<PAGE>
                                                                               .
                                                                               .
                                                                               .

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             ---------------------

                                   FORM 10-Q

<Table>
<C>          <S>
 (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, 2004

                                   OR




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

             FOR THE TRANSITION PERIOD FROM         TO
</Table>

                         COMMISSION FILE NUMBER 0-07477

                             ---------------------

                             THE ENSTAR GROUP, INC.
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                            <C>
                   GEORGIA                                       63-0590560
       (State or other jurisdiction of                        (I.R.S. Employer
        incorporation or organization)                      Identification No.)
</Table>

                               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 [ ]

     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 [ ]

     Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [X]   No [ ]

     The number of shares of Registrant's Common Stock, $.01 par value per
share, outstanding at August 9, 2004 was 5,517,909.
<PAGE>

     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, 2003, 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.
                                        i
<PAGE>

                                     PART I

                             FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                              JUNE 30,   DECEMBER 31,
                                                                2004         2003
                                                              --------   ------------
                                                              (DOLLARS IN THOUSANDS)
                                                                    (UNAUDITED)
<S>                                                           <C>        <C>
                                       ASSETS
Current assets:
  Cash and cash equivalents.................................  $ 62,390     $ 55,767
  Certificates of deposit...................................     4,072        4,072
  Receivable from affiliate.................................        92          120
  Other current assets......................................        76          152
                                                              --------     --------
       Total current assets.................................    66,630       60,111
Partially owned equity affiliates...........................    87,795       91,839
Other assets................................................       503          499
                                                              --------     --------
       Total assets.........................................  $154,928     $152,449
                                                              ========     ========

                        LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued liabilities..................  $    411     $    437
  Accrued taxes.............................................       625          625
  Income taxes payable......................................     2,284        2,562
                                                              --------     --------
       Total current liabilities............................     3,320        3,624
Deferred income taxes.......................................     2,422        1,766
Deferred compensation.......................................       565          695
Other liabilities...........................................       438          432
                                                              --------     --------
       Total liabilities....................................     6,745        6,517
                                                              --------     --------
Commitments and contingencies (Note 4)
Minority interest...........................................    10,202       11,449
                                                              --------     --------
Shareholders' equity:
  Common stock ($.01 par value; 55,000,000 shares
     authorized, 5,960,260 and 5,908,104 shares issued at
     June 30, 2004 and December 31, 2003, respectively).....        60           59
  Additional paid-in capital................................   190,008      188,591
  Deferred compensation of partially owned equity
     affiliate..............................................      (204)        (284)
  Accumulated other comprehensive income of partially owned
     equity affiliates, net.................................       868          669
  Accumulated deficit.......................................   (46,941)     (48,742)
  Treasury stock, at cost (442,351 shares)..................    (5,810)      (5,810)
                                                              --------     --------
       Total shareholders' equity...........................   137,981      134,483
                                                              --------     --------
       Total liabilities and shareholders' equity...........  $154,928     $152,449
                                                              ========     ========
</Table>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                        1
<PAGE>

                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME

<Table>
<Caption>
                                                 THREE MONTHS ENDED         SIX MONTHS ENDED
                                                      JUNE 30,                  JUNE 30,
                                               -----------------------   -----------------------
                                                  2004         2003         2004         2003
                                               ----------   ----------   ----------   ----------
                                                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                  (UNAUDITED)
<S>                                            <C>          <C>          <C>          <C>
Interest income..............................  $      201   $      242   $      378   $      479
Earnings of partially owned equity
  affiliates.................................       1,980        3,360        4,980        4,385
Other income.................................         198          183          298          283
General and administrative expenses..........        (780)        (823)      (1,507)      (1,613)
                                               ----------   ----------   ----------   ----------
Income before income taxes and minority
  interest...................................       1,599        2,962        4,149        3,534
Income taxes.................................        (450)        (740)      (1,279)      (1,243)
                                               ----------   ----------   ----------   ----------
Income before minority interest..............       1,149        2,222        2,870        2,291
Minority interest............................        (446)        (119)      (1,069)        (119)
                                               ----------   ----------   ----------   ----------
Net income...................................  $      703   $    2,103   $    1,801   $    2,172
                                               ==========   ==========   ==========   ==========
Weighted average shares
  outstanding -- basic.......................   5,485,240    5,465,753    5,475,496    5,465,753
                                               ==========   ==========   ==========   ==========
Weighted average shares
  outstanding -- assuming dilution...........   5,778,593    5,887,048    5,773,744    5,864,585
                                               ==========   ==========   ==========   ==========
Net income per common share -- basic.........  $     0.13   $     0.38   $     0.33   $     0.40
                                               ==========   ==========   ==========   ==========
Net income per common share -- assuming
  dilution...................................  $     0.12   $     0.36   $     0.31   $     0.37
                                               ==========   ==========   ==========   ==========
</Table>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                        2
<PAGE>

                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<Table>
<Caption>
                                                               THREE MONTHS       SIX MONTHS
                                                              ENDED JUNE 30,    ENDED JUNE 30,
                                                              ---------------   ---------------
                                                              2004     2003      2004     2003
                                                              -----   -------   ------   ------
                                                                   (DOLLARS IN THOUSANDS,
                                                                   EXCEPT PER SHARE DATA)
                                                                         (UNAUDITED)
<S>                                                           <C>     <C>       <C>      <C>
Net income..................................................  $703    $2,103    $1,801   $2,172
Other comprehensive income (loss) of partially owned equity
  affiliates:
  Unrealized holding gains (losses) on investments, net of
     income tax expense (benefit) of $103, $(6), $150 and
     $(13)..................................................   163      (130)      240      (42)
  Reclassification adjustment for gains (losses) included in
     net income.............................................    --       119        --       20
  Unrealized loss on cash flow hedge, net of income tax
     benefit of $8 and $41..................................   (13)       --       (66)      --
  Currency translation adjustment, net of income tax
     (benefit) expense of $(17), $38, $15 and $29...........   (27)       62        25       48
                                                              ----    ------    ------   ------
Other comprehensive income..................................   123        51       199       26
                                                              ----    ------    ------   ------
Comprehensive income........................................  $826    $2,154    $2,000   $2,198
                                                              ====    ======    ======   ======
</Table>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                        3
<PAGE>

                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                 SIX MONTHS ENDED
                                                                     JUNE 30,
                                                              ----------------------
                                                                2004         2003
                                                              ---------   ----------
                                                              (DOLLARS IN THOUSANDS)
                                                                   (UNAUDITED)
<S>                                                           <C>         <C>
Cash flows from operating activities:
  Net income................................................   $ 1,801     $  2,172
  Adjustments to reconcile net income to net cash provided
     by operating activities:
     Earnings of partially owned equity affiliates..........    (4,980)      (4,385)
     Dividends and distributions received from partially
      owned equity affiliates...............................     9,586       20,826
     Minority interest in earnings of JCF CFN...............     1,069          119
     Noncash compensation expense...........................        33          133
     Deferred income taxes..................................       532        1,063
     Tax benefit from exercise of stock options and issuance
      of shares from deferred compensation plan.............       606           --
  Changes in assets and liabilities:
     Accounts payable and accrued expenses..................      (304)         170
     Other, net.............................................       199           22
                                                               -------     --------
       Net cash provided by operating activities............     8,542       20,120
                                                               -------     --------
Cash flows from investing activities:
  Capital contribution to Castlewood Holdings Limited.......        --       (7,169)
  Investment of JCF CFN in Green Tree.......................        --      (24,685)
  Purchases of certificates of deposit......................    (4,072)      (6,140)
  Maturities of certificates of deposit.....................     4,072        6,105
                                                               -------     --------
       Net cash used in investing activities................        --      (31,889)
                                                               -------     --------
Cash flows from financing activities:
  Minority interest's capital contribution in JCF CFN.......        --       10,200
  Distributions to minority interest........................    (2,474)          --
  Proceeds from exercise of stock options...................       555           --
                                                               -------     --------
       Net cash (used in) provided by financing
        activities..........................................    (1,919)      10,200
                                                               -------     --------
Increase (decrease) in cash and cash equivalents............     6,623       (1,569)
Cash and cash equivalents at the beginning of the period....    55,767       55,375
                                                               -------     --------
Cash and cash equivalents at the end of the period..........   $62,390     $ 53,806
                                                               =======     ========
Supplemental disclosures of cash flow information:
  Income taxes paid.........................................   $   420     $     --
                                                               =======     ========
</Table>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.
                                        4
<PAGE>

                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

NOTE 1:  GENERAL

     The Enstar Group, Inc. (the "Company") is a publicly traded company engaged
in the operation of several equity affiliates in the financial services
industry. Enstar also continues its active search for one or more additional
operating businesses which meet its acquisition criteria.

