As filed with the Securities and Exchange Commission on
August 14, 2001








SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

(Mark One)



| |     |                                                                                         
| | --- | ----------------------------------------------------------------------------------------
| | [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

For the
quarterly period ended June 30, 2001

OR



| |      |                                                                                          
| | ---- | -----------------------------------------------------------------------------------------
| | [  ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

For the
transition period from
 to

Commission File Number 0-07477

THE ENSTAR GROUP, INC.

(Exact name of registrant as specified in its
charter)


|                                                                       |  |                                                
|---------------------------------------------------------------------- |  | -----------------------------------------------
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Georgia(State or other jurisdiction
	of incorporation or organization) |  | 63-0590560(I.R.S. Employer
	Identification No.)

401 Madison Avenue

Montgomery, Alabama 36104


(Address of principal executive offices)


(334) 834-5483

(Registrants telephone number, including
area code)


Indicate by check mark whether the registrant (1) has filed
all reports required by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past
90 days.  YES x  NO o

Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12,
13, or 15(d) of the Securities Exchange Act of 1934 subsequent
to the distribution of securities under a plan confirmed by a
court.  YES x
  NO o

The number of shares of Registrants Common Stock, $.01 par
value per share, outstanding at August 13, 2001 was
5,265,753.









---



THIS FORM 10-Q AND OTHER STATEMENTS ISSUED OR MADE FROM
TIME TO TIME BY THE ENSTAR GROUP, INC. OR MEMBERS OF ITS
MANAGEMENT TEAM CONTAIN STATEMENTS WHICH MAY CONSTITUTE
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933, AND THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED BY THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995, 15 U.S.C.A. SECTIONS 77Z-2 AND 78U-5 (SUPP.
1996). THOSE STATEMENTS INCLUDE STATEMENTS REGARDING THE INTENT,
BELIEF OR CURRENT EXPECTATIONS OF THE ENSTAR GROUP, INC. AND
MEMBERS OF ITS MANAGEMENT TEAM, AS WELL AS THE ASSUMPTIONS ON
WHICH SUCH STATEMENTS ARE BASED. 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 CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS.
IMPORTANT FACTORS CURRENTLY KNOWN TO MANAGEMENT THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN
FORWARD-LOOKING STATEMENTS ARE SET FORTH IN THE SAFE HARBOR
COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED AS
EXHIBIT 99.1 TO THE ENSTAR GROUP, INC. ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000, AND
ARE HEREBY INCORPORATED BY REFERENCE. THE ENSTAR GROUP, INC.
UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING
STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF
UNANTICIPATED EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER
TIME.



---



PART I

FINANCIAL INFORMATION


Item  1.     Financial
Statements

THE ENSTAR GROUP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

|                                             |                                                                                                                                      |                                            |        |              |        |   |        |         |        | 
|-------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ------ | ------------ | ------ | - | ------ | ------- | ------ | 
|                                             |                                                                                                                                      | June 30,                                   |        | December 31,
|                                             |                                                                                                                                      | 2001                                       |        | 2000        
|                                             |                                                                                                                                      |                                            |        |             
|                                             |                                                                                                                                      |                                           
|                                             |                                                                                                                                      | (Dollars in thousands)                    
|                                             |                                                                                                                                      | (Unaudited)                               
|ASSETS                                      
|                                            
|                                            
|                                            
|                                            
|Cash and cash equivalents                    |                                                                                                                                      | $                                          | 82,137 |              |        | $ | 75,252 |        
|                                            
|                                            
|                                            
|                                            
|Certificates of deposit                      |                                                                                                                                      |                                            | 3,923  |              |        |   | 3,798  |        
|                                            
|                                            
|                                            
|                                            
|Other                                        |                                                                                                                                      |                                            | 1,061  |              |        |   | 892    |        
|                                            
|                                            
|                                            
|                                            
|Partially owned equity affiliates            |                                                                                                                                      |                                            | 8,012  |              |        |   | 13,309 |        
|                                            
|                                            
|                                            
|                                            
|Property and equipment, net                  |                                                                                                                                      |                                            | 64     |              |        |   | 68     |        
|                                             |                                                                                                                                      |                                            |        |              |        |   |        |        
|                                             |                                                                                                                                      | Total assets                               |        | $            | 95,197 |   |        | $       | 93,319 | 
|                                             |                                                                                                                                      |                                            |        |              |        |   |        |        
|LIABILITIES AND SHAREHOLDERS
        EQUITY
|                                            
|                                            
|                                            
|                                            
|Accounts payable and accrued liabilities     |                                                                                                                                      | $                                          | 1,102  |              |        | $ | 741    |        
|                                            
|                                            
|                                            
|                                            
|Income taxes payable                         |                                                                                                                                      |                                            | 29     |              |        |   | 190    |        
|                                            
|                                            
|                                            
|                                            
|Deferred income taxes                        |                                                                                                                                      |                                            | 238    |              |        |   | 238    |        
|                                            
|                                            
|                                            
|                                            
|Deferred liabilities                         |                                                                                                                                      |                                            | 421    |              |        |   | 352    |        
|                                            
|                                            
|                                            
|                                            
|Other                                        |                                                                                                                                      |                                            | 401    |              |        |   | 395    |        
|                                             |                                                                                                                                      |                                            |        |              |        |   |        |        
|                                             |                                                                                                                                      | Total liabilities                          |        |              | 2,191  |   |        |         | 1,916  | 
|                                             |                                                                                                                                      |                                            |        |              |        |   |        |        
|Commitments and Contingencies (Note 4)       |                                                                                                                                      |                                            |        |              |        |   |        |        
|                                            
|                                            
|                                            
|                                            
|Shareholders equity:                        |                                                                                                                                      |                                            |        |              |        |   |        |        
|                                            
|                                            
|                                            
|                                            
|                                             | Common stock ($.01 par value; 55,000,000 shares
        authorized, 5,708,104 issued at June 30, 2001 and December 31,
        2000) |                                            |        | 57           |        |   |        | 57      |       
|                                            
|                                            
|                                            
|                                            
|                                             | Additional paid-in capital                                                                                                           |                                            |        | 183,191      |        |   |        | 183,191 |       
|                                            
|                                            
|                                            
|                                            
|                                             | Accumulated deficit                                                                                                                  |                                            |        | (84,432      | )      |   |        | (86,035 | )     
|                                            
|                                            
|                                            
|                                            
|                                             | Treasury stock, at cost (442,351 shares)                                                                                             |                                            |        | (5,810       | )      |   |        | (5,810  | )     
|                                             |                                                                                                                                      |                                            |        |              |        |   |        |        
|                                             |                                                                                                                                      | Total shareholders equity                 |        |              | 93,006 |   |        |         | 91,403 | 
|                                             |                                                                                                                                      |                                            |        |              |        |   |        |        
|                                             |                                                                                                                                      | Total liabilities and shareholders equity |        | $            | 95,197 |   |        | $       | 93,319 | 
|                                             |                                                                                                                                      |                                            |        |              |        |   |        |        

The accompanying notes are an integral part of the consolidated
financial statements.

