Recently Completed LPT/ADC with Enstar and
Additional Strategic Transactions Materially Strengthen Capital
Position
Maiden Holdings, Ltd. (NASDAQ: MHLD) ("Maiden" or the "Company")
today reported a second quarter 2019 net loss attributable to
Maiden common shareholders of $15.4 million or $0.19 per diluted
common share, compared to a net loss attributable to Maiden common
shareholders of $5.9 million or $0.07 per diluted common share in
the second quarter of 2018. The non-GAAP operating loss(11) was
$22.0 million, or $0.27 per diluted common share compared with
$18.5 million, or $0.22 per diluted common share in the second
quarter of 2018.
Maiden's book value per common share(1) was $1.51 at June 30,
2019, an increase of 39.8% from December 31, 2018.
Lawrence F. Metz, Maiden’s President and Chief Executive Officer
said, “Our balance sheet continued to stabilize in the second
quarter and this improvement, combined with the strategic
transactions announced on August 5, further advance Maiden’s
recovery. While work remains to further reduce expenses and return
to operating profitability, we continue to make steps toward the
objective of building shareholder value.”
Patrick J. Haveron, Maiden’s Chief Financial Officer and Chief
Operating Officer added, “We expect our solvency ratios to continue
to improve throughout 2019 and beyond, reflecting the cumulative
effect of the strategic measures we have implemented to materially
strengthen our capital position. Restoring a very strong capital
position remains our primary objective and we continue to evaluate
how to further advance our progress.”
Strategic Transactions
On August 5, 2019, the Company announced it had entered into a
series of strategic transactions which have materially improved its
capital position. The transactions completed include:
- A loss portfolio transfer and adverse development cover
agreement (“LPT/ADC”) with Enstar Group Limited (NASDAQ: ESGR,
“Enstar”) pursuant to the previously announced Master
Agreement;
- A $330.7 million commutation agreement (“Commutation”) of
certain workers’ compensation loss reserves to AmTrust Financial
Services, Inc. (“AmTrust”);
- Entry into a Post-Termination Endorsement with AmTrust to:
- Enable operation of the LPT/ADC and supporting collateral
agreements; and
- Amend the program loss corridor between Maiden and AmTrust
pursuant to the terminated Amended and Restated Quota Share
Agreement (the “AmTrust QS Agreement”) between Maiden’s Bermuda
operating company, Maiden Reinsurance Ltd. (“Maiden Bermuda”) and
AmTrust International Insurance, Ltd. (“AII”); and
- Resolution with Enstar related to balances due under the sale
of Maiden Reinsurance North America, Inc. (“MRNA”), which closed on
December 27, 2018, including cancellation of the $25 million excess
of loss reinsurance contract between Maiden Bermuda and Enstar on
the MRNA loss reserves included in that transaction.
Additional information regarding the strategic transactions the
Company has entered into can be found in the Company’s Quarterly
Report on Form 10-Q filing made on August 9, 2019.
Consolidated Results for the Quarter
Ended June 30, 2019
Net loss attributable to Maiden common shareholders for the
three months ended June 30, 2019 was $15.4 million compared to a
net loss of $5.9 million for the same period in 2018. The higher
net loss for the three months ended June 30, 2019 compared to the
same period in 2018 was primarily due to the following:
- Net loss from discontinued operations of $18.7 million compared
to net income from discontinued operations of $8.2 million for the
same period in 2018 largely as a result of the Settlement and
Commutation Agreement regarding the sale of MRNA entered into by
Maiden and Enstar on July 31, 2019 which caused a non-recurring net
additional loss of $16.7 million to be recognized;
- Net income from continuing operations of $3.3 million compared
to net loss from continuing operations of $5.5 million for the same
period in 2018 largely due to the following factors:
- realized gains on investment of $24.1 million for the three
months ended June 30, 2019 compared to realized losses of $0.4
million for the same period in 2018;
- no dividends paid to preference shareholders for the three
months ended June 30, 2019 compared to $8.5 million for the same
period in 2018 as the Company’s Board of Directors did not declare
dividends on any of our preference shares during 2019; offset
by,
- an underwriting loss of $39.1 million compared to $32.0 million
in the same period in 2018. The deterioration in the underwriting
result was principally due to the impact of:
- higher initial loss ratios on premiums earned during the period
within the AmTrust Reinsurance segment (which excludes the
Terminated Business (as defined in the Quarterly Report on Form
10-Q for the quarter ended June 30, 2019) under the Partial
Termination Amendment);
- higher ceding commission payable of $6.5 million for the
remaining in-force business immediately prior to January 1, 2019
which increased by five percentage points (excluding Terminated
Business) and related unearned premium as of January 1, 2019 under
the Partial Termination Amendment with AmTrust; and
- adverse prior year loss development of $26.0 million or 19.3
percentage points in the second quarter of 2019 compared to adverse
prior year loss development of $28.2 million or 5.6 percentage
points during the same period in 2018.
