Maiden Reinsurance Ltd. Completes
Re-Domestication to Vermont
Maiden Holdings, Ltd. (NASDAQ: MHLD) ("Maiden" or the "Company")
today reported a fourth quarter of 2019 net loss attributable to
Maiden common shareholders of $21.5 million or $0.26 per diluted
common share, compared to a net loss attributable to Maiden common
shareholders of $269.2 million or $3.25 per diluted common share in
the fourth quarter of 2018.
Non-GAAP operating loss(5) was $3.5 million, or $0.04 per
diluted common share in the fourth quarter of 2019 compared with a
non-GAAP operating loss of $212.4 million, or $2.56 per diluted
common share in the fourth quarter of 2018.
Maiden's book value per common share(1) was $0.51 at December
31, 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 December 31, 2019 of $113.0 million,
the adjusted book value per common share(10) was $1.87 at December
31, 2019.
Commenting on the fourth quarter of 2019 financial results,
Lawrence F. Metz, Maiden’s President and Chief Executive Officer
said, “The completion of Maiden Reinsurance’s re-domestication to
Vermont represents a major strategic step for us as it will
continue to appreciably strengthen our solvency ratios and enable
us to continue to evaluate our operating strategy during 2020 while
leveraging the significant assets and capital we retain. We believe
that we are positioned to make further progress for our
shareholders during 2020. Further, our operating results continue
to improve, although the fourth quarter results were impacted by
slightly higher non-recurring expenses and it remains a principal
focus to lower the run rate of all expenses.”
Patrick J. Haveron, Maiden’s Chief Financial Officer and Chief
Operating Officer added, “The fourth quarter results continue to
reflect the run-off of our previously terminated AmTrust
reinsurance contracts and a tempering of the adverse prior year
loss development which we experienced in recent years. We believe
the LPT/ADC Agreement with Enstar is having the desired effect and
will continue to provide adequate limit if further adverse reserve
development emerges. While our adjusted book value per share was
modestly reduced by fourth quarter results, this non-GAAP measure
reflects the ultimate economic value that has been created with the
measures we have implemented over the last 18 months. As we look to
2020, our strategic focus will center on improving risk-adjusted
shareholder returns, whether via asset and capital management or
active reinsurance underwriting, or a combination of both. Our
present assessment of the reinsurance marketplace along with our
current operating profile is that the risk-adjusted returns
produced by other strategic initiatives may create greater
shareholder value versus active reinsurance underwriting.”
Re-Domestication of Maiden Reinsurance to Vermont
Effective March 16, 2020, Maiden’s principal operating
subsidiary, Maiden Reinsurance Ltd. (“Maiden Reinsurance”),
completed its re-domestication to the State of Vermont in the U.S.
Filings had previously been made with the Vermont Department of
Financial Regulation ("Vermont DFR"), the Vermont Secretary of
State and with the Bermuda Monetary Authority ("BMA") to provide
notice of the Company's intent to re-domicile from Bermuda. Maiden
Reinsurance is now subject to the statutes and regulations of
Vermont in the ordinary course of business. As previously reported,
the Company determined that re-domesticating Maiden Reinsurance to
Vermont enables the Company to better align its operations, capital
and resources with our liabilities, which originate mostly in the
U.S., resulting in a more efficient structure. The
re-domestication, in combination with the transactions completed
pursuant to the strategic review in 2018 and 2019, will continue to
strengthen the Company’s capital position and solvency ratios. The
re-domestication does not apply to the parent holding company,
which remains a Bermuda-based holding company. Securities issued by
the Company are not affected by the re-domestication of Maiden
Reinsurance.