1



---



THE ENSTAR GROUP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

|                                                                |  |                                               |           |                  |  |      |           |      |  |   |           |   |  |   |           |  
|--------------------------------------------------------------- |  | --------------------------------------------- | --------- | ---------------- |  | ---- | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                                |  |                                               |           |                 
|                                                                |  | Three Months Ended                            |           | Six Months Ended
|                                                                |  | June 30,                                      |           | June 30,        
|                                                                |  |                                               |           |                 
|                                                                |  | 2001                                          |           | 2000             |  | 2001 |           | 2000
|                                                                |  |                                               |           |                  |  |      |           |     
|                                                                |  |                                              
|                                                                |  | (Dollars in thousands, except per share data)
|                                                                |  | (Unaudited)                                  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest income                                                 |  | $                                             | 899       |                  |  | $    | 1,157     |      |  | $ | 1,938     |   |  | $ | 2,314     |  
|                                                               
|                                                               
|                                                               
|                                                               
|Earnings of partially owned equity affiliates                   |  |                                               | 439       |                  |  |      | 93        |      |  |   | 1,054     |   |  |   | 216       |  
|                                                               
|                                                               
|                                                               
|                                                               
|Litigation expense, net                                         |  |                                               | (9        | )                |  |      |          |      |  |   | (24       | ) |  |   | (4        | )
|                                                               
|                                                               
|                                                               
|                                                               
|General and administrative expenses                             |  |                                               | (670      | )                |  |      | (583      | )    |  |   | (1,238    | ) |  |   | (1,232    | )
|                                                                |  |                                               |           |                  |  |      |           |      |  |   |           |   |  |   |           |  
|Income before income taxes                                      |  |                                               | 659       |                  |  |      | 667       |      |  |   | 1,730     |   |  |   | 1,294     |  
|                                                               
|                                                               
|                                                               
|                                                               
|Income taxes                                                    |  |                                               | (50       | )                |  |      | (50       | )    |  |   | (127      | ) |  |   | (64       | )
|                                                                |  |                                               |           |                  |  |      |           |      |  |   |           |   |  |   |           |  
|Net income                                                      |  | $                                             | 609       |                  |  | $    | 617       |      |  | $ | 1,603     |   |  | $ | 1,230     |  
|                                                                |  |                                               |           |                  |  |      |           |      |  |   |           |   |  |   |           |  
|Weighted average shares outstanding 
        basic             |  |                                               | 5,265,753 |                  |  |      | 5,265,753 |      |  |   | 5,265,753 |   |  |   | 5,265,753 |  
|                                                                |  |                                               |           |                  |  |      |           |      |  |   |           |   |  |   |           |  
|Weighted average shares outstanding 
        assuming dilution |  |                                               | 5,413,306 |                  |  |      | 5,346,804 |      |  |   | 5,403,512 |   |  |   | 5,332,077 |  
|                                                                |  |                                               |           |                  |  |      |           |      |  |   |           |   |  |   |           |  
|Net income per common share  basic                             |  | $                                             | 0.12      |                  |  | $    | 0.12      |      |  | $ | 0.30      |   |  | $ | 0.23      |  
|                                                                |  |                                               |           |                  |  |      |           |      |  |   |           |   |  |   |           |  
|Net income per common share  assuming
        dilution         |  | $                                             | 0.11      |                  |  | $    | 0.12      |      |  | $ | 0.30      |   |  | $ | 0.23      |  
|                                                                |  |                                               |           |                  |  |      |           |      |  |   |           |   |  |   |           |  

The accompanying notes are an integral part of the consolidated
financial statements.

