollars) | ||||||||||||||||||||||||||||||||||
Net premiums earned | $ | 1 | $ | 39 | $ | (38) | $ | 27 | $ | 154 | $ | (127) | |||||||||||||||||||||||
Other income: | |||||||||||||||||||||||||||||||||||
Reduction in estimates of net ultimate defendant A&E liabilities - prior periods | — | 5 | (5) | 4 | 19 | (15) | |||||||||||||||||||||||||||||
Reduction in estimated future defendant A&E expenses | — | 1 | (1) | 1 | 4 | (3) | |||||||||||||||||||||||||||||
All other income | 2 | 6 | (4) | 14 | 25 | (11) | |||||||||||||||||||||||||||||
Total other income | 2 | 12 | (10) | 19 | 48 | (29) | |||||||||||||||||||||||||||||
Total income | 3 | 51 | (48) | 46 | 202 | (156) | |||||||||||||||||||||||||||||
EXPENSES | |||||||||||||||||||||||||||||||||||
Net incurred losses and LAE: | |||||||||||||||||||||||||||||||||||
Current period | 10 | 35 | (25) | 35 | 121 | (86) | |||||||||||||||||||||||||||||
Prior periods: | |||||||||||||||||||||||||||||||||||
Reduction in estimates of net ultimate losses | (46) | (72) | 26 | (183) | (139) | (44) | |||||||||||||||||||||||||||||
Reduction in provisions for ULAE | (15) | (14) | (1) | (49) | (45) | (4) | |||||||||||||||||||||||||||||
Total prior periods | (61) | (86) | 25 | (232) | (184) | (48) | |||||||||||||||||||||||||||||
Total net incurred losses and LAE | (51) | (51) | — | (197) | (63) | (134) | |||||||||||||||||||||||||||||
Acquisition costs | 1 | 8 | (7) | 18 | 37 | (19) | |||||||||||||||||||||||||||||
General and administrative expenses | 34 | 47 | (13) | 109 | 139 | (30) | |||||||||||||||||||||||||||||
Total expenses | (16) | 4 | (20) | (70) | 113 | (183) | |||||||||||||||||||||||||||||
SEGMENT NET EARNINGS | $ | 19 | $ | 47 | $ | (28) | $ | 116 | $ | 89 | $ | 27 | |||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
September 30, | $ Change | September 30, | $ Change | ||||||||||||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||||||||||||||
(in millions of U.S. dollars) | |||||||||||||||||||||||||||||||||||
INCOME | |||||||||||||||||||||||||||||||||||
Net investment income: | |||||||||||||||||||||||||||||||||||
Fixed income securities | $ | 94 | $ | 70 | $ | 24 | $ | 247 | $ | 208 | $ | 39 | |||||||||||||||||||||||
Cash and restricted cash | 2 | (1) | 3 | 3 | (1) | 4 | |||||||||||||||||||||||||||||
Other investments, including equities | 22 | 12 | 10 | 63 | 41 | 22 | |||||||||||||||||||||||||||||
Less: Investment expenses | (4) | 11 | (15) | (19) | (19) | — | |||||||||||||||||||||||||||||
Total net investment income | 114 | 92 | 22 | 294 | 229 | 65 | |||||||||||||||||||||||||||||
Net realized (losses) gains: | |||||||||||||||||||||||||||||||||||
Fixed income securities | (23) | 5 | (28) | (88) | (1) | (87) | |||||||||||||||||||||||||||||
Other investments, including equities | (13) | — | (13) | (23) | 2 | (25) | |||||||||||||||||||||||||||||
Net realized (losses) gains: | (36) | 5 | (41) | (111) | 1 | (112) | |||||||||||||||||||||||||||||
Net unrealized (losses) gains: | |||||||||||||||||||||||||||||||||||
Fixed income securities | (391) | (91) | (300) | (1,061) | (180) | (881) | |||||||||||||||||||||||||||||
Other investments, including equities | (151) | (187) | 36 | (445) | 292 | (737) | |||||||||||||||||||||||||||||
Total net unrealized (losses) gains: | (542) | (278) | (264) | (1,506) | 112 | (1,618) | |||||||||||||||||||||||||||||
Total income | (464) | (181) | (283) | (1,323) | 342 | (1,665) | |||||||||||||||||||||||||||||
EXPENSES | |||||||||||||||||||||||||||||||||||
General and administrative expenses | 9 | 8 | 1 | 28 | 24 | 4 | |||||||||||||||||||||||||||||
Total expenses | 9 | 8 | 1 | 28 | 24 | 4 | |||||||||||||||||||||||||||||
Earnings (losses) from equity method investments | (20) | (14) | (6) | 12 | 101 | (89) | |||||||||||||||||||||||||||||
SEGMENT NET (LOSS) EARNINGS | $ | (493) | $ | (203) | $ | (290) | $ | (1,339) | $ | 419 | $ | (1,758) |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||||||||
September 30, 2022 | September 30, 2021 | $ Change | September 30, 2022 | September 30, 2021 | $ Change | ||||||||||||||||||||||||||||||
(in millions of U.S. dollars) | |||||||||||||||||||||||||||||||||||
