Market Overview

Maiden Holdings, Ltd. Announces Second Quarter 2017 Financial Results

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 Highlights for the quarter ended June 30, 2017

  • Net loss attributable to Maiden common shareholders of $22.4 million, or $0.26 per diluted common share compared with net income attributable to Maiden common shareholders of $30.9 million, or $0.39 per diluted common share in the second quarter of 2016;
  • Non-GAAP net operating loss(1) of $12.5 million, or $0.14 per diluted common share compared with non-GAAP operating earnings of $28.4 million, or $0.37 per diluted common share in the second quarter of 2016;
  • Net adverse development in the second quarter of 2017 was $56.0 million.  Comprised primarily of: 
     -  $29.4 million in the AmTrust Reinsurance segment; and  
     -  $25.4 million in the Diversified Reinsurance segment;
  • Gross premiums written increased 2.5% to $705.2 million compared to the second quarter of 2016;
  • Net premiums written increased 5.2% to $684.1 million compared to the second quarter of 2016;    
  • Combined ratio(13) of 105.8% compared to 98.6% in the second quarter of 2016;
  • Net investment income of $40.5 million increased 14.7% compared to $35.3 million in the second quarter of 2016;
  • Book value per common share(4) of $11.95 decreased 1.4% compared to year-end 2016; and
  • In June, Maiden redeemed its $100 million 8.0% senior notes due 2042 and issued $150 million 6.7% non-cumulative preference shares.

Highlights for the six months ended June 30, 2017

  • Net loss attributable to Maiden common shareholders of $1.9 million, or $0.02 per diluted common share compared with net income attributable to Maiden common shareholders of $58.1 million, or $0.75 per diluted common share in the first half of 2016;
  • Non-GAAP operating earnings(1) of $10.2 million, or $0.12 per diluted common share compared with non-GAAP operating earnings of $56.8 million, or $0.73 per diluted common share in the first six months of 2016;
  • Gross premiums written increased 4.9% to $1.63 billion compared to the first half of 2016;
  • Net premiums written increased 9.8% to $1.58 billion compared to the first six months of 2016;   
  • Combined ratio(13) of 103.4% compared to 98.7% in the first half of 2016; and
  • Net investment income of $82.7 million increased 15.4% compared to $71.6 million in the first half of 2016.

HAMILTON, Bermuda, Aug. 08, 2017 (GLOBE NEWSWIRE) -- Maiden Holdings, Ltd. (NASDAQ:MHLD) ("Maiden" or "the Company") today reported a second quarter 2017 net loss attributable to Maiden common shareholders of $22.4 million or $0.26 per diluted common share compared to net income attributable to Maiden common shareholders of $30.9 million or $0.39 per diluted common share in the second quarter of 2016.  The non-GAAP operating loss(1) was $12.5 million, or $0.14 per diluted common share compared with non-GAAP operating earnings of $28.4 million, or $0.37 per diluted common share in the second quarter of 2016.

Commenting on the results, Art Raschbaum, Chief Executive Officer of Maiden stated, "The emergence of adverse loss development in both of our key operating segments has impacted our second quarter 2017 results.  We do not believe that the development observed in the quarter is analogous to the trend observed across our portfolio over recent quarters which specifically emanated from elevated commercial auto liability frequency and severity from the 2011-2014 underwriting years, a phenomenon which has plagued many in the industry. While the AmTrust Reinsurance segment adverse development is relatively modest in the context of the overall historical portfolio assumed, as we have committed to in the past, it is our practice to respond to confirmed adverse development promptly. In response to observed elevated claims activity which we noted in our first quarter earnings call, Maiden's audit activity has confirmed claims operational changes in AmTrust's U.S. small commercial lines business which are believed to have contributed to a portion of the increased emergence in related casualty lines.  We have however increased our reserves in these lines in the quarter in response to elevated severity in specific jurisdictions.

