Highlights for the quarter ended March
31, 2014
- Annualized operating return on common equity(1) of 12.6%
compared to 9.8% in the first quarter of 2013;
- Record net operating earnings (1) of $25.6 million, or $0.34
per diluted common share compared with net operating earnings of
$21.1 million, or $0.29 per diluted common share in the first
quarter of 2013;
- Net premiums written increased 3.0% to $709.9 million for the
first quarter of 2014 compared to the same period last year;
excluding the cancelled National General Holdings Quota Share, the
underlying growth rate was 16.0%;
- Combined ratio(11) of 97.7% compared to 97.5% in the first
quarter of 2013;
- Net investment income was $27.8 million, an increase of 26.7%
compared to the first quarter of 2013;
- Book value per common share(4) of $11.47, increased 3.0% versus
December 31, 2013 reflecting the impact of lower interest rates on
Maiden's fixed income investment portfolio at the end of the
quarter; and
- On January 15, 2014, Maiden redeemed all outstanding 14% coupon
junior subordinated debt ("TRUPs"); the redemption reduced net
income by a one-time non-cash charge of $28.2 million.
Maiden Holdings, Ltd. (Nasdaq: MHLD) ("Maiden" or "the Company")
today reported record first quarter 2014 net operating earnings(1)
of $25.6 million, or $0.34 per diluted common share compared with
$21.1 million, or $0.29 per diluted common share in the first
quarter of 2013. In the first quarter of 2014, net income was $2.1
million compared to net income of $28.1 million in the first
quarter of 2013, impacted by a non-recurring non-cash charge of
$28.2 million, representing the accelerated amortization of both
the original issue discount and issuance costs associated with the
TRUPs.
Commenting on the Company's results, Art Raschbaum, Chief
Executive Officer of Maiden, said: "Maiden's record operating
profit in the first quarter of 2014 clearly demonstrates the
Company's enhanced earnings power following the redemption of the
14% TRUPs in mid-January. Net investment income was also a
quarterly record for Maiden as our invested asset base reflects
continued growth. Written premium growth in our Diversified and
AmTrust segments for the quarter was strong and notwithstanding the
elevated level of non-cat property losses in the first quarter from
our U.S. Diversified segment, underwriting results remain solidly
profitable. On balance, we are pleased with business
performance for the quarter. Importantly, we remain
true to our specialist, lower volatility, non-catastrophe oriented
reinsurance business model, which is uniquely designed to serve the
reinsurance capital needs of small to mid-sized insurers."
Results for the quarter ended March 31,
2014
Net operating earnings(1) for the first quarter of 2014 were
$25.6 million, or $0.34 per diluted common share compared with
$21.1 million, or $0.29 per diluted common share in the first
quarter of 2013. Net income was $2.1 million compared to net
income of $28.1 million in the first quarter of 2013.
In the first quarter of 2014, net premiums written totaled
$709.9 million, an increase of 3.0% compared to the first quarter
of 2013. The Diversified Reinsurance segment's net premiums
written totaled $291.6 million, an increase of 9.0% versus the
first quarter of 2013. The growth in the Diversified
Reinsurance segment's premium was the result of expanding existing
client relationships as well as increased new business. In the
AmTrust Quota Share Reinsurance segment, net premiums written
increased by 21.5% to $419.0 million compared to the first quarter
of 2013, driven primarily by worker's compensation, which continues
to experience a strong rate environment and increased
payrolls. The limited net premiums written in the NGHC Quota
Share segment reflects the cancellation of that contract as of
August 1, 2013.
Net premiums earned of $519.2 million increased 6.3%, or $30.8
million compared to the first quarter of 2013. Earned
premiums increased 1.6% in the Diversified Reinsurance segment to
$199.3 million compared to the first quarter of 2013. The AmTrust
Quota Share Reinsurance segment earned premiums were up $84.6
million or 38.4% to $304.9 million compared to the first quarter of
2013. The NGHC Quota Share segment net premiums earned were
$15.0 million in the first quarter of 2014, down 79.2% compared to
the first quarter of 2013, reflecting the mutually agreed
cancellation of the NGHC quota share reinsurance contract as of
August 1, 2013.
