Maiden Holdings, Ltd. (NASDAQ: MHLD) ("Maiden" or the "Company")
today reported a third quarter of 2019 net loss attributable to
Maiden common shareholders of $58.3 million or $0.70 per diluted
common share, compared to a net loss attributable to Maiden common
shareholders of $308.8 million or $3.72 per diluted common share in
the third quarter of 2018. Combined ratio(10) was 190.8% in the
third quarter 2019 compared to 150.8% in the same period in
2018.
Non-GAAP operating earnings(11) were $39.8 million, or $0.48 per
diluted common share in the third quarter of 2019 compared with a
non-GAAP operating loss of $240.9 million, or $2.90 per diluted
common share in the third quarter of 2018. Non-GAAP combined
ratio(18) for the third quarter of 2019 was 81.3%, compared with
150.8% in the third quarter of 2018.
Maiden's book value per common share(1) was $0.82 at September
30, 2019, compared to $1.08 at December 31, 2018. On a non-GAAP
basis, adjusted for the unamortized deferred gain on retroactive
reinsurance recognized as of September 30, 2019 of $104.5 million,
the adjusted book value per common share(16) was $2.08 at September
30, 2019.
Commenting on the third quarter 2019 financial results, Lawrence
F. Metz, Maiden’s President and Chief Executive Officer said,
“While our reported results continue to show the impact of
additional reserve development, we are pleased that non-GAAP
operating results have now turned positive during the third
quarter, and the benefits of the numerous steps we have taken to
set Maiden on a course to recovery are emerging. While more work
remains, we believe these are all positive steps for Maiden.”
Patrick J. Haveron, Maiden’s Chief Financial Officer and Chief
Operating Officer added, “Our recently completed LPT/ ADC Agreement
with Enstar is having the tempering effect it was designed to have
as we continue to de-risk our balance sheet and transition away
from the reserve volatility of the last two years. Our third
quarter reported results reflect the continuing challenges in
certain lines of business such as General Liability and Commercial
Auto Liability, the latter which has plagued the industry for an
extended period. While this adverse development is being offset in
part by continuing favorable development in Workers’ Compensation,
we continue to closely monitor and respond to continued observed
volatility and unfavorable emergence in those liability lines.
Despite this, the cumulative impact of our strategic efforts is
highlighted in our adjusted book value per share, and tracks with
the continuing strengthening of our solvency ratios, which now
exceed target levels at both the group and operating company level.
We look for further improvements in these ratios as we close
2019.”
Consolidated Results for the Quarter
Ended September 30, 2019
Net loss attributable to Maiden common shareholders for the
three months ended September 30, 2019 was $58.3 million compared to
net loss of $308.8 million for the same period in 2018. The net
improvement in results for the three months ended September 30,
2019 compared to the same period in 2018 was primarily due to the
following:
- net loss from continuing operations of $58.1 million in the
third quarter 2019 compared to net loss from continuing operations
of $240.4 million for the same period in 2018, largely due to the
following:
- an underwriting loss(5) of $80.3 million in the third quarter
2019 compared to $251.2 million in the same period in 2018. As
noted, combined ratio(10) was 190.8% in the third quarter 2019
compared to 150.8% in the same period in 2018. The reduction in the
underwriting loss was due to lower adverse prior year loss
development incurred, primarily within AmTrust Reinsurance segment,
of $63.2 million or 66.2 combined ratio percentage points in the
third quarter of 2019 compared to adverse prior year loss
development of $212.5 million or 40.7 combined ratio percentage
points during the same period in 2018;
- realized gains on investment of $12.7 million for the three
months ended September 30, 2019 compared to realized losses of $0.2
million for the same period in 2018;
- foreign exchange and other gains of $7.8 million for the three
months ended September 30, 2019 compared to foreign exchange losses
of $0.6 million for the same period in 2018; and
- no dividends paid to preference shareholders for the three
months ended September 30, 2019 compared to $8.5 million for the
same period in 2018 due to our Board not declaring preferred share
dividends during 2019.
- net loss from discontinued operations of $0.3 million compared
to net loss from discontinued operations of $59.8 million for the
same period in 2018 as the prior year period included the
impairment of goodwill and intangible assets of $74.2 million that
was recognized due to the sale of Maiden Reinsurance North America,
Inc. ("Maiden US") partly offset by the $7.5 million in proceeds
from the sale of the renewal rights of certain treaty reinsurance
business of Maiden US pursuant to the Renewal Rights Agreement
("Renewal Rights") entered into with Transatlantic Reinsurance
Company on August 29, 2018.