INCOME | |||||||||||||||||||||||||||||||||||
Run-off | $ | 3 | $ | 51 | $ | (48) | $ | 46 | $ | 202 | $ | (156) | |||||||||||||||||||||||
Assumed Life | 2 | — | 2 | 17 | — | 17 | |||||||||||||||||||||||||||||
Investments | (464) | (181) | (283) | (1,323) | 342 | (1,665) | |||||||||||||||||||||||||||||
Legacy Underwriting | — | 11 | (11) | 8 | 39 | (31) | |||||||||||||||||||||||||||||
Subtotal | (459) | (119) | (340) | (1,252) | 583 | (1,835) | |||||||||||||||||||||||||||||
Corporate and other | (7) | 48 | (55) | 10 | 52 | (42) | |||||||||||||||||||||||||||||
Total income | $ | (466) | $ | (71) | $ | (395) | $ | (1,242) | $ | 635 | $ | (1,877) | |||||||||||||||||||||||
SEGMENT NET (LOSS) EARNINGS | |||||||||||||||||||||||||||||||||||
Run-off | $ | 19 | $ | 47 | $ | (28) | $ | 116 | $ | 89 | $ | 27 | |||||||||||||||||||||||
Assumed Life | (7) | — | (7) | 15 | — | 15 | |||||||||||||||||||||||||||||
Investments | (493) | (203) | (290) | (1,339) | 419 | (1,758) | |||||||||||||||||||||||||||||
Legacy Underwriting | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Total segment net (loss) earnings | (481) | (156) | (325) | (1,208) | 508 | (1,716) | |||||||||||||||||||||||||||||
Corporate and other (1)(2) | 37 | (40) | 77 | (11) | (143) | 132 | |||||||||||||||||||||||||||||
NET (LOSS) EARNINGS ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS | $ | (444) | $ | (196) | $ | (248) | $ | (1,219) | $ | 365 | $ | (1,584) | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
(expressed in millions of U.S. dollars, except share and per share data) | |||||||||||||||||||||||
INCOME | |||||||||||||||||||||||
Net premiums earned | $ | 4 | $ | 52 | $ | 52 | $ | 204 | |||||||||||||||
Net investment income | 116 | 93 | 302 | 231 | |||||||||||||||||||
Net realized (losses) gains | (36) | 6 | (111) | 1 | |||||||||||||||||||
Net unrealized (losses) gains | (546) | (280) | (1,518) | 110 | |||||||||||||||||||
Other (expense) income | (4) | 11 | 33 | 27 | |||||||||||||||||||
Net gain on purchase and sales of subsidiaries | — | 47 | — | 62 | |||||||||||||||||||
Total income | (466) | (71) | (1,242) | 635 | |||||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Net incurred losses and loss adjustment expenses | |||||||||||||||||||||||
Current period | 13 | 42 | 39 | 146 | |||||||||||||||||||
Prior periods | (109) | (69) | (331) | (189) | |||||||||||||||||||
Total net incurred losses and loss adjustment expenses | (96) | (27) | (292) | (43) | |||||||||||||||||||
Policyholder benefit expenses | 7 | — | 25 | — | |||||||||||||||||||
Acquisition costs | — | 11 | 20 | 50 | |||||||||||||||||||
General and administrative expenses | 67 | 93 | 235 | 269 | |||||||||||||||||||
Interest expense | 23 | 18 | 71 | 51 | |||||||||||||||||||
Net foreign exchange gains | (17) | (2) | (27) | (9) | |||||||||||||||||||
Total expenses | (16) | 93 | 32 | 318 | |||||||||||||||||||
(LOSS) EARNINGS BEFORE INCOME TAXES | (450) | (164) | (1,274) | 317 | |||||||||||||||||||
Income tax expense | (8) | (10) | (4) | (13) | |||||||||||||||||||
(Losses) earnings from equity method investments | (20) | (14) | 12 | 101 | |||||||||||||||||||
NET (LOSS) EARNINGS | (478) | (188) | (1,266) | 405 | |||||||||||||||||||
Net loss (earnings) attributable to noncontrolling interests | 43 | 1 | 74 | (13) | |||||||||||||||||||
NET (LOSS) EARNINGS ATTRIBUTABLE TO ENSTAR | (435) | (187) | (1,192) | 392 | |||||||||||||||||||
Dividends on preferred shares | (9) | (9) | (27) | (27) | |||||||||||||||||||
NET (LOSS) EARNINGS ATTRIBUTABLE TO ENSTAR ORDINARY SHAREHOLDERS | $ | (444) | $ | (196) | $ | (1,219) | $ | 365 | |||||||||||||||
(Loss) earnings per ordinary share attributable to Enstar: | |||||||||||||||||||||||
Basic | $ | (26.10) | $ | (10.68) | $ | (70.59) | $ | 17.78 | |||||||||||||||
Diluted | $ | (26.10) | $ | (10.68) | $ | (70.59) | $ | 17.53 | |||||||||||||||
Weighted average ordinary shares outstanding: | |||||||||||||||||||||||
Basic | 17,013,348 | 18,349,483 | 17,269,870 | 20,502,755 | |||||||||||||||||||
Diluted | 17,126,880 | 18,548,368 | 17,382,578 | 20,793,640 | |||||||||||||||||||
September 30, 2022 | December 31, 2021 | ||||||||||