     The Company, through the operations of its partially owned equity
affiliates, Castlewood Holdings Limited ("Castlewood Holdings") and B.H.
Acquisition Limited ("B.H. Acquisition"), and their subsidiaries, has acquired
and manages books of reinsurance business from the international markets. In
general, reinsurance is an arrangement in which the reinsurer agrees to
indemnify an insurance or reinsurance company against all or a portion of the
risks underwritten by such insurance or reinsurance company under one or more
insurance or reinsurance contracts.

     The Company consolidates JCF CFN LLC and related entities (collectively,
the "JCF CFN Entities"). The JCF CFN Entities were formed to serve as members of
Green Tree Investment Holdings LLC (formerly known as CFN Investment Holdings
LLC) and related entities (collectively, "Green Tree"), which, in turn, were
formed to effect the acquisition of a portfolio of home equity and manufactured
housing loan securities and the associated servicing businesses from Conseco
Finance Corp. ("Conseco Finance").

     The condensed consolidated financial statements of 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, results of operations and cash flows for the interim
period. The results of operations for the three and six months ended June 30,
2004 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, 2003
included in the Company's Form 10-K as filed with the Securities and Exchange
Commission on March 15, 2004 under the Securities Exchange Act of 1934, as
amended.

NOTE 2:  SIGNIFICANT ACCOUNTING POLICIES

     (a) Principles of Consolidation -- The condensed consolidated financial
statements include the accounts of the Company and its wholly-owned subsidiary,
Enstar Financial Services, Inc., an inactive company. Since adoption of
Financial Accounting Standards Board Interpretation No. 46R, "Consolidation of
Variable Interest Entities" in 2003, the Company also consolidates the JCF CFN
Entities, recording a minority interest for Castlewood Holdings' 40% interest.
All significant intercompany balances and transactions have been eliminated in
consolidation.

     (b) Use of Estimates -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates. The estimates susceptible to significant change are
those related to the valuation allowance for deferred tax assets and loss and
loss adjustment expenses included in earnings of partially owned equity
affiliates.

     (c) Cash Equivalents -- Cash equivalents consist of short term, highly
liquid investments with original purchased maturities of three months or less.

     (d) Partially Owned Equity Affiliates -- Partially owned equity affiliates
are accounted for under the equity method of accounting. Equity method
investments are recorded at cost and are adjusted periodically to recognize the
Company's proportionate share of the investee's income or loss, additional
contributions made and dividends and capital distributions received. In the
event any of the partially owned equity affiliates were

                                        5
<PAGE>
                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

to incur a loss and the Company's cumulative proportionate share of the loss
exceeded the carrying amount of the equity method investment, application of the
equity method would be suspended and the Company's proportionate share of
further losses would not be recognized until the Company committed to provide
further financial support to the investee. The Company would resume application
of the equity method once the investee becomes profitable and the Company's
proportionate share of the investee's earnings equals its cumulative
proportionate share of losses that were not recognized during the period the
application of the equity method was suspended.

     (e) Comprehensive Income -- The Company reports comprehensive income in
accordance with Statement of Financial Accounting Standards ("SFAS") 130,
"Reporting Comprehensive Income" which defines comprehensive income as certain
changes in equity from non-owner sources. The Company recorded other
comprehensive income from its partially owned equity affiliates. This other
comprehensive income arose from unrealized holding gains and losses from debt
and equity securities that are classified as available-for-sale and are carried
at fair value, unrealized loss on cash flow hedge and currency translation
adjustments resulting from the translations of financial information of
subsidiaries into U.S. dollars.

     (f) Revenue Recognition -- Revenue includes interest income earned from
cash, cash equivalents and certificates of deposit and the Company's
proportionate share of earnings from partially owned equity affiliates. Interest
income is recorded when earned. The Company's proportionate share of earnings
from partially owned equity affiliates is recorded as such earnings are
recognized by the partially owned equity affiliate with the exception of B-Line
LLC ("B-Line"). Prior to its disposal of B-Line in the fourth quarter of 2003,
the Company accounted for its investment in B-Line three months in arrears.

     (g) Stock-Based Compensation -- For the three and six months ended June 30,
2004 and 2003, the Company utilized various stock-based compensation plans for
the benefit of non-employee directors and certain officers. In 1997, the Company
adopted the Deferred Compensation and Stock Plan for Non-Employee Directors and
a long-term incentive program made up of three stock option/incentive plans.
Additionally, in 2001, the Company adopted the 2001 Outside Directors' Stock
Option Plan and amended certain provisions of an existing plan. The Company
accounts for these plans under the intrinsic value recognition and measurement
principles of Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB 25") and related interpretations.
Compensation expense for the Deferred Compensation and Stock Plan for
Non-Employee Directors is recognized at the first of every quarter for retainer
fees and upon the occurrence of various Board of Director and committee
meetings. There is no compensation expense recognized in net earnings for stock
option/incentive plans that had an exercise price equal to the market value of
the Company's underlying common stock on the date of grant. In connection with
options granted in November 2001, the market value of the Company's common stock
on the date of grant exceeded the exercise price, resulting in a charge to
earnings for that year. In addition, compensation expense is being recognized
over the vesting life of these options through June 2004. Had compensation costs
for grants under the Company's stock option/incentive plans been determined
based on the fair value recognition provision of SFAS 123, "Accounting for
Stock-Based Compensation," the Company's pro forma net income

                                        6
<PAGE>
                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and net income per share for the three and six months ended June 30, 2004 and
2003 would have been as follows:

<Table>
<Caption>
                                                       THREE MONTHS               SIX MONTHS
                                                      ENDED JUNE 30,            ENDED JUNE 30,
                                                   ---------------------    ----------------------
                                                     2004        2003         2004         2003
                                                   --------    ---------    ---------    ---------
                                                    (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                     (UNAUDITED)
<S>                                                <C>         <C>          <C>          <C>
Net income, as reported..........................   $ 703       $2,103       $1,801       $2,172
Add: Stock-based employee compensation expense
  included in reported net income, net of income
  taxes..........................................      10           41           20           82
Deduct: Total stock-based employee compensation
  expense determined under fair value based
  method for all awards, net of income taxes.....    (118)         (57)        (235)        (115)
                                                    -----       ------       ------       ------
Pro forma net income.............................   $ 595       $2,087       $1,586       $2,139
                                                    =====       ======       ======       ======
Income per common share:
  Basic -- as reported...........................   $0.13       $ 0.38       $ 0.33       $ 0.40
                                                    =====       ======       ======       ======
  Basic -- pro forma.............................   $0.11       $ 0.38       $ 0.29       $ 0.39
                                                    =====       ======       ======       ======
  Assuming dilution -- as reported...............   $0.12       $ 0.36       $ 0.31       $ 0.37
                                                    =====       ======       ======       ======
  Assuming dilution -- pro forma.................   $0.10       $ 0.35       $ 0.27       $ 0.36
                                                    =====       ======       ======       ======
</Table>

     (h) Reclassifications -- Certain prior period amounts have been
reclassified in the financial statements to conform to the current period
presentation.

NOTE 3:  PARTIALLY OWNED EQUITY AFFILIATES

  B.H. ACQUISITION

     In July 2000, the Company, through B.H. Acquisition, a joint venture with
Castlewood Limited ("Castlewood") and an entity controlled by Trident II, L.P.
("Trident"), acquired as an operating business two reinsurance companies,
Brittany Insurance Company Ltd. ("Brittany") and Compagnie Europeenne
d'Assurances Industrielles S.A. ("CEAI"). Brittany and CEAI are principally
engaged in the active management of books of reinsurance business from
international markets. The Company owns 50% of the voting stock and a 33%
economic interest in B.H. Acquisition. As part of the transaction, Castlewood
owns 33% of the voting stock and a 45% economic interest in B.H. Acquisition.
The Company's ownership in B.H. Acquisition is accounted for using the equity
method of accounting.