Consolidated Results for the Quarter Ended December 31,
2019
Net loss attributable to Maiden common shareholders for the
three months ended December 31, 2019 was $21.5 million compared to
net loss of $269.2 million for the same period in 2018. The
improvement in the net results for the three months ended December
31, 2019 compared to the same period in 2018 was primarily due to
the following:
- net loss from continuing operations of $21.0 million in the
fourth quarter of 2019 compared to $216.7 million for the same
period in 2018, largely due to the following:
- an underwriting loss(4) of $21.7 million in the fourth quarter
of 2019 compared to $232.3 million in the same period in 2018. The
reduction in the underwriting loss was due to lower adverse prior
year loss development incurred, primarily within the AmTrust
Reinsurance segment, of $16.1 million in the fourth quarter of 2019
compared to adverse prior year loss development of $152.8 million
during the same period in 2018;
- realized gains on investment of $2.2 million for the three
months ended December 31, 2019 compared to realized losses of $1.2
million for the same period in 2018; and
- other general and administrative expenses decreased to $6.8
million for the three months ended December 31, 2019 compared to
$10.2 million for the same period in 2018 due to lower salary,
benefits and other corporate expenses associated with the Strategic
Review and related headcount reductions since late 2018.
- net loss from discontinued operations of $0.5 million compared
to net loss from discontinued operations of $52.5 million for the
same period in 2018; the prior year results were primarily due to
the realized loss recognized on the disposal of our wholly-owned
subsidiary Maiden Reinsurance North America, Inc. (“Maiden US”).
The 2018 loss also included recognition of unrealized losses on
investments in Maiden US of $26.6 million.
In the fourth quarter of 2019, gross premiums written were
$(5.4) million, compared to $388.5 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 $35.8 million in the fourth quarter
of 2019, compared to $484.9 million in the fourth quarter of 2018
due to the combined impact of the terminated quota share contracts
within the AmTrust Reinsurance segment, non-renewals in Maiden
Reinsurance'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 fourth quarter of 2019, net investment income
decreased to $21.5 million from $34.7 million in the fourth quarter
of 2018. The decrease in net investment income was principally due
to the decline in average investable assets of 30.6%, the result of
the run-off of the Company’s reinsurance portfolios and certain
agreements entered into in 2019. Investment income was also
adversely effected by a decline in the average yield to 2.9% from
3.3% compared to the same period in 2018. Realized gains of $2.2
million were generated for the three months ended December 31, 2019
compared to realized losses of $1.2 million for the three months
ended December 31, 2018.
During the fourth quarter of 2019, net loss and loss adjustment
expenses decreased to $37.7 million from $556.6 million in the
fourth quarter of 2018, primarily as a result of lower earned
premiums within the AmTrust Reinsurance segment. Prior year adverse
loss development was $16.1 million for the fourth quarter of 2019,
compared to $152.8 million for the same period in 2018. In the
fourth quarter of 2019, $8.4 million of the reported prior year
adverse loss development was related to the Loss Portfolio and
Adverse Development Cover Agreement (“LPT/ADC Agreement”) with
Enstar Group Limited ("Enstar”).
Commission and other acquisition expenses decreased to $17.7
million in the fourth quarter of 2019, from $157.7 million in the
fourth quarter of 2018 due to significantly lower earned premiums
resulting from the terminations in the AmTrust Reinsurance segment.
The commission and other acquisition expense in the fourth quarter
of 2019 includes $1.1 million of additional ceding commission
agreed under the Partial Termination Amendment.
General and administrative expenses for the fourth quarter of
2019 decreased to $9.5 million, compared to $15.2 million in the
fourth quarter of 2018, primarily related to salaries and related
benefits for headcount reductions occurring in 2019. The Company
estimates that it incurred operating expenses of approximately $2.8
million during the three months ended December 31, 2019 which it
believes will not recur in future periods.
Consolidated Results for the Year Ended December 31,
2019
Net loss attributable to Maiden common shareholders for the year
ended December 31, 2019 was $131.9 million compared to net loss of
$570.3 million for the same period in 2018. The improvement in the
net results for the year ended December 31, 2019 compared to the
same period in 2018 was primarily due to the following:
- net loss from continuing operations of $109.4 million compared
to $450.3 million for the same period in 2018 largely due to the
following:
- an underwriting loss of $183.8 million compared to $520.2
million 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 $112.5 million for the
year ended December 31, 2019 compared to $403.2 million during the
same period in 2018; partly offset by
- higher initial losses incurred 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 $18.7 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 $27.9 million for the year
ended December 31, 2019 compared to realized losses of $1.5 million
for the same period in 2018; and
- no dividends were paid to preference shareholders for the year
ended December 31, 2019 compared to $25.6 million for the same
period in 2018. Our Board of Directors did not declare dividends on
any of our preference shares during 2019.
