x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Bermuda
(State or other jurisdiction of
incorporation or organization)
|
98-0570192
(IRS Employer
Identification No.)
|
131 Front Street, Hamilton, Bermuda
(Address of principal executive offices)
|
HM12
(Zip Code)
|
Large accelerated filer
¨
|
Accelerated filer
x
|
|
Non-accelerated filer
¨
(Do not check if a smaller reporting
company)
|
Smaller reporting company
¨
|
June 30, 2011
(Unaudited)
|
December 31, 2010
(Audited)
|
|||||||
ASSETS
|
||||||||
Investments:
|
||||||||
Fixed maturities, available-for-sale, at fair value
(Amortized cost 2011:$1,774,615; 2010: $1,819,775)
|
$ | 1,850,779 | $ | 1,874,433 | ||||
Fixed maturities, trading, at fair value
(Amortized cost 2011:$50,172)
|
49,860 | — | ||||||
Other investments, at fair value
(Cost 2011: $1,783; 2010: $5,751)
|
1,962 | 5,847 | ||||||
Total investments
|
1,902,601 | 1,880,280 | ||||||
Cash and cash equivalents
|
198,356 | 96,151 | ||||||
Restricted cash and cash equivalents
|
67,207 | 89,756 | ||||||
Accrued investment income
|
12,294 | 14,091 | ||||||
Reinsurance balances receivable, net
(includes $185,563 and $95,227 from related parties in 2011 and 2010, respectively)
|
379,806 | 226,333 | ||||||
Funds withheld
|
145,515 | 152,713 | ||||||
Prepaid reinsurance premiums
(includes $5,891 and $1,211 from related parties in 2011 and 2010, respectively)
|
37,555 | 28,992 | ||||||
Reinsurance recoverable on unpaid losses
(includes $2,200 and $383 from related parties in 2011 and 2010, respectively)
|
15,587 | 6,656 | ||||||
Loan to related party
|
167,975 | 167,975 | ||||||
Deferred acquisition costs
(includes $134,109 and $118,015 from related parties in 2011 and 2010, respectively)
|
245,423 | 203,631 | ||||||
Goodwill and intangible assets, net
|
101,284 | 103,905 | ||||||
Other assets
|
19,688 | 12,079 | ||||||
Total assets
|
$ | 3,293,291 | $ | 2,982,562 | ||||
LIABILITIES
|
||||||||
Reserve for loss and loss adjustment expenses
(includes $317,316 and $263,916 from related parties in 2011 and 2010, respectively)
|
$ | 1,279,709 | $ | 1,226,773 | ||||
Unearned premiums
(includes $466,258 and $366,412 from related parties in 2011 and 2010, respectively)
|
841,017 | 657,556 | ||||||
Accrued expenses and other liabilities
|
90,206 | 56,368 | ||||||
Securities sold under agreements to repurchase, at contract value
|
— | 76,225 | ||||||
Senior notes
|
107,500 | — | ||||||
Junior subordinated debt
|
215,228 | 215,191 | ||||||
Total liabilities
|
2,533,660 | 2,232,113 | ||||||
Commitments and Contingencies
|
||||||||
EQUITY
|
||||||||
Common shares
($0.01 par value; 73,112,966 and 73,069,436 shares issued in 2011 and 2010, respectively; 72,150,630 and 72,107,100 shares outstanding in 2011 and 2010, respectively)
|
731 | 731 | ||||||
Additional paid-in capital
|
577,904 | 577,135 | ||||||
Accumulated other comprehensive income
|
77,848 | 54,334 | ||||||
Retained earnings
|
106,654 | 121,775 | ||||||
Treasury shares, at cost
(2011 and 2010: 962,336 shares)
|
(3,801 | ) | (3,801 | ) | ||||
Total Maiden shareholders’ equity
|
759,336 | 750,174 | ||||||
Noncontrolling interest in subsidiary
|
295 | 275 | ||||||
Total equity
|
759,631 | 750,449 | ||||||
Total liabilities and equity
|
$ | 3,293,291 | $ | 2,982,562 |
For the three
months ended
June 30, 2011
|
For the three
months ended
June 30, 2010
|
For the six
months ended
June 30, 2011
|
For the six
months ended
June 30, 2010
|
|||||||||||||
Revenues:
|
||||||||||||||||
Gross premiums written
|
$ | 462,395 | $ | 334,784 | $ | 933,172 | $ | 662,166 | ||||||||
Net premiums written
|
$ | 436,966 | $ | 313,050 | $ | 886,466 | $ | 624,341 | ||||||||
Change in unearned premiums
|
(69,183 | ) | (29,266 | ) | (172,148 | ) | (76,628 | ) | ||||||||
Net premiums earned
|
367,783 | 283,784 | 714,318 | 547,713 | ||||||||||||
Other insurance revenue
|
2,179 | — | 6,834 | — | ||||||||||||
Net investment income
|
19,818 | 18,875 | 38,959 | 36,456 | ||||||||||||
Net realized and unrealized investment gains (losses)
|
591 | 535 | 638 | 847 | ||||||||||||
Total revenues
|
390,371 | 303,194 | 760,749 | 585,016 | ||||||||||||
Expenses:
|
||||||||||||||||
Net loss and loss adjustment expenses
|
250,599 | 175,354 | 471,781 | 345,639 | ||||||||||||
Commission and other acquisition expenses
|
105,824 | 88,447 | 212,896 | 165,843 | ||||||||||||
General and administrative expenses
|
12,839 | 9,484 | 25,132 | 18,036 | ||||||||||||
Interest and amortization expenses
|
9,292 | 9,116 | 18,410 | 18,231 | ||||||||||||
Accelerated amortization of junior subordinated debt discount and issuance cost
|
20,313 | — | 20,313 | — | ||||||||||||
Junior subordinated debt repurchase expense
|
15,050 | — | 15,050 | — | ||||||||||||
Amortization of intangible assets
|
1,259 | 1,452 | 2,517 | 2,904 | ||||||||||||
Foreign exchange (gains) losses
|
(939 | ) | 414 | (2,001 | ) | 1,567 | ||||||||||
Total expenses
|
414,237 | 284,267 | 764,098 | 552,220 | ||||||||||||
(Loss) income before income taxes
|
(23,866 | ) | 18,927 | (3,349 | ) | 32,796 | ||||||||||
Income taxes:
|
||||||||||||||||
Current tax expense
|
211 | — | 1,096 | — | ||||||||||||
Deferred tax expense
|
295 | 290 | 582 | 590 | ||||||||||||
Income tax expense
|
506 | 290 | 1,678 | 590 | ||||||||||||
Net (loss) income
|
(24,372 | ) | 18,637 | (5,027 | ) | 32,206 | ||||||||||
Less: Loss attributable to noncontrolling interest
|
6 | — | 3 | — | ||||||||||||
Net (loss) income attributable to Maiden
|
$ | (24,366 | ) | $ | 18,637 | $ | (5,024 | ) | $ | 32,206 | ||||||
Basic (loss) earnings per share attributable to Maiden shareholders
|
$ | (0.34 | ) | $ | 0.27 | $ | (0.07 | ) | $ | 0.46 | ||||||
Diluted (loss) earnings per share attributable to Maiden shareholders
|
$ | (0.34 | ) | $ | 0.26 | $ | (0.07 | ) | $ | 0.46 | ||||||
Dividends declared per common share
|
$ | 0.07 | $ | 0.065 | $ | 0.14 | $ | 0.13 |
For the three
months ended
June 30, 2011
|
For the three
months ended
June 30, 2010
|
For the six
months ended
June 30, 2011
|
For the six
months ended
June 30, 2010
|
|||||||||||||
Comprehensive (loss) income:
|
||||||||||||||||
Net (loss) income
|
$ | (24,372 | ) | $ | 18,637 | $ | (5,027 | ) | $ | 32,206 | ||||||
Other comprehensive income
|
||||||||||||||||
Unrealized holdings net gains arising during the period
|
18,216 | 4,399 | 21,762 | 28,923 | ||||||||||||
Adjustment for reclassification of net realized (gains) losses recognized in net (loss) income
|
(93 | ) | (3,869 | ) | (140 | ) | (4,181 | ) | ||||||||
Foreign currency translation adjustment
|
528 | — | 1,915 | — | ||||||||||||
Other comprehensive income
|
18,651 | 530 | 23,537 | 24,742 | ||||||||||||
Comprehensive (loss) income
|
(5,721 | ) | 19,167 | 18,510 | 56,948 | |||||||||||
Net loss attributable to noncontrolling interest
|
6 | — | 3 | — | ||||||||||||
Other comprehensive income attributable to noncontrolling interest
|
(7 | ) | — | (23 | ) | — | ||||||||||
Comprehensive income attributable to noncontrolling interest
|
(1 | ) | — | (20 | ) | — | ||||||||||
Comprehensive (loss) income attributable to Maiden
|
$ | (5,722 | ) | $ | 19,167 | $ | 18,490 | $ | 56,948 |
Maiden Shareholders’ Equity
|
||||||||||||||||||||||||||||
For the six months ended
June 30, 2011
|
Total
equity
|
Retained
earnings
|
Treasury
shares
|
Accumulated
other
comprehensive
income
|
Common
shares