  CASTLEWOOD HOLDINGS LIMITED

     In November 2001, the Company, together with Trident and the shareholders
and senior management of Castlewood (the "Castlewood Principals"), completed the
formation of a new venture, Castlewood Holdings, to acquire and manage insurance
and reinsurance companies, including companies in "run-off" (insurance and
reinsurance companies that have ceased the underwriting of new policies), and to
provide management, consulting and other services to the insurance and
reinsurance industry (the "Castlewood Holdings Transaction"). The Castlewood
Principals contributed at closing all the shares of Castlewood to Castlewood
Holdings and received in exchange a 33 1/3% economic interest in the newly
incorporated Castlewood Holdings, plus notes and cash totaling $4.275 million.
As part of the transaction, the Company and Trident made capital commitments of
$39.5 million each, totaling $79 million, in exchange for their 33 1/3% economic
interests in Castlewood Holdings. The Company owns 50% of the voting stock of
Castlewood Holdings and the Castlewood Principals and Trident each own 25% of
Castlewood Holdings' voting stock. Castlewood is a private Bermuda-based firm,
experienced in managing and acquiring reinsurance operations.

                                        7
<PAGE>
                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     As a result of the contribution of Castlewood's outstanding stock to
Castlewood Holdings, the Company's 33% direct economic interest in B.H.
Acquisition increased by an additional 15% indirect economic interest through
Castlewood Holdings. The Company's combined voting interest in B.H. Acquisition
is limited to 50%. The Company's ownership in Castlewood Holdings is accounted
for using the equity method of accounting.

     Immediately following the closing of the Castlewood Holdings Transaction,
the Company and Trident each contributed $12.5 million to Castlewood Holdings.
Through a subsidiary, Castlewood Holdings completed the acquisition of two
reinsurance companies, River Thames Insurance Company Limited ("River Thames"),
based in London, England, and Overseas Reinsurance Corporation Limited
("Overseas Reinsurance"), based in Bermuda. The total purchase price of River
Thames and Overseas Reinsurance was approximately $15.2 million.

     In August 2002, Castlewood Holdings purchased Hudson Reinsurance Company
Limited, a Bermuda-based company, for approximately $4.1 million.

     Also in August 2002, the Company funded an additional $21 million to
Castlewood Holdings. The funds were used, in part, to capitalize Fitzwilliam
(SAC) Insurance Limited ("Fitzwilliam"), a wholly owned subsidiary of Castlewood
Holdings. Fitzwilliam, based in Bermuda, offers specialized reinsurance
protections to related companies, clients of Castlewood Holdings and other
third-party companies. The Company's remaining commitment to Castlewood Holdings
of approximately $7.2 million was funded in March 2003.

     In March 2003, Castlewood Holdings and Shinsei Bank, Limited ("Shinsei")
completed the acquisition of all of the outstanding capital stock of The Toa-Re
Insurance Company (UK) Limited ("Toa-UK"), a London-based company, for
approximately $46 million. Toa-UK underwrote reinsurance business throughout the
world between 1980 and 1994, when it stopped writing new business and is
currently operating in run-off. The acquisition was effected through Hillcot
Holdings Ltd. ("Hillcot"), a newly formed Bermuda company, in which Castlewood
Holdings has a 50.1% economic interest and a 50% voting interest. Upon
completion of the transaction, Toa-UK's name was changed to Hillcot Re Limited.
Hillcot is included in Castlewood Holdings' consolidated financial statements,
with the remaining 49.9% interest reflected as minority interest. J. Christopher
Flowers ("Mr. Flowers"), a member of the Company's board of directors and the
Company's largest shareholder, is a director of Shinsei. Castlewood Holdings'
results of operations include the results of Toa-UK from the date of acquisition
in March 2003.

  B-LINE

     In November 1998, the Company purchased membership units of B-Line for
$965,000. 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. In December 2003, the
Company sold its entire interest in B-Line to B-Line Holdings LLC, an affiliate
of Golden Gate Capital, for cash of approximately $7.8 million, net of expenses.

  PARTIALLY OWNED EQUITY AFFILIATES OF JCF CFN

     During 2003, the Company funded approximately $15.3 million to the JCF CFN
Entities in exchange for a 60% interest in such entities. In addition,
Castlewood Holdings funded approximately $10.2 million to the JCF CFN Entities
in exchange for a 40% interest.

     The JCF CFN Entities invested in Green Tree together with affiliates of
J.C. Flowers I LP, affiliates of Fortress Investment Group LLC and affiliates of
Cerberus Capital Management, L.P. In June 2003, the JCF CFN Entities invested
approximately $25.1 million in exchange for a 3.995% interest in Green Tree.
Green Tree completed the purchase of certain assets of Conseco Finance for
approximately $630 million in cash plus certain assumed liabilities. The assets
consist primarily of a portfolio of home equity and manufactured housing loan
securities as well as the associated servicing businesses. J.C. Flowers I LP is
a private investment
                                        8
<PAGE>
                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

fund, the general partner of which is JCF Associates I LLC. The managing member
of JCF Associates I LLC is Mr. Flowers, a member of the Company's board of
directors and the Company's largest shareholder. The JCF CFN Entities account
for the investment in Green Tree under the equity method of accounting. Because
the JCF CFN Entities are consolidated, Green Tree is treated as a partially
owned equity affiliate of the Company.

     In March 2004, the JCF CFN Entities, along with certain affiliates of J.C.
Flowers I LP, signed a definitive agreement for the sale of their entire
interests in Green Tree to FIT CFN Holdings LLC, an affiliate of Fortress
Investment Group LLC and Cerberus Green Tree Investments, LLC and Cerberus JCF
Coinvest, LLC, each an affiliate of Cerberus Capital Management L.P. (Note 9).

  SUMMARIZED FINANCIAL INFORMATION

     In accordance with APB No. 18, "The Equity Method of Accounting for
Investments in Common Stock", the Company prepared summarized financial
information for B.H. Acquisition and Castlewood Holdings as of June 30, 2004 and
December 31, 2003 and for the three and six months ended June 30, 2004 and 2003,
respectively. Summarized financial information for Green Tree is presented as of
June 30, 2004 and December 31, 2003 and for the three and six months ended June
30, 2004 (Green Tree was acquired in June 2003). Summarized information for
B-Line is presented for the three and six months ended June 30, 2003 (the
Company sold its entire interest in B-Line in December 2003). The summarized
financial information presented below for B.H. Acquisition, Castlewood Holdings
and Green Tree is derived from their respective audited financial statements for
December 31, 2003 and their unaudited quarterly financial statements. The
summarized financial information presented below for B-Line is derived from its
unaudited quarterly financial statements.

<Table>
<Caption>
                                                                 JUNE 30, 2004
                                                     -------------------------------------
                                                        B.H.       CASTLEWOOD
                                                     ACQUISITION    HOLDINGS    GREEN TREE
                                                     -----------   ----------   ----------
                                                            (DOLLARS IN THOUSANDS)
<S>                                                  <C>           <C>          <C>
Total assets.......................................   $113,340      $618,347    $1,249,801
Total liabilities..................................     75,776       445,962       663,813
Minority interest..................................                   28,707
Total equity.......................................     37,564       143,678       585,988
</Table>

<Table>
<Caption>
                                                               DECEMBER 31, 2003
                                                     -------------------------------------
                                                        B.H.       CASTLEWOOD
                                                     ACQUISITION    HOLDINGS    GREEN TREE
                                                     -----------   ----------   ----------
                                                            (DOLLARS IN THOUSANDS)
<S>                                                  <C>           <C>          <C>
Total assets.......................................   $120,474      $632,347    $1,020,514
Total liabilities..................................     82,167       456,436       399,457
Minority interest..................................                   28,295
Total equity.......................................     38,307       147,616       621,057
</Table>

<Table>
<Caption>
                                                        THREE MONTHS ENDED JUNE 30, 2004
                                                      -------------------------------------
                                                         B.H.       CASTLEWOOD
                                                      ACQUISITION    HOLDINGS    GREEN TREE
                                                      -----------   ----------   ----------
                                                             (DOLLARS IN THOUSANDS)
<S>                                                   <C>           <C>          <C>
Revenue.............................................                  $6,289      $111,183
Underwriting income (loss)..........................     $(290)        2,333
Operating income....................................                                51,511
Net income (loss)...................................      (485)        2,109        38,162
</Table>

                                        9
<PAGE>
                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                         SIX MONTHS ENDED JUNE 30, 2004
                                                      -------------------------------------
                                                         B.H.       CASTLEWOOD
                                                      ACQUISITION    HOLDINGS    GREEN TREE
                                                      -----------   ----------   ----------
                                                             (DOLLARS IN THOUSANDS)
<S>                                                   <C>           <C>          <C>
Revenue.............................................                 $10,668      $246,370
Underwriting income (loss)..........................     $(580)        4,173
Operating income....................................                               116,548
Net income (loss)...................................      (742)        5,295        93,183
</Table>