2



---



THE ENSTAR GROUP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                 |                                                                                           |                                                                                  |                                           |          |       |       |        |        |      |        |  
|---------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------- | ----------------------------------------- | -------- | ----- | ----- | ------ | ------ | ---- | ------ | -
|                                                                 |                                                                                           |                                                                                 
|                                                                 |                                                                                           | Six Months Ended                                                                
|                                                                 |                                                                                           |                                                                                 
|                                                                 |                                                                                           | June 30,                                                                         |                                           | June 30,
|                                                                 |                                                                                           | 2001                                                                             |                                           | 2000    
|                                                                 |                                                                                           |                                                                                  |                                           |         
|                                                                 |                                                                                           |                                                                                 
|                                                                 |                                                                                           | (Dollars in thousands)                                                          
|                                                                 |                                                                                           | (Unaudited)                                                                     
|                                                                
|                                                                
|                                                                
|                                                                
|Cash flows from operating activities:                            |                                                                                           |                                                                                  |                                           |          |       |       |        |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Net income                                                                                |                                                                                  | $                                         | 1,603    |       |       | $      | 1,230  |     
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Adjustments to reconcile net income to net cash
        provided by operating activities: |                                                                                  |                                           |          |       |       |        |        |     
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                                                                                           | Depreciation                                                                     |                                           |          | 11    |       |        |        | 9    |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                                                                                           | Amortization of goodwill                                                         |                                           |          | 40    |       |        |        | 39   |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                                                                                           | Accretion of discount on note receivable                                         |                                           |          |      |       |        |        | (85  | )     
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                                                                                           | Reversal of discount on note receivable                                          |                                           |          |      |       |        |        | (411 | )     
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                                                                                           | Earnings of partially owned equity affiliates,
        net of dividends received |                                           |          | 5,257 |       |        |        | (216 | )     
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Changes in assets and liabilities:                                                        |                                                                                  |                                           |          |       |       |        |        |     
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                                                                                           | Accounts payable and accrued expenses                                            |                                           |          | 200   |       |        |        | 248  |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 |                                                                                           | Other                                                                            |                                           |          | (94   | )     |        |        | (13  | )     
|                                                                 |                                                                                           |                                                                                  |                                           |          |       |       |        |       
|                                                                 |                                                                                           |                                                                                  | Net cash provided by operating activities |          |       | 7,017 |        |        |      | 801    |  
|                                                                 |                                                                                           |                                                                                  |                                           |          |       |       |        |       
|Cash flows from investing activities:                            |                                                                                           |                                                                                  |                                           |          |       |       |        |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Purchases of certificates of deposit                                                      |                                                                                  |                                           | (3,923   | )     |       |        | (3,031 | )   
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Maturities of certificates of deposit                                                     |                                                                                  |                                           | 3,798    |       |       |        | 2,950  |     
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Purchase of property and equipment                                                        |                                                                                  |                                           | (7       | )     |       |        | (13    | )   
|                                                                 |                                                                                           |                                                                                  |                                           |          |       |       |        |       
|                                                                 |                                                                                           |                                                                                  | Net cash used in investing activities     |          |       | (132  | )      |        |      | (94    | )
|                                                                 |                                                                                           |                                                                                  |                                           |          |       |       |        |       
|Cash flows from financing activities:                            |                                                                                           |                                                                                  |                                           |          |       |       |        |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Repayment of note receivable                                                              |                                                                                  |                                           |         |       |       |        | 15,000 |     
|                                                                 |                                                                                           |                                                                                  |                                           |          |       |       |        |       
|                                                                 |                                                                                           |                                                                                  | Net cash provided by financing activities |          |       |      |        |        |      | 15,000 |  
|                                                                 |                                                                                           |                                                                                  |                                           |          |       |       |        |       
|Increase in cash and cash equivalents                            |                                                                                           |                                                                                  | 6,885                                     |          |       |       | 15,707 |       
|                                                                
|                                                                
|                                                                
|                                                                
|Cash and cash equivalents at the beginning of the
        period |                                                                                           |                                                                                  | 75,252                                    |          |       |       | 64,265 |       
|                                                                 |                                                                                           |                                                                                  |                                           |          |       |       |        |       
|Cash and cash equivalents at the end of the period               |                                                                                           | $                                                                                | 82,137                                    |          |       | $     | 79,972 |       
|                                                                 |                                                                                           |                                                                                  |                                           |          |       |       |        |       
|Supplemental disclosures of cash flow information:               |                                                                                           |                                                                                  |                                           |          |       |       |        |       
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                 | Income taxes paid                                                                         |                                                                                  | $                                         | 288      |       |       | $      | 100    |     
|                                                                 |                                                                                           |                                                                                  |                                           |          |       |       |        |       

The accompanying notes are an integral part of the consolidated
financial statements.

3



---



THE ENSTAR GROUP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


Note  1:     General

The consolidated financial statements of The Enstar Group, Inc.
and Subsidiary (the Company) are unaudited and, in
the opinion of management, include all adjustments consisting
solely of normal recurring adjustments necessary to fairly state
the Companys financial condition and results of operations
for the interim period. The results of operations for the three
and six months ended June 30, 2001 are not necessarily
indicative of the results to be expected for the full year.
These statements should be read in conjunction with the
consolidated financial statements and notes thereto for the year
ended December 31, 2000 included in the Companys
Form 10-K as filed with the Securities and Exchange
Commission on March 30, 2001 under the Securities Exchange
Act of 1934, as amended. Certain prior year amounts have been
reclassified in the consolidated financial statements to conform
with the current year presentation.

Note  2:     Partially Owned
Equity Affiliates

B-Line

In November 1998, the Company purchased membership units of
B-Line LLC (B-Line) for $965,000 including expenses.
Based in Seattle, Washington, B-Line provides services to credit
card issuers and other holders of similar receivables. B-Line
also purchases credit card receivables and recovers payments on
these accounts. At June 30, 2001, the Companys
ownership percentage was approximately 8.34%. During 2000, the
Companys ownership percentage was approximately 7.99%.

The Companys B-Line membership units are accounted for
under the equity method. Approximately $803,000 of the original
$950,000 paid was recorded as goodwill and is being amortized
over a period of 10 years. The equity in earnings of B-Line
are reported by the Company three months in arrears.

B.H. Acquisition

In July 2000, the Company, through B.H. Acquisition Limited
(B.H. Acquisition), a joint venture, acquired as an
operating business, two reinsurance companies of Petrofina S.A.,
a subsidiary of TotalFina Elf S.A. The reinsurance companies,
Brittany Insurance Company Ltd. (Brittany) and
Compagnie Europeenne dAssurances Industrielles S.A.
(CEAI) were purchased by B.H. Acquisition, a newly
formed company, for $28.5 million. Brittany and CEAI are
principally engaged in the active management of books of
reinsurance business from international markets. In exchange for
a capital contribution of approximately $9.6 million, the
Company received 50% of the voting stock and a 33% economic
interest in B.H. Acquisition. In October 2000, the Company
received $3.9 million representing the Companys
proportionate share of a capital distribution from B.H.
Acquisition. In March 2001, the Company received approximately
$6.3 million from B.H. Acquisition representing the
Companys proportionate share of a dividend from B.H.
Acquisition. The Companys ownership in B.H. Acquisition is
accounted for using the equity method of accounting.

Summarized Financial Information

Summarized information for B-Line and B.H. Acquisition is as
follows:

|                  |  |                        |         |              |  |   |         | 
|----------------- |  | ---------------------- | ------- | ------------ |  | - | ------- | 
|                  |  | June 30,               |         | December 31,
|                  |  | 2001                   |         | 2000        
|                  |  |                        |         |             
|                  |  |                       
|                  |  | (Dollars in thousands)
|                  |  | (Unaudited)           
|                 
|                 
|                 
|                 
|Total assets      |  | $                      | 163,619 |              |  | $ | 188,342 | 
|                 
|                 
|                 
|                 
|Total liabilities |  |                        | 133,035 |              |  |   | 144,173 | 
|                 
|                 
|                 
|                 
|Total equity      |  |                        | 30,584  |              |  |   | 44,169  | 

4



---



THE ENSTAR GROUP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

|                 |  |                        |       |                  |  |      |       |      |  |   |       |  |  |   |       | 
|---------------- |  | ---------------------- | ----- | ---------------- |  | ---- | ----- | ---- |  | - | ----- |  |  | - | ----- | 
|                 |  |                        |       |                 
|                 |  | Three Months Ended     |       | Six Months Ended
|                 |  | June 30,               |       | June 30,        
|                 |  |                        |       |                 
|                 |  | 2001                   |       | 2000             |  | 2001 |       | 2000
|                 |  |                        |       |                  |  |      |       |     
|                 |  |                       
|                 |  | (Dollars in thousands)
|                 |  | (Unaudited)           
|                
|                
|                
|                
|Revenue          |  | $                      | 4,211 |                  |  | $    | 3,177 |      |  | $ | 9,299 |  |  | $ | 6,583 | 
|                
|                
|                
|                
|Operating income |  |                        | 1,764 |                  |  |      | 1,170 |      |  |   | 3,945 |  |  |   | 2,646 | 
|                
|                
|                
|                
|Net income       |  |                        | 2,693 |                  |  |      | 1,170 |      |  |   | 6,313 |  |  |   | 2,646 | 

This summarized financial information reflects the results of
B-Line and B.H. Acquisition from their respective dates of
ownership and also reflects, for B.H. Acquisition, its purchase
of Brittany and CEAI in accordance with Accounting Principles
Board Opinion No. 16, Business Combinations.