|
Additional
paid-in
capital
|
Noncontrolling
interest in
subsidiary
|
|||||||||||||||||||||
Beginning balance
|
$ | 750,449 | $ | 121,775 | $ | (3,801 | ) | $ | 54,334 | $ | 731 | $ | 577,135 | $ | 275 | |||||||||||||
Exercise of options and issuance of shares
|
91 | 91 | — | |||||||||||||||||||||||||
Net loss
|
(5,027 | ) | (5,024 | ) | (3 | ) | ||||||||||||||||||||||
Change in net unrealized gains on investments
|
21,622 | 21,622 | — | |||||||||||||||||||||||||
Foreign currency translation adjustment
|
1,915 | 1,892 | 23 | |||||||||||||||||||||||||
Share based compensation
|
678 | 678 | — | |||||||||||||||||||||||||
Dividends on common shares
|
(10,097 | ) | (10,097 | ) | — | |||||||||||||||||||||||
Ending balance
|
$ | 759,631 | $ | 106,654 | $ | (3,801 | ) | $ | 77,848 | $ | 731 | $ | 577,904 | $ | 295 |
Maiden Shareholders’ Equity
|
||||||||||||||||||||||||||||
For the six months ended
June 30, 2010
|
Total
equity
|
Retained
earnings
|
Treasury
shares
|
Accumulated
other
comprehensive
income
|
Common
shares
|
Additional
paid-in
capital
|
Noncontrolling
interest in
subsidiary
|
|||||||||||||||||||||
Beginning balance
|
$ | 676,526 | $ | 70,781 | $ | (3,801 | ) | $ | 32,747 | $ | 713 | $ | 576,086 | $ | — | |||||||||||||
Exercise of options and issuance of shares
|
3 | 3 | — | |||||||||||||||||||||||||
Net income
|
32,206 | 32,206 | — | |||||||||||||||||||||||||
Change in net unrealized gains on investments
|
24,742 | 24,742 | — | |||||||||||||||||||||||||
Share based compensation
|
450 | 450 | — | |||||||||||||||||||||||||
Dividends on common shares
|
(9,138 | ) | (9,138 | ) | — | |||||||||||||||||||||||
Ending balance
|
$ | 724,789 | $ | 93,849 | $ | (3,801 | ) | $ | 57,489 | $ | 713 | $ | 576,539 | $ | — |
For the six months ended June 30,
|
2011
|
2010
|
||||||
Cash flows from operating activities:
|
||||||||
Net (loss) income
|
$ | (5,027 | ) | $ | 32,206 | |||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization of intangibles
|
5,213 | 3,530 | ||||||
Net realized and unrealized (gains) losses on investments
|
(638 | ) | (847 | ) | ||||
Foreign exchange (gains) losses
|
(2,001 | ) | 1,567 | |||||
Amortization of share-based compensation expense, bond premium and discount and junior subordinated debt discount, net
|
19,503 | (3,599 | ) | |||||
Changes in assets - (increase) decrease:
|
||||||||
Reinsurance balances receivable, net
|
(152,318 | ) | (77,450 | ) | ||||
Funds withheld
|
16,111 | — | ||||||
Prepaid reinsurance premiums
|
(8,563 | ) | (3,010 | ) | ||||
Accrued investment income
|
1,797 | (2,238 | ) | |||||
Deferred commission and other acquisition costs
|
(41,037 | ) | (23,929 | ) | ||||
Other assets
|
(3,597 | ) | (42,745 | ) | ||||
Changes in liabilities – increase (decrease):
|
||||||||
Reserve for loss and loss adjustment expenses
|
36,313 | 70,776 | ||||||
Unearned premiums
|
181,181 | 81,207 | ||||||
Accrued expenses and other liabilities
|
(3,283 | ) | 36,978 | |||||
Net cash provided by operating activities
|
43,654 | 72,446 | ||||||
Cash flows from investing activities:
|
||||||||
Purchases of investments:
|
||||||||
Purchases of fixed-maturity securities – available-for-sale
|
(257,268 | ) | (406,277 | ) | ||||
Purchases of fixed-maturity securities – trading
|
(152,844 | ) | (509,394 | ) | ||||
Purchases of other investments
|
(834 | ) | (123 | ) | ||||
Sale of investments:
|
||||||||
Proceeds from sales of fixed-maturity securities – available-for-sale
|
76,569 | 173,687 | ||||||
Proceeds from sales of fixed-maturity securities – trading and short sales
|
103,482 | 558,388 | ||||||
Proceeds from maturities and calls of fixed-maturity securities – available-for-sale
|
243,891 | 241,703 | ||||||
Proceeds from redemption of other investments
|
4,242 | 6 | ||||||
Decrease (increase) in restricted cash and cash equivalents
|
22,549 | (23,452 | ) | |||||
Purchase of capital assets
|
(830 | ) | (918 | ) | ||||
Net cash provided by investing activities
|
38,957 | 33,620 | ||||||
Cash flows from financing activities:
|
||||||||
Repurchase agreements, net
|
(76,225 | ) | (24,429 | ) | ||||
Senior notes issuance
|
107,500 | — | ||||||
Senior notes issuance cost
|
(2,811 | ) | — | |||||
Common share issuance
|
91 | 3 | ||||||
Dividends paid
|
(10,095 | ) | (9,138 | ) | ||||
Net cash provided by (used in) financing activities
|
18,460 | (33,564 | ) | |||||
Effect of exchange rate changes on foreign currency cash
|
1,134 | (835 | ) | |||||
Net increase in cash and cash equivalents
|
102,205 | 71,667 | ||||||
Cash and cash equivalents, beginning of period
|
96,151 | 107,396 | ||||||
Cash and cash equivalents, end of period
|
$ | 198,356 | $ | 179,063 |
As of June 30, 2011
|
Original or
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
||||||||||||
Fixed Maturities – available-for-sale:
|
||||||||||||||||
U.S. treasury bonds
|
$ | 44,241 | $ | 1,357 | $ | — | $ | 45,598 | ||||||||
U.S. agency bonds – mortgage backed
|
994,852 | 30,311 | (2,019 | ) | 1,023,144 | |||||||||||
U.S. agency bonds – other
|
16,755 | 1,468 | — | 18,223 | ||||||||||||
Non-U.S. government bonds
|
14,687 | 1,500 | — | 16,187 | ||||||||||||
Corporate bonds
|
661,847 | 52,446 | (9,013 | ) | 705,280 | |||||||||||
Municipal bonds
|
42,233 | 646 | (532 | ) | 42,347 | |||||||||||
Total available-for-sale fixed maturities
|
$ | 1,774,615 | $ | 87,728 | $ | (11,564 | ) | $ | 1,850,779 | |||||||
Other investments
|
$ | 1,783 | $ | 179 | $ | — | $ | 1,962 |
As of December 31, 2010
|
Original or
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair Value
|
||||||||||||
Fixed Maturities – available-for-sale:
|
||||||||||||||||
U.S. treasury bonds
|
$ | 92,043 | $ | 1,108 | $ | (1,422 | ) | $ | 91,729 | |||||||
U.S. agency bonds – mortgage backed
|
951,465 | 22,351 | (4,348 | ) | 969,468 | |||||||||||
U.S. agency bonds – other
|
41,770 | 1,638 | — | 43,408 | ||||||||||||
Non-U.S. government bonds
|
15,494 | 444 | — | 15,938 | ||||||||||||
Corporate bonds
|
673,756 | 46,647 | (11,410 | ) | 708,993 | |||||||||||
Municipal bonds
|
45,247 | 441 | (791 | ) | 44,897 | |||||||||||
Total available-for-sale fixed maturities
|
$ | 1,819,775 | $ | 72,629 | $ | (17,971 | ) | $ | 1,874,433 | |||||||
Other investments
|
$ | 5,751 | $ | 96 | $ | — | $ | 5,847 |
As of June 30, 2011
|
Amortized
Cost
|
Fair
Value
|
% of Total
Fair Value
|
|||||||||
Maturity
|
||||||||||||
Due in one year or less
|
$ | 65,769 | $ | 66,404 | 3.6 | % | ||||||
Due after one year through five years
|
221,973 | 228,070 | 12.3 | % | ||||||||
Due after five years through ten years
|
420,133 | 455,941 | 24.6 | % | ||||||||
Due after ten years
|
71,888 | 77,220 | 4.2 | % | ||||||||
779,763 | 827,635 | 44.7 | % | |||||||||
U.S. agency bonds – mortgage backed
|
994,852 | 1,023,144 | 55.3 | % | ||||||||
Total
|
$ | 1,774,615 | $ | 1,850,779 | 100.0 | % |
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
As of June 30, 2011
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
||||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||||||||||
U.S. agency bonds – mortgage backed
|
$ | 218,857 | $ | (2,019 | ) | $ | — | $ | — | $ | 218,857 | $ | (2,019 | ) | ||||||||||
Corporate bonds
|
55,065 | (1,035 | ) | 129,523 | (7,978 | ) | 184,588 | (9,013 | ) | |||||||||||||||
Municipal bonds
|
15,916 | (532 | ) | — | — | 15,916 | (532 | ) | ||||||||||||||||