In the second quarter of 2019, gross premiums written were $2.1
million, compared to $521.5 million in the prior year quarter,
primarily due to the termination of both quota share contracts in
the AmTrust Reinsurance segment and the return of unearned premiums
on certain lines covered by the Partial Termination Agreement with
AmTrust. As previously reported, both terminations were effective
January 1, 2019. Net premiums earned were $134.0 million in the
second quarter of 2019, compared to $504.4 million in the second
quarter of 2018 due to the combined impact of the terminated quota
share contracts within the AmTrust Reinsurance segment and
non-renewals in Maiden Bermuda's European Capital Solutions
business and a reduction in the German Auto programs produced by
the Company's IIS unit within its Diversified Reinsurance
segment.
During the second quarter of 2019, net investment income
decreased modestly to $31.1 million from $34.3 million in the
second quarter of 2018 largely due to the decline in average yield
to 3.1% from 3.3% in the same period in 2018. The realized gains of
$24.1 million for the three months ended June 30, 2019 were
primarily due to sales of corporate bonds during the second quarter
in anticipation of completing and funding the LPT/ADC with
Enstar.
During the second quarter of 2019, net loss and loss adjustment
expenses decreased to $121.6 million from $370.0 million in the
second quarter of 2018, primarily as a result of lower earned
premiums within the AmTrust Reinsurance segment. The second quarter
of 2019 loss ratio(6) was 90.2% compared to 73.1% reported in the
second quarter of 2018, which increased primarily due to a
significant change in the mix of business resulting from the
Partial Termination Amendment with AmTrust and the termination of
both AmTrust quota share contracts effective January 1, 2019. Prior
year adverse loss development was $26.0 million for the second
quarter of 2019, compared to $28.2 million for the same period in
2018.
Commission and other acquisition expenses decreased to $49.7
million in the second quarter of 2019, from $162.8 million in the
second quarter of 2018 due to significantly lower earned premiums
resulting from the terminations in the AmTrust Reinsurance segment.
The commission and other acquisition expense ratio(7) increased 4.8
points to 36.9% for the second quarter of 2019 from 32.1% for the
same period in 2018 as a result of the additional ceding commission
agreed under the Partial Termination Amendment with AmTrust.
General and administrative expenses for the second quarter of
2019 decreased to $12.8 million, compared to $14.9 million in the
second quarter of 2018. Non-recurring expenses were $3.0 million
during the second quarter of 2019, primarily related to salaries
and related benefits for headcount reductions occurring in 2019.
The general and administrative expense ratio(8) in the second
quarter of 2019 increased to 9.5% from 2.9% in the second quarter
of 2018 primarily as a result of lower earned premiums, while the
total expense ratio(9) was 46.4% in the second quarter of 2019
compared with 35.0% for the same period in 2018.
As a result of the above factors, the combined ratio(10) for the
second quarter of 2019 increased to 136.6%, compared with 108.1% in
the second quarter of 2018.