Note 
3:     Shareholders
Equity

In March 2000, J. Christopher Flowers, Vice Chairman of the
Board of Directors of the Company, repaid his $15 million note
with accrued interest to the Company. This note receivable, net
of discount, had been classified as a reduction of equity. The
note had a due date of December 18, 2000, and resulted from
the Companys sale of 1,158,860 newly issued shares of
common stock to Mr. Flowers on December 18, 1998. In
connection with the early repayment of the note receivable, the
Company reversed the unamortized portion of the discount
recorded on the note receivable. This reversal resulted in a
decrease of approximately $411,000 to general and administrative
expenses in March 2000.

Note  4:     Commitments and
Contingencies

In February 1997, fifteen former shareholders of the Company
filed a lawsuit against the Company. The complaint, which deals
with actions occurring prior to the Companys filing for
bankruptcy in 1991, alleges that the Company along with its then
principal officers and others defrauded the plaintiffs in
violation of the Alabama Securities Act and other Alabama
statutory provisions. The plaintiffs seek compensatory damages
in the amount of their alleged losses of approximately $2.0
million and unspecified punitive damages. The Company filed a
motion to dismiss and/or for summary judgment in March 1997. The
motion filed by the Company contends that the claims asserted
are barred by the applicable statutes of limitations. In
November 2000, the Circuit Court granted the Companys
motion and dismissed the plaintiffs claims. In December
2000, the plaintiffs appealed the Circuit Courts judgment
to the Alabama Supreme Court. Management believes that the
impact of this lawsuit, if any, will not have a material effect
on the Companys financial position or results of
operations.

In June 2001, the Company, through Revir Limited
(Revir), a newly formed Bermuda holding company,
announced its intent to acquire two reinsurance companies, River
Thames Insurance Company Limited, based in London, England, and
Overseas Reinsurance Corporation Limited, based in Bermuda, as
operating businesses from Rivers Group Limited and Sedgwick
Group Limited, respectively (the River Thames
Transaction), which are UK-based subsidiaries of Marsh
& McLennan Companies, Inc. Revir is a 50/50 joint venture
with Castlewood Limited (Castlewood), a private
Bermuda-based firm which is experienced in managing and
acquiring insurance and reinsurance operations. In order to
consummate the River Thames Transaction, Enstar has agreed to
guarantee the performance of its interest in Revir up to a
maximum of approximately $11 million. Consummation of the River
Thames Transaction is subject to certain regulatory approvals
and other contingencies. The Companys ownership in Revir
is expected to be accounted for using the equity method of
accounting.

5



---



THE ENSTAR GROUP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Note  5:     Segment
Information

The Company evaluates the performance of B.H. Acquisition, the
Companys only operating segment, based on 100% of B.H.
Acquisitions financial results. A reconciliation of B.H.
Acquisitions consolidated financial information to the
Companys consolidated financial statements as of and for
the three and six months ended June 30, 2001 is as follows:

|                                                                                       |                                         |                        |     |                  |   |   |        |        |  
|-------------------------------------------------------------------------------------- | --------------------------------------- | ---------------------- | --- | ---------------- | - | - | ------ | ------ | -
|                                                                                       |                                         | Three Months Ended     |     | Six Months Ended
|                                                                                       |                                         | June 30, 2001          |     | June 30, 2001   
|                                                                                       |                                         |                        |     |                 
|                                                                                       |                                         |                       
|                                                                                       |                                         | (Dollars in thousands)
|                                                                                       |                                         | (Unaudited)           
|B.H. Acquisition Consolidated Statement of Income
	for the periods ended June 30, 2001 |                                         |                        |     |                  |   |   |        |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Net premiums earned                     |                        | $   | 11               |   |   | $      | 19     |  
|                                                                                       |                                         |                        |     |                  |   |   |        |       
|                                                                                       | Losses and loss adjustment expenses     |                        |     | (722             | ) |   |        | (704   | )
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Reinsurance recoveries                  |                        |     | 655              |   |   |        | 568    |  
|                                                                                       |                                         |                        |     |                  |   |   |        |       
|                                                                                       | Net losses and loss adjustment expenses |                        |     | (67              | ) |   |        | (136   | )
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Underwriting expenses                   |                        |     | (1               | ) |   |        | (5     | )
|                                                                                       |                                         |                        |     |                  |   |   |        |       
|                                                                                       |                                         |                        | (68 | )                |   |   | (141   | )     
|                                                                                       |                                         |                        |     |                  |   |   |        |       
|                                                                                       | Net underwriting loss                   |                        |     | (57              | ) |   |        | (122   | )
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Net investment income                   |                        |     | 1,124            |   |   |        | 2,799  |  
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | General and administrative expenses     |                        |     | (807             | ) |   |        | (1,659 | )
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Amortization of negative goodwill       |                        |     | 212              |   |   |        | 424    |  
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Amortization of run-off provision       |                        |     | 563              |   |   |        | 1,125  |  
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Foreign exchange loss                   |                        |     | (163             | ) |   |        | (396   | )
|                                                                                       |                                         |                        |     |                  |   |   |        |       
|                                                                                       | B.H. Acquisition net income             |                        | $   | 872              |   |   | $      | 2,171  |  
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Companys ownership %                                                                  |                                         |                        | 33  | %                |   |   | 33     | %     
|                                                                                       |                                         |                        |     |                  |   |   |        |       
|Companys earnings of B.H. Acquisition                                                 |                                         | $                      | 288 |                  |   | $ | 716    |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Companys earnings of B-Line                                                           |                                         |                        | 151 |                  |   |   | 338    |       
|                                                                                       |                                         |                        |     |                  |   |   |        |       
|Earnings of partially owned equity affiliates                                          |                                         | $                      | 439 |                  |   | $ | 1,054  |       
|                                                                                       |                                         |                        |     |                  |   |   |        |       
|B.H. Acquisition Consolidated Shareholders
	Equity as of June 30, 2001.               |                                         |                        |     |                  |   | $ | 19,425 |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                       | Companys ownership %                   |                        |     |                  |   |   |        | 33     | %
|                                                                                       |                                         |                        |     |                  |   |   |        |       
|Companys equity in B.H. Acquisition                                                   |                                         |                        |     |                  |   |   | 6,410  |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Capitalized acquisition costs of B.H. Acquisition                                      |                                         |                        |     |                  |   |   | 81     |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Companys equity in B-Line                                                             |                                         |                        |     |                  |   |   | 1,521  |       
|                                                                                       |                                         |                        |     |                  |   |   |        |       
|Partially owned equity affiliates                                                      |                                         |                        |     |                  |   | $ | 8,012  |       
|                                                                                       |                                         |                        |     |                  |   |   |        |       

