Maiden Holdings, Ltd. (NASDAQ:MHLD) ("Maiden" or the "Company")
today reported a first quarter 2019 net loss attributable to Maiden
common shareholders of $36.6 million or $0.44 per diluted common
share, compared to a net income attributable to Maiden common
shareholders of $13.7 million or $0.16 per diluted common share in
the first quarter of 2018. The non-GAAP operating loss(11) was
$26.9 million, or $0.32 per diluted common share compared with a
non-GAAP operating income of $5.8 million, or $0.07 per diluted
common share in the first quarter of 2018.
Maiden's book value per common share(1) was $1.44 at
March 31, 2019, an increase of 33.3% from December 31,
2018.
Consolidated Results for the Quarter
Ended March 31, 2019
In the first quarter of 2019, gross premiums written were
$(561.1) million, compared to $623.3 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 $183.1 million in first quarter 2019, compared to $516.8
million in first quarter 2018 due to the combined impact of the
terminated quota share contracts within the AmTrust Reinsurance
segment and non-renewals in Maiden'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.
First quarter 2019 net loss and loss adjustment expenses
decreased to $152.7 million from $353.2 million in the first
quarter of 2018, due primarily to lower earned premiums for the
AmTrust Reinsurance segment. The first quarter 2019 loss ratio(6)
was 83.0% compared to 67.9% reported in first quarter 2018. The
increase in the loss ratio was primarily due to a change in the mix
of business resulting from the Partial Termination Amendment
entered into with AmTrust. Prior year adverse loss development was
$7.3 million for the first quarter of 2019, compared to $9.8
million for the same period in 2018.
Commission and other acquisition expenses decreased to $69.6
million in first quarter 2019, from $166.6 million in the first
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 increased 5.9
points to 37.9% for the first quarter of 2019 from 32.0% for the
same period in 2018 as a result of the additional ceding commission
agreed to as part of the Partial Termination Amendment with
AmTrust.
General and administrative expenses for the first quarter of
2019 totaled $15.9 million, compared to $15.7 million in the first
quarter of 2018. Non-recurring expenses were $3.0 million during
the first 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 first quarter of
2019 increased to 8.7% from 3.0% in first quarter 2018 primarily as
a result of lower earned premiums, while the total expense ratio(9)
was 46.6% in first quarter 2019 compared with 35.0% for the same
period last year.
The combined ratio(10) for first quarter 2019 totaled 129.6%,
compared with 102.9% in first quarter 2018.
First quarter 2019 net investment income decreased modestly to
$32.0 million from $32.9 million in the first quarter of 2018
largely due to the decline in average yield to 3.1% from 3.2% in
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 concurrent with this news release.
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 concurrent with this news release.
Other Financial Matters
Total assets were $4.6 billion at March 31, 2019, compared
to $5.3 billion at December 31, 2018. Shareholders'
equity was $584.3 million at March 31, 2019, compared to
$554.3 million at December 31, 2018.
(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.
About Maiden Holdings, Ltd.
Maiden Holdings, Ltd. is a Bermuda-based holding company formed
in 2007. The Company is focused on serving the needs of regional
and specialty insurers in Europe and select other global markets by
providing innovative reinsurance solutions designed to support
their capital needs.