"In the Diversified Reinsurance segment, adverse development was observed in the segment's casualty facultative business and from a small number of treaty accounts.  Despite the adverse development in the quarter, year-to-date treaty commercial auto which has been the source of significant development over many recent quarters, has been benign, giving us increasing comfort that we have addressed this issue.  In the quarter, Maiden also experienced elevated non-cat property loss activity in its Diversified Reinsurance segment.  As we have observed in prior quarters, the most recent underwriting years continue to perform within expectations.  Despite the underwriting results, we did benefit from strong investment income, up 14.7% from the prior year period driven by increased investable assets.  Absent adverse development, this will improve both return on equity and operating results in future quarters."            

Results for the quarter ended June 30, 2017
Maiden reported a second quarter 2017 net loss attributable to Maiden common shareholders of $22.4 million or $0.26 per diluted common share compared to net income attributable to Maiden common shareholders of $30.9 million or $0.39 per diluted common share in the second quarter of 2016.   The non-GAAP operating loss(1) was $12.5 million, or $ 0.14 per diluted common share compared with non-GAAP operating earnings of $28.4 million, or $0.37 per diluted common share in the second quarter of 2016.

In the second quarter of 2017, gross premiums written increased 2.5% to $705.2 million from $688.3 million in the second quarter of 2016.  Gross premiums written in the Diversified Reinsurance segment totaled $140.8 million, a decrease of 14.6% versus the second quarter of 2016, primarily due to the commutation of a single large account and the return of the unearned premium reserve.  In the AmTrust Reinsurance segment, gross premiums written were $564.3 million, an increase of 7.8% compared to $523.5 million in the second quarter of 2016. 

Net premiums written totaled $684.1 million in the second quarter of 2017, an increase of 5.2% compared to the second quarter of 2016.  Net premiums written were higher in the second quarter of 2017 due to growth in the AmTrust Reinsurance segment and as a result of lower utilization of retrocessional capacity compared to the prior year period.

Net premiums earned were $711.1 million, an increase of 11.5% compared to the second quarter of 2016.  In the Diversified Reinsurance segment, net premiums earned increased 7.1% to $204.2 million compared to the second quarter of 2016.  The AmTrust Reinsurance segment net premiums earned were $506.8 million, up 13.4% compared to the second quarter of 2016.   

Net loss and loss adjustment expenses of $528.6 million were up 23.8% compared to the second quarter of 2016.  The loss ratio(9) of 74.1% was higher than the 66.8% reported in the second quarter of 2016.

Commission and other acquisition expenses increased 13.1% to $210.0 million in the second quarter of 2017, compared to the second quarter of 2016.  The expense ratio(12) decreased to 31.7% for the second quarter of 2017 compared with 31.8% in the same quarter last year.  General and administrative expenses for the second quarter of 2017 totaled $15.3 million, an 11.2% decrease compared with $17.3 million in the second quarter of 2016. The general and administrative expense ratio(11) was 2.2% in the second quarter of 2017, compared to 2.7% in the second quarter of 2016. 

The combined ratio(13) for the second quarter of 2017 totaled 105.8% compared with 98.6% in the second quarter of 2016.  The Diversified Reinsurance segment combined ratio was 112.9% in the second quarter of 2017 compared to 103.4% in the second quarter of 2016.  The Diversified Reinsurance segment results identified adverse development in its casualty facultative portfolio and select treaty accounts.  The Diversified Reinsurance segment was also impacted by approximately $6 million of non-catastrophe property losses during the second quarter of 2017.  The AmTrust Reinsurance segment combined ratio was 101.5% in the second quarter of 2017 compared to 94.9% in the second quarter of 2016.  The higher combined ratio was significantly driven by adverse loss development recognized in the AmTrust Reinsurance segment's U.S. small commercial business lines.

Net investment income of $40.5 million in the second quarter of 2017 increased 14.7% compared to the second quarter of 2016.  As of June 30, 2017, the average yield on the fixed income portfolio (excluding cash) is 3.23% with an average duration of 4.83 years.  Cash and cash equivalents were $437.3 million at June 30, 2017 and $244.1 million higher than at March 31, 2017.

Total assets increased 8.6% to $6.8 billion at June 30, 2017 compared to $6.3 billion at year-end 2016.   Shareholders' equity was $1.5 billion, up 10.3% compared to December 31, 2016.  Book value per common share(4) was $11.95 at June 30, 2017 or 1.4% lower than at December 31, 2016. 
  