In the third quarter of 2019, gross premiums written were $35.8
million, compared to $484.5 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 amendment
("Partial Termination Amendment") with AmTrust Financial Services,
Inc. ("AmTrust") effective January 1, 2019. Net premiums earned
were $94.9 million in the third quarter of 2019, compared to $520.1
million in the third quarter of 2018 due to the combined impact of
the terminated quota share contracts within the AmTrust Reinsurance
segment, non-renewals in Maiden Reinsurance Ltd.'s ("Maiden
Bermuda') 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 third quarter of 2019, net investment income
decreased to $13.2 million from $34.4 million in the third quarter
of 2018. The decline was primarily attributable to the one-time
payments of interest totaling $13.6 million (in relation to the
implementation of the following two agreements each dated as of
July 31, 2019: (i) the Loss Portfolio and Adverse Development Cover
Agreement (“LPT/ADC Agreement”) with Enstar Group Limited
("Enstar') and (ii) the Commutation and Release Agreement
(“Commutation and Release Agreement”) between Maiden Bermuda and
AmTrust International Insurance, Ltd. (“AII”)) with payments to
Enstar (of $7.3 million) and AmTrust (of $6.3 million), effective
January 1, 2019. Net investment income further decreased due to the
decline in average investable assets of 13.4% and decrease in
average yield to 2.9% (excluding the aforementioned one-time
interest payments to Enstar and AmTrust) from 3.3% in the same
period in 2018.
Realized gains of $12.7 million for the three months ended
September 30, 2019 were primarily due to sales of corporate bonds
during the third quarter for the settlement of the commutation
payment to AII pursuant to the Commutation and Release Agreement
via transfer of cash and invested assets on August 12, 2019.
During the third quarter of 2019, net loss and loss adjustment
expenses decreased to $140.9 million from $600.3 million in the
third quarter of 2018, primarily as a result of lower earned
premiums within the AmTrust Reinsurance segment. The third quarter
of 2019 loss ratio(6) was 147.6% compared to 115.0% reported in the
third 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 $63.2 million for the third
quarter of 2019, compared to $212.5 million for the same period in
2018. The prior year loss development figure includes the
recognition of $27.6 million (or 28.9 net loss and LAE ratio and
combined ratio percentage points) related to the application of the
$40.5 million loss corridor cap on AmTrust program business during
the three months ended September 30, 2019, pursuant to the
previously announced Post-Termination Endorsement of the
reinsurance contracts between the Company and AmTrust.
Commission and other acquisition expenses decreased to $32.8
million in the third quarter of 2019, from $167.6 million in the
third 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 2.2
points to 34.3% for the third 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 of $3.5
million.
General and administrative expenses for the third quarter of
2019 decreased to $8.5 million, compared to $19.2 million in the
third quarter of 2018, primarily related to salaries and related
benefits for headcount reductions occurring in 2019. The general
and administrative expense ratio(8) in the third quarter of 2019
increased to 8.9% from 3.7% in the third quarter of 2018 primarily
as a result of lower earned premiums, while the total expense
ratio(9) was 43.2% in the third quarter of 2019 compared with 35.8%
for the same period in 2018.
Consolidated Results for the Nine
Months Ended September 30, 2019
Net loss attributable to Maiden common shareholders for the nine
months ended September 30, 2019 was $110.4 million compared to net
loss of $301.0 million for the same period in 2018. The net
improvement in results for the nine months ended September 30, 2019
compared to the same period in 2018 was primarily due to the
following:
- net loss from continuing operations of $88.0 million compared
to net loss from continuing operations of $233.6 million for the
same period in 2018 largely due to the following:
- an underwriting loss of $162.1 million compared to $287.9
million for the same period in 2018. Combined ratio for the nine
months ended September 30, 2019 increased to 146.0%, compared to
120.7% for the same period in 2018. The reduction in the
underwriting loss was principally due to the impact of:
- lower adverse prior year loss development incurred, primarily
within the AmTrust Reinsurance segment, of $96.5 million or 23.3
combined ratio percentage points for the nine months ended
September 30, 2019 compared to $250.5 million or 16.2 combined
ratio percentage points during the same period in 2018; partly
offset by
- 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 (the "Terminated Business")); and
- higher ceding commission payable which increased by five
percentage points, or $17.6 million, for the remaining in-force
business immediately prior to January 1, 2019 (excluding Terminated
Business) and related unearned premium as of January 1, 2019 under
the Partial Termination Amendment with AmTrust.
- realized gains on investment of $25.7 million for the nine
months ended September 30, 2019 compared to realized losses of $0.3
million for the same period in 2018;
- foreign exchange and other gains of $14.0 million for the nine
months ended September 30, 2019 compared to foreign exchange gains
of $1.9 million for the same period in 2018 largely due to the
proceeds from the sale of AVS Automotive VersicherungsService GmbH
("AVS") and its subsidiaries to Allianz Partners on January 10,
2019. Excluding the gain of $4.3 million from the sale of AVS, net
foreign exchange gains of $9.7 million were realized during the
nine months ended September 30, 2019 primarily due to the impact of
the strengthening of the U.S. dollar versus the euro and British
pound; and
- no dividends were paid to preference shareholders for the nine
months ended September 30, 2019 compared to $25.6 million for the
same period in 2018. Our Board of Directors have not declared
dividends on any of our preference shares during 2019.
- net loss from discontinued operations of $22.3 million compared
to net loss from discontinued operations of $41.6 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 net additional loss of $16.7 million to be
recognized. The 2018 results included the impairment of goodwill
and intangible assets of $74.2 million that was recognized due to
the sale of Maiden US, partly offset by the proceeds of the sale of
the Renewal Rights of $7.5 million.