Net investment income of $27.8 million in the first quarter of
2014 increased 26.7% compared to the first quarter of
2013. The average yield on the fixed income portfolio
(excluding cash) is 3.57% with an average duration of 4.8
years.
Net loss and loss adjustment expenses of $351.3 million were up
$16.4 million compared to the first quarter of 2013. The
loss ratio(7) decreased by 0.8 percentage points to 67.0% versus
the first quarter of 2013.
Commission and other acquisition expenses including general and
administrative expenses increased $14.6 million to $161.0 million
in the first quarter of 2014, compared to the year ago quarter,
while the total expense ratio(10) rose to 30.7% for the first
quarter of 2014 compared with 29.7% in the same quarter last year,
with business mix attributable to the difference. General and
administrative expenses for the first quarter of 2014 totaled $14.9
million compared with $14.1 million in the first quarter of 2013.
The general and administrative expense ratio(9) dropped to 2.8% in
the first quarter of 2014 versus 2.9% in the first quarter of
2013.
The combined ratio(11) for the first quarter of 2014 totaled
97.7% compared with 97.5% in the first quarter of 2013. The
Diversified Reinsurance segment experienced an unusual frequency of
unrelated non-catastrophe property losses during the quarter, which
drove the combined ratio in that segment to increase to 99.4%
compared to 97.5% in the first quarter of 2013. The AmTrust
Quota Share Reinsurance segment reported a combined ratio of 95.3%
in the first quarter of 2014 compared to 95.9% in the first quarter
of 2013.
Total assets increased 3.3% to $4.9 billion at March 31, 2014
compared to $4.7 billion at year-end 2013. Shareholders'
equity was $1.2 billion, up 2.3% compared to
December 31, 2013. Book value per common share was
$11.47 at the end of the first quarter of 2014 or 3.0% higher than
at December 31, 2013.
During the first quarter of 2014, the Board of Directors
declared dividends of $0.11 per common share, $0.515625 per Series
A preference share and $0.90625 per Series B preference share.
(1)(4) Please see the Non-GAAP Financial Measures table for
additional information on these non-GAAP financial measures and
reconciliation of these measures to GAAP measures.
(7)(9)(10)(11) Loss ratio, general and administrative expense
ratio, expense ratio and combined ratio are operating metrics.
Please see the additional information on these measures under
Segment information tables.
Conference Call
Maiden's CEO Art Raschbaum and CFO John Marshaleck will review
these results tomorrow morning via teleconference and live audio
webcast beginning at 8:30 a.m. ET.
To participate in the conference call, please access one of the
following at least five minutes prior to the start time:
U.S. Callers: 1.877.734.5373 |
Outside U.S. Callers: 1.973.200.3059 |
Passcode: 30737359 |
Webcast:
http://www.maiden.bm/presentations_conferences |
A replay of the conference call will be available beginning at
11:30 a.m. ET on May 8, 2014 through midnight on May 15, 2014. To
listen to the replay, please dial toll free: 1.855.859.2056 (U.S.
Callers) or toll: 1.404.537.3406 (callers outside the U.S.) and
enter the Passcode: 30737359; or access
http://www.maiden.bm/presentations_conferences
About Maiden Holdings, Ltd.
Maiden Holdings, Ltd. is a Bermuda-based holding company formed
in 2007. Through its subsidiaries, which are each A- rated
(excellent) by A.M. Best, the Company is focused on providing
non-catastrophic, customized reinsurance products and services to
small and mid-size insurance companies in the United States and
Europe. As of March 31, 2014, Maiden had $4.9 billion in
assets and shareholders' equity of $1.2 billion.