Total temporarily impaired available-for-sale securities
|
$ | 289,838 | $ | (3,586 | ) | $ | 129,523 | $ | (7,978 | ) | $ | 419,361 | $ | (11,564 | ) |
Less than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
As of December 31, 2010
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
||||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||||||||||
U.S. treasury bonds
|
$ | 47,165 | $ | (1,422 | ) | $ | — | $ | — | $ | 47,165 | $ | (1,422 | ) | ||||||||||
U.S. agency bonds – mortgage backed
|
315,370 | (4,348 | ) | — | — | 315,370 | (4,348 | ) | ||||||||||||||||
Corporate bonds
|
86,976 | (1,555 | ) | 166,062 | (9,855 | ) | 253,038 | (11,410 | ) | |||||||||||||||
Municipal bonds
|
27,315 | (791 | ) | — | — | 27,315 | (791 | ) | ||||||||||||||||
Total temporarily impaired available-for-sale securities
|
$ | 476,826 | $ | (8,116 | ) | $ | 166,062 | $ | (9,855 | ) | $ | 642,888 | $ | (17,971 | ) |
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
Hedge fund
|
$ | — | — | $ | 4,846 | 82.9 | % | |||||||||
Investments in limited partnerships
|
1,962 | 100.0 | % | 1,001 | 17.1 | % | ||||||||||
Total other investments
|
$ | 1,962 | 100.0 | % | $ | 5,847 | 100.0 | % |
For the three months ended June 30, 2011
|
Gross Gains
|
Gross losses
|
Net
|
|||||||||
Available-for-sale securities
|
$ | 211 | $ | (24 | ) | $ | 187 | |||||
Trading securities
|
810 | — | 810 | |||||||||
Other investments
|
— | (94 | ) | (94 | ) | |||||||
Net realized gains
|
1,021 | (118 | ) | 903 | ||||||||
Unrealized loss on trading securities
|
— | (312 | ) | (312 | ) | |||||||
Net realized and unrealized gains
|
$ | 1,021 | $ | (430 | ) | $ | 591 |
For the three months ended June 30, 2010
|
Gross Gains
|
Gross losses
|
Net
|
|||||||||
Available-for-sale securities
|
$ | 5,488 | $ | (1,619 | ) | $ | 3,869 | |||||
Trading securities
|
522 | (1,137 | ) | (615 | ) | |||||||
Other investments
|
— | — | — | |||||||||
Net realized gains
|
6,010 | (2,756 | ) | 3,254 | ||||||||
Unrealized loss on short sales
|
— | (2,719 | ) | (2,719 | ) | |||||||
Net realized and unrealized gains
|
$ | 6,010 | $ | (5,475 | ) | $ | 535 |
For the six months ended June 30, 2011
|
Gross Gains
|
Gross losses
|
Net
|
|||||||||
Available-for-sale securities
|
$ | 274 | $ | (40 | ) | $ | 234 | |||||
Trading securities
|
810 | — | 810 | |||||||||
Other investments
|
— | (94 | ) | (94 | ) | |||||||
Net realized gains
|
1,084 | (134 | ) | 950 | ||||||||
Unrealized loss on trading securities
|
— | (312 | ) | (312 | ) | |||||||
Net realized and unrealized gains
|
$ | 1,084 | $ | (446 | ) | $ | 638 |
For the six months ended June 30, 2010
|
Gross Gains
|
Gross losses
|
Net
|
|||||||||
Available-for-sale securities
|
$ | 5,800 | $ | (1,619 | ) | $ | 4,181 | |||||
Trading securities
|
522 | (1,137 | ) | (615 | ) | |||||||
Other investments
|
— | — | — | |||||||||
Net realized gains
|
6,322 | (2,756 | ) | 3,566 | ||||||||
Unrealized loss on short sales
|
— | (2,719 | ) | (2,719 | ) | |||||||
Net realized and unrealized gains
|
$ | 6,322 | $ | (5,475 | ) | $ | 847 |
June 30, 2011
|
June 30, 2010
|
|||||||
Fixed maturities
|
$ | 76,164 | $ | 57,613 | ||||
Other investments
|
179 | (124 | ) | |||||
Total net unrealized gains
|
76,343 | 57,489 | ||||||
Deferred income tax expense
|
33 | — | ||||||
Net unrealized gains, net of deferred income tax
|
$ | 76,376 | $ | 57,489 | ||||
Change in unrealized gain
|
$ | 21,622 | $ | 24,742 |
June 30, 2011
|
December 31, 2010
|
|||||||
Restricted cash – third party agreements
|
$ | 45,263 | $ | 59,615 | ||||
Restricted cash – related party agreements
|
21,448 | 29,743 | ||||||
Restricted cash – U.S. state regulatory authorities
|
496 | 398 | ||||||
Total restricted cash
|
67,207 | 89,756 | ||||||
Restricted investments – in trust for third party agreements at fair value
(
Amortized cost: 2011 – $872,700; 2010 – $1,024,895
)
|
899,015 | 1,053,982 | ||||||
Restricted investments – in trust for related party agreements at fair value
(
Amortized cost: 2011 – $413,631; 2010 – $339,810
)
|
441,750 | 361,424 | ||||||
Restricted investments – in trust for U.S. state regulatory authorities
(
Amortized cost: 2011 – $13,192; 2010 – $13,198
)
|
13,824 | 13,690 | ||||||
Total restricted investments
|
1,354,589 | 1,429,096 | ||||||
Total restricted cash and investments
|
$ | 1,421,796 | $ | 1,518,852 |
|
·
|
Level 1 - Unadjusted quoted market prices for identical assets or liabilities in active markets that the Company has the ability to access.
|
|
·
|
Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data.
|
|
·
|
Level 3 - Valuations based on models where significant inputs are not observable. The unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use.
|
As of June 30, 2011
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total Fair
Value
|
||||||||||||
Assets
|
||||||||||||||||
Fixed maturities
|
||||||||||||||||
U.S. treasury bonds
|
$ | 95,458 | $ | — | $ | — | $ | 95,458 | ||||||||
U.S. agency bonds – mortgage backed
|
— | 1,023,144 | — | 1,023,144 | ||||||||||||
U.S. agency bonds – other
|
— | 18,223 | — | 18,223 | ||||||||||||
Non U.S. government bonds
|
— | 16,187 | — | 16,187 | ||||||||||||
Corporate bonds
|
— | 705,280 | — | 705,280 | ||||||||||||
Municipal bonds
|
— | 42,347 | — | 42,347 | ||||||||||||
Other investments
|
— | — | 1,962 | 1,962 | ||||||||||||
Total investments
|
$ | 95,458 | $ | 1,805,181 | $ | 1,962 | $ | 1,902,601 | ||||||||
As a percentage of total assets
|
2.9 | % | 54.8 | % | 0.1 | % | 57.8 | % | ||||||||
Liabilities
|
||||||||||||||||
Securities sold under agreements to repurchase
|
$ | — | $ | — | $ | — | $ | — | ||||||||
As a percentage of total liabilities
|
— | — | — | — |
As of December 31, 2010
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total Fair
Value
|
||||||||||||
Assets
|
||||||||||||||||
Fixed maturities
|
||||||||||||||||
U.S. treasury bonds
|
$ | 91,729 | $ | — | $ | — | $ | 91,729 | ||||||||
U.S. agency bonds – mortgage backed
|
— | 969,468 | — | 969,468 | ||||||||||||
U.S. agency bonds – other
|
— | 43,408 | — | 43,408 | ||||||||||||
Non U.S. government bonds
|
— | 15,938 | — | 15,938 | ||||||||||||
Corporate bonds
|
— | 708,993 | — | 708,993 | ||||||||||||
Municipal bonds
|
— | 44,897 | — | 44,897 | ||||||||||||
Other investments
|
— | — | 5,847 | 5,847 | ||||||||||||
Total investments
|
$ | 91,729 | $ | 1,782,704 | $ | 5,847 | $ | 1,880,280 | ||||||||
As a percentage of total assets
|
3.1 | % | 59.7 | % | 0.2 | % | 63.0 | % | ||||||||
Liabilities
|
||||||||||||||||
Securities sold under agreements to repurchase
|
$ | — | $ | 76,225 | $ | — | $ | 76,225 | ||||||||
As a percentage of total liabilities
|
— | 3.4 | % | — | 3.4 | % |
Other Investments:
|
For the three
months ended
June 30, 2011
|
For the three
months ended
June 30, 2010
|
||||||
Balance at beginning of period
|
$ | 6,322 | $ | 5,601 | ||||
Net realized and unrealized gains – included in net income
|
— | — | ||||||
Net realized and unrealized losses – included in net income
|
(94 | ) | — | |||||
Change in net unrealized gains – included in other comprehensive (loss) income
|
(151 | ) | — | |||||
Change in net unrealized losses – included in other comprehensive (loss) income
|
— | (44 | ) | |||||
Purchases
|
593 | 123 | ||||||
Sales and redemptions
|
(4,708 | ) | (3 | ) | ||||
Transfers into Level 3
|
— | — | ||||||