During the nine months ended September 30, 2019, gross premiums
written were negative $523.2 million compared to $1.63 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 Amendment with AmTrust, effective January 1,
2019. Net premiums earned were $412.0 million during the nine
months ended September 30, 2019, compared to $1.54 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 nine months ended September 30, 2019, net investment
income decreased to $76.4 million from $101.5 million for the same
period in 2018 largely due to the decline in average investable
assets of 6.7% and decrease in average yield to 3.1% (excluding the
aforementioned one-time interest payments to Enstar and AmTrust)
from 3.2% for the same period in 2018.
Realized gains of $25.7 million for the nine months ended
September 30, 2019 were primarily driven by sales of corporate
bonds during the second and third quarter in anticipation of
completing and funding the LPT/ADC with Enstar and the commutation
payment to AII pursuant to the Commutation and Release Agreement,
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 nine months ended September 30, 2019, net loss and
loss adjustment expenses decreased to $415.1 million from $1.32
billion for the same period in 2018, primarily as a result of lower
earned premiums within the AmTrust Reinsurance segment. During the
nine months ended September 30, 2019, the loss ratio was 100.3%
compared to 85.4% 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 $96.5 million for
the first nine months of 2019, compared to $250.5 million for the
same period in 2018. The prior year loss development figure
includes the recognition of $27.6 million (or 6.7 net loss and LAE
ratio and combined ratio percentage points) related to the
application of the $40.5 million loss corridor cap on AmTrust
program business during the nine months ended September 30, 2019,
pursuant to the previously announced Post-Termination Endorsement
of the reinsurance contracts between the Company and AmTrust.
Commission and other acquisition expenses decreased to $152.0
million during the nine months ended September 30, 2019, from
$497.0 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 increased 4.6 points to 36.7% for the nine months
ended September 30, 2019 from 32.1% for the same period in 2018 as
a result of the additional ceding commission of $17.6 million
agreed under the Partial Termination Amendment with AmTrust.
General and administrative expenses for the nine months ended
September 30, 2019 decreased to $37.3 million, compared to $49.7
million for the same period in 2018, primarily related to salaries
and related benefits for headcount reductions occurring in 2019.
The general and administrative expense ratio for the nine months
ended September 30, 2019 increased to 9.0% from 3.2% for the same
period in 2018 as a result of lower earned premiums, while the
total expense ratio was 45.7% in the nine months ended September
30, 2019 compared with 35.3% for the same period in 2018.
LPT/ADC Agreement with
Enstar
Pursuant to the LPT/ADC Agreement, Enstar's Bermuda subsidiary,
Cavello Bay Reinsurance Ltd. ("Cavello") assumed liabilities for
loss reserves as of December 31, 2018 associated with the AmTrust
Quota Share in excess of a $2.179 billion retention, up to $600.0
million in exchange for a retrocession premium of $445.0 million.
The $2.179 billion retention will be subject to adjustment for paid
losses subsequent to December 31, 2018. The LPT/ADC Agreement
provides Maiden Bermuda with $155.0 million in adverse development
cover over its carried AmTrust Quota Share loss reserves at
December 31, 2018. The LPT/ADC Agreement meets the criteria for
risk transfer and therefore has been accounted for as retroactive
reinsurance.
Cumulative ceded losses exceeding $445.0 million would result in
a deferred gain which will be amortized into income over the
settlement period in proportion to cumulative losses collected over
the estimated ultimate reinsurance recoverable. Consequently,
cumulative adverse development for losses subject to the LPT/ADC
Agreement subsequent to December 31, 2018 may result in significant
losses from operations until periods when the deferred gain is
recognized as a benefit to earnings. At September 30, 2019, the
unamortized deferred gain liability recognized for retroactive
reinsurance under the LPT/ADC Agreement was approximately $104.5
million.
Amortization of the deferred gain will not occur until paid
losses have exceeded the minimum retention under the LPT/ADC
Agreement. The current estimated payout period for the losses
covered by the LPT/ADC Agreement before the minimum retention is
exceeded is approximately five years.
Non-GAAP Operating Results for the
Three and Nine Months Ended September 30, 2019
Non-GAAP operating earnings were $39.8 million, or $0.48 per
diluted common share in the third quarter of 2019 compared with a
non-GAAP operating loss of $240.9 million, or $2.90 per diluted
common share in the third quarter of 2018. Non-GAAP combined
ratio(17) for the third quarter of 2019 was 81.3%, compared with
150.8% in the third quarter of 2018.
Non-GAAP operating loss was $9.1 million, or $0.11 per diluted
common share for the nine months ended September 30, 2019 compared
with a non-GAAP operating loss of $253.6 million, or $3.05 per
diluted common share in the same period in 2018. Non-GAAP combined
ratio for the nine months ended September 30, 2019 was 120.8%,
compared with 120.7% in the same period in 2018.
Management has adjusted the GAAP net loss and underwriting
results as well as the loss and LAE ratios and combined ratios by
recognizing the unamortized deferred gain arising from the LPT/ADC
Agreement which is fully recoverable from Cavello to show the
ultimate economic benefit of the LPT/ADC Agreement to Maiden.
For the three and nine months ended September 30, 2019, the
improvements in the non-GAAP operating earnings (loss) and non-GAAP
operating earnings (loss) per share, along with the non-GAAP
combined ratio, primarily reflect the impact of unfavorable loss
development for which we have ceded that risk under a retroactive
reinsurance agreement. The amount recognized as an unamortized
deferred gain liability for the three and nine months ended
September 30, 2019 under this agreement was $104.5 million.
