A.M. Best has upgraded the financial strength rating
(FSR) to A (Excellent) from A- (Excellent) and the issuer credit
ratings (ICR) to “a” from “a-” for Maiden Reinsurance Ltd.
and its reinsured affiliate, Maiden Reinsurance North America,
Inc. (headquartered in Mount Laurel, NJ) (collectively referred
to as Maiden Re). The companies are subsidiaries of Maiden
Holdings, Ltd. (Maiden Holdings) [NASDAQ:MHLD] All companies
are headquartered in Hamilton, Bermuda, unless otherwise specified.
A.M. Best also has upgraded the ICRs to “bbb” from “bbb-” for
Maiden Holdings and its subsidiary, Maiden Holdings North
America, Ltd. (MHNA) (Delaware), whose debt is fully and
unconditionally guaranteed by Maiden Holdings. The issue and
indicative issue ratings of Maiden Holdings and MHNA also have been
upgraded. The outlooks have been revised to stable from positive.
(See below for a detailed listing of companies and ratings.)
The rating upgrades reflect Maiden Re’s consistently profitable
underwriting and operating performance within its niche market
segments. Returns have improved in recent years, as the company’s
growing book of business has generated results in-line with
historical levels and as Maiden Holdings has successfully lowered
its financing costs. Maiden Re’s business primarily consists of
proportional reinsurance in working layers, which affords it a
greater ability to price due to the relatively low severity but
higher frequency of the losses it assumes.
This produces greater accuracy in pricing and reserving. The
results also benefit from limited exposure to shock losses,
although its combined ratio therefore, has not benefited from the
relatively benign catastrophe environment in recent years. The
ratings also acknowledge Maiden Re’s strong risk-adjusted
capitalization, due, in part, to capital contributions from its
ultimate parent, Maiden Holdings, and the operational benefits that
Maiden Re derives as a quota share partner with a related party,
AmTrust International Insurance, Ltd. (AII), the Bermuda
reinsurance subsidiary of AmTrust Financial Services, Inc.
(AmTrust).
Partially offsetting these positive rating factors is the
continued execution risk Maiden Holdings faces in achieving its
business plans given the continuing competitive environment in its
core reinsurance markets and its client concentration, as the AII
business accounted for approximately 70% of the group’s 2015 total
net premiums written. In addition, the 2015 results of the
Diversified Reinsurance segment deteriorated from prior years,
driven by adverse development of loss reserves associated with its
commercial auto book. The favorable results of the AII business
offset the impact, and the group posted favorable underwriting
results overall, demonstrating the benefits derived from the
relationship with AII.
Maiden Holdings’ adjusted debt-to-total capital, excluding
accumulated other comprehensive income (AOCI) of 27.1% and adjusted
debt-to-total tangible capital (excluding AOCI) of 28.4% at June
30, 2016, was within A.M. Best’s guidelines. Financial leverage
will decline following the mandatory conversion of the company’s
Series A preference shares to common equity in September 2016.
Interest coverage also is within A.M. Best’s tolerances, although
modestly below expectations for the rating level.
Although A.M. Best does not expect positive rating actions in
the near term, they could take place in the mid-to-long term if
Maiden Re’s underwriting and operating results consistently
outperform higher-rated peers while maintaining similar or better
levels of risk-adjusted capital. Negative rating actions could
result from deterioration in the group’s operating or underwriting
performance; from a change in the group’s relationship with its
largest client, AmTrust; or from deterioration in the financial
condition of the group’s ultimate parent, Maiden Holdings.
The FSR has been upgraded to A (Excellent) from A- (Excellent)
and the ICRs have been upgraded to “a” from “a-” for Maiden
Reinsurance Ltd. and Maiden Reinsurance North America,
Inc.
The ICRs have been upgraded to “bbb” from “bbb-”for Maiden
Holdings, Ltd. and Maiden Holdings North America,
Ltd.
The following issue ratings have been upgraded:
Maiden Holdings, Ltd.—
-- to “bbb” from “bbb-” on $110 million 6.625% senior unsecured
notes, due 2046
-- to “bb+” from “bb” on $165 million 7.25% preferred stock
-- to “bb+” from “bb” on $165 million 7.125% preferred
non-cumulative stock
-- to “bb+” from “bb” on $150 million 8.25% preferred stock
Maiden Holdings North America, Ltd.—
-- to “bbb” from “bbb-” on $100 million 8.0% senior unsecured
notes, due 2042
-- to “bbb” from “bbb-” on $152.5 million 7.75% senior unsecured
notes, due 2043
The following indicative issue ratings have been upgraded:
Maiden Holdings, Ltd.—
-- to “bbb” from “bbb-“ on senior unsecured debt
-- to “bbb-” from “bb+” on subordinated debt
-- to “bb+” from “bb” on preferred stock
Maiden Holdings North America, Ltd.—
-- to “bbb” from “bbb-” on senior unsecured debt
-- to “bbb-” from “bb+” on senior subordinated debt
-- to “bb+” from “bb” on junior subordinated debt
This press release relates to rating(s) that have been
published on A.M. Best’s website. For all rating information
relating to the release and pertinent disclosures, including
details of the office
responsible for issuing each of the individual ratings
referenced in this release, please see A.M. Best’s Recent
Rating Activity web page.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating
Services, Inc. ALL RIGHTS RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20160901006565/en/
A.M. BestJennifer Marshall, +1 908 439 2200, ext.
5327Assistant Vice
Presidentjennifer.marshall@ambest.comorChristopher Sharkey,
+1 908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorMichael
Lagomarsino, CFA, FRM, +1 908 439 2200, ext. 5810Vice
Presidentmichael.lagomarsino@ambest.comorJim Peavy, +1
908-439-2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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