- net loss from discontinued operations of $22.5 million compared
to net loss from discontinued operations of $94.1 million for the
same period in 2018 largely as a result of the Settlement and
Commutation Agreement entered into between 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 (as defined in our Annual Report on Form
10-K filed with the SEC today) of $7.5 million.
During the year ended December 31, 2019, gross premiums written
were $(528.6) million compared to $2.02 billion for the same period
in 2018 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, effective January 1, 2019. Net premiums
earned were $447.8 million during the year ended December 31, 2019,
compared to $2.03 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 year ended December 31, 2019, net investment income
decreased by 28.2% to $97.8 million from $136.3 million for the
same period in 2018 largely due to a decline in average investable
assets of 11.5% and a decrease in average yield to 2.7% from 3.3%
for the same period in 2018. The decline in average investable
assets was impacted by the following two agreements each dated as
of July 31, 2019: (i) the payment of $445.0 million premium
associated with the LPT/ADC Agreement with Enstar and (ii) the
return of $312.8 million in reserves (adjusted for paid losses
since January 1, 2019) related to the Commutation and Release
Agreement (“Commutation and Release Agreement”) between Maiden
Reinsurance and AmTrust International Insurance, Ltd. (“AII”)),
both effective January 1, 2019.
Realized gains of $27.9 million for the year ended December 31,
2019 were primarily driven by sales of securities related to
funding the LPT/ADC Agreement with Enstar and the commutation
payment to AII pursuant to the Commutation and Release Agreement,
partially offset by net investment losses realized on sales of
securities related to the Partial Termination Amendment and the
conversion of a portion of reinsurance trust assets held as
collateral into funds withheld receivable.
During the year ended December 31, 2019, net loss and loss
adjustment expenses decreased to $452.8 million from $1.88 billion
for the same period in 2018, primarily as a result of lower earned
premiums within the AmTrust Reinsurance segment. Prior year adverse
loss development was $112.5 million for the year ended December 31,
2019, compared to $403.2 million for the same period in 2018.
During 2019, $113.0 million of the reported prior year adverse loss
development was related to the LPT/ADC Agreement with Enstar.
Commission and other acquisition expenses decreased to $169.8
million during the year ended December 31, 2019, from $654.7
million for the same period in 2018 due to significantly lower
earned premiums resulting from the terminations of both quota share
contracts in the AmTrust Reinsurance segment. The commission and
other acquisition expense during the year ended December 31, 2019
includes $18.7 million of additional ceding commission agreed under
the Partial Termination Amendment.
General and administrative expenses for the year ended December
31, 2019 decreased to $47.2 million, compared to $64.9 million for
the same period in 2018, primarily related to salaries and related
benefits for headcount reductions occurring in 2019. The Company
estimates that it incurred operating expenses of approximately
$10.7 million during the year ended December 31, 2019 which it
believes will not recur in future periods.
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 (as defined in our Annual Report on Form 10-K filed
with the SEC today) 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 is subject to adjustment for
paid losses subsequent to December 31, 2018. The LPT/ADC Agreement
provides Maiden Reinsurance 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 December 31, 2019, the
unamortized deferred gain liability recognized for retroactive
reinsurance under the LPT/ADC Agreement was approximately $113.0
million.
Amortization of the deferred gain will not occur until paid
losses have exceeded the minimum retention under the LPT/ADC
Agreement. The current payout date for the losses covered by the
LPT/ADC Agreement before the minimum retention is exceeded is
expected to be during 2024.
Non-GAAP Operating Results for the Three and Twelve Months
Ended December 31, 2019
Non-GAAP operating loss was $3.5 million, or $0.04 per diluted
common share in the fourth quarter of 2019 compared with a non-GAAP
operating loss of $212.4 million, or $2.56 per diluted common share
in the fourth quarter of 2018. Non-GAAP operating loss was $26.5
million, or $0.32 per diluted common share for the year ended
December 31, 2019 compared with a non-GAAP operating loss of $466.1
million, or $5.61 per diluted common share in the same period in
2018.
In addition to other adjustments, management has adjusted the
GAAP net operating loss and underwriting results 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. The amount recognized
as an unamortized deferred gain liability for the three and twelve
months ended December 31, 2019 under this agreement was $8.4
million and $113.0 million, respectively.