Adjusted for the amortization into income of the deferred gain
on retroactive reinsurance of $104.5 million during the three and
nine months ended September 30, 2019, non-GAAP net loss and LAE(17)
were $36.3 million and $310.6 million, respectively, and the
non-GAAP net loss and LAE ratios(17) were 38.1% and 75.1%,
respectively, compared to 115.0% and 85.4% for the respective
comparative periods in 2018.
Adjusted for the amortization into income of the deferred gain
on retroactive reinsurance of $104.5 million during the three
months ended September 30, 2019, adjusted non-GAAP underwriting
income(17) was $24.3 million compared to underwriting loss of
$251.2 million for the comparative period in 2018. Non-GAAP
combined ratio during the three months ended September 30, 2019 was
81.3% compared to 150.8% during the same period in 2018.
Adjusted for the amortization into income of the deferred gain
on retroactive reinsurance of $104.5 million during the nine months
ended September 30, 2019, non-GAAP underwriting loss was $57.6
million compared to $287.9 million in the comparative period in
2018. Non-GAAP combined ratio during the nine months ended
September 30, 2019 was 120.8% compared to 120.7% during the same
period in 2018.
Excluding the adverse development subject to the LPT/ADC
Agreement for the first half of 2019 of $30.6 million, during the
three months ended September 30, 2019, the non-GAAP net loss and
LAE and non-GAAP underwriting loss were $66.9 million and $113.3
million, respectively, and the non-GAAP net loss and LAE ratio and
combined ratio were 70.1% and 113.3%, respectively.
These non-GAAP measures include the recognition of $27.6 million
(or 28.9 and 6.7 net loss and LAE ratio and combined ratio
percentage points for the three and nine months ended September 30,
2019, respectively) related to the application of the $40.5 million
loss corridor cap on AmTrust program business during the three and
nine months ended September 30, 2019, pursuant to the previously
announced Post-Termination Endorsement of the reinsurance contracts
between the Company and AmTrust.
Other Financial Matters
Total assets were $3.8 billion at September 30, 2019, compared
to $5.3 billion at December 31, 2018. Shareholders' equity was
$533.2 million at September 30, 2019, compared to $554.3 million at
December 31, 2018. Adjusted shareholders' equity(16) was $637.7
million at September 30, 2019, reflecting the unamortized deferred
gain on retroactive reinsurance of $104.5 million.
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.
Report on Form 10-Q for the Quarter
Ended September 30, 2019
The Company’s report on Form 10-Q for the quarter ended
September 30, 2019 was filed with the U.S. Securities and Exchange
Commission on November 12, 2019. Additional information on the
matters reported in this news release along with other required
disclosures can be found in that filing.
About Maiden Holdings,
Ltd.
Maiden Holdings, Ltd. is a Bermuda-based holding company formed
in 2007.
(2)(5)(11)(12)(16)(17) 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)(17) 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 of U.S. dollars,
except share and per share data)
September 30, 2019
December 31, 2018
ASSETS
(Unaudited)
(Audited)
Investments:
Fixed maturities, available-for-sale, at
fair value (amortized cost 2019 - $2,040,852; 2018 -
$3,109,980)
$
2,059,560
$
3,051,568
Fixed maturities, held-to-maturity, at
amortized cost (fair value 2018 - $998,012)
—
1,015,681
Other investments, at fair value
30,412
23,716
Total investments
2,089,972
4,090,965
Cash and cash equivalents
39,755
200,841
Restricted cash and cash equivalents
33,171
130,148
Accrued investment income
19,139
27,824
Reinsurance balances receivable, net
46,291
67,997
Reinsurance recoverable on unpaid
losses
615,481
71,901
Loan to related party
167,975
167,975
Deferred commission and other acquisition
expenses, net
90,367
388,442
Funds withheld receivable
678,775
27,039
Other assets
11,029
10,700
Assets held for sale
—
103,628
Total assets
$
3,791,955
$
5,287,460
LIABILITIES
Reserve for loss and loss adjustment
expenses
$
2,625,858
$
3,126,134
Unearned premiums
261,130
1,200,419
Deferred gain on retroactive
reinsurance
104,542
—
Accrued expenses and other liabilities
12,416
66,183
Senior notes - principal amount
262,500
262,500
Less: unamortized debt issuance costs
7,646
7,806
Senior notes, net
254,854
254,694
Liabilities held for sale
—
85,114
Total liabilities
3,258,800
4,732,544
Commitments and Contingencies
EQUITY
Preference shares
465,000
465,000
Common shares
881
879
Additional paid-in capital
751,138
749,418
Accumulated other comprehensive income
(loss)
21,936
(65,616
)
Accumulated deficit
(674,267
)
(563,891
)
Treasury shares, at cost
(31,533
)
(31,515
)
Total Maiden Shareholders’
Equity
533,155
554,275
Noncontrolling interest in
subsidiaries
—
641
Total Equity
533,155
554,916
Total Liabilities and Equity
$
3,791,955
$
5,287,460
Book value per common share(1)
$
0.82
$
1.08
Common shares outstanding
83,111,180
82,948,577
MAIDEN HOLDINGS, LTD.