Consolidated Results for the Six Months
Ended June 30, 2019
Net loss attributable to Maiden common shareholders for the six
months ended June 30, 2019 was $52.0 million compared to net income
of $7.8 million for the same period in 2018. The net decrease in
results for the six months ended June 30, 2019 compared to the same
period in 2018 was primarily due to the following:
- Net loss from discontinued operations of $22.1 million compared
to net income from discontinued operations of $18.2 million for the
same period in 2018 largely as a result of the Settlement and
Commutation Agreement entered into by Maiden and Enstar on July 31,
2019 which caused a non-recurring net additional loss of $16.7
million to be recognized;
- Net loss from continuing operations of $30.0 million compared
to net income from continuing operations of $6.8 million for the
same period in 2018 largely due to the following factors:
- an underwriting loss of $81.9 million compared to $36.7 million
in the same period in 2018. The deterioration in the underwriting
result was principally due to the impact of:
- higher initial loss ratios on current year premiums earned
during the period within the AmTrust Reinsurance segment (which
excludes the Terminated Business under the Partial Termination
Amendment);
- higher ceding commission payable of $14.1 million for the
remaining in-force business immediately prior to January 1, 2019,
which increased by five percentage points (excluding Terminated
Business) and related unearned premium as of January 1, 2019 under
the Partial Termination Amendment with AmTrust; and
- adverse prior year loss development of $33.3 million or 10.5
percentage points in the first half of 2019 compared to $38.0
million or 3.7 percentage points during the same period in
2018.
The unfavorable movements in results of operations were
primarily offset by the following:
- No dividends paid to preference shareholders for the six months
ended June 30, 2019 compared to $17.1 million for the same period
in 2018 as the Company’s Board of Directors did not declare
dividends on any of our preference shares during 2019; and
- Realized gains on investment of $13.0 million for the six
months ended June 30, 2019 compared to realized losses of $0.1
million for the same period in 2018.
During the six months ended June 30, 2019, gross premiums
written were $(559.0) million compared to $1.14 billion for the
same period in the prior year primarily due to the termination of
both quota share contracts in the AmTrust Reinsurance segment and
the return of unearned premiums on certain lines covered by the
Partial Termination Agreement with AmTrust. As previously reported,
both terminations were effective January 1, 2019. Net premiums
earned were $317.1 million during the six months ended June 30,
2019, compared to $1.02 billion for the same period in 2018 due to
the combined impact of the terminated quota share contracts within
the AmTrust Reinsurance segment as well as the reduction in the
German Auto programs produced by the Company's IIS unit within its
Diversified Reinsurance segment.
During the six months ended June 30, 2019, net investment income
decreased modestly to $63.1 million from $67.1 million for the same
period in 2018 largely due to the decline in average yield to 3.1%
from 3. 3% for the same period in 2018. The realized gains of $13.0
million for the six months ended June 30, 2019 were primarily
driven by sales of corporate bonds during the second quarter in
anticipation of completing and funding the LPT/ADC with Enstar,
partially offset by net investment losses realized on the non-cash
transfer of corporate and other debt securities in the first
quarter of 2019 related to the Partial Termination Amendment with
AmTrust and the conversion of a portion of reinsurance trust assets
held as collateral into funds withheld receivable.
During the six months ended June 30, 2019, net loss and loss
adjustment expenses decreased to $274.3 million from $723.2 million
for the same period in 2018, primarily as a result of lower earned
premiums within the AmTrust Reinsurance segment. During the six
months ended June 30, 2019, the loss ratio(6) was 86.1% compared to
70.4% reported for the same period in 2018, which increased
primarily due to a significant change in the mix of business
resulting from the Partial Termination Amendment with AmTrust.
Prior year adverse loss development was $33.3 million for the first
half of 2019, compared to $38.0 million for the same period in
2018.
Commission and other acquisition expenses decreased to $119.3
million during the six months ended June 30, 2019, from $329.4
million for the same period in 2018 due to significantly lower
earned premiums resulting from the terminations in the AmTrust
Reinsurance segment. The commission and other acquisition expense
ratio(7) increased 5.4 points to 37.5% for the six months ended
June 30, 2019 from 32.1% for the same period in 2018 as a result of
the additional ceding commission agreed under the Partial
Termination Amendment with AmTrust.
General and administrative expenses for the six months ended
June 30, 2019 decreased to $28.8 million, compared to $30.5 million
for the same period in 2018. Non-recurring expenses were $6.0
million during the six months ended June 30, 2019, primarily
related to salaries and related benefits for headcount reductions
occurring in 2019. The general and administrative expense ratio(8)
for the six months ended June 30, 2019 increased to 9.0% from 3.0%
for the same period in 2018 as a result of lower earned premiums,
while the total expense ratio(9) was 46.5% in the six months ended
June 30, 2019 compared with 35.1% for the same period in 2018.