(in millions of U.S. dollars, except share data) | |||||||||||
ASSETS | |||||||||||
Short-term investments, trading, at fair value | $ | 14 | $ | 6 | |||||||
Short-term investments, available-for-sale, at fair value (amortized cost: 2022 — $9; 2021 — $34; net of allowance: 2022 and 2021 — $0) | 9 | 34 | |||||||||
Fixed maturities, trading, at fair value | 2,315 | 3,756 | |||||||||
Fixed maturities, available-for-sale, at fair value (amortized cost: 2022 — $5,624; 2021 — $5,689; net of allowance: 2022 — $35; 2021 — $10) | 4,868 | 5,652 | |||||||||
Funds held - directly managed | 2,150 | 3,007 | |||||||||
Equities, at fair value (cost: 2022 — $1,320; 2021 — $1,831) | 1,199 | 1,995 | |||||||||
Other investments, at fair value | 3,203 | 2,333 | |||||||||
Equity method investments | 468 | 493 | |||||||||
Total investments | 14,226 | 17,276 | |||||||||
Cash and cash equivalents | 923 | 1,646 | |||||||||
Restricted cash and cash equivalents | 434 | 446 | |||||||||
Reinsurance balances recoverable on paid and unpaid losses (net of allowance: 2022 — $134; 2021 — $136) | 886 | 1,085 | |||||||||
Reinsurance balances recoverable on paid and unpaid losses, at fair value | 287 | 432 | |||||||||
Insurance balances recoverable (net of allowance: 2022 and 2021 — $5) | 190 | 213 | |||||||||
Funds held by reinsured companies | 3,727 | 2,340 | |||||||||
Deferred charge assets | 255 | 371 | |||||||||
Other assets | 624 | 620 | |||||||||
TOTAL ASSETS | $ | 21,552 | $ | 24,429 | |||||||
LIABILITIES | |||||||||||
Losses and loss adjustment expenses | $ | 11,549 | $ | 11,269 | |||||||
Losses and loss adjustment expenses, at fair value | 1,286 | 1,989 | |||||||||
Future policyholder benefits | 1,285 | 1,502 | |||||||||
Defendant asbestos and environmental liabilities | 617 | 638 | |||||||||
Insurance and reinsurance balances payable | 154 | 254 | |||||||||
Debt obligations | 1,905 | 1,691 | |||||||||
Other liabilities | 432 | 581 | |||||||||
TOTAL LIABILITIES | 17,228 | 17,924 | |||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||
REDEEMABLE NONCONTROLLING INTERESTS | 166 | 179 | |||||||||
SHAREHOLDERS’ EQUITY | |||||||||||
Ordinary Shares (par value $1 each, issued and outstanding 2022: 17,584,201; 2021: 18,223,574): | |||||||||||
Voting Ordinary Shares (issued and outstanding 2022: 15,986,489; 2021: 16,625,862) | 16 | 17 | |||||||||
Non-voting convertible ordinary Series C Shares (issued and outstanding 2022 and 2021: 1,192,941) | 1 | 1 | |||||||||
Non-voting convertible ordinary Series E Shares (issued and outstanding 2022 and 2021: 404,771) | — | — | |||||||||
Preferred Shares: | |||||||||||
Series C Preferred Shares (issued and held in treasury 2022 and 2021: 388,571) | — | — | |||||||||
Series D Preferred Shares (issued and outstanding 2022 and 2021: 16,000; liquidation preference $400) | 400 | 400 | |||||||||
Series E Preferred Shares (issued and outstanding 2022 and 2021: 4,400; liquidation preference $110) | 110 | 110 | |||||||||
Treasury shares, at cost (Series C Preferred Shares 2022 and 2021: 388,571) | (422) | (422) | |||||||||
Joint Share Ownership Plan (voting ordinary shares, held in trust 2022 and 2021: 565,630) | (1) | (1) | |||||||||
Additional paid-in capital | 757 | 922 | |||||||||
Accumulated other comprehensive loss | (667) | (16) | |||||||||
Retained earnings | 3,866 | 5,085 | |||||||||
Total Enstar Shareholders’ Equity | 4,060 | 6,096 | |||||||||
Noncontrolling interests | 98 | 230 | |||||||||
TOTAL SHAREHOLDERS’ EQUITY | 4,158 | 6,326 | |||||||||
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY | $ | 21,552 | $ | 24,429 |
Non-GAAP Measure | Definition | Purpose of Non-GAAP Measure over GAAP Measure | ||||||||||||
Adjusted book value per ordinary share | Total Enstar ordinary shareholders' equity Divided by Number of ordinary shares outstanding, adjusted for: -the ultimate effect of any dilutive securities on the number of ordinary shares outstanding | Increases the number of ordinary shares to reflect the exercise of equity awards granted but not yet vested as, over the long term, this presents both management and investors with a more economically accurate measure of the realizable value of shareholder returns by factoring in the impact of share dilution. We use this non-GAAP measure in our incentive compensation program. |