CONSOLIDATED STATEMENTS OF
INCOME (Unaudited)
(In thousands of U.S. dollars,
except share and per share data)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2019
2018
2019
2018
Revenues:
Gross premiums written
$
35,844
$
484,493
$
(523,178
)
$
1,629,347
Net premiums written
$
35,944
$
482,806
$
(525,995
)
$
1,626,485
Change in unearned premiums
58,954
37,271
937,981
(85,207
)
Net premiums earned
94,898
520,077
411,986
1,541,278
Other insurance revenue
554
1,870
2,058
7,629
Net investment income
13,223
34,419
76,367
101,548
Net realized gains (losses) on
investment
12,700
(225
)
25,685
(282
)
Total other-than-temporary impairment
losses
(165
)
(479
)
(165
)
(479
)
Total revenues
121,210
555,662
515,931
1,649,694
Expenses:
Net loss and loss adjustment expenses
140,860
600,296
415,110
1,323,503
Commission and other acquisition
expenses
32,763
167,618
152,036
497,026
General and administrative expenses
8,546
19,207
37,334
49,738
Total expenses
182,169
787,121
604,480
1,870,267
Non-GAAP loss from
operations(2)
(60,959
)
(231,459
)
(88,549
)
(220,573
)
Other expenses
Interest and amortization expenses
(4,831
)
(4,829
)
(14,490
)
(14,487
)
Foreign exchange and other gains
(losses)
7,827
(552
)
14,013
1,862
Total other expenses
2,996
(5,381
)
(477
)
(12,625
)
Loss before income taxes
(57,963
)
(236,840
)
(89,026
)
(233,198
)
Less: income tax expense (benefit)
87
3,573
(977
)
402
Net loss from continuing
operations
(58,050
)
(240,413
)
(88,049
)
(233,600
)
Loss from discontinued operations, net
of income tax
(277
)
(59,819
)
(22,327
)
(41,609
)
Net loss
(58,327
)
(300,232
)
(110,376
)
(275,209
)
Net income attributable to noncontrolling
interest
—
(62
)
—
(180
)
Net loss attributable to Maiden
(58,327
)
(300,294
)
(110,376
)
(275,389
)
Dividends on preference shares(3)
—
(8,545
)
—
(25,636
)
Net loss attributable to Maiden common
shareholders
$
(58,327
)
$
(308,839
)
$
(110,376
)
$
(301,025
)
Basic and diluted loss from continuing
operations per share attributable to Maiden common
shareholders(15)
$
(0.70
)
$
(3.00
)
$
(1.06
)
$
(3.12
)
Basic and diluted loss from
discontinued operations per share attributable to Maiden common
shareholders(15)
—
(0.72
)
(0.27
)
(0.50
)
Basic and diluted loss per share
attributable to Maiden common shareholders(15)
$
(0.70
)
$
(3.72
)
$
(1.33
)
$
(3.62
)
Dividends declared per common
share
$
—
$
0.05
$
—
$
0.35
Annualized return on average common
equity
(238.9
)%
(258.4
)%
(187.5
)%
(74.9
)%
Weighted average number of common
shares - basic and diluted(15)
83,092,085
83,089,172
83,036,925
83,085,441
MAIDEN HOLDINGS, LTD.
SUPPLEMENTAL FINANCIAL DATA -
SEGMENT INFORMATION (Unaudited)
(in thousands of U.S.
dollars)
For the Three Months Ended September
30, 2019
Diversified
Reinsurance
AmTrust Reinsurance
Other
Total
Gross premiums written
$
14,439
$
21,405
$
—
$
35,844
Net premiums written
$
14,539
$
21,405
$
—
$
35,944
Net premiums earned
$
20,492
$
74,406
$
—
$
94,898
Other insurance revenue
554
—
—
554
Net loss and loss adjustment expenses
("loss and LAE")
(13,807
)
(126,945
)
(108
)
(140,860
)
Commission and other acquisition
expenses
(7,005
)
(25,758
)
—
(32,763
)
General and administrative expenses(4)
(1,849
)
(235
)
—
(2,084
)
Underwriting loss(5)
$
(1,615
)
$
(78,532
)
$
(108
)
(80,255
)
Reconciliation to net loss from
continuing operations
Net investment income and realized gains
on investment
25,923
Total other-than-temporary impairment
losses
(165
)
Interest and amortization expenses
(4,831
)
Foreign exchange and other gains
7,827
Other general and administrative
expenses(4)
(6,462
)
Income tax expense
(87
)
Net loss from continuing
operations
$
(58,050
)
Net loss and LAE ratio(6)
65.6
%
170.6
%
147.6
%
Commission and other acquisition expense
ratio(7)
33.3
%
34.6
%
34.3
%
General and administrative expense
ratio(8)
8.8
%
0.3
%
8.9
%
Expense Ratio(9)
42.1
%
34.9
%
43.2
%
Combined ratio(10)
107.7
%
205.5
%
190.8
%
MAIDEN HOLDINGS, LTD.