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. In addition,
the Company may not be able to complete the proposed transaction
with Enstar on the terms summarized above or other acceptable
terms, or at all, due to a number of factors, including but not
limited to failure to obtain governmental and regulatory approvals
or to satisfy other closing conditions. 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) March 31, 2019 December 31,
2018 (Unaudited) (Audited) Assets
Fixed maturities, available-for-sale, at
fair value (Amortized cost 2019: $3,130,981 ; 2018:$3,109,980)
$ 3,131,934 $ 3,051,568 Fixed
maturities, held-to-maturity, at amortized cost (Fair value 2018:
$998,012)
- 1,015,681 Other investments, at fair
value
24,693 23,716 Total
investments 3,156,627 4,090,965 Cash and cash
equivalents
89,521 200,841 Restricted cash and cash
equivalents
42,334 130,148 Accrued investment income
27,788 27,824 Reinsurance balances receivable, net
72,867 67,308 Loan to related party
167,975
167,975 Deferred commission and other acquisition expenses,
net
161,976 388,442 Funds withheld receivable
652,087 27,039 Other assets
14,729
12,443 Assets held for sale
177,452
174,475 Total Assets $ 4,563,356
$ 5,287,460 Liabilities and Equity
Liabilities Reserve for loss and loss adjustment expenses
$ 2,980,113 $ 3,055,976 Unearned
premiums
455,175 1,200,419 Reinsurance balances
payable, net
117,943 52,594 Accrued expenses and
other liabilities
12,087 12,900 Senior notes -
principal amount
262,500 262,500 Less: unamortized
debt issuance costs
7,753 7,806 Senior
notes, net
254,747 254,694 Liabilities
held for sale
159,002 155,961 Total
Liabilities 3,979,067 4,732,544
Commitments and Contingencies
Equity Preference Shares
465,000 465,000 Common shares
881 879
Additional paid-in capital
750,670 749,418
Accumulated other comprehensive loss
(220) (65,616)
Accumulated deficit
(600,527) (563,891) Treasury
shares, at cost
(31,515) (31,515)
Total Maiden Shareholders’ Equity 584,289
554,275 Noncontrolling interest in subsidiaries
- 641 Total Equity
584,289 554,916 Total Liabilities and
Equity $ 4,563,356 $ 5,287,460
Book value per common share(1) $
1.44 $ 1.08 Common shares
outstanding 83,064,173 82,948,577
Maiden Holdings, Ltd. Consolidated Statements of
Income (in thousands (000's), except per share data)
(Unaudited) For the Three Months Ended March
31,
2019
2018
Revenues: Gross premiums written
$ (561,139)
$ 623,328 Net premiums written
$
(561,530) $ 622,651 Change in unearned
premiums 744,632 (105,838)
Net premiums earned
183,102 516,813 Other insurance revenue 750 3,726 Net investment
income 32,022 32,869 Net realized (losses) gains on investment
(11,101) 357
Total revenues 204,773 553,765
Expenses: Net loss and loss adjustment expenses 152,689
353,206 Commission and other acquisition expenses 69,617 166,628
General and administrative expenses 15,939 15,671
Total expenses 238,245 535,505
Non-GAAP
(loss) income from operations(2) (33,472)
18,260 Other expenses: Interest and
amortization expenses (4,829) (4,829) Foreign exchange and other
gains (losses) 4,979 (2,407)
Total other
expenses 150 (7,236)
(Loss) income before
income taxes (33,322) 11,024 Less: income tax
benefit (38) (1,324)
Net (loss) income from
continuing operations (33,284) 12,348 (Loss)
income from discontinued operations, net of income tax
(3,352) 9,995 Net (loss) income
(36,636) 22,343 Net income from continuing operations
attributable to noncontrolling interests - (71)