Adjusted return on equity (%) | Adjusted operating income (loss) attributable to Enstar ordinary shareholders divided by adjusted opening Enstar ordinary shareholder's equity | Calculating the operating income (loss) as a percentage of our adjusted opening Enstar ordinary shareholders' equity provides a more consistent measure of the performance of our business by enabling comparison between the financial periods presented. We eliminate the impact of net realized and unrealized (gains) losses on fixed maturity investments and funds-held directly managed and the change in fair value of insurance contracts for which we have elected the fair value option, as: •we typically hold most of our fixed maturity investments until the earlier of maturity or the time that they are used to fund any settlement of related liabilities which are generally recorded at cost; and •removing the fair value option improves comparability since there are limited acquisition years for which we elected the fair value option. Therefore, we believe that excluding their impact on our earnings improves comparability of our core operational performance across periods. We include the amortization of fair value adjustments as a non-GAAP adjustment to the adjusted operating income (loss) attributable to Enstar ordinary shareholders as it is a non-cash charge that is not reflective of the impact of our claims management strategies on our loss portfolios. We eliminate the net gain (loss) on the purchase and sales of subsidiaries and net earnings from discontinued operations, as these items are not indicative of our ongoing operations. We use this non-GAAP measure in our incentive compensation program. | ||||||||||||
Adjusted operating income (loss) attributable to Enstar ordinary shareholders (numerator) | Net earnings (loss) attributable to Enstar ordinary shareholders, adjusted for: -net realized and unrealized (gains) losses on fixed maturity investments and funds held-directly managed -change in fair value of insurance contracts for which we have elected the fair value option (1) -amortization of fair value adjustments -net gain/loss on purchase and sales of subsidiaries (if any) -net earnings from discontinued operations (if any) -tax effects of adjustments -adjustments attributable to noncontrolling interests | |||||||||||||
Adjusted opening Enstar ordinary shareholders' equity (denominator) | Opening Enstar ordinary shareholders' equity, less: -net unrealized gains (losses) on fixed maturity investments and funds held-directly managed, -fair value of insurance contracts for which we have elected the fair value option (1), -fair value adjustments, and -net assets of held for sale or disposed subsidiaries classified as discontinued operations (if any) | |||||||||||||
Adjusted total investment return (%) | Adjusted total investment return (dollars) recognized in earnings for the applicable period divided by period average adjusted total investable assets. | Provides a key measure of the return generated on the capital held in the business and is reflective of our investment strategy. Provides a consistent measure of investment returns as a percentage of all assets generating investment returns. We adjust our investment returns to eliminate the impact of the change in fair value of fixed maturity securities (both credit spreads and interest rates), as we typically hold most of these investments until the earlier of maturity or used to fund any settlement of related liabilities which are generally recorded at cost. | ||||||||||||
Adjusted total investment return ($) (numerator) | Total investment return (dollars), adjusted for: -net realized and unrealized (gains) losses on fixed maturity investments and funds held-directly managed | |||||||||||||
Adjusted average aggregate total investable assets (denominator) | Total average investable assets, adjusted for: -net unrealized (gains) losses on fixed maturities, AFS investments included within AOCI -net unrealized (gains) losses on fixed maturities, trading instruments |