For the three and twelve months ended December 31, 2019, the
non-GAAP operating loss is primarily the result of underwriting
results not covered by the LPT/ADC Agreement, specifically the
run-off of AmTrust quota share business with losses occurring after
December 31, 2018 (including the additional ceding commission paid
under the Partial Termination Amendment) as well as claims related
to the AmTrust Hospital Liability Quota Share. In addition, as
previously noted, the Company estimates that it incurred operating
expenses of approximately $2.8 million and $10.7 million during the
three and twelve months ended December 31, 2019, which it believes
will not recur in future periods.
The improvement in the non-GAAP operating losses for the three
and twelve months ended December 31, 2019 compared to the same
periods in 2018 primarily reflects the impact of unfavorable loss
development for which we have ceded that risk under the LPT/ADC
Agreement.
Report on Form 10-K for the Year Ended December 31, 2019 and
Other Financial Matters
The Company’s Annual Report on Form 10-K for the year ended
December 31, 2019 was filed with the U.S. Securities and Exchange
Commission on March 18, 2020. Additional information on the matters
reported in this news release along with other required disclosures
can be found in that filing.
Total assets were $3.6 billion at December 31, 2019, compared to
$5.3 billion at December 31, 2018. Shareholders' equity was $507.7
million at December 31, 2019, compared to $554.3 million at
December 31, 2018. Adjusted shareholders' equity(10) was $620.7
million at December 31, 2019, reflecting the unamortized deferred
gain on retroactive reinsurance of $113.0 million.
The Company has discontinued the presentation of certain
non-GAAP measures such as combined ratio and its related components
in this news release, as it believes that as the run-off of its
reinsurance portfolios progresses, such ratios are increasingly not
meaningful and of less value to readers as they evaluate the
financial results of the Company. The Company has, for the time
being, continued to utilize such non-GAAP measures on an annual
basis in its Annual Report on Form 10-K for the year ended December
31, 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. At March 15, 2020, because preference share
dividends have not been declared and paid for six quarterly
dividend periods, the holders of the Preference Share Series A,
Series C and Series D are collectively entitled to enforce certain
rights under the provisions of those securities.
About Maiden Holdings, Ltd.
Maiden Holdings, Ltd. is a Bermuda-based holding company formed
in 2007.
Special Note about Forward-Looking Statements
Certain statements in this press release, other than purely
historical information, including estimates, projections,
statements relating to the Company’s business plans, objectives and
expected operating results and the assumptions upon which those
statements are based are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements include general statements both with
respect to the Company and the insurance industry and generally are
identified with the words "anticipate", "believe", "expect",
"predict", "estimate", "intend", "plan", "project", "seek",
"potential", "possible", "could", "might", "may", "should", "will",
"would", "will be", "will continue", "will likely result" and
similar expressions. In light of the risks and uncertainties
inherent in all forward-looking statements, the inclusion of such
statements in this press release should not be considered as a
representation by the Company or any other person that the
Company’s objectives or plans or other matters described in any
forward-looking statement will be achieved. These statements are
based on current plans, estimates, assumptions and expectations.
Actual results may differ materially from those projected in such
forward-looking statements and therefore, you should not place
undue reliance on them. Important factors that could cause actual
results to differ materially from those in such forward-looking
statements are set forth in Item 1A "Risk Factors" in the Company’s
Annual Report on Form 10-K for the year ended December 31,
2019.
The Company cautions that the list of important risk factors in
its Annual Report on Form 10-K for the year ended December 31, 2019
is not intended to be and is not exhaustive. The Company undertakes
no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required by law, and all subsequent
written and oral forward-looking statements attributable to the
Company or individuals acting on the Company’s behalf are expressly
qualified in their entirety by this paragraph. If one or more risks
or uncertainties materialize, or if the Company’s underlying
assumptions prove to be incorrect, the Company’s actual results may
vary materially from what was projected. Any forward-looking
statements in this press release reflect the Company’s current view
with respect to future events and are subject to these and other
risks, uncertainties and assumptions relating to the Company’s
operations, results of operations, growth, strategy and liquidity.