The Maiden Holdings, Ltd. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5006
Forward Looking Statements
This release contains "forward-looking statements" which are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. The forward-looking
statements are based on the Company's current expectations and
beliefs concerning future developments and their potential effects
on the Company. There can be no assurance that actual developments
will be those anticipated by the Company. Actual results may differ
materially from those projected as a result of significant risks
and uncertainties, including non-receipt of the expected payments,
changes in interest rates, effect of the performance of financial
markets on investment income and fair values of investments,
developments of claims and the effect on loss reserves, accuracy in
projecting loss reserves, the impact of competition and pricing
environments, changes in the demand for the Company's products, the
effect of general economic conditions and unusual frequency of
storm activity, adverse state and federal legislation, regulations
and regulatory investigations into industry practices, developments
relating to existing agreements, heightened competition, changes in
pricing environments, and changes in asset valuations. Additional
information about these risks and uncertainties, as well as others
that may cause actual results to differ materially from those
projected is contained in Item 1A. Risk Factors in the Company's
Annual Report on Form 10-K for the year ended December 31, 2013 as
updated in periodic filings with the SEC. The Company undertakes no
obligation to publicly update any forward-looking statements,
except as may be required by law.
Maiden Holdings,
Ltd. |
Balance
Sheet |
(in thousands (000's),
except per share data) |
|
|
|
|
|
|
|
March 31, 2014 |
December 31, 2013 |
|
(Unaudited) |
(Audited) |
Assets |
|
|
Fixed maturities, available-for-sale, at fair
value (Amortized cost 2014: $3,096,675; 2013: $3,127,792) |
$ 3,168,819 |
$ 3,162,067 |
Other investments, at fair value (Cost 2014:
$5,083; 2013: $4,522) |
5,773 |
5,092 |
Total investments |
3,174,592 |
3,167,159 |
Cash and cash equivalents |
72,038 |
139,833 |
Restricted cash and cash equivalents |
151,212 |
77,360 |
Accrued investment income |
25,268 |
25,238 |
Reinsurance balances receivable,
net |
675,219 |
560,145 |
Prepaid reinsurance premiums |
31,870 |
39,186 |
Reinsurance recoverable on unpaid losses |
83,350 |
84,036 |
Loan to related party |
167,975 |
167,975 |
Deferred commission and other acquisition
expenses |
348,716 |
304,908 |
Goodwill and intangible assets, net |
89,794 |
90,613 |
Other assets |
48,522 |
56,926 |
Total
Assets |
$ 4,868,556 |
$ 4,713,379 |
Liabilities
and Equity |
|
|
Liabilities |
|
|
Reserve for loss and loss adjustment
expenses |
$ 2,035,840 |
$ 1,957,835 |
Unearned premiums |
1,218,519 |
1,034,754 |
Accrued expenses and other liabilities |
103,565 |
110,114 |
Senior notes |
360,000 |
360,000 |
Junior subordinated debt |
-- |
126,381 |
Total
Liabilities |
3,717,924 |
3,589,084 |
|
|
|
Equity |
|
|
Preference Shares |
315,000 |
315,000 |
Common shares |
738 |
736 |
Additional paid-in capital |
575,201 |
574,522 |
Accumulated other comprehensive
income |
63,578 |
25,784 |
Retained earnings |
199,506 |
211,602 |
Treasury stock, at cost |
(3,867) |
(3,801) |
Total Maiden Shareholders'
Equity |
1,150,156 |
1,123,843 |
Noncontrolling interest in
subsidiaries |
476 |
452 |
Total
Equity |
1,150,632 |
1,124,295 |
Total Liabilities
and Equity |
$ 4,868,556 |
$ 4,713,379 |
|
|
|
Book value per common
share(4) |
$ 11.47 |
$ 11.14 |
|
|
|
Common shares
outstanding |
72,828,662 |
72,633,561 |
|
|
|
|
|
|
Maiden Holdings,
Ltd. |
Income
Statement |
(in thousands (000's),
except per share data) |