As a result of the above factors, the combined ratio(10) for the
six months ended June 30, 2019 increased to 132.6%, compared with
105.5% for the same period in 2018.
Additional information regarding the Company’s results of
operations can be found in the Company’s Quarterly Report on Form
10-Q filing made on August 9, 2019.
Quarterly Dividends
The Company's Board of Directors did not authorize any quarterly
dividends related to either its common shares or any series of its
preferred shares. Additional information regarding the Company’s
dividends can be found in the Company’s Quarterly Report on Form
10-Q filing made on August 9, 2019.
Other Financial Matters
Total assets were $4.6 billion at June 30, 2019, compared to
$5.3 billion at December 31, 2018. Shareholders' equity was $590.6
million at June 30, 2019, compared to $554.3 million at December
31, 2018.
About Maiden Holdings,
Ltd.
Maiden Holdings, Ltd. is a Bermuda-based holding company formed
in 2007.
(1)(11) 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.
(6)(7)(8)(9)(10) Loss ratio, commission and other acquisition
expense ratio, general and administrative expense ratio, expense
ratio and combined ratio are non-GAAP operating metrics. Please see
the additional information on these measures under Non-GAAP
Financial Measures tables.
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, 2018 as
updated in periodic filings with the SEC. However these factors
should not be construed as exhaustive. Forward-looking statements
speak only as of the date they are made and the Company undertakes
no obligation to update or revise any forward-looking statement
that may be made from time to time, whether as a result of new
information, future developments or otherwise, except as required
by law.
Maiden Holdings, Ltd.
Consolidated Balance
Sheets
(in thousands (000's), except
per share data)
June 30, 2019
December 31, 2018
(Unaudited)
(Audited)
Assets Fixed maturities, available-for-sale, at fair value
(amortized cost 2019: $2,942,207 ; 2018: $3,109,980)
$
2,971,598
$
3,051,568
Fixed maturities, held-to-maturity, at amortized cost (fair value
2018: $998,012)
-
1,015,681
Other investments, at fair value
28,431
23,716
Total investments
3,000,029
4,090,965
Cash and cash equivalents
82,465
200,841
Restricted cash and cash equivalents
381,698
130,148
Accrued investment income
22,279
27,824
Reinsurance balances receivable, net
67,625
67,308
Loan to related party
167,975
167,975
Deferred commission and other acquisition expenses, net
113,630
388,442
Funds withheld receivable
681,272
27,039
Other assets
15,574
12,443
Assets held for sale
66,009
174,475
Total Assets
$
4,598,556
$
5,287,460
Liabilities and Equity Liabilities Reserve for loss
and loss adjustment expenses
$
3,051,265
$
3,055,976
Unearned premiums
322,166
1,200,419
Liability for securities purchased
298,939
-
Accrued expenses and other liabilities
14,805
65,494
Senior notes - principal amount
262,500
262,500
Less: unamortized debt issuance costs
7,700
7,806
Senior notes, net
254,800
254,694
Liabilities held for sale
66,009
155,961
Total Liabilities
4,007,984
4,732,544
Commitments and Contingencies
Equity Preference Shares
465,000
465,000
Common shares
881
879
Additional paid-in capital
751,007
749,418
Accumulated other comprehensive income (loss)
21,152
(65,616)
Accumulated deficit
(615,940)
(563,891)
Treasury shares, at cost
(31,528)
(31,515)
Total Maiden Shareholders’ Equity
590,572
554,275
Noncontrolling interest in subsidiaries
-
641
Total Equity
590,572
554,916
Total Liabilities and Equity
$
4,598,556
$
5,287,460
Book value per common share(1)
$
1.51
$
1.08
Common shares outstanding
83,066,135
82,948,577
Maiden Holdings, Ltd.