Net (loss) income attributable to Maiden (36,636)
22,272 Dividends on preference shares(3) -
(8,545)
Net loss attributable to Maiden common shareholders
$ (36,636) $ 13,727
Basic (loss) earnings from continuing
operations per share attributable to Maiden common
shareholders
$ (0.40) $ 0.05
Basic (loss) earnings from discontinued
operations per share attributable to Maiden common
shareholders
(0.04) 0.12 Basic (loss) earnings
per share attributable to Maiden common shareholders $
(0.44) $ 0.17
Diluted (loss) earnings from continuing
operations per share attributable to Maiden common
shareholders(15)
$ (0.40) $ 0.04
Diluted (loss) earnings from
discontinued operations per share attributable to Maiden
common shareholders(15)
(0.04) 0.12 Diluted (loss) earnings
per share attributable to Maiden common shareholders(15)
$ (0.44) $ 0.16 Dividends declared
per common share $ - $ 0.15
Annualized return on average common equity -142.5%
7.6% Weighted average number of common shares - basic
82,965,156 83,040,413
Adjusted weighted average number of common
shares and assumed conversions - diluted(15) 82,965,156
83,318,542
Maiden Holdings, Ltd. Supplemental
Financial Data - Segment Information (in thousands
(000's)) (Unaudited) For
the Three Months Ended March 31, 2019
Diversified Reinsurance
AmTrust Reinsurance
Other Total Gross premiums written $ 15,338 $
(576,477) $ - $ (561,139) Net premiums written $ 14,947 $ (576,477)
$ - $ (561,530) Net premiums earned $ 25,292 $ 157,810 $ - $
183,102 Other insurance revenue 750 - - 750 Net loss and loss
adjustment expenses ("loss and LAE") (14,391) (138,070) (228)
(152,689) Commissions and other acquisition expenses (9,261)
(60,356) - (69,617) General and administrative expenses(4)
(3,031) (1,266) - (4,297)
Underwriting
loss(5) $ (641) $ (41,882) $ (228) $ (42,751)
Reconciliation to net loss from continuing operations Net
investment income and realized losses on investment 20,921 Interest
and amortization expenses (4,829) Foreign exchange and other gains
4,979 Other general and administrative expenses(4) (11,642) Income
tax benefit 38
Net loss from continuing operations $
(33,284) Net loss and LAE ratio(6) 55.3%
87.5% 83.0% Commission and other acquisition expense
ratio(7) 35.6% 38.2% 37.9% General and administrative expense
ratio(8) 11.6% 0.8% 8.7% Expense ratio(9)
47.2% 39.0% 46.6%
Combined
ratio(10) 102.5% 126.5% 129.6%
For the Three Months Ended March 31,
2018
Diversified Reinsurance
AmTrust Reinsurance
Other Total Gross premiums written $ 49,400 $ 573,928
$ - $ 623,328 Net premiums written $ 48,271 $ 574,380 $ - $ 622,651
Net premiums earned $ 25,515 $ 491,298 $ - $ 516,813 Other
insurance revenue 3,726 - - 3,726 Net loss and LAE (15,899)
(337,307) - (353,206) Commissions and other acquisition expenses
(9,312) (157,316) - (166,628) General and administrative
expenses(4) (4,481) (920) - (5,401)
Underwriting loss(5) $ (451) $ (4,245) $ - $ (4,696)
Reconciliation to net income from continuing
operations Net investment income and realized gains on
investment 33,226 Interest and amortization expenses (4,829)
Foreign exchange losses (2,407) Other general and administrative
expenses(4) (10,270) Income tax benefit 1,324
Net income
from continuing operations $ 12,348 Net loss and LAE
ratio(6) 54.4% 68.7% 67.9% Commission and
other acquisition expense ratio(7) 31.8% 32.0% 32.0% General and
administrative expense ratio(8) 15.3% 0.2%
3.0% Expense ratio(9) 47.1% 32.2% 35.0%
Combined ratio(10) 101.5% 100.9%
102.9%
Maiden Holdings, Ltd.