(Unaudited) |
|
|
|
|
For the Three Months |
For the Three Months |
|
Ended March 31,
2014 |
Ended March 31,
2013 |
Revenues: |
|
|
Gross premiums written |
$ 722,382 |
$ 714,720 |
Net premiums written |
$ 709,892 |
$ 689,059 |
Change in unearned premiums |
(190,662) |
(200,617) |
Net premiums
earned |
519,230 |
488,442 |
Other insurance revenue |
5,162 |
5,215 |
Net investment income |
27,842 |
21,979 |
Net realized gains on investment |
88 |
3,283 |
Total
revenues |
552,322 |
518,919 |
Expenses: |
|
|
Net loss and loss adjustment
expenses |
351,344 |
334,895 |
Commission and other acquisition
expenses |
146,082 |
132,330 |
General and administrative expenses |
14,924 |
14,095 |
Total
expenses |
512,350 |
481,320 |
|
|
|
Income from
operations(2) |
39,972 |
37,599 |
|
|
|
Other expenses |
|
|
Amortization of intangible assets |
(819) |
(945) |
Foreign exchange and other gains |
138 |
1,547 |
Interest and amortization expenses |
(8,064) |
(9,570) |
Accelerated amortization of junior
subordinated debt discount and issuance cost |
(28,240) |
-- |
Total other
expenses |
(36,985) |
(8,968) |
|
|
|
Income before income
taxes |
2,987 |
28,631 |
Income tax expense |
926 |
524 |
|
|
|
Net income |
2,061 |
28,107 |
Less: income attributable to noncontrolling
interest |
(39) |
(27) |
Net income attributable to
Maiden |
2,022 |
28,080 |
Dividends on preference shares |
(6,084) |
(3,094) |
Net income (loss) attributable to
Maiden common shareholders |
$ (4,062) |
$ 24,986 |
Net operating earnings attributable
to Maiden common shareholders(1) |
$ 25,553 |
$ 21,052 |
|
|
|
Basic earnings (loss) per common
share attributable to Maiden shareholders |
$ (0.06) |
$ 0.35 |
Diluted earnings (loss) per common
share attributable to Maiden shareholders(6) |
$ (0.06) |
$ 0.34 |
Basic operating earnings per common
share attributable to Maiden shareholders |
$ 0.35 |
$ 0.29 |
Diluted operating earnings per common
share attributable to Maiden shareholders |
$ 0.34 |
$ 0.29 |
|
|
|
Dividends declared per common
share |
$ 0.11 |
$ 0.09 |
|
|
|
Weighted average number of common
shares - basic |
72,708,113 |
72,417,358 |
Adjusted weighted average number of
common shares and assumed conversions - diluted(6) |
84,600,741 |
73,440,372 |
|
|
|
Net loss and loss adjustment expense
ratio(7) |
67.0% |
67.8% |
Commission and other acquisition
expense ratio(8) |
27.9% |
26.8% |
General and administrative
expense ratio(9) |
2.8% |
2.9% |
Expense ratio(10) |
30.7% |
29.7% |
Combined ratio(11) |
97.7% |
97.5% |
Annualized return on common
equity |
(2.0%) |
11.6% |
Annualized operating return on common
equity |
12.6% |
9.8% |
|
|
|
|
|
|
Maiden Holdings,
Ltd. |
Non - GAAP Financial
Measure |
(in thousands (000's),
except per share data) |
(Unaudited) |
|
|
|
|
For the Three Months |
For the Three Months |
|
Ended March 31, 2014 |
Ended March 31, 2013 |
|
|
|
Reconciliation of net income (loss)
attributable to Maiden common shareholders to net operating
earnings: |
|
|
Net income (loss) attributable to Maiden
common shareholders |
$ (4,062) |
$ 24,986 |
Add (subtract) |
|
|
Net realized gains on
investment |
(88) |
(3,283) |
Foreign exchange and other
gains |
(138) |
(1,547) |
Amortization of intangible
assets |
819 |
945 |
Interest expense incurred
related to 7.75% senior notes prior to actual redemption of the
junior subordinated debt |
492 |
-- |
Accelerated amortization of
junior subordinated debt discount and issuance cost |
28,240 |
-- |
Non-cash deferred tax expense
(benefit) |
290 |
(49) |
Net operating earnings attributable to Maiden
common shareholders(1) |
$ 25,553 |
$ 21,052 |
|
|
|
Operating earnings per common share
attributable to Maiden shareholders: |
|
|
|
|
|
Basic earnings per common share attributable
to Maiden shareholders |
$ 0.35 |
$ 0.29 |
Diluted earnings per common share