Adjusted run-off liability earnings (%) | Adjusted PPD divided by average adjusted net loss reserves | Calculating the RLE as a percentage of our adjusted average net loss reserves provides a more meaningful and comparable measurement of the impact of our claims management strategies on our loss portfolios across acquisition years and also to our overall financial periods. We use this measure to evaluate the impact of our claims management strategies because it provides visibility into our ability to settle our claims obligations for amounts less than our initial estimate at the point of acquiring the obligations. In order to provide a complete and consistent picture of our claims management performance, we combine: •the reduction (increase) in estimates of prior period net ultimate losses relating to our Run-off segment; with •the amortization of deferred charge assets (as the amortization will increase or decrease as a result of the periodic development in accordance with our accounting policies). Both adjustments are included in net incurred losses and LAE. We also include our performance in managing claims on our defendant A&E liabilities, that do not form part of loss reserves. The remaining components of periodic recurring net incurred losses and LAE and net loss reserves are not considered key components of our claims management performance for the following reasons: •The results of our Legacy Underwriting segment have been economically transferred to a third party primarily through use of reinsurance and a Capacity Lease Agreement(2); as such, the results are not a relevant contribution to Adjusted RLE, which is designed to analyze the impact of our claims management strategies; •The results of our Assumed Life segment relate only to our exposure to active property catastrophe business; as this business is not in run-off, the results are not a relevant contribution to Adjusted RLE; •The change in fair value of insurance contracts for which we have elected the fair value option(1) has been removed to support comparability between the two acquisition years for which we elected the fair value option in reserves assumed and the acquisition years for which we did not make this election (specifically, this election was only made in the 2017 and 2018 acquisition years and the election of such option is irrevocable); •The reduction/(increase) in provisions for ULAE are not considered directly related to the reserves and their exclusion provides alignment with our insurance contract disclosures, which is a key measure of our comparability between the acquisition years over time; and •The amortization of fair value adjustments are non-cash charges that obscure our trends on a consistent basis. We use this measure to assess the performance of our claim strategies and part of the performance assessment of our past acquisitions. | ||||||||||||
Adjusted prior period development (numerator) | Prior period net incurred losses and LAE, adjusted to: Remove: -Legacy Underwriting and Assumed Life operations -the reduction/(increase) in provisions for unallocated LAE (ULAE) -amortization of fair value adjustments, -change in fair value of insurance contracts for which we have elected the fair value option (1), and Add: -the reduction/(increase) in estimates of our defendant A&E ultimate net liabilities. | |||||||||||||
Adjusted net loss reserves (denominator) | Net losses and LAE, adjusted to: Remove: -Legacy Underwriting and Assumed Life net loss reserves -current period net loss reserves -the net ULAE provision -net fair value adjustments associated with the acquisition of companies, -the fair value adjustments for contracts for which we have elected the fair value option (1) and Add: -net nominal defendant asbestos and environmental exposures. |
September 30, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||
Equity (1) | Ordinary Shares | Per Share Amount | Equity (1) | Ordinary Shares | Per Share Amount | |||||||||||||||||||||||||||||||||
(in millions of U.S. dollars, except share and per share data) | ||||||||||||||||||||||||||||||||||||||