<Table>
<Caption>
                                                         THREE MONTHS ENDED JUNE 30, 2003
                                                        ----------------------------------
                                                                     B.H.       CASTLEWOOD
                                                        B-LINE    ACQUISITION    HOLDINGS
                                                        -------   -----------   ----------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                     <C>       <C>           <C>
Revenue...............................................  $12,358                   $8,348
Underwriting income (loss)............................               $(404)        2,000
Operating income......................................    3,822
Net income (loss).....................................    3,822       (263)        8,194
</Table>

<Table>
<Caption>
                                                          SIX MONTHS ENDED JUNE 30, 2003
                                                        ----------------------------------
                                                                     B.H.       CASTLEWOOD
                                                        B-LINE    ACQUISITION    HOLDINGS
                                                        -------   -----------   ----------
                                                              (DOLLARS IN THOUSANDS)
<S>                                                     <C>       <C>           <C>
Revenue...............................................  $23,960                  $13,949
Underwriting income (loss)............................               $(403)        2,700
Operating income......................................    7,620
Net income (loss).....................................    7,620       (193)       10,248
</Table>

     The Company's consolidated accumulated deficit includes undistributed
earnings of its partially owned equity affiliates of approximately $16.1 million
and approximately $18.9 million at June 30, 2004 and December 31, 2003,
respectively.

NOTE 4:  COMMITMENTS AND CONTINGENCIES

     The Company is currently negotiating the renewal of its lease of an office
building which serves as the corporate headquarters. Additionally, pursuant to
an oral agreement, the Company leases space in a warehouse at 703 Howe Street,
Montgomery, Alabama on a month-to-month basis. The Company leases the office
building and warehouse space from unaffiliated third parties for $2,750 and $350
per month, respectively. In February 2002, the Company entered into an agreement
with J.C. Flowers & Company, LLC running through November 2005 for the use of
certain office space and administrative services from J.C. Flowers & Company,
LLC for an annual payment of $66,000.

NOTE 5:  INCOME TAXES

     Income tax expense was $450,000 and approximately $1.3 million for the
three and six months ended June 30, 2004, respectively, compared to $740,000 and
approximately $1.2 million for the same periods in 2003. The Company's effective
tax rates for 2004 and 2003 differ from the statutory rate primarily due to
changes in the valuation allowance related to deferred tax assets and state
income taxes.

     The Company provides U.S. taxes for the anticipated repatriation of certain
earnings of foreign subsidiaries. A valuation allowance is recorded when it is
more likely than not that some portion or all of the deferred tax assets will
not be realized. The ultimate realization of the deferred tax assets depends on
the ability to generate sufficient taxable income in the future in the
appropriate jurisdictions. The Company has provided a valuation allowance for
operating losses of partially owned foreign subsidiaries and tax credits at
                                        10
<PAGE>
                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

June 30, 2004 and December 31, 2003. During the six months ended June 30, 2004,
the Company increased the valuation allowance from approximately $7.2 million to
approximately $7.3 million.

     In the second quarter of 2004 additional paid-in capital increased by
$606,000 as a result of an income tax benefit. This income tax benefit resulted
from tax deductions triggered by the exercise of stock options and the issuance
of shares of common stock from the Deferred Compensation and Stock Plan for
Non-Employee Directors.

NOTE 6:  SEGMENT INFORMATION

     The Company separately evaluates the performance of B.H. Acquisition and
Castlewood Holdings based on the different services provided by each of the
entities, and such evaluation is based on 100% of the entities' results of
operations. Prior to its sale in December 2003, the Company also separately
evaluated the performance of B-Line. The Company also reviews separate financial
results for JCF CFN and Enstar's corporate activity.

     A reconciliation of the consolidated financial information by segment to
the Company's consolidated financial statements as of June 30, 2004 and December
31, 2003 and for the three and six months ended June 30, 2004 and 2003,
respectively, is as follows:

<Table>
<Caption>
                                                                 JUNE 30, 2004
                                           ---------------------------------------------------------
                                                          B.H.       CASTLEWOOD
                                           CORPORATE   ACQUISITION    HOLDINGS    JCF CFN    TOTAL
                                           ---------   -----------   ----------   -------   --------
                                                            (DOLLARS IN THOUSANDS)
<S>                                        <C>         <C>           <C>          <C>       <C>
Total reportable segment assets:
  Partially owned equity affiliates......                $12,477      $47,786     $27,532   $ 87,795
  Corporate assets.......................   $67,133                                           67,133
                                            -------      -------      -------     -------   --------
     Total...............................   $67,133      $12,477      $47,786     $27,532   $154,928
                                            =======      =======      =======     =======   ========
</Table>

<Table>
<Caption>
                                                               DECEMBER 31, 2003
                                           ---------------------------------------------------------
                                                          B.H.       CASTLEWOOD
                                           CORPORATE   ACQUISITION    HOLDINGS    JCF CFN    TOTAL
                                           ---------   -----------   ----------   -------   --------
                                                            (DOLLARS IN THOUSANDS)
<S>                                        <C>         <C>           <C>          <C>       <C>
Total reportable segment assets:
  Partially owned equity affiliates......                $12,722      $49,385     $29,732   $ 91,839
  Corporate assets.......................   $60,610                                           60,610
                                            -------      -------      -------     -------   --------
     Total...............................   $60,610      $12,722      $49,385     $29,732   $152,449
                                            =======      =======      =======     =======   ========
</Table>

                                        11
<PAGE>
                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                        THREE MONTHS ENDED JUNE 30, 2004
                                             -------------------------------------------------------
                                                            B.H.       CASTLEWOOD
                                             CORPORATE   ACQUISITION    HOLDINGS    JCF CFN   TOTAL
                                             ---------   -----------   ----------   -------   ------
                                                             (DOLLARS IN THOUSANDS)
<S>                                          <C>         <C>           <C>          <C>       <C>
Net underwriting income (loss).............                 $(290)      $ 2,333
Revenue....................................                               6,289
Net investment income......................                    55           481
Interest income............................   $   201
Share of net income of partly-owned
  companies................................                                 342     $1,661
General and administrative expenses........      (780)       (224)       (7,088)
Amortization of run-off provision..........                   333
Other income...............................       198
Foreign exchange loss......................                  (359)         (104)
                                              -------       -----       -------     ------
Income (loss) before income taxes..........      (381)       (485)        2,253      1,661
Income taxes...............................      (450)                     (188)
Minority interest..........................      (446)                       44
                                              -------       -----       -------     ------
Net income (loss)..........................   $(1,277)      $(485)      $ 2,109     $1,661
                                              =======
Company's economic ownership %.............                    33%       33 1/3%
                                                            -----       -------     ------
                                                                            702
Company's portion of earnings from JCF
  CFN......................................                                (223)
                                                                        -------
Earnings (losses) of partially owned equity
  affiliates...............................                 $(160)      $   479     $1,661    $1,980
                                                            =====       =======     ======    ======
</Table>

                                        12
<PAGE>
                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                         SIX MONTHS ENDED JUNE 30, 2004
                                             -------------------------------------------------------
                                                            B.H.       CASTLEWOOD
                                             CORPORATE   ACQUISITION    HOLDINGS    JCF CFN   TOTAL
                                             ---------   -----------   ----------   -------   ------
                                                             (DOLLARS IN THOUSANDS)
<S>                                          <C>         <C>           <C>          <C>       <C>
Net underwriting income (loss).............                $  (580)     $  4,173
Revenue....................................                               10,668
Net investment income......................                    513         2,687
Interest income............................   $   378
Share of net income of partly-owned
  companies................................                                1,026    $3,995
General and administrative expenses........    (1,507)      (1,139)      (13,366)
Amortization of run-off provision..........                    666
Other income...............................       298
Foreign exchange gain (loss)...............                   (202)          973
                                              -------      -------      --------    ------
Income (loss) before income taxes..........      (831)        (742)        6,161     3,995
Income taxes...............................    (1,279)                      (454)
Minority interest..........................    (1,069)                      (412)
                                              -------      -------      --------    ------
Net income (loss)..........................   $(3,179)     $  (742)     $  5,295    $3,995
                                              =======
Company's economic ownership %.............                     33%       33 1/3%
                                                           -------      --------    ------
                                                                           1,764
Company's portion of earnings from JCF
  CFN......................................                                 (534)
                                                                        --------
Earnings (losses) of partially owned equity
  affiliates...............................                $  (245)     $  1,230    $3,995    $4,980
                                                           =======      ========    ======    ======
</Table>

     A minority interest for Castlewood Holdings' portion of earnings from the
JCF CFN Entities is reported in the Corporate column.