attributable to Maiden shareholders |
$ 0.34 |
$ 0.29 |
|
|
|
Reconciliation of net income
attributable to Maiden to income from operations: |
|
|
Net income attributable to Maiden |
$ 2,022 |
$ 28,080 |
Add (subtract) |
|
|
Foreign exchange and other
gains |
(138) |
(1,547) |
Amortization of intangible
assets |
819 |
945 |
Interest and amortization
expenses |
8,064 |
9,570 |
Accelerated amortization of
junior subordinated debt discount and issuance cost |
28,240 |
-- |
Income tax expense |
926 |
524 |
Income attributable to
noncontrolling interest |
39 |
27 |
Income from operations(2) |
$ 39,972 |
$ 37,599 |
|
|
|
|
March 31, 2014 |
December 31, 2013 |
Investable assets: |
|
|
Total investments |
$ 3,174,592 |
$ 3,167,159 |
Cash and cash equivalents |
72,038 |
139,833 |
Restricted cash and cash equivalents |
151,212 |
77,360 |
Loan to related party |
167,975 |
167,975 |
Total investable assets(3) |
$ 3,565,817 |
$ 3,552,327 |
|
|
|
|
March 31, 2014 |
December 31, 2013 |
Capital: |
|
|
Preference shares |
$ 315,000 |
$ 315,000 |
Common shareholders' equity |
835,156 |
808,843 |
Total Maiden shareholders'
equity |
1,150,156 |
1,123,843 |
2011 Senior Notes |
107,500 |
107,500 |
2012 Senior Notes |
100,000 |
100,000 |
2013 Senior Notes |
152,500 |
152,500 |
Junior Subordinated Debt |
-- |
126,381 |
Total capital
resources(5) |
$ 1,510,156 |
$ 1,610,224 |
|
(1) Net operating earnings
is a non-GAAP financial measure defined by the Company as net
income (loss) attributable to Maiden common shareholders excluding
realized and unrealized investment gains and losses, foreign
exchange and other gains and losses, amortization of intangible
assets, interest expense incurred related to 7.75% senior notes
prior to actual redemption of the junior subordinated debt,
accelerated amortization of junior subordinated debt discount and
issuance cost and non-cash deferred tax charge and should not be
considered as an alternative to net income. The Company's
management believes that net operating earnings is a useful
indicator of trends in the Company's underlying operations. The
Company's measure of net operating earnings may not be comparable
to similarly titled measures used by other companies. |
|
(2) Income from Operations
is a non-GAAP financial measure defined by the Company as net
income attributable to Maiden excluding foreign exchange and other
gains and losses, amortization of intangible assets, interest and
amortization expenses, accelerated amortization of junior
subordinated debt and issuance cost, income tax expense and
income or loss attributable to noncontrolling interest and should
not be considered as an alternative to net income. The
Company's management believes that income from operations is a
useful measure of the Company's underlying earnings fundamentals
based on its underwriting and investment income before financing
costs. This income from operations enables readers of this
information to more clearly understand the essential operating
results of the Company. The Company's measure of income from
operations may not be comparable to similarly titled measures used
by other companies. |
|
(3) Investable assets is
the total of the Company's investments, cash and cash equivalents
and loan to a related party. |
|
(4) Calculated by dividing
total Maiden shareholders' equity less the preference shares by
total common shares outstanding. |
|
(5) Capital is the total of
the Company's senior notes, junior subordinated debt and Maiden
shareholders' equity. |
|
(6) In calculating the
diluted loss per common share for the three months ended March 31,
2014, the weighted average number of common shares - basic was used
as the effect of share options, restricted shares units and
convertible preference shares were anti-dilutive. |
|
|
|
|
|
|