SUPPLEMENTAL FINANCIAL DATA -
SEGMENT INFORMATION (Unaudited)
(in thousands of U.S.
dollars)
For the Three Months Ended September
30, 2018
Diversified
Reinsurance
AmTrust Reinsurance
Other
Total
Gross premiums written
$
31,698
$
452,795
$
—
$
484,493
Net premiums written
$
31,291
$
451,515
$
—
$
482,806
Net premiums earned
$
28,784
$
491,293
$
—
$
520,077
Other insurance revenue
1,870
—
—
1,870
Net loss and LAE
(19,764
)
(579,163
)
(1,369
)
(600,296
)
Commission and other acquisition
expenses
(8,961
)
(158,657
)
—
(167,618
)
General and administrative expenses(4)
(4,256
)
(952
)
—
(5,208
)
Underwriting loss(5)
$
(2,327
)
$
(247,479
)
$
(1,369
)
(251,175
)
Reconciliation to net loss from
continuing operations
Net investment income and realized losses
on investment
34,194
Total other-than-temporary impairment
losses
(479
)
Interest and amortization expenses
(4,829
)
Foreign exchange and other losses
(552
)
Other general and administrative
expenses(4)
(13,999
)
Income tax expense
(3,573
)
Net loss from continuing
operations
$
(240,413
)
Net loss and LAE ratio(6)
64.5
%
117.9
%
115.0
%
Commission and other acquisition expense
ratio(7)
29.2
%
32.3
%
32.1
%
General and administrative expense
ratio(8)
13.9
%
0.2
%
3.7
%
Expense Ratio(9)
43.1
%
32.5
%
35.8
%
Combined ratio(10)
107.6
%
150.4
%
150.8
%
MAIDEN HOLDINGS, LTD.
SUPPLEMENTAL FINANCIAL DATA -
SEGMENT INFORMATION (Unaudited)
(in thousands of U.S.
dollars)
For the Nine Months Ended September 30,
2019
Diversified
Reinsurance
AmTrust Reinsurance
Other
Total
Gross premiums written
$
41,021
$
(564,199
)
$
—
$
(523,178
)
Net premiums written
$
38,204
$
(564,199
)
$
—
$
(525,995
)
Net premiums earned
$
68,256
$
343,730
$
—
$
411,986
Other insurance revenue
2,058
—
—
2,058
Net loss and LAE
(40,695
)
(374,103
)
(312
)
(415,110
)
Commission and other acquisition
expenses
(24,413
)
(127,623
)
—
(152,036
)
General and administrative expenses(4)
(6,972
)
(2,063
)
—
(9,035
)
Underwriting loss(5)
$
(1,766
)
$
(160,059
)
$
(312
)
(162,137
)
Reconciliation to net loss from
continuing operations
Net investment income and realized gains
on investment
102,052
Total other-than-temporary impairment
losses
(165
)
Interest and amortization expenses
(14,490
)
Foreign exchange and other gains
14,013
Other general and administrative
expenses(4)
(28,299
)
Income tax benefit
977
Net loss from continuing
operations
$
(88,049
)
Net loss and LAE ratio(6)
57.9
%
108.8
%
100.3
%
Commission and other acquisition expense
ratio(7)
34.7
%
37.1
%
36.7
%
General and administrative expense
ratio(8)
9.9
%
0.6
%
9.0
%
Expense Ratio(9)
44.6
%
37.7
%
45.7
%
Combined ratio(10)
102.5
%
146.5
%
146.0
%
MAIDEN HOLDINGS, LTD.
SUPPLEMENTAL FINANCIAL DATA -
SEGMENT INFORMATION (Unaudited)
(in thousands of U.S.
dollars)
For the Nine Months Ended September 30,
2018
Diversified
Reinsurance
AmTrust Reinsurance
Other
Total
Gross premiums written
$
111,139
$
1,518,208
$
—
$
1,629,347
Net premiums written
$
109,279
$
1,517,206
$
—
$
1,626,485
Net premiums earned
$
82,838
$
1,458,440
$
—
$
1,541,278
Other insurance revenue
7,629
—
—
7,629
Net loss and LAE
(51,828
)
(1,270,306
)
(1,369
)
(1,323,503
)
Commission and other acquisition
expenses
(28,261
)
(468,765
)
—
(497,026
)
General and administrative expenses(4)
(13,330
)
(2,954
)
—
(16,284
)
Underwriting loss(5)
$
(2,952
)
$
(283,585
)
$
(1,369
)
(287,906
)
Reconciliation to net loss from
continuing operations
Net investment income and realized losses
on investment
101,266
Total other-than-temporary impairment
losses
(479
)
Interest and amortization expenses
(14,487
)
Foreign exchange and other gains
1,862
Other general and administrative
expenses(4)
(33,454
)
Income tax expense
(402
)
Net loss from continuing
operations
$
(233,600
)
Net loss and LAE ratio(6)
57.3
%
87.1
%
85.4
%
Commission and other acquisition expense
ratio(7)
31.3
%
32.1
%
32.1
%
General and administrative expense
ratio(8)
14.7
%
0.2
%
3.2
%
Expense Ratio(9)
46.0
%
32.3
%
35.3
%
Combined ratio(10)
103.3
%
119.4
%
120.7
%
MAIDEN HOLDINGS, LTD.