Note  6:     Stock
Compensation

In May 2001, the Companys Board of Directors approved
certain additions to the Companys long-term incentive
program. These additions were approved by the Companys
shareholders at the Annual Meeting of Shareholders held in June
2001. The additions consist of a new stock option plan and an
amendment to an existing plan. The long-term incentive program
is designed to promote the success and enhance the value of the
Company by providing flexibility in the Companys ability
to attract, motivate and retain the services of key employees
and directors. As part of that program, the Company has adopted
the 2001 Outside Directors Stock Option Plan (the
2001 Outside Directors Plan) and amended
certain provisions of the 1997 Amended Omnibus Incentive Plan
(the Incentive Plan). A total of 45,000 shares of
common stock were

6



---



THE ENSTAR GROUP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

reserved for issuance under the 2001 Outside Directors
Plan. The amendments to the Incentive Plan increased the total
number of shares of common stock available to be granted under
the plan from 112,500 to 322,500, and increased the aggregate
number of shares of common stock that may be granted to any
individual participant from 100,000 to 200,000.

Under the Incentive Plan, on June 27, 2001 the Company
entered into agreements with Nimrod T. Frazer, the
Companys Chairman and Chief Executive Officer, and John J.
Oros, the Companys President and Chief Operating Officer,
to (a) sell a total of 100,000 shares (50,000 per
individual) of the Companys common stock at $18.00 per
share, the closing trading price on that date and (b) grant
options to purchase a total of 100,000 additional shares (50,000
per individual) at $18.00 per share to Messrs. Frazer and Oros,
subject to the consummation of the River Thames Transaction
described in Note 4. These options vest on various dates
from the date of consummation of the River Thames Transaction
through July 2004 and may not be exercised prior to June 2002.
In the event the price per share of the Companys common
stock exceeds $18.00 on the date of consummation of the River
Thames Transaction, the Company will recognize a charge to
earnings equal to the per share difference multiplied by the
number of shares. As of June 30, 2001, a total of 200,000
options have been granted under the Incentive Plan.

Under the 2001 Outside Directors Plan, the Companys
three current outside (non-employee) directors were granted
options in June 2001 for 15,000 shares of common stock with an
exercise price of $18.90 per share. Options granted to each of
the three outside directors under the plan will vest in three
equal installments of 5,000 shares in each of January 2002,
January 2003 and January 2004; provided, however, that such
shares will vest only so long as the recipient remains a
director of the Company. The options granted under this plan
must be exercised no later than January 2011, or 60 days
after the director ceases to be a director of the Company other
than by reason of death, mandatory retirement or disability.

Note  7:     Newly Issued
Accounting Standards

In July 2001, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting
Standards No. (SFAS) 141, Business
Combinations, which eliminates the pooling-of-interests
method of accounting effective for transactions initiated after
June 30, 2001. Additionally, goodwill and intangibles that
arise as a result of purchase transactions initiated during the
period July 1, 2001 to December 31, 2001 would follow
the guidance prescribed by SFAS No. 142, described below.

In July 2001, the FASB also issued SFAS No. 142,
Goodwill and Other Intangible Assets. This statement
prescribes that goodwill should no longer be amortized upon
adoption of the standard. Instead, goodwill will be tested
annually for impairment, and on an interim basis if certain
impairment indicators are present. Additionally, intangible
assets with an indefinite, economic useful life may not be
amortized. The Company will adopt SFAS No. 142 on
January 1, 2002.

In June 1998, the FASB issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133, as amended by SFAS
Nos. 137 and 138, became effective January 1, 2001.
SFAS No. 133 establishes accounting and reporting standards
for derivative instruments including certain derivative
instruments embedded in other contracts, and for hedging
activities. SFAS No. 133 requires the Company to recognize
all derivatives as either assets or liabilities in the balance
sheet measured at fair value. The Companys January 1,
2001 adoption of SFAS No. 133 had no impact on the
Companys consolidated financial position or results of
operations as the Company has no derivative instruments.

7



---



THE ENSTAR GROUP, INC. AND SUBSIDIARY


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Note  8:     Income per
Share

The table below illustrates the reconciliation between net
income per common share  basic and net income per
common share  assuming dilution for the three and six
month periods ending June 30, 2001 and 2000. Net income per
common share  basic is computed by dividing net
income by the weighted average shares outstanding. Net income
per common share  assuming dilution is computed by
dividing net income by the sum of the weighted average shares
outstanding and common share equivalents.