<Table>
<Caption>
                                                   THREE MONTHS ENDED JUNE 30, 2003
                                   -----------------------------------------------------------------
                                                            B.H.       CASTLEWOOD
                                   CORPORATE   B-LINE    ACQUISITION    HOLDINGS    JCF CFN   TOTAL
                                   ---------   -------   -----------   ----------   -------   ------
                                                        (DOLLARS IN THOUSANDS)
<S>                                <C>         <C>       <C>           <C>          <C>       <C>
Net underwriting income (loss)...                           $(404)      $ 2,000
Revenue..........................              $12,358                    8,348
Net investment income............                             434         3,314
Interest income..................   $   242
Share of net income (loss) of
  partly-owned company...........                                          (118)     $397
General and administrative
  expenses.......................      (823)    (7,157)      (912)       (3,987)
Amortization of run-off
  provision......................                             375
Interest expense.................               (1,379)
Other income.....................       183
Foreign exchange gain............                             244           888
                                    -------    -------      -----       -------      ----
Income (loss) before income
  taxes..........................      (398)     3,822       (263)       10,445       397
Income taxes.....................      (740)                               (607)
Minority interest................      (119)                             (1,644)
                                    -------    -------      -----       -------      ----
Net income (loss)................   $(1,257)   $ 3,822      $(263)      $ 8,194      $397
                                    =======    -------      -----       -------      ----
Company's economic ownership %...                 8.34%        33%       33 1/3%
                                               -------      -----       -------      ----
Earnings (losses) of partially
  owned equity affiliates........              $   319      $ (87)      $ 2,731      $397     $3,360
                                               =======      =====       =======      ====     ======
</Table>

                                        13
<PAGE>
                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                    SIX MONTHS ENDED JUNE 30, 2003
                                  ------------------------------------------------------------------
                                                            B.H.       CASTLEWOOD
                                  CORPORATE    B-LINE    ACQUISITION    HOLDINGS    JCF CFN   TOTAL
                                  ---------   --------   -----------   ----------   -------   ------
                                                        (DOLLARS IN THOUSANDS)
<S>                               <C>         <C>        <C>           <C>          <C>       <C>
Net underwriting income
  (loss)........................                           $  (403)     $ 2,700
Revenue.........................              $ 23,960                   13,949
Net investment income...........                               905        4,773
Interest income.................   $   479
Share of net income (loss) of
  partly-owned company..........                                            (87)     $397
General and administrative
  expenses......................    (1,613)    (13,133)     (1,663)      (9,568)
Amortization of run-off
  provision.....................                               750
Interest expense................                (3,207)
Other income....................       283
Foreign exchange gain...........                               218          811
                                   -------    --------     -------      -------      ----
Income (loss) before income
  taxes.........................      (851)      7,620        (193)      12,578       397
Income taxes....................    (1,243)                                (686)
Minority interest...............      (119)                              (1,644)
                                   -------    --------     -------      -------      ----
Net income (loss)...............   $(2,213)   $  7,620     $  (193)     $10,248      $397
                                   =======
Company's economic ownership
  %.............................                  8.34%         33%      33 1/3%
                                              --------     -------      -------      ----
Earnings (losses) of partially
  owned equity affiliates.......              $    636     $   (64)     $ 3,416      $397     $4,385
                                              ========     =======      =======      ====     ======
</Table>

NOTE 7:  STOCK COMPENSATION

     In May 2004 Mr. Jeffrey S. Halis resigned from the Company's board of
directors. Upon his resignation, Mr. Halis exercised 25,000 stock options in
connection with the 1997 Amended Outside Directors' Stock Option Plan at an
exercise price of $10.8125 per share and 15,000 stock options in connection with
the 2001 Outside Directors' Stock Option Plan at an exercise price of $18.90 per
share. In addition, 12,156 shares of the Company's common stock were issued to
Mr. Halis pursuant to the terms of the Deferred Compensation and Stock Plan for
Non-Employee Directors.

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 months ended June 30, 2004 and 2003. 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. Common share equivalents

                                        14
<PAGE>
                    THE ENSTAR GROUP, INC. AND SUBSIDIARIES

      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

consist of stock units deferred under the Deferred Compensation and Stock Plan
for Non-Employee Directors and stock options granted under the Company's stock
option/incentive plans.

<Table>
<Caption>
                                                 THREE MONTHS ENDED         SIX MONTHS ENDED
                                                      JUNE 30,                  JUNE 30,
                                               -----------------------   -----------------------
                                                  2004         2003         2004         2003
                                               ----------   ----------   ----------   ----------
                                                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                  (UNAUDITED)
<S>                                            <C>          <C>          <C>          <C>
Net income...................................  $      703   $    2,103   $    1,801   $    2,172
                                               ==========   ==========   ==========   ==========
Net income per common share -- basic.........  $     0.13   $     0.38   $     0.33   $     0.40
                                               ==========   ==========   ==========   ==========
Net income per common share -- assuming
  dilution...................................  $     0.12   $     0.36   $     0.31   $     0.37
                                               ==========   ==========   ==========   ==========
Weighted average shares
  outstanding -- basic.......................   5,485,240    5,465,753    5,475,496    5,465,753
Common share equivalents.....................     293,353      421,295      298,248      398,832
                                               ----------   ----------   ----------   ----------
Weighted average shares
  outstanding -- assuming dilution...........   5,778,593    5,887,048    5,773,744    5,864,585
                                               ==========   ==========   ==========   ==========
</Table>

NOTE 9:  SUBSEQUENT EVENTS

     In July 2004, the JCF CFN Entities, along with certain affiliates of J.C.
Flowers I LP, completed the sale of their entire interests in Green Tree to FIT
CFN Holdings LLC, an affiliate of Fortress Investment Group LLC, and Cerberus
Green Tree Investments, LLC and Cerberus JCF Coinvest, LLC, each an affiliate of
Cerberus Capital Management L.P. In exchange for their entire interest, the JCF
CFN Entities received aggregate sales proceeds of approximately $40 million in
cash. Of this amount, Castlewood Holdings received aggregate sales proceeds of
approximately $16 million. The proceeds received by the JCF CFN Entities at
completion of the sale were reduced by prior cash distributions of approximately
$7.2 million made by Green Tree during 2004. The Company will record a realized
gain on the sale in the third quarter of 2004.

                                        15
<PAGE>

                REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM

Board of Directors and Shareholders of
The Enstar Group, Inc.
Montgomery, Alabama

     We have reviewed the accompanying condensed consolidated balance sheet of
The Enstar Group, Inc. and Subsidiaries ("Enstar") as of June 30, 2004, and the
related condensed consolidated statements of income and comprehensive income for
the three-month and six-month periods ended June 30, 2004 and 2003, and of cash
flows for the six-month periods ended June 30, 2004 and 2003. These interim
financial statements are the responsibility of Enstar's management.

     We conducted our reviews in accordance with standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with standards
of the Public Company Accounting Oversight Board (United States), 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 reviews, we are not aware of any material modifications that
should be made to such condensed consolidated interim 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 standards of the Public
Company Accounting Oversight Board (United States), the consolidated balance
sheet of Enstar as of December 31, 2003, and the related consolidated statements
of income, comprehensive income, stockholders' equity, and cash flows for the
year then ended (not presented herein); and in our report dated March 12, 2004,
we expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 2003 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
August 9, 2004

                                        16
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

OVERVIEW

     Through the operations of the Company's partially owned equity affiliates,
Castlewood Holdings and B.H. Acquisition, and their subsidiaries, the Company
has acquired and manages books of reinsurance business from the international
markets. In general, reinsurance is an arrangement in which the reinsurer agrees
to indemnify an insurance or reinsurance company against all or a portion of the
risks underwritten by such insurance or reinsurance company under one or more
insurance or reinsurance contracts. For a discussion of certain risks and
uncertainties relating to the Company's participation in the reinsurance
industry see "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, 2003, which is hereby incorporated by
reference.

     The Company is also actively engaged in the search for one or more
additional operating businesses which meet the Company's acquisition criteria.