Transfers out of Level 3
|
— | — | ||||||
Balance at end of period
|
$ | 1,962 | $ | 5,677 | ||||
Level 3 gains (losses) included in net income attributable to the change in unrealized gains (losses) relating to assets held at the reporting date
|
$ | — | $ | — |
Other Investments:
|
For the six
months ended
June 30, 2011
|
For the six
months ended
June 30, 2010
|
||||||
Balance at beginning of period
|
$ | 5,847 | $ | 5,549 | ||||
Net realized and unrealized gains – included in net income
|
— | — | ||||||
Net realized and unrealized losses – included in net income
|
(94 | ) | — | |||||
Change in net unrealized gains – included in other comprehensive income (loss)
|
83 | — | ||||||
Change in net unrealized losses – included in other comprehensive income (loss)
|
— | 11 | ||||||
Purchases
|
834 | 123 | ||||||
Sales and redemptions
|
(4,708 | ) | (6 | ) | ||||
Transfers into Level 3
|
— | — | ||||||
Transfers out of Level 3
|
— | — | ||||||
Balance at end of period
|
$ | 1,962 | $ | 5,677 | ||||
Level 3 gains (losses) included in net income attributable to the change in unrealized gains (losses) relating to assets held at the reporting date
|
$ | — | $ | — |
As of June 30, 2011
|
Gross
|
Accumulated
Amortization
|
Net
|
Useful Life
|
|||||||||
Goodwill
|
$ | 58,325 | $ | — | $ | 58,325 |
Indefinite
|
||||||
State licenses
|
7,727 | — | 7,727 |
Indefinite
|
|||||||||
Customer relationships
|
51,400 | (16,168 | ) | 35,232 |
15 years double declining
|
||||||||
Net balance
|
$ | 117, 452 | $ | (16,168 | ) | $ | 101,284 |
As of December 31, 2010
|
Gross
|
Accumulated
Amortization
|
Net
|
Useful Life
|
|||||||||
Goodwill
|
$ | 58,429 | $ | — | $ | 58,429 |
Indefinite
|
||||||
State licenses
|
7,727 | — | 7,727 |
Indefinite
|
|||||||||
Customer relationships
|
51,400 | (13,651 | ) | 37,749 |
15 years double declining
|
||||||||
Net balance
|
$ | 117,556 | $ | (13,651 | ) | $ | 103,905 |
June 30, 2011
|
||||
2011
|
$ | 2,516 | ||
2012
|
4,362 | |||
2013
|
3,781 | |||
2014
|
3,276 | |||
2015
|
2,840 |
For the
three months
ended
June 30,
2011
|
For the
three months
ended
June 30, 2010
|
For the
six months
ended
June 30,
2011
|
For the
six months
ended
June
30, 2010
|
|||||||||||||
Net (loss) income available to Maiden common shareholders
|
$ | (24,366 | ) | $ | 18,637 | $ | (5,024 | ) | $ | 32,206 | ||||||
Weighted average number of common shares outstanding – basic
|
72,118,315 | 70,291,894 | 72,112,785 | 70,291,650 | ||||||||||||
Potentially dilutive securities:
|
||||||||||||||||
Warrants
|
— | — | — | — | ||||||||||||
Share options
|
827,024 | 478,955 | 750,709 | 482,114 | ||||||||||||
Weighted average number of common shares outstanding – diluted
|
72,945,339 | 70,770,849 | 72,863,494 | 70,773,764 | ||||||||||||
Basic (loss) earnings per share attributable to Maiden shareholders:
|
$ | (0.34 | ) | $ | 0.27 | $ | (0.07 | ) | $ | 0.46 | ||||||
Diluted (loss) earnings per share attributable to Maiden shareholders:
|
$ | (0.34 | ) | $ | 0.26 | $ | (0.07 | ) | $ | 0.46 |
Assumptions:
|
June 30, 2011
|
|||
Volatility
|
29.8-46.0 | % | ||
Risk-free interest rate
|
1.62-3.30 | % | ||
Weighted average expected lives in years
|
5-6.1 years
|
|||
Forfeiture rate
|
0 | % | ||
Dividend yield rate
|
1-5.39 | % |
For the three months ended June 30, 2011
|
Number of
Share Options
|
Weighted
Average
Exercise Price
|
Weighted Average
Remaining
Contractual Term
|
|||||||||
Outstanding, March 31, 2011
|
2,906,065 | $ | 6.41 |
8.13 years
|
||||||||
Granted
|
29,000 | 9.09 |
9.90 years
|
|||||||||
Exercised
|
(42,532 | ) | 3.80 | — | ||||||||
Cancelled
|
— | — | — | |||||||||
Outstanding, June 30, 2011
|
2,892,533 | $ | 6.47 |
7.96 years
|
For the three months ended June 30, 2010
|
Number of
Share Options
|
Weighted
Average
Exercise Price
|
Weighted Average
Remaining
Contractual Term
|
|||||||||
Outstanding, March 31, 2010
|
2,335,824 | $ | 5.98 |
8.78 years
|
||||||||
Granted
|
— | — | — | |||||||||
Exercised
|
(344 | ) | 3.28 | — | ||||||||
Cancelled
|
(4,250 | ) | 3.28 | — | ||||||||
Outstanding, June 30, 2010
|
2,331,230 | $ | 5.99 |
8.53 years
|
For the six months ended June 30, 2011
|
Number of
Share Options
|
Weighted
Average
Exercise Price
|
Weighted Average
Remaining
Contractual Term
|
|||||||||
Outstanding, December 31, 2010
|
2,940,876 | $ | 6.41 |
8.40 years
|
||||||||
Granted
|
36,500 | 8.81 |
9.86 years
|
|||||||||
Exercised
|
(43,530 | ) | 3.79 | — | ||||||||
Cancelled
|
(41,313 | ) | 7.21 | — | ||||||||
Outstanding, June 30, 2011
|
2,892,533 | $ | 6.47 |
7.96 years
|
For the six months ended June 30, 2010
|
Number of
Share Options
|
Weighted
Average
Exercise Price
|
Weighted Average
Remaining
Contractual Term
|
|||||||||
Outstanding, December 31, 2009
|
2,036,542 | $ | 5.79 |
8.86 years
|
||||||||
Granted
|
300,000 | 7.25 |
9.68 years
|
|||||||||
Exercised
|
(812 | ) | 3.28 | — | ||||||||
Cancelled
|
(4,500 | ) | 3.28 | — | ||||||||
Outstanding, June 30, 2010
|
2,331,230 | $ | 5.99 |
8.53 years
|
|
·
|
by lending funds in the amount of $167,975 as of June 30, 2011 and December 31, 2010 to AII pursuant to a loan agreement entered into between those parties. This loan is carried at cost. The amount of collateral Maiden Bermuda is required to maintain, which is determined quarterly, equals its proportionate share of (a) the amount of ceded paid losses for which AII is responsible to such AmTrust subsidiaries but has not yet paid, (b) the amount of ceded loss reserves (including ceded reserves for claims reported but not resolved and losses incurred but not reported) for which AII is responsible to AmTrust subsidiaries, and (c) the amount of ceded reserves for unearned premiums ceded by AmTrust subsidiaries to AII. Pursuant to the Master Agreement, AmTrust has agreed to cause AII not to commingle Maiden Bermuda’s assets with AII’s other assets and to cause the AmTrust subsidiaries not to commingle Maiden Bermuda’s assets with the AmTrust subsidiaries’ other assets if an AmTrust subsidiary withdraws those assets. AII has agreed that, if an AmTrust subsidiary returns to AII excess assets withdrawn from a trust account, drawn on a letter of credit or maintained by such AmTrust subsidiary as withheld funds, AII will immediately return to Maiden Bermuda its proportionate share of such excess assets. AII has further agreed that if the aggregate fair market value of the amount of Maiden Bermuda’s assets held in the trust account exceeds Maiden Bermuda’s proportionate share of AII’s obligations, or if an AmTrust subsidiary misapplies any such collateral, AII will immediately return to Maiden Bermuda an amount equal to such excess or misapplied collateral, less any amounts AII has paid to Maiden Bermuda. In addition, if an AmTrust subsidiary withdraws Maiden Bermuda’s assets from a trust account and maintains those assets on its books as withheld funds, AII has agreed to pay to
Maiden Bermuda interest at the rate equivalent to the one-month LIBOR plus 90 basis points per annum computed on the basis of a 360-day year on the loan (except to the extent Maiden Bermuda’s proportionate share of AII’s obligations to that AmTrust subsidiary exceeds the value of the collateral Maiden Bermuda has provided). The amount of accrued interest relating to the loan was $0 and $496 as of June 30, 2011 and December 31, 2010, respectively.