Readers are cautioned not to place undue reliance on the
forward-looking statements which speak only as of the dates of the
documents in which such statements were made.
Maiden Holdings, Ltd.
Consolidated Balance
Sheets
(in thousands (000's), except
per share data)
December 31, 2019
December 31, 2018
Assets
Fixed maturities, available-for-sale, at
fair value (amortized cost 2019: $1,813,426 ; 2018: $3,109,980)
$
1,835,518
$
3,051,568
Fixed maturities, held-to-maturity, at
amortized cost (fair value 2018: $998,012)
-
1,015,681
Other investments
31,748
23,716
Total investments
1,867,266
4,090,965
Cash and cash equivalents
48,197
200,841
Restricted cash and cash equivalents
59,081
130,148
Accrued investment income
18,331
27,824
Reinsurance balances receivable, net
12,181
67,997
Reinsurance recoverable on unpaid
losses
623,422
71,901
Loan to related party
167,975
167,975
Deferred commission and other acquisition
expenses, net
77,356
388,442
Funds withheld receivable
684,441
27,039
Other assets
9,946
10,700
Assets held for sale
-
103,628
Total Assets
$
3,568,196
$
5,287,460
Liabilities and Equity
Liabilities
Reserve for loss and loss adjustment
expenses
$
2,439,907
$
3,126,134
Unearned premiums
220,269
1,200,419
Deferred gain on retroactive
reinsurance
112,950
-
Accrued expenses and other liabilities
32,444
66,183
Senior notes - principal amount
262,500
262,500
Less: unamortized debt issuance costs
7,592
7,806
Senior notes, net
254,908
254,694
Liabilities held for sale
-
85,114
Total Liabilities
3,060,478
4,732,544
Commitments and Contingencies
Equity
Preference Shares
465,000
465,000
Common shares
882
879
Additional paid-in capital
751,327
749,418
Accumulated other comprehensive income
(loss)
17,836
(65,616)
Accumulated deficit
(695,794)
(563,891)
Treasury shares, at cost
(31,533)
(31,515)
Total Maiden Shareholders’
Equity
507,718
554,275
Noncontrolling interest in
subsidiaries
-
641
Total Equity
507,718
554,916
Total Liabilities and Equity
$
3,568,196
$
5,287,460
Book value per common share(1)
$
0.51
$
1.08
Common shares outstanding
83,148,458
82,948,577
Maiden Holdings, Ltd.
Consolidated Statements of
Income
(in thousands (000's), except
per share data)
For the Three Months Ended
December 31,
For the Year Ended December
31,
2019
2018
2019
2018
Revenues:
Gross premiums written
$
(5,415)
$
388,451
$
(528,593)
$
2,017,798
Net premiums written
$
(5,855)
$
388,112
$
(531,850)
$
2,014,597
Change in unearned premiums
41,631
96,812
979,612
11,605
Net premiums earned
35,776
484,924
447,762
2,026,202
Other insurance revenue
721
2,052
2,841
9,681
Net investment income
21,470
34,737
97,837
136,285
Net realized gains (losses) on
investment
2,175
(1,247)
27,860
(1,529)
Total other-than-temporary impairment
losses
-
(5,353)
(165)
(5,832)
Portion of loss recognized in other
comprehensive income (loss)
-
-
-
-
Net impairment losses recognized in
earnings
-
(5,353)
(165)
(5,832)
Total revenues
60,142
515,113
576,135
2,164,807
Expenses:
Net loss and loss adjustment expenses
37,719
556,618
452,829
1,880,121
Commission and other acquisition
expenses
17,724
157,714
169,760
654,740
General and administrative expenses
9,543
15,202
47,218
64,940
Total expenses
64,986
729,534
669,807
2,599,801
Other expenses:
Interest and amortization expenses
(4,830)
(4,831)
(19,320)
(19,318)