During the second quarter of 2017, the Board of Directors declared dividends of $0.15 per common share, $0.515625 per Series A preference share and $0.445313 per Series C preference share.

Results for the six months ended June 30, 2017
Net loss attributable to Maiden common shareholders was $1.9 million or $0.02 per diluted common share in the first six months of 2017 compared to net income attributable to Maiden common shareholders of $58.1 million or $0.75 per diluted common share in the first half 2016.  Non-GAAP net operating earnings(1) for the first six months of 2017 were $10.2 million, or $0.12 per diluted common share compared with $56.8 million, or $0.73 per diluted common share in the first half of 2016.

In the first half of 2017, gross premiums written totaled $1.6 billion, an increase of 4.9% compared to the first half of 2016.  Gross premiums written in the Diversified Reinsurance segment totaled $472.9 million, a decrease of 1.6% versus the first six months of 2016.  In the AmTrust Reinsurance segment, gross premiums written increased by 7.8% to $1.2 billion compared to the first half of 2016.

In the first six months of 2017, net premiums written totaled $1.6 billion, an increase of 9.8% compared to the first six months of 2016. 

Net premiums earned of $1.4 billion increased 13.3% compared to the first half of 2016.  Net premiums earned increased 11.9% in the Diversified Reinsurance segment to $406.1 million compared to the first six months of 2016. The AmTrust Reinsurance segment net premiums earned were up 13.9% to $1.0 billion compared to the first half of 2016.

Net loss and loss adjustment expenses of $1.0 billion were up 21.5% compared to the first half of 2016.  The loss ratio(9) of 70.8% was higher than the 65.9% in the first six months of 2016.

Commission and other acquisition expenses, increased 13.5% to $432.1 million in the first half of 2017 compared to the first half of 2016, while the expense ratio(12) lowered to 32.6% compared with 32.8% in the first six months of 2016.  General and administrative expenses for the first half of 2017 totaled $32.8 million, the same as in the first half of 2016. The general and administrative expense ratio(11) decreased to 2.3% versus 2.6% in the first six months of 2016.

The combined ratio(13) for the first six months of 2017 was 103.4% compared to the 98.7% combined ratio reported for the first half of 2016.  The Diversified Reinsurance segment had a combined ratio of 106.4% in the first half of 2017 compared to 103.2% in the first half of 2016.  The AmTrust Reinsurance segment combined ratio was 100.6% in the first six months of 2017 compared to 95.1% in the first six months of 2016.

Net investment income of $82.7 million in the first half of 2017 increased 15.4% compared to $71.6 million in the first half of 2016.

(1)(4) Please see the Non-GAAP Financial Measures table for additional information on these non-GAAP financial measures and reconciliation of these measures to GAAP measures.

(9)(11)(12)(13) Loss 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.

Conference Call

Maiden's Chief Executive Officer, Art Raschbaum and Chief Financial Officer, Karen Schmitt will review these results tomorrow via teleconference and live audio webcast beginning at 8:30 a.m. ET.

To participate in the conference call, please access one of the following at least five minutes prior to the start time: 

U.S. Callers: 1.877.734.5373

Outside U.S. Callers: 1.973.200.3059

Passcode: 57795342

Webcast: http://www.maiden.bm/news_events 

A replay of the conference call will be available beginning at 11:30 a.m. ET on August 9, 2017 through 11:30 a.m. ET on August 16, 2017. To listen to the replay, please dial toll free: 1.855.859.2056 (U.S. Callers) or toll: 1.404.537.3406 (callers outside the U.S.) and enter the Passcode: 57795342; or access http://www.maiden.bm/news_events.

About Maiden Holdings, Ltd.

Maiden Holdings, Ltd. is a Bermuda-based holding company formed in 2007.  Through its subsidiaries, which are each A rated (excellent) by A.M. Best, the Company is focused on providing non-catastrophic, customized reinsurance products and services to small and mid-size insurance companies in the United States and Europe. As of June 30, 2017, Maiden had $6.8 billion in assets and shareholders' equity of $1.5 billion.