|
|
·
|
by entering into a Reinsurer Trust Assets Collateral agreement. The amount of the collateral, as of June 30, 2011 was approximately $406,472 (December 31, 2010 – $358,621) and the accrued interest was $3,953 (December 31, 2010 – $3,684).
|
For the three months ended June 30, 2011
|
Diversified
Reinsurance
|
AmTrust
Quota Share
Reinsurance
|
ACAC
Quota Share
|
Total
|
||||||||||||
Net premiums written
|
$ | 158,020 | $ | 216,449 | $ | 62,497 | $ | 436,966 | ||||||||
Net premiums earned
|
170,288 | 136,299 | 61,196 | 367,783 | ||||||||||||
Other insurance revenue
|
2,179 | — | — | 2,179 | ||||||||||||
Net loss and loss adjustment expenses
|
(116,387 | ) | (94,740 | ) | (39,472 | ) | (250,599 | ) | ||||||||
Commissions and other acquisition expenses
|
(48,257 | ) | (38,116 | ) | (19,451 | ) | (105,824 | ) | ||||||||
General and administrative expenses
|
(8,309 | ) | (596 | ) | (472 | ) | (9,377 | ) | ||||||||
Underwriting (loss) income
|
$ | (486 | ) | $ | 2,847 | $ | 1,801 | $ | 4,162 | |||||||
Reconciliation to net loss
|
||||||||||||||||
Net investment income and realized and unrealized investment gains (losses)
|
20,409 | |||||||||||||||
Amortization of intangible assets
|
(1,259 | ) | ||||||||||||||
Foreign exchange gain
|
939 | |||||||||||||||
Interest and amortization expenses
|
(9,292 | ) | ||||||||||||||
Accelerated amortization of junior subordinated debt discount and issuance cost
|
(20,313 | ) | ||||||||||||||
Junior subordinated debt repurchase expense
|
(15,050 | ) | ||||||||||||||
Other general and administrative expenses
|
(3,462 | ) | ||||||||||||||
Income tax expense
|
(506 | ) | ||||||||||||||
Loss attributable to noncontrolling interest
|
6 | |||||||||||||||
Net loss attributable to Maiden
|
$ | (24,366 | ) | |||||||||||||
Net loss and loss expense ratio*
|
67.5 | % | 69.5 | % | 64.5 | % | 67.7 | % | ||||||||
Acquisition cost ratio**
|
28.0 | % | 28.0 | % | 31.8 | % | 28.6 | % | ||||||||
General and administrative expense ratio***
|
4.8 | % | 0.4 | % | 0.8 | % | 3.5 | % | ||||||||
Combined ratio****
|
100.3 | % | 97.9 | % | 97.1 | % | 99.8 | % |
For the three months ended June 30, 2010
|
Diversified
Reinsurance
|
AmTrust
Quota Share
Reinsurance
|
ACAC
Quota Share
|
Total
|
||||||||||||
Net premiums written
|
$ | 136,709 | $ | 109,123 | $ | 67,218 | $ | 313,050 | ||||||||
Net premiums earned
|
161,779 | 101,664 | 20,341 | 283,784 | ||||||||||||
Net loss and loss adjustment expenses
|
(99,218 | ) | (63,423 | ) | (12,713 | ) | (175,354 | ) | ||||||||
Commissions and other acquisition expenses
|
(48,386 | ) | (33,090 | ) | (6,971 | ) | (88,447 | ) | ||||||||
General and administrative expenses
|
(5,726 | ) | (598 | ) | — | (6,324 | ) | |||||||||
Underwriting income
|
$ | 8,449 | $ | 4,553 | $ | 657 | $ | 13,659 | ||||||||
Reconciliation to net income
|
||||||||||||||||
Net investment income and realized and unrealized investment gains (losses)
|
19,410 | |||||||||||||||
Amortization of intangible assets
|
(1,452 | ) | ||||||||||||||
Foreign exchange loss
|
(414 | ) | ||||||||||||||
Interest and amortization expenses
|
(9,116 | ) | ||||||||||||||
Other general and administrative expenses
|
(3,160 | ) | ||||||||||||||
Income tax expense
|
(290 | ) | ||||||||||||||
Net income attributable to Maiden
|
$ | 18,637 | ||||||||||||||
Net loss and loss expense ratio*
|
61.3 | % | 62.4 | % | 62.5 | % | 61.8 | % | ||||||||
Acquisition cost ratio**
|
29.9 | % | 32.5 | % | 34.3 | % | 31.2 | % | ||||||||
General and administrative expense ratio***
|
3.5 | % | 0.6 | % | — | 3.3 | % | |||||||||
Combined ratio****
|
94.7 | % | 95.5 | % | 96.8 | % | 96.3 | % |
For the six months ended June 30, 2011
|
Diversified
Reinsurance
|
AmTrust
Quota Share
Reinsurance
|
ACAC
Quota Share
|
Total
|
||||||||||||
Net premiums written
|
$ | 416,838 | $ | 343,163 | $ | 126,465 | $ | 886,466 | ||||||||
Net premiums earned
|
344,522 | 250,773 | 119,023 | 714,318 | ||||||||||||
Other insurance revenue
|
6,834 | — | — | 6,834 | ||||||||||||
Net loss and loss adjustment expenses
|
(226,732 | ) | (168,279 | ) | (76,770 | ) | (471,781 | ) | ||||||||
Commissions and other acquisition expenses
|
(99,677 | ) | (75,353 | ) | (37,866 | ) | (212,896 | ) | ||||||||
General and administrative expenses
|
(16,337 | ) | (1,264 | ) | (1,015 | ) | (18,616 | ) | ||||||||
Underwriting income
|
$ | 8,610 | $ | 5,877 | $ | 3,372 | $ | 17,859 | ||||||||
Reconciliation to net loss
|
||||||||||||||||
Net investment income and realized and unrealized investment gains (losses)
|
39,597 | |||||||||||||||
Amortization of intangible assets
|
(2,517 | ) | ||||||||||||||
Foreign exchange gain
|
2,001 | |||||||||||||||
Interest and amortization expenses
|
(18,410 | ) | ||||||||||||||
Accelerated amortization of junior subordinated debt discount and issuance cost
|
(20,313 | ) | ||||||||||||||
Junior subordinated debt repurchase expense
|
(15,050 | ) | ||||||||||||||
Other general and administrative expenses
|
(6,516 | ) | ||||||||||||||
Income tax expense
|
(1,678 | ) | ||||||||||||||
Loss attributable to noncontrolling interest
|
3 | |||||||||||||||
Net loss attributable to Maiden
|
$ | (5,024 | ) | |||||||||||||
Net loss and loss expense ratio*
|
64.5 | % | 67.1 | % | 64.5 | % | 65.4 | % | ||||||||
Acquisition cost ratio**
|
28.4 | % | 30.0 | % | 31.8 | % | 29.5 | % | ||||||||
General and administrative expense ratio***
|
4.6 | % | 0.6 | % | 0.9 | % | 3.5 | % | ||||||||
Combined ratio****
|
97.5 | % | 97.7 | % | 97.2 | % | 98.4 | % |
For the six months ended June 30, 2010
|
Diversified
Reinsurance
|
AmTrust
Quota Share
Reinsurance
|
ACAC
Quota Share
|
Total
|
||||||||||||
Net premiums written
|
$ | 304,623 | $ | 230,679 | $ | 89,039 | $ | 624,341 | ||||||||
Net premiums earned
|
312,959 | 212,323 | 22,431 | 547,713 | ||||||||||||
Net loss and loss adjustment expenses
|
(198,635 | ) | (132,985 | ) | (14,019 | ) | (345,639 | ) | ||||||||
Commissions and other acquisition expenses
|
(88,900 | ) | (69,238 | ) | (7,705 | ) | (165,843 | ) | ||||||||
General and administrative expenses
|
(11,598 | ) | (1,072 | ) | — | (12,670 | ) | |||||||||
Underwriting income
|
$ | 13,826 | $ | 9,028 | $ | 707 | $ | 23,561 | ||||||||
Reconciliation to net income
|
||||||||||||||||
Net investment income and realized and unrealized investment gains (losses)
|
37,303 | |||||||||||||||
Amortization of intangible assets
|
(2,904 | ) | ||||||||||||||
Foreign exchange loss
|
(1,567 | ) | ||||||||||||||
Interest and amortization expenses
|
(18,231 | ) | ||||||||||||||
Other general and administrative expenses
|
(5,366 | ) | ||||||||||||||
Income tax expense
|
(590 | ) | ||||||||||||||
Net income attributable to Maiden
|
$ | 32,206 | ||||||||||||||
Net loss and loss expense ratio*
|
63.5 | % | 62.6 | % | 62.5 | % | 63.1 | % | ||||||||
Acquisition cost ratio**
|
28.4 | % | 32.6 | % | 34.3 | % | 30.3 | % | ||||||||
General and administrative expense ratio***
|
3.7 | % | 0.5 | % | — | 3.3 | % | |||||||||
Combined ratio****
|
95.6 | % | 95.7 | % | 96.8 | % | 96.7 | % |
*
|
Calculated by dividing net loss and loss adjustment expenses by net earned premium and other insurance revenue.