Book value per ordinary share | $ | 3,550 | 17,018,571 | $ | 208.60 | $ | 5,586 | 17,657,944 | $ | 316.34 | ||||||||||||||||||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||||||||
Share-based compensation plans | 193,951 | 315,205 | ||||||||||||||||||||||||||||||||||||
Adjusted book value per ordinary share* | $ | 3,550 | 17,212,522 | $ | 206.25 | $ | 5,586 | 17,973,149 | $ | 310.80 | ||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2022 | September 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Net (loss) earnings (1) | Opening equity (1) | (Adj) ROE | Annualized (Adj) ROE | Net (loss) earnings (1) | Opening equity (1) | (Adj) ROE | Annualized (Adj) ROE | ||||||||||||||||||||||||||||||||||||||||
(in millions of U.S. dollars) | |||||||||||||||||||||||||||||||||||||||||||||||
Net (loss) earnings/Opening equity/ROE/Annualized ROE (1) | $ | (444) | $ | 4,183 | (10.6) | % | (42.5) | % | $ | (196) | $ | 6,677 | (2.9) | % | (11.7) | % | |||||||||||||||||||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||||||||
Remove: | |||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized losses (gains) on fixed maturity investments and funds held - directly managed / Net unrealized losses (gains) on fixed maturity investments and funds held - directly managed (2) | 418 | 1,245 | 87 | (339) | |||||||||||||||||||||||||||||||||||||||||||
Change in fair value of insurance contracts for which we have elected the fair value option / Fair value of insurance contracts for which we have elected the fair value option (3) | (82) | (239) | (10) | (91) | |||||||||||||||||||||||||||||||||||||||||||
Amortization of fair value adjustments / Fair value adjustments | 4 | (99) | 5 | (120) | |||||||||||||||||||||||||||||||||||||||||||
Net gain on purchase and sales of subsidiaries | — | — | (47) | — | |||||||||||||||||||||||||||||||||||||||||||
Tax effects of adjustments (4) | (2) | — | (5) | — | |||||||||||||||||||||||||||||||||||||||||||
Adjustments attributable to noncontrolling interests (5) | (42) | — | (8) | — | |||||||||||||||||||||||||||||||||||||||||||
Adjusted operating (loss) income/Adjusted opening equity/Adjusted ROE/Annualized adjusted ROE* | $ | (148) | $ | 5,090 | (2.9) | % | (11.6) | % | $ | (174) | $ | 6,127 | (2.8) | % | (11.4) | % |
Nine Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2022 | September 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Net (loss) earnings (1) | Opening equity (1) | (Adj) ROE | Annualized (Adj) ROE | Net (loss) earnings (1) | Opening equity (1) | (Adj) ROE | Annualized (Adj) ROE | ||||||||||||||||||||||||||||||||||||||||
(in millions of U.S. dollars) | |||||||||||||||||||||||||||||||||||||||||||||||
Net (loss) earnings/Opening equity/ROE/Annualized ROE (1) | $ | (1,219) | $ | 5,586 | (21.8) | % | (29.1) | % | $ | 365 | $ | 6,164 | 5.9 | % | 7.9 | % | |||||||||||||||||||||||||||||||
Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||||||||||||||||
Net realized and unrealized losses on fixed maturity investments and funds held - directly managed / Net unrealized gains on fixed maturity investments and funds held - directly managed (2) | 1,161 | (89) | 183 | (560) | |||||||||||||||||||||||||||||||||||||||||||
Change in fair value of insurance contracts for which we have elected the fair value option / Fair value of insurance contracts for which we have elected the fair value option (3) | (228) | (107) | (68) | (33) | |||||||||||||||||||||||||||||||||||||||||||
Amortization of fair value adjustments / Fair value adjustments | 11 | (106) | 13 | (128) | |||||||||||||||||||||||||||||||||||||||||||
Net gain on purchase and sales of subsidiaries | — | — | (62) | — | |||||||||||||||||||||||||||||||||||||||||||
Tax effects of adjustments (4) | (6) | — | (18) | — | |||||||||||||||||||||||||||||||||||||||||||
Adjustments attributable to noncontrolling interests (5) | (90) | — | 4 | — | |||||||||||||||||||||||||||||||||||||||||||
Adjusted operating (loss) income/Adjusted opening equity/Adjusted ROE/Annualized adjusted ROE* | $ | (371) | $ | 5,284 | (7.0) | % | (9.4) | % | $ | 417 | $ | 5,443 | 7.7 | % | 10.2 | % |
Three Months Ended | As of | Three Months Ended | ||||||||||||||||||||||||||||||