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, 2016 as updated in periodic filings with the SEC. However these factors should not be construed as exhaustive. Forward-looking statements speak only as of the date they are made and the Company undertakes no obligation to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by law. 

Maiden Holdings, Ltd.
Consolidated Balance Sheets 
(in thousands (000's), except per share data)
 
       June 30, 2017       December 31, 2016
       (Unaudited)     (Audited)
  Assets          
  Fixed maturities, available-for-sale, at fair value (Amortized cost 2017: $3,692,950; 2016: $4,005,642)     $   3,704,761     $   3,971,666  
  Fixed maturities, held-to-maturity, at amortized cost (Fair value 2017: $1,160,694; 2016: $766,135)     1,132,916         752,212  
  Other investments, at fair value (Cost 2017: $10,041; 2016: $10,057)     15,553         13,060  
  Total investments     4,853,230         4,736,938  
  Cash and cash equivalents     246,826         45,747  
  Restricted cash and cash equivalents     190,470         103,788  
  Accrued investment income     35,773         36,517  
  Reinsurance balances receivable, net      499,756         410,166  
  Reinsurance recoverable on unpaid losses     87,681         99,936  
  Loan to related party      167,975         167,975  
  Deferred commission and other acquisition expenses, net     475,655         424,605  
  Goodwill and intangible assets, net     76,649         77,715  
  Other assets     157,214         148,912  
  Total Assets $   6,791,229     $   6,252,299  
  Liabilities and  Equity          
  Liabilities          
  Reserve for loss and loss adjustment expenses $   3,110,208     $   2,896,496  
  Unearned premiums      1,644,704         1,475,506  
  Accrued expenses and other liabilities     152,684         161,334  
  Liability for investments purchased     128,504         6,402  
  Senior notes          
  Principal amount     262,500         362,500  
  Less: unamortized debt issuance costs     8,123         11,091  
  Senior notes, net     254,377         351,409  
  Total Liabilities     5,290,477         4,891,147  
             
  Equity          
  Preference Shares     465,000         315,000  
  Common shares     877         873  
  Additional paid-in capital     746,707         749,256  
  Accumulated other comprehensive income     35,575         14,997  
  Retained earnings     257,806         285,662  
  Treasury shares, at cost     (5,566 )       (4,991 )
  Total Maiden Shareholders' Equity     1,500,399         1,360,797  
  Noncontrolling interest in subsidiaries     353         355  
  Total Equity     1,500,752         1,361,152  
  Total Liabilities and Equity $   6,791,229     $   6,252,299  
             
             
  Book value per common share(4) $   11.95     $   12.12  
             
  Common shares outstanding   86,620,524       86,271,109  
             

 

Maiden Holdings, Ltd.
Consolidated Statements of Income
(in thousands (000's), except per share data)
(Unaudited)
                         
  For the Three Months
Ended June 30,

  For the Six Months
Ended June 30,
   2017
   2016
   2017
   2016
Revenues:                      
Gross premiums written $   705,198     $   688,322     $   1,628,625     $   1,552,436  
Net premiums written $   684,072     $   650,427     $   1,584,620     $   1,443,258  
Change in unearned premiums     27,053         (12,863 )       (164,011 )       (189,685 )
Net premiums earned     711,125         637,564         1,420,609         1,253,573  
Other insurance revenue     1,547         1,525         5,328         6,351  
Net investment income     40,512         35,323         82,669         71,625  
Net realized gains on investment      1,572         334         2,457         2,611  
Total revenues     754,756         674,746         1,511,063         1,334,160  
Expenses:                      
Net loss and loss adjustment expenses     528,620         426,989         1,009,189         830,610  
Commission and other acquisition expenses      210,039         185,727         432,068         380,795  
General and administrative expenses     15,346         17,290         32,760         32,786  
Total expenses     754,005         630,006         1,474,017         1,244,191  
                       
Non-GAAP income from operations(2)     751         44,740         37,046         89,969  
                       