|
**
|
Calculated by dividing commission and other acquisition expenses by net earned premium and other insurance revenue.
|
***
|
Calculated by dividing general and administrative expenses by net earned premium and other insurance revenue.
|
****
|
Calculated by adding together net loss and loss expense ratio, acquisition cost ratio and general and administrative expense ratio.
|
Diversified
Reinsurance
|
AmTrust
Quota Share
Reinsurance
|
ACAC
Quota Share
|
Total
|
|||||||||||||
As of June 30, 2011
|
||||||||||||||||
Reinsurance balances receivable, net
|
$ | 194,248 | $ | 110,733 | $ | 74,825 | $ | 379,806 | ||||||||
Funds withheld
|
145,515 | — | — | 145,515 | ||||||||||||
Prepaid reinsurance premiums
|
37,555 | — | — | 37,555 | ||||||||||||
Reinsurance recoverable on unpaid losses
|
15,587 | — | — | 15,587 | ||||||||||||
Deferred acquisition costs
|
109,575 | 107,414 | 28,434 | 245,423 | ||||||||||||
Loan to related party
|
— | 167,975 | — | 167,975 | ||||||||||||
Goodwill and intangible assets, net
|
101,284 | — | — | 101,284 | ||||||||||||
Restricted investments and cash
|
967,429 | 406,472 | 47,895 | 1,421,796 | ||||||||||||
Corporate and other assets
|
5,648 | — | — | 778,350 | ||||||||||||
Total Assets
|
$ | 1,576,841 | $ | 792,594 | $ | 151,154 | $ | 3,293,291 |
Diversified
Reinsurance
|
AmTrust
Quota Share
Reinsurance
|
ACAC
Quota Share
|
Total
|
|||||||||||||
As of December 31, 2010
|
||||||||||||||||
Reinsurance balances receivable, net
|
$ | 131,109 | $ | 25,566 | $ | 69,658 | $ | 226,333 | ||||||||
Funds withheld
|
152,713 | — | — | 152,713 | ||||||||||||
Prepaid reinsurance premiums
|
28,992 | — | — | 28,992 | ||||||||||||
Reinsurance recoverable on unpaid losses
|
6,656 | — | — | 6,656 | ||||||||||||
Deferred acquisition costs
|
85,252 | 92,155 | 26,224 | 203,631 | ||||||||||||
Loan to related party
|
— | 167,975 | — | 167,975 | ||||||||||||
Goodwill and intangible assets, net
|
103,905 | — | — | 103,905 | ||||||||||||
Restricted investments and cash
|
1,136,252 | 358,621 | 23,979 | 1,518,852 | ||||||||||||
Corporate and other assets
|
88 | — | — | 573,505 | ||||||||||||
Total Assets
|
$ | 1,644,967 | $ | 644,317 | $ | 119,861 | $ | 2,982,562 |
For the three months ended June 30,
|
2011
|
2010
|
||||||||||||||
Total
|
% of Total
|
Total
|
% of Total
|
|||||||||||||
Net premiums written
|
||||||||||||||||
Diversified Reinsurance
|
||||||||||||||||
Property
|
$ | 49,441 | 11.3 | % | $ | 36,276 | 11.6 | % | ||||||||
Casualty
|
76,785 | 17.6 | % | 91,855 | 29.4 | % | ||||||||||
Accident and Health
|
5,834 | 1.3 | % | 8,578 | 2.7 | % | ||||||||||
International
|
25,960 | 6.0 | % | — | — | |||||||||||
Total Diversified Reinsurance
|
158,020 | 36.2 | % | 136,709 | 43.7 | % | ||||||||||
AmTrust Quota Share Reinsurance
|
||||||||||||||||
Small Commercial Business
|
54,942 | 12.5 | % | 44,896 | 14.3 | % | ||||||||||
Specialty Program
|
26,961 | 6.2 | % | 20,827 | 6.6 | % | ||||||||||
Specialty Risk and Extended Warranty
|
134,546 | 30.8 | % | 43,400 | 13.9 | % | ||||||||||
Total AmTrust Quota Share Reinsurance
|
216,449 | 49.5 | % | 109,123 | 34.8 | % | ||||||||||
ACAC Quota Share
|
||||||||||||||||
Automobile Liability
|
35,461 | 8.1 | % | 38,514 | 12.3 | % | ||||||||||
Automobile Physical Damage
|
27,036 | 6.2 | % | 28,704 | 9.2 | % | ||||||||||
Total ACAC Quota Share
|
62,497 | 14.3 | % | 67,218 | 21.5 | % | ||||||||||
$ | 436,966 | 100.0 | % | $ | 313,050 | 100.0 | % |
For the six months ended June 30,
|
2011
|
2010
|
||||||||||||||
Total
|
% of Total
|
Total
|
% of Total
|
|||||||||||||
Net premiums written
|
||||||||||||||||
Diversified Reinsurance
|
||||||||||||||||
Property
|
$ | 121,704 | 13.7 | % | $ | 94,329 | 15.1 | % | ||||||||
Casualty
|
207,803 | 23.4 | % | 184,016 | 29.5 | % | ||||||||||
Accident and Health
|
23,541 | 2.7 | % | 26,278 | 4.2 | % | ||||||||||
International
|
63,790 | 7.2 | % | — | — | |||||||||||
Total Diversified Reinsurance
|
416,838 | 47.0 | % | 304,623 | 48.8 | % | ||||||||||
AmTrust Quota Share Reinsurance
|
||||||||||||||||
Small Commercial Business
|
116,612 | 13.1 | % | 103,830 | 16.6 | % | ||||||||||
Specialty Program
|
35,432 | 4.0 | % | 30,901 | 4.9 | % | ||||||||||
Specialty Risk and Extended Warranty
|
191,119 | 21.6 | % | 95,948 | 15.4 | % | ||||||||||
Total AmTrust Quota Share Reinsurance
|
343,163 | 38.7 | % | 230,679 | 36.9 | % | ||||||||||
ACAC Quota Share
|
||||||||||||||||
Automobile Liability
|
72,208 | 8.2 | % | 50,959 | 8.2 | % | ||||||||||
Automobile Physical Damage
|
54,257 | 6.1 | % | 38,080 | 6.1 | % | ||||||||||
Total ACAC Quota Share
|
126,465 | 14.3 | % | 89,039 | 14.3 | % | ||||||||||
$ | 886,466 | 100.0 | % | $ | 624,341 | 100.0 | % |
For the three months ended June 30,
|
2011
|
2010
|
||||||||||||||
Total
|
% of Total
|
Total
|
% of Total
|
|||||||||||||
Net premiums earned
|
||||||||||||||||
Diversified Reinsurance
|
||||||||||||||||
Property
|
$ | 43,944 | 11.9 | % | $ | 47,550 | 16.7 | % | ||||||||
Casualty
|
92,254 | 25.1 | % | 95,829 | 33.8 | % | ||||||||||
Accident and Health
|
11,448 | 3.1 | % | 18,400 | 6.5 | % | ||||||||||
International
|
22,642 | 6.2 | % | — | — | |||||||||||
Total Diversified Reinsurance
|
170,288 | 46.3 | % | 161,779 | 57.0 | % | ||||||||||
AmTrust Quota Share Reinsurance
|
||||||||||||||||
Small Commercial Business
|
51,297 | 13.9 | % | 56,186 | 19.8 | % | ||||||||||
Specialty Program
|
20,108 | 5.5 | % | 16,680 | 5.9 | % | ||||||||||
Specialty Risk and Extended Warranty
|
64,894 | 17.7 | % | 28,798 | 10.1 | % | ||||||||||
Total AmTrust Quota Share Reinsurance
|
136,299 | 37.1 | % | 101,664 | 35.8 | % | ||||||||||
ACAC Quota Share
|
||||||||||||||||
Automobile Liability
|
34,967 | 9.5 | % | 11,425 | 4.0 | % | ||||||||||
Automobile Physical Damage
|
26,229 | 7.1 | % | 8,916 | 3.2 | % | ||||||||||
Total ACAC Quota Share
|
61,196 | 16.6 | % | 20,341 | 7.2 | % | ||||||||||
$ | 367,783 | 100.0 | % | $ | 283,784 | 100.0 | % |
For the six months ended June 30,
|
2011
|
2010
|
||||||||||||||
Total
|
% of Total
|
Total
|
% of Total
|
|||||||||||||
Net premiums earned
|
||||||||||||||||
Diversified Reinsurance
|
||||||||||||||||
Property
|
$ | 89,396 | 12.5 | % | $ | 89,338 | 16.3 | % | ||||||||
Casualty
|
177,959 | 24.9 | % | 184,075 | 33.6 | % | ||||||||||
Accident and Health
|
23,099 | 3.2 | % | 39,546 | 7.2 | % | ||||||||||
International
|
54,068 | 7.6 | % | — | — | |||||||||||
Total Diversified Reinsurance
|
344,522 | 48.2 | % | 312,959 | 57.1 | % | ||||||||||
AmTrust Quota Share Reinsurance
|
||||||||||||||||
Small Commercial Business
|
100,499 | 14.1 | % | 108,140 | 19.8 | % | ||||||||||
Specialty Program
|
36,513 | 5.1 | % | 31,454 | 5.7 | % | ||||||||||
Specialty Risk and Extended Warranty
|
113,761 | 15.9 | % | 72,729 | 13.3 | % | ||||||||||
Total AmTrust Quota Share Reinsurance
|
250,773 | 35.1 | % | 212,323 | 38.8 | % | ||||||||||
ACAC Quota Share
|
||||||||||||||||
Automobile Liability
|
68,020 | 9.5 | % | 12,594 | 2.3 | % | ||||||||||
Automobile Physical Damage
|
51,003 | 7.2 | % | 9,837 | 1.8 | % | ||||||||||
Total ACAC Quota Share
|
119,023 | 16.7 | % | 22,431 | 4.1 | % | ||||||||||
$ | 714,318 | 100.0 | % | $ | 547,713 | 100.0 | % |
|
·
|
Entering into a quota share reinsurance agreement with AmTrust Financial Services, Inc. ("AmTrust") in 2007 (the "AmTrust Quota Share");
|
|
·
|
Acquiring the reinsurance operations of GMAC Insurance in 2008 (the "GMAC Acquisition");
|
|
·
|
Completing a private placement of trust preferred securities of approximately $260.1 million in 2009 (the "TRUPS Offering");
|
|
·
|
Entering into a quota share reinsurance agreement with American Capital Acquisition Corporation ("ACAC") in 2010 (the "ACAC Quota Share");
|
|
·
|
Acquiring the majority of the reinsurance-related infrastructure, assets and liabilities of U.K.-based GMAC International Insurance Services, Ltd. (“IIS”) in 2010 (the "IIS Acquisition"); and
|
|
·
|
Completing a public debt offering of $107.5 million in June 2011 and repurchasing a like amount of the junior subordinated debt in July 2011.