Maiden Holdings,
Ltd. |
Supplemental Financial
Data - Segment Information |
(in thousands
(000's)) |
(Unaudited) |
|
|
|
|
|
|
Diversified |
AmTrust Quota Share |
|
|
For the Three Months Ended March 31,
2014 |
Reinsurance |
Reinsurance |
NGHC Quota
Share |
Total |
Net premiums written |
$ 291,619 |
$ 419,010 |
$ (737) |
$ 709,892 |
Net premiums earned |
$ 199,316 |
$ 304,922 |
$ 14,992 |
$ 519,230 |
Other insurance revenue |
5,162 |
-- |
-- |
5,162 |
Net loss and loss adjustment expenses |
(141,364) |
(199,544) |
(10,436) |
(351,344) |
Commissions and other acquisition
expenses |
(50,841) |
(90,485) |
(4,756) |
(146,082) |
General and administrative expenses |
(10,990) |
(548) |
(199) |
(11,737) |
Underwriting income
(loss) |
$ 1,283 |
$ 14,345 |
$ (399) |
$ 15,229 |
|
|
|
|
|
Reconciliation to net
income |
|
|
|
|
Net investment income and realized gains on
investment |
|
|
|
27,930 |
Amortization of intangible assets |
|
|
|
(819) |
Foreign exchange and other gains |
|
|
|
138 |
Interest and amortization expenses |
|
|
|
(8,064) |
Accelerated amortization of junior
subordinated debt discount and issuance cost |
|
|
|
(28,240) |
Other general and administrative
expenses |
|
|
|
(3,187) |
Income tax expense |
|
|
|
(926) |
Net income |
|
|
|
$ 2,061 |
|
|
|
|
|
Net loss and loss adjustment expense
ratio(7) |
69.1% |
65.4% |
69.6% |
67.0% |
Commission and other acquisition expense
ratio(8) |
24.9% |
29.7% |
31.7% |
27.9% |
General and administrative expense
ratio(9) |
5.4% |
0.2% |
1.4% |
2.8% |
Combined ratio(11) |
99.4% |
95.3% |
102.7% |
97.7% |
|
|
|
|
|
|
|
|
|
|
|
Diversified |
AmTrust Quota Share |
|
|
For the Three Months Ended March 31,
2013 |
Reinsurance |
Reinsurance |
NGHC Quota
Share |
Total |
Net premiums written |
$ 267,610 |
$ 344,818 |
$ 76,631 |
$ 689,059 |
Net premiums earned |
$ 196,249 |
$ 220,288 |
$ 71,905 |
$ 488,442 |
Other insurance revenue |
5,215 |
-- |
-- |
5,215 |
Net loss and loss adjustment expenses |
(140,763) |
(145,645) |
(48,487) |
(334,895) |
Commissions and other acquisition
expenses |
(44,782) |
(65,132) |
(22,416) |
(132,330) |
General and administrative expenses |
(10,798) |
(489) |
(174) |
(11,461) |
Underwriting income |
$ 5,121 |
$ 9,022 |
$ 828 |
$ 14,971 |
|
|
|
|
|
Reconciliation to net
income |
|
|
|
|
Net investment income and realized gains on
investment |
|
|
|
25,262 |
Amortization of intangible assets |
|
|
|
(945) |
Foreign exchange and other gains |
|
|
|
1,547 |
Interest and amortization expenses |
|
|
|
(9,570) |
Other general and administrative
expenses |
|
|
|
(2,634) |
Income tax expense |
|
|
|
(524) |
Net income |
|
|
|
$ 28,107 |
|
|
|
|
|
Net loss and loss adjustment expense
ratio(7) |
69.9% |
66.1% |
67.4% |
67.8% |
Commission and other acquisition expense
ratio(8) |
22.2% |
29.6% |
31.2% |
26.8% |
General and administrative expense
ratio(9) |
5.4% |
0.2% |
0.2% |
2.9% |
Combined ratio(11) |
97.5% |
95.9% |
98.8% |
97.5% |
|
|
|
|
|
(7) Calculated by dividing net
loss and loss adjustment expenses by the sum of net premiums earned
and other insurance revenue. |
(8) Calculated by dividing
commission and other acquisition expenses by the sum of net
premiums earned and other insurance revenue. |
(9) Calculated by dividing
general and administrative expenses by the sum of net premiums
earned and other insurance revenue. |
(10) Calculated by adding
together the commission and other acquisition expense ratio and
general and administrative expense ratio. |
(11) Calculated by adding
together the net loss and loss adjustment expense ratio and expense
ratio. |
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CONTACT: Noah Fields, Vice President, Investor Relations
Maiden Holdings, Ltd.
Phone: 441.298.4927
E-mail: nfields@maiden.bm
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