September 30, 2022 | September 30, 2022 | June 30, 2022 | September 30, 2022 | September 30, 2022 | ||||||||||||||||||||||||||||
PPD | Net loss reserves | Net loss reserves | Average net loss reserves | Annualized RLE % | ||||||||||||||||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||||||||||||||
PPD/net loss reserves/Annualized RLE | $ | 109 | $ | 11,564 | $ | 12,238 | $ | 11,901 | 3.7 | % | ||||||||||||||||||||||
Non-GAAP Adjustments: | ||||||||||||||||||||||||||||||||
Assumed Life | — | (139) | (147) | (143) | ||||||||||||||||||||||||||||
Legacy Underwriting | (2) | (136) | (140) | (138) | ||||||||||||||||||||||||||||
Net loss reserves - current period | — | (36) | (26) | (31) | ||||||||||||||||||||||||||||
Reduction in provisions for ULAE / Net ULAE provisions | (15) | (480) | (504) | (492) | ||||||||||||||||||||||||||||
Amortization of fair value adjustments / Net fair value adjustments associated with the acquisition of companies | 4 | 95 | 99 | 97 | ||||||||||||||||||||||||||||
Changes in fair value - fair value option / Net fair value adjustments for contracts for which we have elected the fair value option (1) | (82) | 305 | 239 | 272 | ||||||||||||||||||||||||||||
Change in estimate of net ultimate liabilities - defendant A&E / Net nominal defendant A&E liabilities | — | 571 | 574 | 573 | ||||||||||||||||||||||||||||
Adjusted PPD/Adjusted net loss reserves/Annualized Adjusted RLE* | $ | 14 | $ | 11,744 | $ | 12,333 | $ | 12,039 | 0.5 | % |
Three Months Ended | As of | Three Months Ended | ||||||||||||||||||||||||||||||
September 30, 2021 | September 30, 2021 | June 30, 2021 | September 30, 2021 | September 30, 2021 | ||||||||||||||||||||||||||||
PPD | Net loss reserves | Net loss reserves | Average net loss reserves | Annualized RLE % | ||||||||||||||||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||||||||||||||
PPD/net loss reserves/Annualized RLE | $ | 69 | $ | 11,963 | $ | 10,835 | $ | 11,399 | 2.4 | % | ||||||||||||||||||||||
Non-GAAP Adjustments: | ||||||||||||||||||||||||||||||||
Assumed Life | — | (177) | — | (89) | ||||||||||||||||||||||||||||
Legacy Underwriting | (2) | (147) | (156) | (152) | ||||||||||||||||||||||||||||
Net loss reserves - current period | — | (130) | (91) | (111) | ||||||||||||||||||||||||||||
Reduction in provisions for ULAE / Net ULAE provisions | (14) | (432) | (410) | (421) | ||||||||||||||||||||||||||||
Amortization of fair value adjustments / Net fair value adjustments associated with the acquisition of companies | 5 | 109 | 120 | 115 | ||||||||||||||||||||||||||||
Changes in fair value - fair value option / Net fair value adjustments for contracts for which we have elected the fair value option (1) | (10) | 100 | 91 | 96 | ||||||||||||||||||||||||||||
Change in estimate of net ultimate liabilities - defendant A&E / Net nominal defendant A&E liabilities | 5 | 601 | 584 | 593 | ||||||||||||||||||||||||||||
Adjusted PPD/Adjusted net loss reserves/Annualized Adjusted RLE* | $ | 53 | $ | 11,887 | $ | 10,973 | $ | 11,430 | 1.9 | % |
Nine Months Ended | As of | Nine Months Ended | ||||||||||||||||||||||||||||||
September 30, 2022 | September 30, 2022 | December 31, 2021 | September 30, 2022 | September 30, 2022 | ||||||||||||||||||||||||||||
PPD | Net loss reserves | Net loss reserves | Average net loss reserves | Annualized RLE % | ||||||||||||||||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||||||||||||||
PPD/net loss reserves/Annualized RLE | $ | 331 | $ | 11,564 | $ | 11,555 | $ | 11,560 | 3.8 | % | ||||||||||||||||||||||
Non-GAAP Adjustments: | ||||||||||||||||||||||||||||||||
Assumed Life | (29) | (139) | (181) | (160) | ||||||||||||||||||||||||||||
Legacy Underwriting | 3 | (136) | (153) | (145) | ||||||||||||||||||||||||||||
Net loss reserves - current period | — | (36) | — | (18) | ||||||||||||||||||||||||||||
Reduction in provisions for ULAE / Net ULAE provisions | (50) | (480) | (416) | (448) | ||||||||||||||||||||||||||||
Amortization of fair value adjustments / Net fair value adjustments associated with the acquisition of companies | 11 | 95 | 106 | 101 | ||||||||||||||||||||||||||||