|
|
·
|
A renewal rights agreement under which Maiden Bermuda underwrites certain assumed reinsurance business written by GMAC International Insurance Company, Ltd. (“GMAC IICL”), which covers primarily personal auto and credit life coverages offered by primary insurers in association with programs IIS designs and implements for original equipment automobile manufacturers;
|
|
·
|
A reinsurance agreement (the "IICL Agreement") under which Maiden Bermuda reinsures all of the existing contracts written by GMAC IICL pursuant to a loss portfolio transfer; under the purchase agreement, all future contracts will be underwritten by Maiden Bermuda;
|
|
·
|
Acquisition of GMAC VersichsrungService (“GMAC VS”), an insurance producer based in Germany which supports sales of primary personal auto insurance through participating automobile dealerships and original equipment automobile manufacturers; and
|
|
·
|
Acquisition of GMAC Life Försäkrings (“GMAC LF”), a credit life insurer domiciled in Sweden which writes certain credit life insurance in association through automobile financings offered through participating automobile dealerships and original equipment automobile manufacturers which has been renamed Maiden Life Försäkrings AB (“Maiden LF”).
|
|
·
|
Net loss to common shareholders of $24.4 million, or $0.34 basic and diluted loss per share for the three months ended June 30, 2011 as compared to net income of $18.6 million or $0.27 basic and $0.26 diluted earnings per share for the same period in 2010.
|
|
·
|
Operating earnings of $11.2 million, or $0.16 basic and $0.15 diluted operating earnings per share for the three months ended June 30, 2011 as compared to $21.2 million or $0.30 basic and diluted operating earnings per share for the same period in 2010.
(1)
|
|
·
|
Net loss to common shareholders of $5.0 million, or $0.07 basic and diluted loss per share for the six months ended June 30, 2011 as compared to net income of $32.2 million, or $0.46 basic and diluted earnings per share for the same period in 2010.
|
|
·
|
Operating earnings of $31.0 million, or $0.43 basic and diluted earnings per share for the six months ended June 30, 2011 as compared to $37.4 million, or $0.53 basic and diluted earnings per share for the same period in 2010.
|
|
·
|
Non-recurring charges in the three and six months ended June 30, 2011 related to Senior Notes Offering of $15.1 million for the repurchase expense of $107.5 million in junior subordinated debentures funded by the Notes along with a $20.3 million non-cash charge for the accelerated amortization of subordinated debt discount and issuance costs related to the TRUPS Offering which were repurchased with the proceeds of the Senior Notes Offering.
|
|
·
|
Gross premiums written of $462.4 million and $933.2 million for the three and six months ended June 30, 2011, an increase of 38.1% and 40.9% over 2010.
|
|
Net premiums earned of $367.8 million and $714.3 million for the three and six months ended June 30, 2011, an increase of 29.6% and 30.4% over 2010.
|
|
Underwriting income of $4.2 million and $17.9 million and a combined ratio of 99.8% and 98.4% for the three and six months ended June 30, 2011 as compared to $13.7 million and $23.6 million and 96.3% and 96.7%, respectively for the same periods in 2010.
(1)
|
|
Adverse net underwriting impact of second quarter 2011 U.S. thunderstorm and tornado activity totaling $9.5 million, net of the Company’s quarterly provision for normalized catastrophe activity.
|
|
Net investment income of $19.8 million and $39.0 million for the three and six months ended June 30, 2011, an increase of 5.0% and 6.9% over the same periods in 2010, respectively.
|
|
·
|
Annualized operating return on equity of 8.3% as compared to 10.8% for the same period in 2010.
(1)
|
|
·
|
Common shareholders' equity of $759.3 million; book value per common share of $10.52.
|
|
·
|
Total investments of $1.9 billion; fixed maturities comprise 99.9% of total investments, of which 62.0% have a credit rating of AAA and an overall average credit rating of AA.
|
|
Adjusted for the repurchase of $89.0 million (net of accelerated amortization of subordinated debt discount and issuance costs of $18.5 million) of junior subordinated debt on July 15, 2011, total debt of $233.7 million and a debt to total capitalization ratio of 23.5%.
|
(1)
|
Operating earnings and operating earnings per share are non-GAAP financial measures. See "Non-GAAP Financial Measures" for additional information and a reconciliation to the nearest GAAP financial measure (net income). Combined ratios and underwriting income are operating metrics. See “Certain Operating Measures” for additional information on these measures.
|
For the three months
ended June 30,
|
For the six months
ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
($ in Millions)
|
($ in Millions)
|
|||||||||||||||
Net (loss) income attributable to Maiden
|
$ | (24.4 | ) | $ | 18.6 | $ | (5.0 | ) | $ | 32.2 | ||||||
Add (subtract):
|
||||||||||||||||
Net realized and unrealized investment gains
|
(0.6 | ) | (0.5 | ) | (0.6 | ) | (0.9 | ) | ||||||||
Amortization of intangibles
|
1.3 | 1.4 | 2.5 | 2.9 | ||||||||||||
Foreign exchange (gains) losses
|
(0.9 | ) | 0.4 | (2.0 | ) | 1.6 | ||||||||||
Junior subordinated debt repurchase expense
|
15.1 | — | 15.1 | — | ||||||||||||
Accelerated amortization of subordinated debt discount and issuance cost
|
20.3 | — | 20.3 | — | ||||||||||||
Non-recurring general and administrative expenses relating to IIS Acquisition
|
0.1 | 1.0 | 0.1 | 1.0 | ||||||||||||
Non-cash deferred tax expense
|
0.3 | 0.3 | 0.6 | 0.6 | ||||||||||||
Operating earnings
|
$ | 11.2 | $ | 21.2 | $ | 31.0 | $ | 37.4 | ||||||||
Operating earnings per common share:
|
||||||||||||||||
Basic operating earnings per share
|
$ | 0.16 | $ | 0.30 | $ | 0.43 | $ | 0.53 | ||||||||
Diluted operating earnings per share
|
$ | 0.15 | $ | 0.30 | $ | 0.43 | $ | 0.53 |
For the three months
ended June 30,
|
For the six months
ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
($ in Millions)
|
($ in Millions)
|
|||||||||||||||
Operating earnings
|
$ | 11.2 | $ | 21.2 | $ | 31.0 | $ | 37.4 | ||||||||
Opening shareholders’ equity
|
$ | 769.7 | $ | 710.0 | $ | 750.2 | $ | 676.5 | ||||||||
Ending shareholders’ equity
|
759.3 | 724.8 | 759.3 | 724.8 | ||||||||||||
Average shareholders’ equity
|
$ | 764.5 | $ | 717.4 | $ | 754.8 | $ | 700.7 | ||||||||
Operating return on equity
|
1.5 | % | 3.0 | % | 4.1 | % | 5.3 | % | ||||||||
Annualized operating return on equity
|
5.9 | % | 11.9 | % | 8.3 | % | 10.8 | % |
|
·
|
losses paid, which are actual cash payments to insureds, net of recoveries from reinsurers;
|
|
·
|
change in outstanding loss or case reserves, which represent management's best estimate of the likely settlement amount for known claims, less the portion that can be recovered from reinsurers; and
|
|
·
|
change in Incurred But Not Reported (“IBNR”) reserves, which are reserves established by us for changes in the values of claims that have been reported to us but are not yet settled, as well as claims that have occurred but have not yet been reported. The portion recoverable from reinsurers is deducted from the gross estimated loss.