Consolidated Statements of
Income
(in thousands (000's), except
per share data)
(Unaudited)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2019
2018
2019
2018
Revenues:
Gross premiums written
$
2,117
$
521,526
$
(559,022)
$
1,144,854
Net premiums written
$
(409)
$
521,028
$
(561,939)
$
1,143,679
Change in unearned premiums
134,395
(16,640)
879,027
(122,478)
Net premiums earned
133,986
504,388
317,088
1,021,201
Other insurance revenue
754
2,033
1,504
5,759
Net investment income
31,122
34,260
63,144
67,129
Net realized gains (losses) on
investment
24,086
(414)
12,985
(57)
Total revenues
189,948
540,267
394,721
1,094,032
Expenses:
Net loss and loss adjustment expenses
121,561
370,001
274,250
723,207
Commission and other acquisition
expenses
49,656
162,780
119,273
329,408
General and administrative expenses
12,849
14,860
28,788
30,531
Total expenses
184,066
547,641
422,311
1,083,146
Non-GAAP income (loss) from
operations(2)
5,882
(7,374)
(27,590)
10,886
Other expenses:
Interest and amortization expenses
(4,830)
(4,829)
(9,659)
(9,658)
Foreign exchange and other gains
1,207
4,821
6,186
2,414
Total other expenses
(3,623)
(8)
(3,473)
(7,244)
Income (loss) before income
taxes
2,259
(7,382)
(31,063)
3,642
Less: income tax benefit
(1,026)
(1,847)
(1,064)
(3,171)
Net income (loss) from continuing
operations
3,285
(5,535)
(29,999)
6,813
(Loss) income from discontinued
operations, net of income tax
(18,698)
8,215
(22,050)
18,210
Net (loss) income
(15,413)
2,680
(52,049)
25,023
Net income attributable to noncontrolling
interests
-
(47)
-
(118)
Net (loss) income attributable to
Maiden
(15,413)
2,633
(52,049)
24,905
Dividends on preference shares(3)
-
(8,546)
-
(17,091)
Net (loss) income attributable to
Maiden common shareholders
$
(15,413)
$
(5,913)
$
(52,049)
$
7,814
Basic and diluted earnings (loss) from
continuing operations per share attributable to Maiden common
shareholders(15)
$
0.04
$
(0.17)
$
(0.36)
$
(0.13)
Basic and diluted (loss) earnings from
discontinued operations per share attributable to Maiden common
shareholders(15)
(0.23)
0.10
(0.27)
0.22
Basic and diluted (loss)
earnings per share attributable to Maiden common
shareholders(15)
$
(0.19)
$
(0.07)
$
(0.63)
$
0.09
Dividends declared per common
share
$
-
$
0.15
$
-
$
0.30
Annualized return on average common
equity
-50.5%
-3.6%
-97.7%
2.2%
Weighted average number of common
shares - basic
83,058,123
83,126,204
83,008,888
83,083,545
Adjusted weighted average number of
common shares and assumed conversions - diluted(15)
83,075,156
83,126,204
83,008,888
83,083,545
Maiden Holdings, Ltd.