Foreign exchange and other (losses)
gains
(11,294)
2,599
2,719
4,461
Total other expenses
(16,124)
(2,232)
(16,601)
(14,857)
Loss before income taxes
(20,968)
(216,653)
(110,273)
(449,851)
Less: income tax expense (benefit)
66
39
(911)
441
Net loss from continuing
operations
(21,034)
(216,692)
(109,362)
(450,292)
Loss from discontinued operations, net
of income tax
(493)
(52,504)
(22,541)
(94,113)
Net loss
(21,527)
(269,196)
(131,903)
(544,405)
Net income attributable to noncontrolling
interests
-
(39)
-
(219)
Net loss attributable to Maiden
(21,527)
(269,235)
(131,903)
(544,624)
Dividends on preference shares(2)
-
-
-
(25,636)
Net loss attributable to Maiden common
shareholders
$
(21,527)
$
(269,235)
$
(131,903)
$
(570,260)
Basic and diluted loss from continuing
operations per share attributable to Maiden common
shareholders(9)
$
(0.25)
$
(2.61)
$
(1.32)
$
(5.74)
Basic and diluted loss from
discontinued operations per share attributable to Maiden common
shareholders(9)
(0.01)
(0.64)
(0.27)
(1.13)
Basic and diluted loss per share
attributable to Maiden common shareholders(9)
$
(0.26)
$
(3.25)
$
(1.59)
$
(6.87)
Dividends declared per common
share
$
-
$
-
$
-
$
0.35
Annualized return on average common
equity
-154.1%
-538.3%
-199.9%
-133.2%
Weighted average number of common
shares - basic and diluted(9)
83,133,466
82,946,266
83,061,259
83,050,362
Maiden Holdings, Ltd.
Supplemental Financial Data -
Segment Information
(in thousands (000's))
For the Three Months Ended December 31,
2019
Diversified
Reinsurance
AmTrust Reinsurance
Other
Total
Gross premiums written
$
11,387
$
(16,802)
$
-
$
(5,415)
Net premiums written
$
10,947
$
(16,802)
$
-
$
(5,855)
Net premiums earned
$
15,435
$
20,341
$
-
$
35,776
Other insurance revenue
721
-
-
721
Net loss and loss adjustment expenses
("loss and LAE")
(9,210)
(28,509)
-
(37,719)
Commissions and other acquisition
expenses
(5,485)
(12,239)
-
(17,724)
General and administrative expenses(3)
(1,900)
(832)
-
(2,732)
Underwriting loss(4)
$
(439)
$
(21,239)
$
-
$
(21,678)
Reconciliation to net loss from
continuing operations
Net investment income and realized gains
on investment
23,645
Interest and amortization expenses
(4,830)
Foreign exchange and other losses
(11,294)
Other general and administrative
expenses(3)
(6,811)
Income tax expense
(66)
Net loss from continuing
operations
$
(21,034)
For the Three Months Ended December 31,
2018
Diversified
Reinsurance
AmTrust Reinsurance
Other
Total
Gross premiums written
$
20,379
$
368,072
$
-
$
388,451
Net premiums written
$
20,040
$
368,072
$
-
$
388,112
Net premiums earned
$
29,649
$
455,275
$
-
$
484,924
Other insurance revenue
2,052
-
-
2,052
Net loss and LAE
(19,613)
(536,689)
(316)
(556,618)
Commissions and other acquisition
expenses
(10,488)
(147,226)
-
(157,714)
General and administrative expenses(3)
(4,066)
(891)
-
(4,957)
Underwriting loss(4)
$
(2,466)
$
(229,531)
$
(316)
$
(232,313)
Reconciliation to net loss from
continuing operations
Net investment income and realized losses
on investment
33,490
Total other-than-temporary impairment
losses
(5,353)
Interest and amortization expenses
(4,831)
Foreign exchange and other gains
2,599
Other general and administrative
expenses(3)
(10,245)
Income tax expense
(39)
Net loss from continuing
operations
$
(216,692)
Maiden Holdings, Ltd.