Other expenses:                      
Interest and amortization expenses     (6,745 )       (7,193 )       (13,601 )       (14,458 )
Accelerated amortization of senior note issuance cost     (2,809 )       (2,345 )       (2,809 )       (2,345 )
Amortization of intangible assets     (533 )       (615 )       (1,066 )       (1,230 )
Foreign exchange (losses) gains     (6,722 )       5,520         (8,643 )       5,787  
Total other expenses     (16,809 )       (4,633 )       (26,119 )       (12,246 )
                       
(Loss) income before income taxes     (16,058 )       40,107         10,927         77,723  
Less: income tax expense     277         220         761         1,007  
                       
Net (loss) income     (16,335 )       39,887         10,166         76,716  
Add: net loss attributable to noncontrolling interest     9         46         31         110  
Net (loss) income attributable to Maiden      (16,326 )       39,933         10,197         76,826  
Dividends on preference shares(6)     (6,033 )       (9,023 )       (12,066 )       (18,700 )
Net (loss) income attributable to Maiden common shareholders $   (22,359 )   $   30,910     $   (1,869 )   $   58,126  
                       
Basic (loss) earnings per common share attributable to Maiden shareholders $   (0.26 )   $   0.42     $   (0.02 )   $   0.79  
Diluted (loss) earnings per common share attributable to Maiden shareholders(8) $   (0.26 )   $   0.39     $   (0.02 )   $   0.75  
Dividends declared per common share $   0.15     $   0.14     $   0.30     $   0.28  
Annualized return on average common equity   (8.6) %     12.3 %     (0.4) %     12.2 %
                       
Weighted average number of common shares - basic     86,564,794         73,997,759         86,458,413         73,934,518  
Adjusted weighted average number of common shares and assumed conversions - diluted(8)     86,564,794         85,926,626        86,458,413         85,894,062  
                       

 

Maiden Holdings, Ltd.
Supplemental Financial Data - Segment Information
(in thousands (000's))
(Unaudited)
                                 
                                 
For the Three Months Ended June 30, 2017   Diversified
Reinsurance
    AmTrust
Reinsurance
    Other     Total  
Gross premiums written   $   140,841       $   564,276       $   81       $   705,198    
Net premiums written   $   137,247       $   546,735       $   90       $   684,072    
Net premiums earned   $ 204,219       $ 506,816       $   90       $ 711,125    
Other insurance revenue     1,547           -            -          1,547    
Net loss and loss adjustment expenses ("loss and LAE")       (176,837 )         (350,561 )         (1,222 )         (528,620 )  
Commissions and other acquisition expenses       (46,989 )         (163,055 )         5           (210,039 )  
General and administrative expenses       (8,494 )         (664 )         -            (9,158 )  
Underwriting loss    $   (26,554 )     $   (7,464 )     $   (1,127 )     $   (35,145 )  
                                 
Reconciliation to net loss                                
Net investment income and realized gains on investment                               42,084    
Interest and amortization expenses                               (6,745 )  
Accelerated amortization of senior note issuance cost                               (2,809 )  
Amortization of intangible assets                               (533 )  
Foreign exchange losses                               (6,722 )  
Other general and administrative expenses                               (6,188 )  
Income tax expense                               (277 )  
Net loss                           $   (16,335 )  
                                 
                                 
Net loss and LAE ratio(9)     86.0 %       69.2 %               74.1 %  
Commission and other acquisition expense ratio(10)     22.8 %       32.2 %               29.5 %  
General  and administrative expense ratio(11)     4.1 %       0.1 %               2.2 %  
Expense ratio(12)     26.9 %       32.3 %               31.7 %  
Combined ratio(13)     112.9 %       101.5 %               105.8 %  
                                 
                                 
For the Three Months Ended June 30, 2016   Diversified
Reinsurance
    AmTrust
Reinsurance
    Other     Total  
Gross premiums written   $   164,834       $   523,488       $   -        $   688,322    
Net premiums written   $   161,294       $   489,133       $   -        $   650,427    
Net premiums earned   $ 190,755       $ 446,809       $   -        $   637,564    
Other insurance revenue     1,525           -            -            1,525    
Net loss and LAE       (144,246 )         (282,619 )         (124 )         (426,989 )  
Commissions and other acquisition expenses       (45,496 )         (140,230 )         (1 )         (185,727 )  
General and administrative expenses       (9,079 )         (963 )         -            (10,042 )  
Underwriting (loss) income    $   (6,541 )     $   22,997       $   (125 )     $   16,331    
                                 