CRITICAL ACCOUNTING POLICIES

  ENSTAR

     In the ordinary course of business, the Company has made a number of
estimates and assumptions relating to the reporting of results of operations and
financial condition in the preparation of its financial statements in conformity
with accounting principles generally accepted in the United States of America.
Actual results could differ significantly from those estimates under different
assumptions and conditions. The most significant accounting estimates inherent
in the preparation of the Company's consolidated financial statements include
estimates associated with its evaluation of income tax reserves.

     Income Tax Valuation Reserve -- The Company recognizes deferred tax assets
and liabilities for the expected future tax consequences of events that have
been included in the financial statements or tax returns. The effect of
temporary differences on the financial statements includes certain operating
losses of partially owned foreign subsidiaries and tax credit carryforwards. The
Company has established a valuation allowance for the uncertainty of the
realization of these and any other net deferred tax assets. However, utilization
of the remaining deferred tax assets at June 30, 2004 is based on management's
assessment of the Company's earnings history, expectations of future taxable
income, and other relevant considerations.

  CASTLEWOOD HOLDINGS AND B.H. ACQUISITION

     Certain amounts in Castlewood Holdings' and B.H. Acquisition's consolidated
financial statements are the result of transactions that require the use of best
estimates and assumptions to determine reported values. These amounts could
ultimately be materially different than what has been provided in their
consolidated financial statements. The assessment of loss reserves and
reinsurance recoverable are considered to be the values requiring the most
inherently subjective and complex estimates. In addition, the assessment of the
possible impairment of goodwill involves certain estimates and assumptions. As
such, the accounting policies for these amounts are of critical importance to
their consolidated financial statements.

     Loss and Loss Adjustment Expenses -- Because a significant amount of time
can lapse between the assumption of risk, the occurrence of a loss event, the
reporting of the event to an insurance or reinsurance company and the ultimate
payment of the claim on the loss event, Castlewood Holdings' and B.H.
Acquisition's liability for unpaid losses and loss expenses is based largely
upon estimates. Castlewood Holdings' and B.H. Acquisition's management must use
considerable judgment in the process of developing these estimates. The
liability for unpaid losses and loss expenses for property and casualty business
includes amounts determined from loss reports on individual cases and amounts
for losses incurred but not reported. Such reserves are estimated by management
based upon reports received from ceding companies and independent actuarial
estimates of ultimate unpaid losses. These estimates are continually reviewed
and Castlewood Holdings' and B.H. Acquisition's ultimate liability may be
significantly greater than or less than the amount estimated, with any
adjustments in such estimates being reflected in the periods in which they
become known.
                                        17
<PAGE>

     Reinsurance Balances Receivable -- One of the ways loss exposure is managed
is through the use of reinsurance. While reinsurance arrangements are designed
to limit losses and to permit recovery of a portion of direct unpaid losses,
reinsurance does not relieve Castlewood Holdings or B.H. Acquisition of their
liabilities to their insureds. Accordingly, loss reserves represent total gross
losses, and reinsurance recoverable represents anticipated recoveries of a
portion of those unpaid losses as well as amounts recoverable from reinsurers
with respect to claims, which have already been paid.

     Goodwill -- On January 1, 2002, Castlewood Holdings and B.H. Acquisition
adopted SFAS 142, "Goodwill and Other Intangible Assets." This statement
requires that goodwill be assessed for impairment on at least an annual basis
and that negative goodwill be reversed immediately upon adoption. In assessing
the recoverability of Castlewood Holdings' goodwill, Castlewood Holdings must
make assumptions regarding estimated future cash flows to determine the fair
value of the respective assets. If these estimates or their related assumptions
change in the future, Castlewood Holdings may be required to record impairment
charges for these assets.

RECENT DEVELOPMENTS

     In July 2004, the JCF CFN Entities, along with certain affiliates of J.C.
Flowers I LP, completed the sale of their entire interests in Green Tree to FIT
CFN Holdings LLC, an affiliate of Fortress Investment Group LLC, and Cerberus
Green Tree Investments, LLC and Cerberus JCF Coinvest, LLC, each an affiliate of
Cerberus Capital Management L.P. In exchange for their entire interest, the JCF
CFN Entities received aggregate sales proceeds of approximately $40 million in
cash. Of this amount, Castlewood Holdings received aggregate sales proceeds of
approximately $16 million. The proceeds received by the JCF CFN Entities at
completion of the sale were reduced by prior cash distributions of approximately
$7.2 million made by Green Tree during 2004.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's primary uses of liquidity include, but are not limited to,
funding normal operating expenses as well as various expenses incurred in
connection with the Company's search for one or more suitable acquisitions. In
addition, the Company uses cash on hand to fund commitments made in connection
with the purchase of its partially owned equity affiliates. The primary sources
of the Company's liquidity include the receipt of dividends and distributions
from partially owned equity affiliates.

     Net cash provided by operating activities decreased from approximately
$20.1 million for the six months ended June 30, 2003 to approximately $8.5
million for the same period in 2004. This substantial decrease was primarily due
to the receipt of approximately $20.8 million in dividends from Castlewood
Holdings in 2003, compared to the receipt of distributions of approximately $6.6
million from Green Tree and a $3.0 million dividend from Castlewood Holdings in
2004.

     Net cash used in investing activities was approximately $31.9 million for
the six months ended June 30, 2003. The Company funded capital contributions to
Castlewood Holdings of approximately $7.2 million. In addition, the JCF CFN
Entities invested approximately $24.7 million in Green Tree in 2003.

     Net cash used in financing activities was approximately $1.9 million for
the six months ended June 30, 2004 compared to net cash provided by financing
activities of approximately $10.2 million for the same period in 2003. During
2004, approximately $2.5 million was distributed to Castlewood Holdings as the
minority interest portion of the approximately $6.2 million distribution
received from Green Tree in March 2004. This amount was partially offset by the
receipt of $555,000 from the exercise of certain stock options in May 2004. Net
cash provided by financing activities of approximately $10.2 million in 2003
represents Castlewood Holdings' minority interest capital contribution in the
JCF CFN Entities.

     The Company's assets, aggregating approximately $154.9 million at June 30,
2004, include approximately $62.4 million in cash and cash equivalents and
approximately $4.1 million in short-term certificates of deposit. The Company
believes its current liquidity is adequate to fund any foreseeable cash
requirements.

                                        18
<PAGE>

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

     The Company is currently negotiating the renewal of its lease of an office
building which serves as the corporate headquarters. Additionally, pursuant to
an oral agreement, the Company leases space in a warehouse at 703 Howe Street,
Montgomery, Alabama on a month-to-month basis. The Company leases the office
building and warehouse space from unaffiliated third parties for $2,750 and $350
per month, respectively. The Company believes the rental amounts are competitive
with market rates and that the cancellation or termination of either of these
leases would not have a material adverse effect on the Company's results of
operations. In February 2002, the Company entered into an agreement with J.C.
Flowers & Company, LLC running through November 2005 for the use of certain
office space and administrative services from J.C. Flowers & Company, LLC for an
annual payment of $66,000. J.C. Flowers & Company, LLC is managed by Mr.
Flowers, a member of the Company's board of directors and the Company's largest
shareholder.

RESULTS OF OPERATIONS

     The Company reported net income of $703,000 and approximately $1.8 million
for the three and six months ended June 30, 2004, respectively, compared to net
income of approximately $2.1 million and approximately $2.2 million for the same
periods in the prior year. The changes in net income for the three and six month
periods ended June 30, 2004 compared to the same periods in the prior year were
primarily attributable to increased earnings from Green Tree and decreased
earnings from the Company's other partially owned equity affiliates.

     Interest income was $201,000 and $378,000 for the three and six months
periods ended June 30, 2004, respectively, compared to $242,000 and $479,000 for
the same periods in the prior year. Interest income was earned from cash, cash
equivalents and certificates of deposit. Interest income decreased primarily as
a result of a reduction of interest rates earned on the Company's cash, cash
equivalents and certificates of deposit.