Supplemental Financial Data -
Segment Information
(in thousands (000's))
(Unaudited)
For the Three Months Ended June 30,
2019
Diversified
Reinsurance
AmTrust Reinsurance
Other
Total
Gross premiums written
$
11,244
$
(9,127)
$
-
$
2,117
Net premiums written
$
8,718
$
(9,127)
$
-
$
(409)
Net premiums earned
$
22,472
$
111,514
$
-
$
133,986
Other insurance revenue
754
-
-
754
Net loss and loss adjustment expenses
("loss and LAE")
(12,497)
(109,088)
24
(121,561)
Commissions and other acquisition
expenses
(8,147)
(41,509)
-
(49,656)
General and administrative expenses(4)
(2,092)
(562)
-
(2,654)
Underwriting income (loss)(5)
$
490
$
(39,645)
$
24
$
(39,131)
Reconciliation to net income from
continuing operations
Net investment income and realized gains
on investment
55,208
Interest and amortization expenses
(4,830)
Foreign exchange and other gains
1,207
Other general and administrative
expenses(4)
(10,195)
Income tax benefit
1,026
Net income from continuing
operations
$
3,285
Net loss and LAE ratio(6)
53.8%
97.8%
90.2%
Commission and other acquisition expense
ratio(7)
35.1%
37.2%
36.9%
General and administrative expense
ratio(8)
9.0%
0.5%
9.5%
Expense ratio(9)
44.1%
37.7%
46.4%
Combined ratio(10)
97.9%
135.5%
136.6%
For the Three Months Ended June 30,
2018
Diversified
Reinsurance
AmTrust Reinsurance
Other
Total
Gross premiums written
$
30,041
$
491,485
$
-
$
521,526
Net premiums written
$
29,717
$
491,311
$
-
$
521,028
Net premiums earned
$
28,539
$
475,849
$
-
$
504,388
Other insurance revenue
2,033
-
-
2,033
Net loss and LAE
(16,165)
(353,836)
-
(370,001)
Commissions and other acquisition
expenses
(9,988)
(152,792)
-
(162,780)
General and administrative expenses(4)
(4,593)
(1,082)
-
(5,675)
Underwriting loss(5)
$
(174)
$
(31,861)
$
-
$
(32,035)
Reconciliation to net loss from
continuing operations
Net investment income and realized losses
on investment
33,846
Interest and amortization expenses
(4,829)
Foreign exchange gains
4,821
Other general and administrative
expenses(4)
(9,185)
Income tax benefit
1,847
Net loss from continuing
operations
$
(5,535)
Net loss and LAE ratio(6)
52.9%
74.4%
73.1%
Commission and other acquisition expense
ratio(7)
32.7%
32.1%
32.1%
General and administrative expense
ratio(8)
15.0%
0.2%
2.9%
Expense ratio(9)
47.7%
32.3%
35.0%
Combined ratio(10)
100.6%
106.7%
108.1%
Maiden Holdings, Ltd.
Supplemental Financial Data -
Segment Information
(in thousands (000's))
(Unaudited)
For the Six Months Ended June 30,
2019
Diversified
Reinsurance
AmTrust Reinsurance
Other
Total
Gross premiums written
$
26,582
$
(585,604)
$
-
$
(559,022)
Net premiums written
$
23,665
$
(585,604)
$
-
$
(561,939)
Net premiums earned
$
47,764
$
269,324
$
-
$
317,088
Other insurance revenue
1,504
-
-
1,504
Net loss and LAE
(26,888)
(247,158)
(204)
(274,250)
Commissions and other acquisition
expenses
(17,408)
(101,865)
-
(119,273)
General and administrative expenses(4)
(5,123)
(1,828)
-
(6,951)
Underwriting loss(5)
$
(151)
$
(81,527)
$
(204)
$
(81,882)
Reconciliation to net loss from
continuing operations
Net investment income and realized gains
on investment
76,129
Interest and amortization expenses
(9,659)
Foreign exchange and other gains
6,186
Other general and administrative
expenses(4)
(21,837)
Income tax benefit
1,064
Net loss from continuing
operations
$
(29,999)
Net loss and LAE ratio(6)
54.6%
91.8%
86.1%
Commission and other acquisition expense
ratio(7)
35.3%
37.8%
37.5%
General and administrative expense
ratio(8)
10.4%
0.7%
9.0%
Expense ratio(9)
45.7%
38.5%
46.5%
Combined ratio(10)
100.3%
130.3%
132.6%
For the Six Months Ended June 30,
2018
Diversified
Reinsurance
AmTrust Reinsurance
Other
Total
Gross premiums written
$
79,441
$
1,065,413
$
-
$
1,144,854
Net premiums written
$
77,988
$
1,065,691
$
-
$
1,143,679
Net premiums earned
$
54,054
$
967,147
$
-
$
1,021,201
Other insurance revenue
5,759
-
-
5,759
Net loss and LAE
(32,064)
(691,143)
-
(723,207)
Commissions and other acquisition
expenses
(19,300)
(310,108)
-
(329,408)
General and administrative expenses(4)
(9,074)
(2,002)
-
(11,076)
Underwriting loss(5)
$
(625)
$
(36,106)
$
-
$
(36,731)
Reconciliation to net income from
continuing operations
Net investment income and realized losses
on investment
67,072
Interest and amortization expenses
(9,658)
Foreign exchange gains
2,414
Other general and administrative
expenses(4)
(19,455)
Income tax benefit
3,171
Net income from continuing
operations
$
6,813
Net loss and LAE ratio(6)
53.6%
71.4%
70.4%
Commission and other acquisition expense
ratio(7)
32.2%
32.1%
32.1%
General and administrative expense
ratio(8)
15.2%
0.2%
3.0%
Expense ratio(9)
47.4%
32.3%
35.1%
Combined ratio(10)
101.0%
103.7%
105.5%
Maiden Holdings, Ltd.