Reconciliation to net income                                
Net investment income and realized gains on investment                               35,657    
Interest and amortization expenses                               (7,193 )  
Accelerated amortization of senior note issuance cost                               (2,345 )  
Amortization of intangible assets                               (615 )  
Foreign exchange gains                               5,520    
Other general and administrative expenses                               (7,248 )  
Income tax expense                               (220 )  
Net income                            $   39,887    
                                 
Net loss and LAE ratio(9)     75.0 %       63.3 %               66.8 %  
Commission and other acquisition expense ratio(10)     23.7 %       31.4 %               29.1 %  
General  and administrative expense ratio(11)     4.7 %       0.2 %               2.7 %  
Expense ratio(12)     28.4 %       31.6 %               31.8 %  
Combined ratio(13)     103.4 %       94.9 %               98.6 %  
                                 

 

Maiden Holdings, Ltd.
Supplemental Financial Data - Segment Information
(in thousands (000's))
(Unaudited)
                                 
                                 
For the Six Months Ended June 30, 2017   Diversified
Reinsurance
    AmTrust
Reinsurance
    Other     Total  
Gross premiums written   $ 472,886       $   1,155,658       $   81       $   1,628,625    
Net premiums written   $ 464,743       $ 1,119,787       $   90       $   1,584,620    
Net premiums earned   $ 406,061       $ 1,014,458       $   90       $   1,420,609    
Other insurance revenue       5,328           -            -            5,328    
Net loss and LAE       (315,486 )         (692,192 )         (1,511 )         (1,009,189 )  
Commissions and other acquisition expenses       (104,934 )         (327,139 )         5           (432,068 )  
General and administrative expenses       (17,224 )         (1,469 )         -            (18,693 )  
Underwriting loss   $   (26,255 )     $   (6,342 )     $   (1,416 )     $   (34,013 )  
                                 
Reconciliation to net income                                
Net investment income and realized gains on investment                               85,126    
Interest and amortization expenses                               (13,601 )  
Accelerated amortization of senior note issuance cost                               (2,809 )  
Amortization of intangible assets                               (1,066 )  
Foreign exchange losses                               (8,643 )  
Other general and administrative expenses                               (14,067 )  
Income tax expense                               (761 )  
Net income                           $   10,166    
                                 
Net loss and LAE ratio(9)     76.7 %       68.3 %               70.8 %  
Commission and other acquisition expense ratio(10)     25.5 %       32.2 %               30.3 %  
General  and administrative expense ratio(11)     4.2 %       0.1 %               2.3 %  
Expense ratio(12)     29.7 %       32.3 %               32.6 %  
Combined ratio(13)     106.4 %       100.6 %               103.4 %  
                                 
                                 
For the Six Months Ended June 30, 2016   Diversified
Reinsurance
    AmTrust
Reinsurance
    Other     Total  
Gross premiums written   $   480,638       $   1,071,798       $   -        $   1,552,436    
Net premiums written   $   447,430       $ 995,828       $   -        $   1,443,258    
Net premiums earned   $ 363,011       $ 890,562       $   -        $ 1,253,573    
Other insurance revenue       6,351           -            -          6,351    
Net loss and LAE       (263,322 )         (564,393 )         (2,895 )         (830,610 )  
Commissions and other acquisition expenses       (100,027 )         (280,768 )         -            (380,795 )  
General and administrative expenses       (17,679 )         (1,549 )         -            (19,228 )  
Underwriting (loss) income    $   (11,666 )     $   43,852       $   (2,895 )     $   29,291    
                                 
Reconciliation to net income                                
Net investment income and realized gains on investment                               74,236    
Interest and amortization expenses                               (14,458 )  
Accelerated amortization of senior note issuance cost                               (2,345 )  
Amortization of intangible assets                               (1,230 )  
Foreign exchange gains                               5,787    
Other general and administrative expenses                               (13,558 )  
Income tax expense                               (1,007 )  
Net income                           $   76,716    
                                 