     Earnings of partially owned equity affiliates were approximately $2.0
million and approximately $5.0 million for the three and six month periods ended
June 30, 2004, respectively, compared to approximately $3.4 million and
approximately $4.4 million for the same periods in the prior year. The Company
recorded equity in losses of $160,000 and $245,000 from B.H. Acquisition for the
three and six month periods ended June 30, 2004, respectively, compared to
equity in losses of $87,000 and $64,000 for the same periods in 2003. The
Company recorded equity in earnings of $479,000 and approximately $1.2 million
from Castlewood Holdings for the three and six months ended June 30, 2004,
respectively, compared to approximately $2.7 million and approximately $3.4
million for the same periods in 2003. The Company's equity in earnings from
B-Line was $319,000 and $636,000 for the three and six months ended June 30,
2003 (the Company sold its entire interest in B-Line in December 2003). The
Company reported equity in earnings of approximately $1.7 million and
approximately $4.0 million from Green Tree for the three and six months ended
June 30, 2004, respectively, compared to $397,000 for the three months ended
June 30, 2003 (the Company's made its investment in Green Tree in June 2003).
The Company's reported income was reduced by $446,000 and approximately $1.1
million to reflect Castlewood Holdings' minority interest in Green Tree for the
three and six months ended June 30, 2004, respectively, compared to $119,000 for
the three months ended June 30, 2003. For further discussion of the reasons
underlying the changes in earnings (losses) from B.H. Acquisition and Castlewood
Holdings, see "-- Results of Operations -- Partially Owned Equity Affiliates".

     Other income consists primarily of investment management fees charged to
Castlewood Holdings, one of the Company's partially owned equity affiliates.

     General and administrative expenses were $780,000 and approximately $1.5
million for the three and six month periods ended June 30, 2004, respectively,
compared to $823,000 and approximately $1.6 million for the same periods in
2003. Of these amounts, $291,000 and $593,000, including non-cash compensation,
related to employee expenses for the three and six month periods ended June 30,
2004, respectively, compared

                                        19
<PAGE>

to $361,000 and $769,000 for the same periods in 2003. General and
administrative expenses also include legal and professional fees as well as
travel expenses incurred in connection with the Company's search for one or more
additional operating companies. Additionally, the Company incurs legal and
professional fees in connection with reporting requirements associated with
being a publicly traded company, and in connection with handling various other
accounting and tax matters. Legal and professional fees and travel expenses were
$332,000 and $574,000 for the three and six months ended June 30, 2004,
respectively, compared to $287,000 and $497,000 for the same periods in 2003.

     Income tax expense was $450,000 and approximately $1.3 million for the
three and six months ended June 30, 2004, respectively, compared to $740,000 and
approximately $1.2 million for the same periods in 2003. The Company's effective
tax rates for 2004 and 2003 differ from the statutory rate primarily due to
changes in the valuation allowance related to deferred tax assets and state
income taxes.

RESULTS OF OPERATIONS -- PARTIALLY OWNED EQUITY AFFILIATES

     Since a substantial portion of the Company's results of operations are
comprised of the results of operations of Castlewood Holdings and B.H.
Acquisition, the following additional summary information is provided with
respect to those companies' results of operations:

  CASTLEWOOD HOLDINGS

     Castlewood Holdings reported consolidated net earnings of $2.1 million and
$5.3 million for the three and six months ended June 30, 2004, respectively,
compared to net earnings of $8.2 million and $10.2 million for the same periods
in 2003. The reduction in earnings of $4.9 million for the six months ended June
30, 2004 compared to the same period in 2003 was due to a combination of reduced
consulting fees, increased salaries and benefits cost and a reduction in
investment income earned.

     Underwriting income was $2.3 million and $4.2 million for the three and six
months ended June 30, 2004, respectively, compared to $2.0 million and $2.7
million for the same periods in 2003. The increase for the six months ended June
2004 over 2003 is due primarily to the inclusion of Hillcot Re results for a
full six months versus only three months in 2003.

     Castlewood Holdings earned consulting fees of $6.3 million and $10.7
million for the three and six months ended June 30, 2004, respectively, compared
to $8.3 million and $14.0 million for the same periods in 2003. Castlewood
Holdings generates its consulting fees based on a combination of fixed and
success based fee arrangements. Consulting income will vary dependent on the
success and timing of completion of success based fee arrangements. Included in
these amounts were $313,000 and $625,000 in consulting fees charged to B.H.
Acquisition, a partly-owned company, for each of the three and six months ended
June 30, 2004 and 2003, respectively.

     Castlewood Holdings' share of equity in earnings from its partly-owned
companies was $342,000 and $1.0 million for the three and six months ended June
30, 2004, respectively, compared to equity in losses of $118,000 and $87,000 for
the same periods in 2003. This amount represents Castlewood Holdings'
proportionate share of equity in the earnings of B.H. Acquisition and the JCF
CFN Entities.

     Net investment income, excluding unrealized gains and losses, was $481,000
and $2.7 million for the three and six months ended June 30, 2004, respectively,
compared to $3.3 million and $4.8 million for the same periods in 2003.
Investment income includes interest income earned from cash, cash equivalents,
debt securities and cash equivalent mutual funds and, in 2003, a loss from a
currency option of $945,000. During the first quarter of 2003, Castlewood
Holdings sold a currency option as an economic hedge on Castlewood Holdings'
portion of the purchase price of Toa-UK. The weakening of the British pound from
the sale date of the currency option to the completion date of the Toa-UK
transaction had an adverse effect on Castlewood Holdings' hedge, resulting in
the loss of $945,000. The reduction in net investment income for the six months
ended June 30, 2004 compared to the same period in 2003 is attributable to the
reduction in interest rates along with the lower return earned in the second
quarter on one of its cash equivalent mutual funds.

                                        20
<PAGE>

     Salaries and benefits were $4.2 million and $8.4 million for the three and
six months ended June 30, 2004, respectively, compared to $1.1 million and $4.4
million for the same periods in 2003. Castlewood Holdings is a service based
company and as such employee salaries and benefits are its largest cost.
Additionally, Castlewood Holdings has a discretionary bonus plan included as a
part of its employee compensation. During the quarter ended June 30, 2003 the
bonus plan was amended, resulting in a decrease in bonus accruals and salaries
and benefits expense of $2.6 million for the three month period ended June 30,
2003.

     General and administrative expenses were $2.8 million and $5.0 million for
the three and six months ended June 30, 2004, respectively, compared to $2.9
million and $5.2 million for the same periods in 2003. General and
administrative expenses include rent and rent related costs, professional fees
(legal, investment, audit and actuarial) and travel expenses. Castlewood
Holdings operates in both the UK and Bermuda and staff travel frequently in
connection with Castlewood Holdings' search for acquisition opportunities and in
the general management of the business.

     Castlewood Holdings has recorded a foreign exchange loss of $104,000 and a
foreign exchange gain of $1.0 million for the three and six months ended June
30, 2004, respectively, compared to gains of $888,000 and $811,000 for the same
periods in 2003. Through its subsidiaries, Castlewood Holdings conducts business
in a variety of foreign (non-U.S.) currencies, the principal exposures being
Euros and British pounds. At each balance sheet date, recorded balances that are
denominated in a currency other than the functional currency of Castlewood
Holdings are adjusted to reflect the current exchange rate. Revenue and expense
items are translated into U.S. dollars at average rates of exchange for the
periods. The resulting exchange gains or losses are included in net earnings.

     Income taxes of $188,000 and $454,000 were recorded for the three and six
months ended June 30, 2004, respectively, compared to $607,000 and $686,000 for
the same periods in 2003. Under current Bermuda law, Castlewood Holdings and its
Bermuda subsidiaries are not required to pay taxes in Bermuda on either income
or capital gains. Castlewood Holdings and its Bermuda subsidiaries have received
an undertaking from the Bermuda government that, in the event of income or
capital gains taxes being imposed, Castlewood Holdings and its Bermuda
subsidiaries will be exempted from such taxes until the year 2016. United
Kingdom subsidiaries record income taxes based on their graduated statutory
rates, net of tax benefits arising from tax loss carryforwards.

     Castlewood Holdings has recorded a minority interest in earnings (losses)
of $(44,000) and $412,000 for the three and six months ended June 30, 2004,
respectively, compared to $1.6 million and $1.6 million for the same periods in
2003. The minority interest amounts represent Shinsei's proportionate share of
earnings from Hillcot.

  B.H. ACQUISITION

     B.H. Acquisition reported net losses of $485,000 and $742,000 for the three
and six months ended June 30, 2004, respectively, compared to net losses of
$263,000 and $193,000 for the same periods in the prior year.

     The Company had net underwriting losses of $290,000 and $580,000 for the
three and six months ended June 30, 2004 compared to net underwriting losses of
$404,000 and $403,000 for the same periods in 2003.

     Net investment income was $55,000 and $513,000 for the three and six months
ended June 30, 2004, respectively, compared to $434,000 and $905,000 for the
same periods in 2003. The principal source of net investment income was interest
income earned from cash, cash equivalents and mutual funds. The decrease in
income for the current quarter was attributable to a reduced return on one of
the mutual funds held by the Company.