Supplemental Financial Data -
Segment Information
(in thousands (000's))
For the Year Ended December 31,
2019
Diversified
Reinsurance
AmTrust Reinsurance
Other
Total
Gross premiums written
$
52,408
$
(581,001)
$
-
$
(528,593)
Net premiums written
$
49,151
$
(581,001)
$
-
$
(531,850)
Net premiums earned
$
83,691
$
364,071
$
-
$
447,762
Other insurance revenue
2,841
-
-
2,841
Net loss and LAE
(49,905)
(402,612)
(312)
(452,829)
Commissions and other acquisition
expenses
(29,898)
(139,862)
-
(169,760)
General and administrative expenses(3)
(8,872)
(2,895)
-
(11,767)
Underwriting loss(4)
$
(2,143)
$
(181,298)
$
(312)
$
(183,753)
Reconciliation to net loss from
continuing operations
Net investment income and realized gains
on investment
125,697
Total other-than-temporary impairment
losses
(165)
Interest and amortization expenses
(19,320)
Foreign exchange and other gains
2,719
Other general and administrative
expenses(3)
(35,451)
Income tax benefit
911
Net loss from continuing
operations
$
(109,362)
For the Year Ended December 31,
2018
Diversified
Reinsurance
AmTrust Reinsurance
Other
Total
Gross premiums written
$
131,518
$
1,886,280
$
-
$
2,017,798
Net premiums written
$
129,319
$
1,885,278
$
-
$
2,014,597
Net premiums earned
$
112,487
$
1,913,715
$
-
$
2,026,202
Other insurance revenue
9,681
-
-
9,681
Net loss and LAE
(71,441)
(1,806,995)
(1,685)
(1,880,121)
Commissions and other acquisition
expenses
(38,749)
(615,991)
-
(654,740)
General and administrative expenses(3)
(17,396)
(3,845)
-
(21,241)
Underwriting loss(4)
$
(5,418)
$
(513,116)
$
(1,685)
$
(520,219)
Reconciliation to net loss from
continuing operations
Net investment income and realized losses
on investment
134,756
Total other-than-temporary impairment
losses
(5,832)
Interest and amortization expenses
(19,318)
Foreign exchange and other gains
4,461
Other general and administrative
expenses(3)
(43,699)
Income tax expense
(441)
Net loss from continuing
operations
$
(450,292)
Maiden Holdings, Ltd.
Non - GAAP Financial
Measures
(in thousands (000's), except
per share data)
For the Three Months Ended
December 31,
For the Year Ended December
31,
2019
2018
2019
2018
Non-GAAP operating loss attributable to
Maiden common shareholders(5)
$
(3,507)
$
(212,414)
$
(26,514)
$
(466,062)
Non-GAAP basic and diluted operating
loss per share attributable to Maiden common shareholders
$
(0.04)
$
(2.56)
$
(0.32)
$
(5.61)
Annualized non-GAAP operating return on
average common equity(6)
-25.1%
-424.7%
-40.2%
-108.8%
Reconciliation of net loss attributable
to Maiden common shareholders to non-GAAP operating loss
attributable to Maiden common shareholders:
Net loss attributable to Maiden common
shareholders
$
(21,527)
$
(269,235)
$
(131,903)
$
(570,260)
Add (subtract)
Net realized (gains) losses on investment
(2,175)
1,247
(27,860)
1,529
Total other-than-temporary impairment losses
-
5,353
165
5,832
Foreign exchange and other losses (gains)
11,294
(2,599)
(2,719)
(4,461)
Loss from discontinued operations, net of income tax
493
52,504
22,541
94,113
Loss from NGHC Quota Share run-off
-
316
312
1,685
Separation costs incurred due to retirement of former CEO and CFO
-
-
-
5,500
Unamortized deferred gain on retroactive reinsurance
8,408
-
112,950
-
Non-GAAP operating loss attributable to
Maiden common shareholders(5)
$
(3,507)
$
(212,414)
$
(26,514)
$
(466,062)
Weighted average number of common
shares - basic and diluted
83,133,466
82,946,266
83,061,259
83,050,362
Reconciliation of diluted loss per
share attributable to Maiden common shareholders to non-GAAP
diluted operating loss per share attributable to Maiden common
shareholders:
Diluted loss per share attributable to
Maiden common shareholders
$
(0.26)
$
(3.25)
$
(1.59)
$
(6.87)
Add (subtract)
Net realized (gains) losses on investment
(0.03)
0.02
(0.34)
0.02
Total other-than-temporary impairment losses
-
0.07
-
0.07
Foreign exchange and other losses (gains)
0.14
(0.03)
(0.03)
(0.05)
Loss from discontinued operations, net of income tax
0.01
0.63
0.27
1.13
Loss from NGHC Quota Share run-off
-
-
0.01
0.02
Separation costs incurred due to retirement of former CEO and CFO
-