|                                                         |  |                                               |           |                  |  |      |           |      |  |   |           |  |  |   |           | 
|-------------------------------------------------------- |  | --------------------------------------------- | --------- | ---------------- |  | ---- | --------- | ---- |  | - | --------- |  |  | - | --------- | 
|                                                         |  |                                               |           |                 
|                                                         |  | Three Months Ended                            |           | Six Months Ended
|                                                         |  | June 30,                                      |           | June 30,        
|                                                         |  |                                               |           |                 
|                                                         |  | 2001                                          |           | 2000             |  | 2001 |           | 2000
|                                                         |  |                                               |           |                  |  |      |           |     
|                                                         |  |                                              
|                                                         |  | (Dollars in thousands, except per share data)
|                                                         |  | (Unaudited)                                  
|                                                        
|                                                        
|                                                        
|                                                        
|Net income                                               |  | $                                             | 609       |                  |  | $    | 617       |      |  | $ | 1,603     |  |  | $ | 1,230     | 
|                                                         |  |                                               |           |                  |  |      |           |      |  |   |           |  |  |   |           | 
|Net income per common share  basic                      |  | $                                             | 0.12      |                  |  | $    | 0.12      |      |  | $ | 0.30      |  |  | $ | 0.23      | 
|                                                         |  |                                               |           |                  |  |      |           |      |  |   |           |  |  |   |           | 
|Net income per common
	share  assuming dilution         |  | $                                             | 0.11      |                  |  | $    | 0.12      |      |  | $ | 0.30      |  |  | $ | 0.23      | 
|                                                         |  |                                               |           |                  |  |      |           |      |  |   |           |  |  |   |           | 
|Weighted average shares
	outstanding  basic             |  |                                               | 5,265,753 |                  |  |      | 5,265,753 |      |  |   | 5,265,753 |  |  |   | 5,265,753 | 
|                                                        
|                                                        
|                                                        
|                                                        
|Common share equivalents                                 |  |                                               | 147,553   |                  |  |      | 81,051    |      |  |   | 137,759   |  |  |   | 66,324    | 
|                                                         |  |                                               |           |                  |  |      |           |      |  |   |           |  |  |   |           | 
|Weighted average shares
	outstanding  assuming dilution |  |                                               | 5,413,306 |                  |  |      | 5,346,804 |      |  |   | 5,403,512 |  |  |   | 5,332,077 | 
|                                                         |  |                                               |           |                  |  |      |           |      |  |   |           |  |  |   |           | 

8



---



INDEPENDENT ACCOUNTANTS REPORT

Board of Directors and Shareholders of





We have reviewed the accompanying consolidated balance sheet of
The Enstar Group, Inc. and Subsidiary (Enstar) as of
June 30, 2001, and the related consolidated statements of
income and cash flows for the three-month and six-month periods
ended June 30, 2001 and 2000. These financial statements
are the responsibility of Enstars management.

We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and of making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with auditing standards generally
accepted in the United States of America, the objective of which
is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such
an opinion.

Based on our review, we are not aware of any material
modifications that should be made to such consolidated financial
statements for them to be in conformity with accounting
principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing
standards generally accepted in the United States of America,
the consolidated balance sheet of Enstar as of December 31,
2000 and the related consolidated statements of income,
comprehensive income, shareholders equity and cash flows
for the year then ended (not presented herein), and in our
report dated March 28, 2001, we expressed an unqualified
opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying
consolidated balance sheet as of December 31, 2000 is
fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.

/s/ DELOITTE & TOUCHE LLP

Atlanta, Georgia



9



---



Item 
2.     Managements Discussion
and Analysis of Financial Condition and Results of
Operations

Liquidity and Capital Resources

The Companys assets, aggregating approximately $95.2
million at June 30, 2001, consist primarily of
approximately $82.1 million in cash and cash equivalents,
approximately $3.9 million in certificates of deposit and
approximately $8.0 million in partially owned equity affiliates.

The Companys net increase in cash and cash equivalents for
the six months ended June 30, 2001 was approximately $6.9
million. This increase can primarily be attributed to the
receipt of a dividend of approximately $6.3 million from B.H.
Acquisition on March 27, 2001.

The Company is currently engaged in the active search for one or
more additional operating businesses. This search occupies a
significant amount of the time of the Companys senior
officers. During 2000, the Company acquired one operating
business, together with co-investors, consisting of two
reinsurance companies. With the exception of various expenses
incurred in connection with the Companys search for a
suitable acquisition, its only needs are to fund normal
operating expenses.

Financial Condition

The Company had total assets of $95.2 million at June 30,
2001 compared to $93.3 million at December 31, 2000.

Mr. J. Christopher Flowers, Vice Chairman of the Board of
Directors of the Company, repaid his $15 million note with
accrued interest to the Company on March 3, 2000. The note
had a due date of December 18, 2000, and resulted from the
Companys sale of 1,158,860 newly issued shares of Common
Stock to Mr. Flowers on December 18, 1998 (the
Flowers Transaction). In connection with the
repayment, the Company reversed the unamortized discount on the
note of approximately $411,000.

Other Transaction

In June 2001, the Company, through Revir Limited
(Revir), a newly formed Bermuda holding company,
announced its intent to acquire two reinsurance companies, River
Thames Insurance Company Limited, based in London, England, and
Overseas Reinsurance Corporation Limited, based in Bermuda, as
operating businesses from Rivers Group Limited and Sedgwick
Group Limited, respectively (the River Thames
Transaction), which are UK-based subsidiaries of Marsh
& McLennan Companies, Inc. Revir is a 50/50 joint venture
with Castlewood Limited (Castlewood), a private
Bermuda-based firm which is experienced in managing and
acquiring insurance and reinsurance operations. In order to
consummate the River Thames Transaction, Enstar has agreed to
guarantee the performance of its interest in Revir up to a
maximum of approximately $11 million. Consummation of the River
Thames Transaction is subject to certain regulatory approvals
and other contingencies. The Companys ownership in Revir
is expected to be accounted for using the equity method of
accounting.

Results of Operations

The Company reported net income of $609,000 and approximately
$1.6 million for the three and six month periods ended
June 30, 2001, respectively, compared to net income of
$617,000 and approximately $1.2 million for the same periods in
the prior year. The changes in net income from the three and six
month periods ended June 30, 2001 compared to the same
periods in the prior year are primarily a result of an increase
in earnings from partially owned equity affiliates, offset by a
decrease in interest income.

Interest income was $899,000 and approximately $1.9 million for
the three and six months periods ended June 30, 2001,
respectively, compared to approximately $1.2 million and $2.3
million for the same periods in the prior year. Interest income
was earned from cash, cash equivalents, certificates of deposit
and in 2000, the note receivable from Mr. J. Christopher
Flowers. Interest income decreased during the three and six
month periods ended June 30, 2001, respectively, compared
to the same periods in 2000 due to a reduction in 2001 of
interest rates earned on the Companys cash, cash
equivalents and certificates of deposit.

10



---



Earnings of partially owned equity affiliates was $439,000 and
approximately $1.1 million for the three and six month periods
ended June 30, 2001, respectively, compared to $93,000 and
$216,000 for the same periods in the prior year. These increases
can primarily be attributed to the Companys investment in
B.H. Acquisition in July 2000 and an increase in earnings
of B-Line LLC (B-Line). The Company recorded
earnings of $287,000 and $716,000 from B.H. Acquisition for the
three and six months periods ended June 30, 2001. The
Companys earnings from B-Line were $152,000 and $338,000
for the three and six months periods ended June 30, 2001
compared to $93,000 and $216,000 for the same periods in 2000.