Net loss and LAE ratio(9)     71.3 %       63.4 %               65.9 %  
Commission and other acquisition expense ratio(10)     27.1 %       31.5 %               30.2 %  
General  and administrative expense ratio(11)     4.8 %       0.2 %               2.6 %  
Expense ratio(12)     31.9 %       31.7 %               32.8 %  
Combined ratio(13)     103.2 %       95.1 %               98.7 %  
                                 

 

Maiden Holdings, Ltd.
Non - GAAP Financial Measures
(in thousands (000's), except per share data)
(Unaudited)
                         
    For the Three Months
Ended June 30,
 
  For the Six Months
Ended June 30,
 
    2017   2016   2017   2016
Non-GAAP operating (loss) earnings attributable to Maiden common shareholders(1) $  (12,450 )   $   28,431     $   10,188     $   56,778  
Non-GAAP basic operating (loss) earnings per common share attributable to Maiden shareholders $   (0.14 )   $   0.38     $   0.12     $   0.77  
Non-GAAP diluted operating (loss) earnings per common share attributable to Maiden shareholders(8) $   (0.14 )   $   0.37     $   0.12     $   0.73  
Annualized non-GAAP operating return on average common equity(7)   (4.8) %     11.3 %     2.0 %     11.9 %
                         
Reconciliation of net (loss) income attributable to Maiden common shareholders to non-GAAP operating (loss) earnings attributable to Maiden common shareholders:                      
Net (loss) income attributable to Maiden common shareholders $  (22,359 )   $   30,910     $   (1,869 )   $   58,126  
Add (subtract)                      
  Net realized gains on investment      (1,572 )       (334 )       (2,457 )       (2,611 )
  Foreign exchange losses (gains)    6,722         (5,520 )       8,643        (5,787 )
  Amortization of intangible assets     533         615         1,066         1,230  
  Divested excess and surplus "E&S" business and NGHC run-off     1,127         125         1,416         2,895  
  Accelerated amortization of senior note issuance cost     2,809         2,345         2,809         2,345  
  Non-cash deferred tax expense      290         290         580         580  
Non-GAAP operating (loss) earnings attributable to Maiden common shareholders(1) $  (12,450 )   $  28,431     $  10,188     $  56,778  
                         
Weighted average number of common shares - basic
  86,564,794       73,997,759       86,458,413       73,934,518  
Adjusted weighted average number of common shares and assumed conversions - diluted(8)
  86,564,794       85,926,626       87,384,378       85,894,062  
                         
Reconciliation of diluted (loss) earnings per common share attributable to Maiden shareholders to non-GAAP diluted operating (loss) earnings per common share attributable to Maiden shareholders:                      
Diluted (loss) earnings per common share attributable to Maiden shareholders(8) $   (0.26 )   $   0.39     $   (0.02 )   $   0.75  
                         
Add (subtract)                      
  Net realized gains on investment      (0.02 )       -          (0.03 )       (0.03 )
  Foreign exchange losses (gains)     0.08         (0.06 )       0.10         (0.07 )
  Amortization of intangible assets     0.01         0.01         0.01         0.02  
  Divested excess and surplus "E&S" business and NGHC run-off     0.02         -          0.02         0.03  
  Accelerated amortization of senior note issuance cost     0.03         0.03         0.03         0.03  
  Non-cash deferred tax expense      -          -          0.01         -   
Non-GAAP diluted operating (loss) earnings per common share attributable to Maiden shareholders(8) $   (0.14 )   $   0.37     $   0.12     $   0.73  
                         
Reconciliation of net (loss) income attributable to Maiden to non-GAAP income from operations:                      
Net (loss) income attributable to Maiden  $  (16,326 )   $   39,933     $   10,197     $   76,826  
Add (subtract)                      
  Foreign exchange losses (gains)     6,722         (5,520 )       8,643         (5,787 )
  Amortization of intangible assets     533         615         1,066         1,230  
  Interest and amortization expenses   6,745       7,193       13,601        14,458  
  Accelerated amortization of senior note issuance cost     2,809         2,345         2,809         2,345  
  Income tax expense      277         220         761         1,007  
  Net loss attributable to noncontrolling interest     (9 )       (46 )       (31 )       (110 )
Non-GAAP income from operations(2) $ 751     $  44,740     $  37,046     $  89,969  
                         

 

Maiden Holdings, Ltd.
 