Non - GAAP Financial Measures (in thousands (000's),
except per share data) (Unaudited) For the
Three Months Ended March 31, 2019 2018
Non-GAAP operating (loss) income attributable to Maiden common
shareholders(11) $ (26,934) $ 5,782
Non-GAAP basic
and diluted operating (loss) earnings per share attributable to
Maiden common shareholders $ (0.32) $ 0.07
Annualized
non-GAAP operating return on average common equity(12)
-104.7% 3.2%
Reconciliation of net (loss) income
attributable to Maiden common shareholders to non-GAAP operating
(loss) income attributable to Maiden common
shareholders:
Net (loss) income attributable to Maiden common shareholders $
(36,636) $ 13,727 Add (subtract) Net realized losses (gains) on
investment 11,101 (357) Foreign exchange and other (gains) losses
(4,979) 2,407 Loss (income) from discontinued operations, net of
income tax 3,352 (9,995) Divested NGHC Quota Share run-off
228 -
Non-GAAP operating (loss) income attributable to
Maiden common shareholders(11) $ (26,934)
$ 5,782 Weighted average number of common
shares - basic 82,965,156 83,040,413
Adjusted weighted
average number of common shares and assumed conversions -
diluted(15) 82,965,156 83,318,542
Reconciliation of diluted (loss)
earnings per share attributable to Maiden common shareholders to
non-GAAP diluted operating (loss) earnings per share
attributable to Maiden common shareholders:
Diluted (loss) earnings per share attributable to Maiden common
shareholders $ (0.44) $ 0.16 Add (subtract) Net realized
losses (gains) on investment 0.13 - Foreign exchange and other
(gains) losses (0.06) 0.03 Loss (income) from discontinued
operations, net of income tax 0.04 (0.12) Divested NGHC Quota Share
run-off 0.01 -
Non-GAAP diluted operating (loss)
earnings per share attributable to Maiden common shareholders
$ (0.32) $ 0.07
Reconciliation of net (loss) income attributable to Maiden to
non-GAAP (loss) income from operations: Net (loss) income
attributable to Maiden $ (36,636) $ 22,272 Add (subtract) Foreign
exchange and other (gains) losses (4,979) 2,407 Interest and
amortization expenses 4,829 4,829 Income tax benefit (38) (1,324)
Loss (income) from discontinued
operations, net of income tax
3,352
(9,995)
Net income attributable to noncontrolling
interest
-
71
Non-GAAP (loss) income from operations(2) $
(33,472) $ 18,260
Maiden Holdings, Ltd.
Non - GAAP Financial Measures (in thousands (000's),
except per share data) (Unaudited)
March 31, 2019 December 31, 2018 Investable
assets: Total investments $ 3,156,627 $ 4,090,965 Cash and cash
equivalents 89,521 200,841 Restricted cash and cash equivalents
42,334 130,148 Loan to related party 167,975 167,975 Funds withheld
652,087 27,039 Total investable
assets(13)
$ 4,108,544 $
4,616,968 March 31, 2019 December 31,
2018 Capital: Preference shares $ 465,000 $ 465,000
Common shareholders' equity 119,289
89,275
Total Maiden shareholders' equity 584,289 554,275
2016 Senior Notes 110,000 110,000 2013 Senior Notes
152,500 152,500
Total capital
resources(14) $ 846,789
$ 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 (loss) income from operations is a non-GAAP financial
measure defined by the Company as net loss attributable to Maiden
excluding foreign exchange and other gains and losses, interest and
amortization expenses, income tax expense, net income or loss
attributable to noncontrolling interest and loss from discontinued
operations, net of income tax and should not be considered as an
alternative to net income (loss). The Company’s management believes
that non-GAAP (loss) income from operations is a useful measure of
the Company’s underlying earnings fundamentals based on its
underwriting and investment income before financing costs. This
(loss) income 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 (loss) income from
operations may not be comparable to similarly titled measures used
by other companies. (3) Dividends on preference shares
consist of $0 and $3,094 paid to Preference shares - Series A for
the three months ended March 31, 2019 and 2018, respectively, $0
and $2,939 paid to Preference shares - Series C for the three
months ended March 31, 2019 and 2018, respectively, and $0 and
$2,512 paid to Preference shares - Series D for the three months
ended March 31, 2019 and 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) income is a non-GAAP financial measure defined by the
Company as net loss attributable to Maiden common shareholders
excluding realized and unrealized investment gains and losses,
foreign exchange and other gains and losses, Divested NGHC Quota
Share run-off and loss from discontinued operations, net of income
tax and should not be considered as an alternative to net loss. The
Company's management believes that non-GAAP operating (loss) income
is a useful indicator of trends in the Company's underlying
operations. The Company's measure of non-GAAP operating (loss)
income 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) income 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, funds withheld receivable and loan to a related party.
(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.
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Sard Verbinnen & Co.Maiden-SVC@sardverb.com
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