NON-GAAP FINANCIAL MEASURES
(Unaudited)
(In thousands of U.S. dollars,
except share and per share data)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2019
2018
2019
2018
Non-GAAP operating earnings (loss)
attributable to Maiden common shareholders(11)
$
39,834
$
(240,895
)
$
(9,132
)
$
(253,648
)
Non-GAAP basic and diluted operating
earnings (loss) per common share attributable to Maiden
shareholders
$
0.48
$
(2.90
)
$
(0.11
)
$
(3.05
)
Annualized non-GAAP operating return on
average common equity(12)
163.2
%
(201.6
)%
(15.5
)%
(63.1
)%
Reconciliation of Net loss attributable
to Maiden common shareholders to Non-GAAP operating income (loss)
attributable to Maiden common shareholders:
Net loss attributable to Maiden common
shareholders
$
(58,327
)
$
(308,839
)
$
(110,376
)
$
(301,025
)
Add (subtract):
Net realized (gains) losses on
investment
(12,700
)
225
(25,685
)
282
Total other-than-temporary impairment
losses
165
479
165
479
Foreign exchange and other (gains)
losses
(7,827
)
552
(14,013
)
(1,862
)
Loss from NGHC Quota Share run-off
108
1,369
312
1,369
Unamortized deferred gain on retroactive
reinsurance
104,542
—
104,542
—
Loss from discontinued operations, net of
income tax
277
59,819
22,327
41,609
Interest expense paid resulting from the
LPT/ADC Agreement and the Commutation Agreement
13,596
—
13,596
—
Separation costs incurred due to
retirement of former executives
—
5,500
—
5,500
Non-GAAP operating earnings (loss)
attributable to Maiden common shareholders(11)
$
39,834
$
(240,895
)
$
(9,132
)
$
(253,648
)
Weighted average number of common shares -
basic and diluted
83,092,085
83,089,172
83,036,925
83,085,441
Reconciliation of diluted loss per
share attributable to Maiden common shareholders to Non-GAAP
diluted operating earnings (loss) per share attributable to Maiden
common shareholders:
Diluted loss per share attributable to
Maiden common shareholders
$
(0.70
)
$
(3.72
)
$
(1.33
)
$
(3.62
)
Add (subtract):
Net realized (gains) losses on
investment
(0.15
)
—
(0.31
)
—
Total other-than-temporary impairment
losses
—
0.01
—
0.01
Foreign exchange and other (gains)
losses
(0.09
)
0.01
(0.17
)
(0.03
)
Loss from NGHC Quota Share run-off
—
0.01
0.01
0.02
Unamortized deferred gain on retroactive
reinsurance
1.26
—
1.26
—
Loss from discontinued operations, net of
income tax
—
0.72
0.27
0.50
Interest expense paid resulting from the
LPT/ADC Agreement and the Commutation Agreement
0.16
—
0.16
—
Separation costs incurred due to
retirement of former executives
—
0.07
—
0.07
Non-GAAP diluted operating earnings
(loss) per share attributable to Maiden common shareholders
$
0.48
$
(2.90
)
$
(0.11
)
$
(3.05
)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2019
2018
2019
2018
Reconciliation of net loss attributable
to Maiden to non-GAAP loss from operations
Net loss attributable to Maiden
$
(58,327
)
$
(300,294
)
$
(110,376
)
$
(275,389
)
Add (subtract):
Foreign exchange and other (gains)
losses
(7,827
)
552
(14,013
)
(1,862
)
Interest and amortization expenses
4,831
4,829
14,490
14,487
Income tax expense (benefit)
87
3,573
(977
)
402
Loss from discontinued operations, net of
income tax
277
59,819
22,327
41,609
Net income attributable to noncontrolling
interest
—
62
—
180
Non-GAAP loss from
operations(2)
$
(60,959
)
$
(231,459
)
$
(88,549
)
$
(220,573
)
Reconciliation of GAAP combined ratio
to non-GAAP combined ratio:
Combined ratio
190.8
%
150.8
%
146.0
%
120.7
%
Less: Unamortized deferred gain on
retroactive reinsurance
109.5
%
—
25.2
%
—
Non-GAAP combined ratio(17)
81.3
%
150.8
%
120.8
%
120.7
%
September 30, 2019
December 31, 2018
Reconciliation of total Maiden
shareholders' equity to adjusted Maiden shareholders'
equity
Total Maiden Shareholders’ Equity
$
533,155
$
554,275
Unamortized deferred gain on retroactive
reinsurance
104,542
—
Adjusted Maiden shareholders'
equity(16)
$
637,697
$
554,275
Reconciliation of book value per common
share to adjusted book value per common share
Book value per common share
$
0.82
$
1.08
Add: Unamortized deferred gain on
retroactive reinsurance
1.26
—
Adjusted book value per common
share(16)
$
2.08
$
1.08
Non-GAAP underwriting results
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
($ in thousands)
2019
2018
2019
2018
Gross premiums written
$
35,844
$
484,493
$
(523,178
)
$
1,629,347
Net premiums written
$
35,944
$
482,806
$
(525,995
)
$
1,626,485
Net premiums earned
$
94,898
$
520,077
$
411,986
$
1,541,278
Other insurance revenue
554
1,870
2,058
7,629
Non-GAAP net loss and LAE(17)
(36,318
)
(600,296
)
(310,568
)
(1,323,503
)
Commission and other acquisition
expenses
(32,763
)
(167,618
)
(152,036
)
(497,026
)
General and administrative expenses
(2,084
)
(5,208
)
(9,035
)
(16,284
)
Non-GAAP underwriting income
(loss)(17)
$
24,287
$
(251,175
)
$
(57,595
)
$
(287,906
)
Ratios:
Non-GAAP net loss and LAE ratio(17)
38.1
%
115.0
%
75.1
%
85.4
%
Commission and other acquisition expense
ratio
34.3