Non - GAAP Financial Measures
 
(in thousands (000's), except per share data)
 
(Unaudited)
 
                                                                                                                                                                                                                 
               
               
      June 30, 2017      December 31, 2016   
Investable assets:              
Total investments   $ 4,853,230   $ 4,736,938  
Cash and cash equivalents     246,826     45,747  
Restricted cash and cash equivalents     190,470     103,788  
Loan to related party     167,975     167,975  
Total investable assets(3)   $   5,458,501   $ 5,054,448  
               
    June 30, 2017   December 31, 2016  
Capital:              
Preference shares   $ 465,000   $ 315,000  
Common shareholders' equity     1,035,399     1,045,797  
Total Maiden shareholders' equity     1,500,399     1,360,797  
2016 Senior Notes     110,000     110,000  
2013 Senior Notes     152,500     152,500  
2012 Senior Notes     -     100,000  
Total capital resources(5)   $   1,762,899   $ 1,723,297  


(1) Non-GAAP operating (loss) earnings is a non-GAAP financial measure defined by the Company as net income attributable to Maiden common shareholders excluding realized and unrealized investment gains and losses, foreign exchange and other gains and losses, amortization of intangible assets, divested excess and surplus business and NGHC run-off, accelerated amortization of senior note issuance cost and non-cash deferred tax expense and should not be considered as an alternative to net income. The Company's management believes that non-GAAP operating (loss) earnings is a useful indicator of trends in the Company's underlying operations. The Company's measure of non-GAAP operating (loss) earnings may not be comparable to similarly titled measures used by other companies.   
               
(2) Non-GAAP income from operations is a non-GAAP financial measure defined by the Company as net income attributable to Maiden excluding foreign exchange and other gains and losses, amortization of intangible assets, interest and amortization expenses, accelerated amortization of senior note issuance cost, income tax expense and net income or loss attributable to noncontrolling interest and should not be considered as an alternative to net income.  The Company's management believes that non-GAAP income from operations is a useful measure of the Company's underlying earnings fundamentals based on its underwriting and investment income before financing costs. This income from operations enables readers of this information to more clearly understand the essential operating results of the Company. The Company's measure of non-GAAP income from operations may not be comparable to similarly titled measures used by other companies.   
               
(3) Investable assets is the total of the Company's investments, cash and cash equivalents and loan to a related party.  
               
(4) 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.
 
               
(5) Total capital resources is the sum of the Company's principal amount of debt and Maiden shareholders' equity.  
               
(6) Dividends on preference shares consist of $3,094 and $6,188 paid to Preference shares - Series A for the three and six months ended June 30, 2017 and 2016, respectively, and $2,939 paid to Preference shares - Series C for the three months ended June 30, 2017 and 2016, and $5,878 and $6,532 for the six months ended June 30, 2017 and 2016, respectively. It also includes $2,990 and $5,980 paid to Preference Shares - Series B during the three and six months ended June 30, 2016. On September 15, 2016, each of then outstanding Preference share - Series B were automatically converted into 12,069,090 of the Company's common shares at a conversion rate of 3.6573 per preference share.
 
               
(7) 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) earnings attributable to Maiden common shareholders divided by average Maiden common shareholders' equity.   
               
(8) 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.   
               
(9) Calculated by dividing net loss and LAE by the sum of net premiums earned and other insurance revenue.  
               
(10) Calculated by dividing commission and other acquisition expenses by the sum of net premiums earned and other insurance revenue.  
               
(11) Calculated by dividing general and administrative expenses by the sum of net premiums earned and other insurance revenue.  
               
(12) Calculated by adding together the commission and other acquisition expense ratio and general and administrative expense ratio.  
               
(13) Calculated by adding together the net loss and LAE ratio and the expense ratio.  
               


CONTACT:
 
Noah Fields, Senior Vice President, Investor Relations
Maiden Holdings, Ltd.
Phone: 441.298.4927
E-mail: nfields@maiden.bm

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