General and administrative expenses were $670,000 and
approximately $1.2 million for the three and six month periods
ended June 30, 2001, respectively, compared to $583,000 and
approximately $1.2 million for the same periods in 2000.
Although general and administrative expenses were approximately
the same for the six month periods ending June 30, 2001 and
2000, the expense for Alabama shares tax for 2001 was
substantially less than in 2000 due to a change in Alabama tax
law. The six month period in 2000 reflected a $411,000 decrease
in general and administrative expenses resulting from the
reversal of the unamortized portion of the discount recorded on
the note receivable in the Flowers Transaction. In addition to
these and other normal operating expenses, general and
administrative expenses include legal and professional fees as
well as travel expenses incurred in connection with the
Companys search for one or more additional operating
businesses. Most variances to general and administrative
expenses can be attributed to the number of potential
acquisition candidates the Company locates as well as the degree
of interest the Company may have in such candidates. The
stronger the interest in a candidate, the more rigorous
financial and legal due diligence the Company will incur with
respect to that candidate.

Income tax expense was $50,000 and $127,000 for the three and
six months ended June 30, 2001, respectively, compared to
$50,000 and $64,000 for the same periods in the prior year.

Newly Issued Accounting Standards

In July 2001, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting
Standards No. (SFAS) 141, Business
Combinations, which eliminates the pooling-of-interests
method of accounting effective for transactions initiated after
June 30, 2001. Additionally, goodwill and intangibles that
arise as a result of purchase transactions initiated during the
period July 1, 2001 to December 31, 2001 would follow
the guidance prescribed by SFAS No. 142, described below.

In July 2001, the FASB also issued SFAS No. 142,
Goodwill and Other Intangible Assets. This statement
prescribes that goodwill should no longer be amortized upon
adoption of the standard. Instead, goodwill will be tested
annually for impairment, and on an interim basis if certain
impairment indicators are present. Additionally, intangible
assets with an indefinite, economic useful life may not be
amortized. The Company will adopt SFAS No. 142 on
January 1, 2002.

In June 1998, the FASB issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133, as amended by SFAS Nos. 137
and 138, became effective January 1, 2001. SFAS
No. 133 establishes accounting and reporting standards for
derivative instruments including certain derivative instruments
embedded in other contracts, and for hedging activities. SFAS
No. 133 requires the Company to recognize all derivatives as
either assets or liabilities in the balance sheet measured at
fair value. The Companys January 1, 2001 adoption of
SFAS No. 133 had no impact on the Companys
consolidated financial position or results of operations as the
Company has no derivative instruments.

Other Matter

In June 2001, the Companys Board of Directors elected
John J. Oros as President and Chief Operating Officer.
Mr. Oros had been Executive Vice President of the Company
since March 2000, and has also been a director of the Company
since that time. Nimrod T. Frazer, the Companys
former President, remains actively involved with the Company as
Chairman of the Board and Chief Executive Officer.

11



---



Item  3.     Quantitative
and Qualitative Disclosures About Market Risk

The Company is exposed to some market risk from changes in
interest rates. The Company had cash and cash equivalents of
approximately $82.1 million in interest bearing accounts
(interest at floating rates) and approximately $3.9 million of
short-term certificates of deposit (interest at fixed rates) at
June 30, 2001. Accordingly, each one percent change in
market interest rates would change interest income by
approximately $860,000 per annum. However, any future
transactions affecting the Companys cash and cash
equivalents and certificates of deposit will change this
estimate. Additionally, although interest rate changes would
affect the fair value of the Companys certificates of
deposits, the weighted average original term of certificates
held by the Company at June 30, 2001 was approximately six
months. The short-term nature of these certificates limits the
Companys risk of changes in the fair value of these
certificates.

PART II

OTHER INFORMATION

Item  1.     Legal
Proceedings

In February 1997, fifteen former shareholders of the Company
filed a lawsuit against the Company in the Circuit Court of
Montgomery County, Alabama styled Peter N. Zachary, et al. v.
The Enstar Group, Inc., Case No. CV-97-257-Gr. The
complaint, which deals with actions occurring prior to the
Companys filing for bankruptcy in 1991, alleges that the
Company along with its then principal officers and others
defrauded the plaintiffs in violation of the Alabama Securities
Act and other Alabama statutory provisions. The plaintiffs seek
compensatory damages in the amount of their alleged losses of
approximately $2 million and unspecified punitive damages. The
complaint is virtually identical to a complaint brought by these
plaintiffs against the Companys former chairman, former
president and others in December 1991, during the pendency of
the Companys bankruptcy case and prior to the confirmation
of the Companys Second Amended Plan of Reorganization, as
modified (the Reorganization Plan). The plaintiffs
allege that the United States Bankruptcy Court for the Middle
District of Alabama (the Bankruptcy Court) issued an
order in January 1997, allowing them to litigate their claims
against the Company. The Bankruptcy Courts order actually
held that the plaintiffs could not bring a late claim against
the Company in its bankruptcy case and then went on to state
that because of facts relating to these particular plaintiffs,
they were not bound by the provisions of the Reorganization Plan
and their claims were not subject to discharge under the
Bankruptcy Code. In March 1997, the Company filed a motion to
dismiss and/or for summary judgment in response to the complaint
on the basis that the claims asserted are barred by the
applicable statute of limitations. In November 2000, the Circuit
Court granted the Companys motion and dismissed the
plaintiffs claims. In December 2000, the plaintiffs
appealed the Circuit Courts judgment to the Alabama
Supreme Court.