%
32.1
%
36.7
%
32.1
%
General and administrative expense
ratio
8.9
%
3.7
%
9.0
%
3.2
%
Expense ratio
43.2
%
35.8
%
45.7
%
35.3
%
Non-GAAP combined ratio(17)
81.3
%
150.8
%
120.8
%
120.7
%
Non-GAAP Net Loss and LAE
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
($ in thousands)
2019
2018
2019
2018
Net loss and loss adjustment expenses
$
140,860
$
600,296
$
415,110
$
1,323,503
Less: Unamortized deferred gain on
retroactive reinsurance
104,542
—
104,542
—
Non-GAAP net loss and loss adjustment
expenses(17)
$
36,318
$
600,296
$
310,568
$
1,323,503
September 30, 2019
December 31, 2018
Investable assets:
Total investments
$
2,089,972
$
4,090,965
Cash and cash equivalents
39,755
200,841
Restricted cash and cash equivalents
33,171
130,148
Loan to related party
167,975
167,975
Funds withheld receivable
678,775
27,039
Total investable assets(13)
$
3,009,648
$
4,616,968
September 30, 2019
December 31, 2018
Capital:
Preference shares
$
465,000
$
465,000
Common shareholders' equity
68,155
89,275
Total Maiden shareholders'
equity
533,155
554,275
2016 Senior Notes
110,000
110,000
2013 Senior Notes
152,500
152,500
Total capital resources(14)
$
795,655
$
816,775
MAIDEN HOLDINGS, LTD. NON-GAAP FINANCIAL
MEASURES (Unaudited) (In thousands of U.S. dollars, except share
and per share data)
(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 nine months ended
September 30, 2019 and $3,094 and $9,282 paid to Preference shares
- Series A for the three and nine months ended September 30, 2018,
respectively, $0 paid to Preference shares - Series C for the three
and nine months ended September 30, 2019 and $2,938 and $8,816 paid
to Preference shares - Series C for the three and nine months ended
September 30, 2018, respectively, and $0 paid to Preference shares
- Series D for the three and nine months ended September 30, 2019
and $2,513 and $7,538 paid to Preference shares - Series D for the
three and nine months ended September 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 loss.
(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 the general and administrative
expense ratio.
(10) Calculated by adding together the net loss and LAE ratio
and the expense ratio.
(11) Non-GAAP operating income (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, total other-than-temporary impairment losses, foreign
exchange and other gains and losses, (loss) income from
discontinued operations, net of income tax, income (loss) from NGHC
Quota Share run-off, interest expense paid resulting from the
LPT/ADC Agreement and the Commutation Agreement, separation costs
incurred due to retirement of former CEO and CFO and unamortized
deferred gain on retroactive reinsurance and should not be
considered as an alternative to net (loss) income. The Company's
management believes that non-GAAP operating income (loss) is a
useful indicator of trends in the Company's underlying operations.
The Company's measure of non-GAAP operating income (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 income
(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.
(16) Adjusted Total Maiden Shareholders' Equity and Adjusted
Book Value per Common Share: Management has adjusted GAAP Maiden
shareholders' equity by adding the unamortized deferred gain on
retroactive reinsurance arising from the LPT/ADC Agreement relating
to losses incurred subject to that agreement to Maiden
shareholders' equity. As a result, by virtue of this adjustment,
management has also computed the Adjusted Book Value per Common
Share. The deferred gain represents amounts fully recoverable from
Cavello and management believes adjusting for this shows the
ultimate economic benefit of the LPT/ADC Agreement. We believe
reflecting the economic benefit of this retroactive reinsurance
agreement is helpful for understanding future trends in our
operations, which will improve Maiden shareholders' equity over the
settlement period.
(17) Non-GAAP underwriting income (loss), Non-GAAP loss and LAE
ratio, and Non-GAAP combined ratio: Management has further adjusted
the underwriting income (loss), as defined above, as well as the
reported loss and LAE ratios and reported combined ratios by
recognizing into income the unamortized deferred gain arising from
the LPT/ADC Agreement relating to losses subject to that agreement.
The deferred gain represents amounts fully recoverable from Cavello
and management believes adjusting for this shows the ultimate
economic benefit of the LPT/ADC Agreement on Maiden's underwriting
income (loss). We believe reflecting the economic benefit of this
retroactive reinsurance agreement is helpful for understanding
future trends in our operations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191112006165/en/
Sard Verbinnen & Co. Maiden-SVC@sardverb.com
Maiden (NASDAQ:MHLD)
Historical Stock Chart
From May 2024 to Jun 2024
Maiden (NASDAQ:MHLD)
Historical Stock Chart
From Jun 2023 to Jun 2024