-
-
0.07
Unamortized deferred gain on retroactive reinsurance
0.10
-
1.36
-
Non-GAAP diluted operating loss per
share attributable to Maiden common shareholders
$
(0.04)
$
(2.56)
$
(0.32)
$
(5.61)
December 31, 2019
December 31, 2018
Reconciliation of total Maiden
shareholders' equity to adjusted Maiden shareholders'
equity:
Total Maiden Shareholders’ Equity
$
507,718
$
554,275
Unamortized deferred gain on retroactive reinsurance
112,950
-
Adjusted Maiden shareholders'
equity(10)
$
620,668
$
554,275
Reconciliation of book value per common
share to adjusted book value per common share:
Book value per common share
$
0.51
$
1.08
Unamortized deferred gain on retroactive reinsurance
1.36
-
Adjusted book value per common
share(10)
$
1.87
$
1.08
For the Three Months
Ended
December 31,
For the Year Ended
December 31,
Non-GAAP underwriting results:
2019
2018
2019
2018
Gross premiums written
$
(5,415)
$
388,451
$
(528,593)
$
2,017,798
Net premiums written
$
(5,855)
$
388,112
$
(531,850)
$
2,014,597
Net premiums earned
$
35,776
$
484,924
$
447,762
$
2,026,202
Other insurance revenue
721
2,052
2,841
9,681
Non-GAAP net loss and LAE(11)
(29,311)
(556,618)
(339,879)
(1,880,121)
Commissions and other acquisition
expenses
(17,724)
(157,714)
(169,760)
(654,740)
General and administrative expenses(3)
(2,732)
(4,957)
(11,767)
(21,241)
Non-GAAP underwriting loss(11)
$
(13,270)
$
(232,313)
$
(70,803)
$
(520,219)
Non-GAAP net loss and LAE:
Net loss and LAE
$
37,719
$
556,618
$
452,829
$
1,880,121
Less: Unamortized deferred gain on retroactive reinsurance
8,408
-
112,950
-
Non-GAAP net loss and LAE(11)
$
29,311
$
556,618
$
339,879
$
1,880,121
Maiden Holdings, Ltd.
Non - GAAP Financial
Measures
(in thousands (000's), except
per share data)
December 31, 2019
December 31, 2018
Investable assets:
Total investments
$
1,867,266
$
4,090,965
Cash and cash equivalents
48,197
200,841
Restricted cash and cash equivalents
59,081
130,148
Loan to related party
167,975
167,975
Funds withheld receivable
684,441
27,039
Total investable assets(7)
$
2,826,960
$
4,616,968
December 31, 2019
December 31, 2018
Capital:
Preference shares
$
465,000
$
465,000
Common shareholders' equity
42,718
89,275
Total Maiden shareholders'
equity
507,718
554,275
2016 Senior Notes
110,000
110,000
2013 Senior Notes
152,500
152,500
Total capital resources(8)
$
770,218
$
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) Dividends on preference shares consist
of $0 paid to Preference shares - Series A for the three and twelve
months ended December 31, 2019 and $0 and $9,282 paid to Preference
shares - Series A for the three and twelve months ended December
31, 2018, respectively, $0 paid to Preference shares - Series C for
the three and twelve months ended December 31, 2019 and $0 and
$8,816 paid to Preference shares - Series C for the three and
twelve months ended December 31, 2018, respectively, and $0 paid to
Preference shares - Series D for the three and twelve months ended
December 31, 2019 and $0 and $7,538 paid to Preference shares -
Series D for the three and twelve months ended December 31, 2018,
respectively.
(3) 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.
(4) 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.
(5) 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, 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.
(6) 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.
(7) Investable assets is the total of the
Company's investments, cash and cash equivalents, loan to a related
party and funds withheld receivable.
(8) Total capital resources is the sum of
the Company's principal amount of debt and Maiden shareholders'
equity.
(9) 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.
(10) 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.
(11) Non-GAAP net loss and LAE and
Non-GAAP underwriting income (loss): Management has further
adjusted the net loss and LAE and underwriting income (loss) (as
defined above) 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/20200318005779/en/
Sard Verbinnen & Co. Maiden-SVC@sardverb.com
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