Item 4.     Submission of
Matters to a Vote of Security Holders

The Company held its Annual Meeting of Shareholders on
June 6, 2001. Matters voted upon at the meeting and the
number of votes cast for, against or withheld, are as follows:



| |                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1)  To consider and act upon a proposal to elect the
        following nominees to be Directors for three year terms until
        the 2004 annual meeting of shareholders:

|                       |  |           |           |                |  |  |        | 
|---------------------- |  | --------- | --------- | -------------- |  |  | ------ | 
|Nominee                |  | Votes For |           | Votes Withheld
|                       |  |           |           |               
|J. Christopher Flowers |  |           | 4,969,169 |                |  |  | 35,946 | 
|                      
|                      
|                      
|                      
|Jeffrey S. Halis       |  |           | 4,948,649 |                |  |  | 56,466 | 



| |                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In addition to Messrs. Flowers and Halis, the continuing
        directors are Nimrod T. Frazer, John J. Oros, T. Whit Armstrong
        and T. Wayne Davis. Messrs. Frazer and Oros terms expire
        in the year 2002 while Messrs. Armstrong and Davis
        terms expire in the year 2003.
|
| | (2)  To ratify the appointment of Deloitte & Touche LLP
        as independent auditors for the year ended December 31,
        2001. Votes cast were: 4,991,563 for, 9,045 against and 4,507
        abstentions.                                                                                   

12



---





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (3)  To approve the adoption of the 2001 Outside
        Directors Stock Option Plan. Votes cast were: 4,820,247
        for, 177,342 against and 7,526 abstentions.                                                                                                                                                                                                                                                                                                                                                          
|
| | (4)  To approve the amendment of the 1997 Amended Omnibus
        Incentive Plan (the Incentive Plan) to increase the
        total number of shares of common stock available to be granted
        under the Incentive Plan from 112,500 to 322,500, and to
        increase the aggregate number of shares of common stock that may
        be granted to any individual participant in the Incentive Plan
        from 100,000 to 200,000. Votes cast were: 4,795,606 for, 202,943
        against and 6,566 abstentions.

Item  6.     Exhibits and
Reports on Form 8-K

(a)  Exhibits

|          |      |  |  |                         |  |                                                                                                                                                                                                                                                                                                             
|--------- | ---- |  |  | ----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Reference |      |  |  |                        
|Number    |      |  |  | Description of Exhibits
|          |      |  |  |                        
|          | 2.1  |  |  |                        |  | Second Amended Plan of Reorganization of the
        Company, effective as of June 1, 1992 (incorporated by
        reference to Exhibit 2.1 to the Amendment No. 2 to the
        Registration Statement on Form 10, dated March 27,
        1997).                                                        
|          | 2.2  |  |  |                        |  | Amended Modification to Second Amended Plan of
        Reorganization of the Company, confirmed on August 24, 1993
        (incorporated by reference to Exhibit 2.2 to the Amendment
        No. 2 to the Registration Statement on Form 10, dated
        March 27, 1997).                                
|          | 2.3  |  |  |                        |  | Agreement and Plan of Merger, dated as of
        December 31, 1996 (incorporated by reference to
        Exhibit 2.3 to the Amendment No. 2 to the Registration
        Statement on Form 10, dated March 27, 1997).                                                                                       
|          | 2.4  |  |  |                        |  | Shareholders Agreement, dated as of July 3,
        2000, among B.H. Acquisition Limited, the Company and the other
        parties thereto (incorporated by reference to Exhibit 2.1
        to the Current Report on Form 8-K, dated July 18,
        2000).                                              
|          | 2.5  |  |  |                        |  | Investment Agreement, dated as of July 3,
        2000, among B.H. Acquisition Limited, the Company and the other
        parties thereto (incorporated by reference to Exhibit 2.2
        to the Current Report on Form 8-K, dated July 18,
        2000).                                                
|          | 2.6  |  |  |                        |  | Share Sale and Purchase Agreement, dated as of
        March 31, 2000 between PetroFina S.A. and B.H. Acquisition
        Limited (incorporated by reference to Exhibit 2.3 to the
        Current Report on Form 8-K, dated July 18, 2000).                                                                
|          | 2.7  |  |  |                        |  | Share Sale and Purchase Agreement, dated as of
        March 31, 2000 between PetroFina S.A., and Brittany
        Holdings Limited and B.H. Acquisition Limited (incorporated by
        reference to Exhibit 2.4 to the Current Report on
        Form 8-K, dated July 18, 2000).                         
|          | 3.1  |  |  |                        |  | Articles of Incorporation of the Company, as
        amended on June 10, 1998 (incorporated by reference to
        Exhibit 3.1 to the Quarterly Report on Form 10-Q,
        dated August 4, 1998).                                                                                                        
|          | 3.2  |  |  |                        |  | Bylaws of the Company, as amended (incorporated
        by reference to Exhibit 3.2 to the Quarterly Report on
        Form 10-Q, dated August 6, 1999).                                                                                                                                                    
|          | 4.1  |  |  |                        |  | Rights Agreement between the Company and American
        Stock Transfer & Trust Company, as Rights Agent, dated as of
        January 20, 1997 (incorporated by reference to
        Exhibit 4.1 to the Amendment No. 2 to the Registration
        Statement on Form 10, dated March 27, 1997).           
|          | 4.2  |  |  |                        |  | Amendment Agreement dated as of October 20,
        1998, to the Rights Agreement dated as of January 20, 1997
        between the Company and American Stock Transfer & Trust
        Company (incorporated by reference to Exhibit 10.2 to the
        Current Report on Form 8-K dated October 20, 1998).
|          | 10.1 |  |  |                        |  | 1997 Amended Omnibus Incentive Plan.                                                                                                                                                                                                                                                                        
|          | 10.2 |  |  |                        |  | 2001 Outside Directors Stock Option Plan
        (incorporated by reference to Annex B to the Proxy
        Statement for the Annual Meeting of Shareholders, dated
        May 8, 2001).                                                                                                                  

13



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|          |      |  |  |                         |  |                                                                                                                                                                                                                                                 
|--------- | ---- |  |  | ----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Reference |      |  |  |                        
|Number    |      |  |  | Description of Exhibits
|          |      |  |  |                        
|          | 99.1 |  |  |                        |  | The Enstar Group, Inc. Private Securities
	Litigation Reform Act of 1995 Safe Harbor Compliance Statement
	For Forward-Looking Statements (incorporated by reference to
	Exhibit 99.1 to the Annual Report on Form 10-K, dated
	March 30, 2001).

(b)  Reports on Form 8-K

There were no reports filed on Form 8-K for the quarter
ended June 30, 2001.

14



---



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.



| |                       
| | ----------------------
| | THE ENSTAR GROUP, INC.



| |     |                    
| | --- | -------------------
| | By: | /s/ CHERYL D. DAVIS

| |                                         
| | ----------------------------------------
| |                                         
| | Cheryl D. Davis                         
| | Chief Financial Officer, Vice
	President
| | of Corporate Taxes, Secretary           
| | (Authorized Officer)                    
| | (Principal Financial Officer)           

Date: August 14, 2001

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