Non - GAAP Financial
Measures
(in thousands (000's), except
per share data)
(Unaudited)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2019
2018
2019
2018
Non-GAAP operating loss attributable to
Maiden common shareholders(11)
$
(22,032)
$
(18,535)
$
(48,966)
$
(12,753)
Non-GAAP basic and diluted operating
loss per share attributable to Maiden common shareholders
$
(0.27)
$
(0.22)
$
(0.59)
$
(0.15)
Annualized non-GAAP operating return on
average common equity(12)
-72.2%
-11.2%
-91.9%
-3.7%
Reconciliation of net (loss) income
attributable to Maiden common shareholders to non-GAAP operating
loss attributable to Maiden common shareholders:
Net (loss) income attributable to Maiden
common shareholders
$
(15,413)
$
(5,913)
$
(52,049)
$
7,814
Add (subtract)
Net realized (gains) losses on investment
(24,086)
414
(12,985)
57
Foreign exchange and other gains
(1,207)
(4,821)
(6,186)
(2,414)
Loss (income) from discontinued operations, net of income tax
18,698
(8,215)
22,050
(18,210)
(Income) loss from NGHC Quota Share run-off
(24)
-
204
-
Non-GAAP operating loss attributable to
Maiden common shareholders(11)
$
(22,032)
$
(18,535)
$
(48,966)
$
(12,753)
Weighted average number of common
shares - basic and diluted
83,058,123
83,126,204
83,008,888
83,083,545
Reconciliation of diluted (loss)
earnings per share attributable to Maiden common shareholders to
non-GAAP diluted operating loss per share attributable to Maiden
common shareholders:
Diluted (loss) earnings per share
attributable to Maiden common shareholders
$
(0.19)
$
(0.07)
$
(0.63)
$
0.09
Add (subtract)
Net realized (gains) losses on investment
(0.29)
0.01
(0.16)
-
Foreign exchange and other gains
(0.02)
(0.06)
(0.07)
(0.02)
Loss (income) from discontinued operations, net of income tax
0.23
(0.10)
0.27
(0.22)
Non-GAAP diluted operating loss per
share attributable to Maiden common shareholders
$
(0.27)
$
(0.22)
$
(0.59)
$
(0.15)
Reconciliation of net (loss) income
attributable to Maiden to non-GAAP income (loss) from
operations:
Net (loss) income attributable to
Maiden
$
(15,413)
$
2,633
$
(52,049)
$
24,905
Add (subtract)
Foreign exchange and other gains
(1,207)
(4,821)
(6,186)
(2,414)
Interest and amortization expenses
4,830
4,829
9,659
9,658
Income tax benefit
(1,026)
(1,847)
(1,064)
(3,171)
Loss (income) from discontinued operations, net of income tax
18,698
(8,215)
22,050
(18,210)
Net income attributable to noncontrolling interest
-
47
-
118
Non-GAAP income (loss) from
operations(2)
$
5,882
$
(7,374)
$
(27,590)
$
10,886
Maiden Holdings, Ltd.
Non - GAAP Financial
Measures
(in thousands (000's), except
per share data)
(Unaudited)
June 30, 2019
December 31, 2018
Investable assets:
Total investments
$
3,000,029
$
4,090,965
Cash and cash equivalents
82,465
200,841
Restricted cash and cash equivalents
381,698
130,148
Loan to related party
167,975
167,975
Funds withheld receivable
681,272
27,039
Total investable assets(13)
$
4,313,439
$
4,616,968
June 30, 2019
December 31, 2018
Capital:
Preference shares
$
465,000
$
465,000
Common shareholders' equity
125,572
89,275
Total Maiden shareholders'
equity
590,572
554,275
2016 Senior Notes
110,000
110,000
2013 Senior Notes
152,500
152,500
Total capital resources(14)
$
853,072
$
816,775
(1) Book value per common share is
calculated using Maiden common shareholders’ equity (shareholders'
equity excluding the aggregate liquidation value of our preference
shares) divided by the number of common shares outstanding.