     Amortization of the run-off provision was $333,000 and $666,000 for the
three and six months ended June 30, 2004, respectively, compared to $375,000 and
$750,000 for the same periods in 2003. The Company established a provision at
the date of acquisition equal to the anticipated expenses to be incurred over
the expected life of the run-off. In 2003, an additional provision was
established and the expected life of the run-off was extended 2 years. This
provision is amortized on a straight-line basis over this period.
                                        21
<PAGE>

     General and administrative expenses were $224,000 and $1.1 million for the
three and six months ended June 30, 2004, respectively, compared to $912,000 and
$1.7 million for the same periods in 2003. General and administrative expenses
include legal, audit, management and actuarial expenses. The recovery reflected
in the current quarter relates primarily to the reclassification of
claims-related legal expenses from general and administrative expenses to
underwriting income.

     B.H. Acquisition recorded foreign exchange losses of $359,000 and $202,000
for the three and six months ended June 30, 2004, respectively, compared to
foreign exchange gains of $244,000 and $218,000 for the same periods in 2003.
Through its subsidiaries, B.H. Acquisition conducts business in a variety of
foreign (non-U.S.) currencies, the principal exposures being Euros and British
pounds. At each balance sheet date, recorded balances that are denominated in a
currency other than the functional currency of B.H. Acquisition are adjusted to
reflect the current exchange rate. Revenue and expense items are translated into
U.S. dollars at average rates of exchange for the years. The resulting exchange
gains or losses are included in net income.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company is exposed to market risk from changes in interest rates. At
June 30, 2004, the Company had cash and cash equivalents of approximately $62.4
million in interest bearing accounts (interest at floating rates) and
approximately $4.1 million of short-term certificates of deposit (interest at
fixed rates). Accordingly, each one percent change in market interest rates
would change interest income by approximately $665,000 per year. 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, 2004 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.

     The Company is also exposed to foreign currency risk through its holdings
in partially owned equity affiliates and their subsidiaries. Foreign currency
risk is the risk that the Company will incur economic losses due to adverse
changes in foreign currency exchange rates. These entities conduct business in a
variety of foreign (non-U.S.) currencies, the principal exposures being in Euros
and British pounds. Assets and liabilities denominated in foreign currencies are
exposed to risk stemming from changes in currency exchange rates. Exchange rate
fluctuations impact the Company's and its partially owned equity affiliates'
reported consolidated financial condition, results of operations and cash flows
from year to year.

ITEM 4.  CONTROLS AND PROCEDURES

     As required by Securities and Exchange Commission ("SEC") rules, the
Company has evaluated the effectiveness of the design and operation of its
disclosure controls and procedures as of the end of the period covered by this
quarterly report. This evaluation was carried out under the supervision and with
the participation of the Company's management, including its principal executive
officer and principal financial officer. Based on this evaluation, these
officers have concluded that the design and operation of the Company's
disclosure controls and procedures are effective. There were no changes to the
Company's internal controls over financial reporting during the period covered
by this report that materially affected, or are reasonably likely to materially
affect, the Company's internal controls over financial reporting subsequent to
the date of their evaluation.

     Disclosure controls and procedures are the Company's controls and other
procedures that are designed to ensure that information required to be disclosed
by the Company in the reports that it files or submits under the Exchange Act,
is recorded, processed, summarized and reported, within the time periods
specified in SEC rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act are accumulated and communicated to the Company's
management, including its principal executive officer and principal financial
officer, as appropriate, to allow timely decisions regarding required
disclosure.

                                        22
<PAGE>

                                    PART II

                               OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     In May 2004, Mr. Jeffrey S. Halis, a former director of the Company,
exercised options to acquire 25,000 shares of the Company's common stock at an
exercise price of $10.8125 per share and 15,000 shares of the Company's common
stock at an exercise price of $18.90 per share. In addition, 12,156 shares of
the Company's common stock were issued to Mr. Halis pursuant to the terms of the
Deferred Compensation and Stock Plan for Non-Employee Directors. The foregoing
purchases, sales and issuances were exempt from registration under the
Securities Act of 1933, as amended, pursuant to Section 4(2) thereof, on the
basis that the transactions did not involve a public offering. The total
proceeds from Mr. Halis' option exercises of approximately $555,000 will be used
to fund current operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     The Company held its Annual Meeting of Shareholders on May 21, 2004.
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 2007 annual meeting
     of shareholders:

<Table>
<Caption>
                                                                           VOTES
NOMINEE                                                       VOTES FOR   WITHHELD
-------                                                       ---------   --------
<S>                                                           <C>         <C>
J. Christopher Flowers......................................  5,014,816    74,398
Gregory L. Curl.............................................  5,048,621    40,593
Paul J. Collins.............................................  5,048,595    40,619
</Table>

          In addition to Messrs. Flowers, Curl and Collins, 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 2005 while
     Messrs. Armstrong and Davis' terms expire in the year 2006.

          (2) To ratify the appointment of Deloitte & Touche LLP as independent
     auditors for the year ended December 31, 2004. Votes cast were: 5,000,095
     for, 1,373 against and 87,746 abstentions.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

<Table>
<Caption>
REFERENCE
 NUMBER                             DESCRIPTION OF EXHIBITS
---------                           -----------------------
<S>         <C>   <C>
   2.1      --    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).
   2.2      --    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).
   2.3      --    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).
   2.4      --    Share Sale and Purchase Agreement, dated as of March 31,
                  2000, between PetroFina S.A., 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).
</Table>

                                        23
<PAGE>

<Table>
<Caption>
REFERENCE
 NUMBER                             DESCRIPTION OF EXHIBITS
---------                           -----------------------
<S>         <C>   <C>
   2.5      --    Share Purchase and Capital Commitment Agreement, dated as of
                  October 1, 2001, between the Company, Castlewood Holdings,
                  Trident, Marsh & McLennan Capital Professionals Fund, L.P.,
                  Marsh & McLennan Employees' Securities Company, L.P. and the
                  other parties thereto (incorporated by reference to Exhibit
                  2.1 to the Current Report on Form 8-K, dated December 13,
                  2001).
   2.6      --    Amendment No. 1 and Waiver of Certain Closing Conditions to
                  the Share Purchase and Capital Commitment Agreement, dated
                  as of November 29, 2001 (incorporated by reference to
                  Exhibit 2.2 to the Current Report on Form 8-K, dated
                  December 13, 2001).
   2.7      --    Agreement Relating to the Sale and Purchase of the Entire
                  Issued Share Capital of Toa-UK, dated as of March 28, 2003,
                  between The Toa Reinsurance Company, Limited, Castlewood
                  Holdings and Shinsei (incorporated by reference to Exhibit
                  2.1 to the Current Report on Form 8-K, dated April 11,
                  2003).
   2.8      --    Purchase and Sale Agreement, dated March 10, 2004, by and
                  among J.C. Flowers I L.P., JCF CFN LLC, JCF CFN II LLC, JCF
                  AIV II LP, JCF AIV III LP, JCF Associates I LLC and FIT CFN
                  Holdings LLC (incorporated by reference to Exhibit 99.2 to
                  the Current Report on Form 8-K, dated March 23, 2004).
   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 on May 20, 1999
                  (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 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).
  31.1      --    Certification of Chief Executive Officer pursuant to Rule
                  13a -- 14(a) or Rule 15d -- 14(a) of the Securities Exchange
                  Act of 1934 as adopted under Section 302 of the
                  Sarbanes-Oxley Act of 2002.
  31.2      --    Certification of Chief Financial Officer pursuant to Rule
                  13a -- 14(a) or Rule 15d -- 14(a) of the Securities Exchange
                  Act of 1934 as adopted under Section 302 of the
                  Sarbanes-Oxley Act of 2002.
  32.1      --    Certification of Chief Executive Officer pursuant to 18
                  U.S.C. Section 1350, as adopted pursuant to Section 906 of
                  the Sarbanes-Oxley Act of 2002.
  32.2      --    Certification of Chief Financial Officer pursuant to 18
                  U.S.C. Section 1350, as adopted pursuant to Section 906 of
                  the Sarbanes-Oxley Act of 2002.
  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
                  15, 2004).
</Table>

     (b) Reports on Form 8-K

     There were no reports filed on Form 8-K for the quarter ended June 30,
2004.

                                        24
<PAGE>

                                   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 9, 2004

                                        25