Changes in fair value - fair value option / Net fair value adjustments for contracts for which we have elected the fair value option (1) | (228) | 305 | 107 | 206 | ||||||||||||||||||||||||||||
Change in estimate of net ultimate liabilities - defendant A&E / Net nominal defendant A&E liabilities | 4 | 571 | 574 | 572 | ||||||||||||||||||||||||||||
Adjusted PPD/Adjusted net loss reserves/Annualized Adjusted RLE* | $ | 42 | $ | 11,744 | $ | 11,592 | $ | 11,668 | 0.5 | % |
Nine Months Ended | As of | Nine Months Ended | ||||||||||||||||||||||||||||||
September 30, 2021 | September 30, 2021 | December 31, 2020 | September 30, 2021 | September 30, 2021 | ||||||||||||||||||||||||||||
PPD | Net loss reserves | Net loss reserves | Average net loss reserves | Annualized RLE % | ||||||||||||||||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||||||||||||||
PPD/net loss reserves/Annualized RLE | $ | 189 | $ | 11,963 | $ | 8,544 | $ | 10,254 | 2.5 | % | ||||||||||||||||||||||
Non-GAAP Adjustments: | ||||||||||||||||||||||||||||||||
Assumed Life | — | (177) | — | (89) | ||||||||||||||||||||||||||||
Legacy Underwriting | (4) | (147) | (955) | (552) | ||||||||||||||||||||||||||||
Net loss reserves - current period | — | (130) | — | (65) | ||||||||||||||||||||||||||||
Reduction in provisions for ULAE / Net ULAE provisions | (46) | (432) | (334) | (383) | ||||||||||||||||||||||||||||
Amortization of fair value adjustments / Net fair value adjustments associated with the acquisition of companies | 13 | 109 | 128 | 119 | ||||||||||||||||||||||||||||
Changes in fair value - fair value option / Net fair value adjustments for contracts for which we have elected the fair value option (1) | (68) | 100 | 33 | 67 | ||||||||||||||||||||||||||||
Change in estimate of net ultimate liabilities - defendant A&E / Net nominal defendant A&E liabilities | 19 | 601 | 615 | 608 | ||||||||||||||||||||||||||||
Adjusted PPD/Adjusted net loss reserves/Annualized Adjusted RLE* | $ | 103 | $ | 11,887 | $ | 8,031 | $ | 9,959 | 1.4 | % |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||||||||||||
(in millions of U.S. dollars) | ||||||||||||||||||||||||||
Net investment income | $ | 116 | $ | 93 | $ | 302 | $ | 231 | ||||||||||||||||||
Net realized (losses) gains | (36) | 6 | (111) | 1 | ||||||||||||||||||||||
Net unrealized (losses) gains | (546) | (280) | (1,518) | 110 | ||||||||||||||||||||||
Earnings (losses) from equity method investments | (20) | (14) | 12 | 101 | ||||||||||||||||||||||
TIR ($) | $ | (486) | $ | (195) | $ | (1,315) | $ | 443 | ||||||||||||||||||
Non-GAAP adjustment: | ||||||||||||||||||||||||||
Net realized and unrealized losses (gains) on fixed maturity investments and funds held-directly managed | 418 | 87 | 1,161 | 183 | ||||||||||||||||||||||
Adjusted TIR ($)* | $ | (68) | $ | (108) | $ | (154) | $ | 626 | ||||||||||||||||||
Total investments | $ | 14,226 | $ | 16,962 | $ | 14,226 | $ | 16,962 | ||||||||||||||||||
Cash and cash equivalents, including restricted cash and cash equivalents | 1,357 | 2,035 | 1,357 | 2,035 | ||||||||||||||||||||||
Funds held by reinsured companies | 3,727 | 2,410 | 3,727 | 2,410 | ||||||||||||||||||||||
Net variable interest entity assets | — | 448 | — | 448 | ||||||||||||||||||||||
Total investable assets | $ | 19,310 | $ | 21,855 | $ | 19,310 | $ | 21,855 | ||||||||||||||||||
Average aggregate invested assets, at fair value (1) | 20,140 | 21,889 | 20,192 | 20,737 | ||||||||||||||||||||||
Annualized TIR % (2) | (9.7) | % | (3.6) | % | (8.7) | % | 2.8 | % | ||||||||||||||||||
Non-GAAP adjustment: | ||||||||||||||||||||||||||
Net unrealized losses (gains) on fixed maturities, AFS investments included within AOCI and net unrealized losses (gains) on fixed maturities, trading instruments | 1,928 | (326) | 1,928 | (326) | ||||||||||||||||||||||
Adjusted investable assets* | $ | 21,238 | $ | 21,529 | $ | 21,238 | $ | 21,529 | ||||||||||||||||||
Adjusted average aggregate invested assets, at fair value* (3) | $ | 21,728 | $ | 21,610 | $ | 21,093 | $ | 20,411 | ||||||||||||||||||
Annualized adjusted TIR %* (4) | (1.3) | % | (2.0) | % | (1.0) | % | 4.1 | % |