(2) Non-GAAP income (loss) from operations
is a non-GAAP financial measure defined by the Company as net loss
(income) attributable to Maiden excluding foreign exchange and
other gains and losses, interest and amortization expenses, income
tax (benefit) expense, (loss) income from discontinued operations,
net of income tax and net income attributable to noncontrolling
interest and should not be considered as an alternative to net
(loss) income. The Company’s management believes that non-GAAP
income (loss) 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 (loss) from
operations enables readers of this information to more clearly
understand the essential operating results of the Company. The
Company’s measure of non-GAAP income (loss) from operations may not
be comparable to similarly titled measures used by other
companies.
(3) Dividends on preference shares consist
of $0 paid to Preference shares - Series A for the three and six
months ended June 30, 2019 and $3,094 and $6,188 paid to Preference
shares - Series A for the three and six months ended June 30, 2018,
respectively, $0 paid to Preference shares - Series C for the three
and six months ended June 30, 2019 and $2,939 and $5,878 paid to
Preference shares - Series C for the three and six months ended
June 30, 2018, respectively, and $0 paid to Preference shares -
Series D for the three and six months ended June 30, 2019 and
$2,513 and $5,025 paid to Preference shares - Series D for the
three and six months ended June 30, 2018, respectively.
(4) Underwriting related general and
administrative expenses is a non-GAAP measure and includes expenses
which are segregated for analytical purposes as a component of
underwriting income.
(5) Underwriting loss is a non-GAAP
measure and is calculated as net premiums earned plus other
insurance revenue less net loss and LAE, commission and other
acquisition expenses and general and administrative expenses
directly related to underwriting activities. Management believes
that this measure is important in evaluating the underwriting
performance of the Company and its segments. This measure is also a
useful tool to measure the profitability of the Company separately
from the investment results and is also a widely used performance
indicator in the insurance industry.
(6) Calculated by dividing net loss and
LAE by the sum of net premiums earned and other insurance
revenue.
(7) Calculated by dividing commission and
other acquisition expenses by the sum of net premiums earned and
other insurance revenue.
(8) Calculated by dividing general and
administrative expenses by the sum of net premiums earned and other
insurance revenue.
(9) Calculated by adding together the
commission and other acquisition expense ratio and general and
administrative expense ratio.
(10) Calculated by adding together the net
loss and LAE ratio and the expense ratio.
(11) Non-GAAP operating loss is a non-GAAP
financial measure defined by the Company as net (loss) income
attributable to Maiden common shareholders excluding realized
investment gains and losses, foreign exchange and other gains and
losses, (loss) income from discontinued operations, net of income
tax and income (loss) from NGHC Quota Share run-off and should not
be considered as an alternative to net (loss) income. The Company's
management believes that non-GAAP operating loss is a useful
indicator of trends in the Company's underlying operations. The
Company's measure of non-GAAP operating loss may not be comparable
to similarly titled measures used by other companies.
(12) Non-GAAP operating return on average
common equity is a non-GAAP financial measure. Management uses
non-GAAP operating return on average common shareholders' equity as
a measure of profitability that focuses on the return to Maiden
common shareholders. It is calculated using non-GAAP operating loss
attributable to Maiden common shareholders divided by average
Maiden common shareholders' equity.
(13) Investable assets is the total of the
Company's investments, cash and cash equivalents, loan to a related
party and funds withheld receivable.
(14) Total capital resources is the sum of
the Company's principal amount of debt and Maiden shareholders'
equity.
(15) During a period of loss, the basic
weighted average common shares outstanding is used in the
denominator of the diluted loss per common share computation as the
effect of including potential dilutive shares would be
anti-dilutive.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190812005633/en/
Sard Verbinnen & Co.
Maiden-SVC@sardverb.com
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