|
For the three months
ended June 30,
|
For the six months
ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
($ in Millions)
|
($ in Millions)
|
|||||||||||||||
Gross premiums written
|
$ | 462.4 | $ | 334.8 | $ | 933.2 | $ | 662.2 | ||||||||
Net premiums written
|
$ | 437.0 | $ | 313.1 | $ | 886.5 | $ | 624.3 | ||||||||
Net earned premium
|
$ | 367.8 | $ | 283.8 | $ | 714.3 | $ | 547.7 | ||||||||
Other insurance revenue
|
2.2 | — | 6.8 | — | ||||||||||||
Net loss and loss adjustment expenses
|
(250.6 | ) | (175.4 | ) | (471.7 | ) | (345.6 | ) | ||||||||
Commissions and other acquisition expenses
|
(105.8 | ) | (88.4 | ) | (212.9 | ) | (165.8 | ) | ||||||||
General and administrative expenses
|
(9.4 | ) | (6.3 | ) | (18.6 | ) | (12.7 | ) | ||||||||
Total underwriting income
|
4.2 | 13.7 | 17.9 | 23.6 | ||||||||||||
General and administrative expenses
|
(3.4 | ) | (3.2 | ) | (6.5 | ) | (5.4 | ) | ||||||||
Net investment income
|
19.8 | 18.9 | 39.0 | 36.5 | ||||||||||||
Net realized and unrealized investment gains (losses)
|
0.6 | 0.5 | 0.6 | 0.8 | ||||||||||||
Junior subordinated debt repurchase expense
|
(15.1 | ) | — | (15.1 | ) | — | ||||||||||
Accelerated amortization of subordinated debt discount and issuance cost
|
(20.3 | ) | — | (20.3 | ) | — | ||||||||||
Amortization of intangible assets
|
(1.3 | ) | (1.5 | ) | (2.5 | ) | (2.9 | ) | ||||||||
Foreign exchange gains (losses)
|
0.9 | (0.4 | ) | 2.0 | (1.6 | ) | ||||||||||
Interest and amortization expenses
|
(9.3 | ) | (9.1 | ) | (18.4 | ) | (18.2 | ) | ||||||||
Income tax expense
|
(0.5 | ) | (0.3 | ) | (1.7 | ) | (0.6 | ) | ||||||||
Net (loss) income
|
$ | (24.4 | ) | $ | 18.6 | $ | (5.0 | ) | $ | 32.2 | ||||||
Selected Consolidated Ratios:
|
||||||||||||||||
Net loss and loss expense ratio
|
67.7 | % | 61.8 | % | 65.4 | % | 63.1 | % | ||||||||
Acquisition cost ratio
|
28.6 | % | 31.2 | % | 29.5 | % | 30.3 | % | ||||||||
General and administrative expense ratio
|
3.5 | % | 3.3 | % | 3.5 | % | 3.3 | % | ||||||||
Expense ratio
|
32.1 | % | 34.5 | % | 33.0 | % | 33.6 | % | ||||||||
Combined ratio
|
99.8 | % | 96.3 | % | 98.4 | % | 96.7 | % |
Net Premiums Written
|
Net Premiums Earned
|
|||||||||||||||||||||||||||||||
For the three months ended
June 30,
|
For the six months ended
June 30,
|
For the three months ended
June 30,
|
For the six months ended
June 30,
|
|||||||||||||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||||||||||||||
Diversified Reinsurance
|
36.2 | % | 43.7 | % | 47.0 | % | 48.8 | % | 46.3 | % | 57.0 | % | 48.2 | % | 57.1 | % | ||||||||||||||||
AmTrust Quota Share Reinsurance
|
49.5 | % | 34.8 | % | 38.7 | % | 36.9 | % | 37.1 | % | 35.8 | % | 35.1 | % | 38.8 | % | ||||||||||||||||
ACAC Quota Share
|
14.3 | % | 21.5 | % | 14.3 | % | 14.3 | % | 16.6 | % | 7.2 | % | 16.7 | % | 4.1 | % | ||||||||||||||||
Total
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
|
·
|
As noted previously, the ACAC Quota Share segment results in 2011 reflect a full six months of operations as compared to 2010, which only had four months of operation.
|
|
·
|
In addition, the IIS Acquisition, which was completed in the fourth quarter of 2010 and is reported as part of the Diversified Reinsurance segment, continues to diversify the Company.
|
|
·
|
In the three and six months ended June 30, 2011, the U.S. business associated with the Diversified Reinsurance business experienced growth resulting in further diversification of the Company’s premium base.
|
|
·
|
Finally, the Company continues to experience diversified growth within its AmTrust segment, which added an additional line of business in the second quarter 2011, with the inception of the European Hospital Liability Quota Share, which is discussed in greater detail in the AmTrust segment discussion.
|
·
|
Completion of the first year of operations of the ACAC Quota Share segment.
While second quarter premium was down slightly, 2011 includes a full six months of results compared to only four months in 2010, resulting in growth of $37.4 million or 42.0% for the six month period 2011 as compared to 2010.
|
·
|
First full calendar quarter of the IIS Acquisition.
The IIS Acquisition was completed on November 30, 2010 and thus the three and six months ended June 30, 2011 represents the first full calendar periods of operations for the business associated with the IIS Acquisition, which contributed $26.0 million and $63.8 million of the overall increase in net premium written for the three and six month periods in 2011.
|
Continued underwriting discipline by Maiden US
. Maiden US continues to maintain its underwriting discipline in the face of ongoing significant market competition. However, Maiden US continues to see demand for its products and in the three and six months ended June 30, 2011, was successful in securing a series of new accounts and experienced organic growth, which resulted in increased premiums of $0.7 million and $36.3 million.
|
·
|
Growth in the AmTrust Quota Share Reinsurance segment premium.
The commencement of the European Hospital Liability Quota Share increased premiums written by $75.1 million in the three and six months ended June 30, 2011 while the business under the Master Agreement increased $32.3 million and $37.4 million in the three and six months ended June 30, 2011.
|
Completion of the first year of operations of the ACAC Quota Share segment.
As noted, this new segment commenced on March 1, 2010 and thus the six months ended June 30, 2011 represents a full six month period as compared to only four months in 2010, contributing $40.9 million and $96.6 million of the increase for the three and six month periods ended June 30, 2011 as compared to the same periods in 2010, respectively.
|
·
|
First full calendar quarters of the IIS Acquisition.
The IIS Acquisition was completed on November 30, 2010 and thus the six months ended June 30, 2011 represents the first full calendar periods of operations for the business associated with the IIS Acquisition, which contributed $22.6 million and $54.1 million of the overall increase in net premium earned for the three and six month periods ended June 30, 2011 as compared to the same periods in 2010, respectively.
|
·
|
Growth in the AmTrust Quota Share Reinsurance segment premium.
The commencement of the European Hospital Liability Quota Share increased premiums earned by $19.5 million in the three and six months ended June 30, 2011 while the business under the Master Agreement increased $15.1 million and $19.0 million in the three and six months ended June 30, 2011 as compared to the same periods in 2010, respectively.
|
For the three months ended
June 30,
|
For the six months ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
($ in Millions)
|
($ in Millions)
|
|||||||||||||||
General and administrative expenses – segments
|
$ | 9.4 | $ | 6.3 | $ | 18.6 | $ | 12.7 | ||||||||
General and administrative expenses – corporate
|
3.4 | 3.2 | 6.5 | 5.4 | ||||||||||||
Total
|
$ | 12.8 | $ | 9.5 | $ | 25.1 | $ | 18.1 |
For the three months ended
June 30,
|
For the six months ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
($ in Millions)
|
($ in Millions)
|
|||||||||||||||
TRUPS Offering
|
$ | 9.1 | $ | 9.1 | $ | 18.2 | $ | 18.2 | ||||||||
Senior Note Offering
|
0.2 | — | 0.2 | — | ||||||||||||
Total
|
$ | 9.3 | $ | 9.1 | $ | 18.4 | $ | 18.2 |
For the three months ended
June 30,
|
For the six months ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
($ in Millions)
|
($ in Millions)
|
|||||||||||||||
Net premiums written
|
$ | 158.0 | $ | 136.7 | $ | 416.8 | $ | 304.6 | ||||||||
Net premiums earned
|
$ | 170.3 | $ | 161.8 | $ | 344.5 | $ | 312.9 | ||||||||
Other insurance revenue
|
2.2 | — | 6.8 | — | ||||||||||||
Net loss and loss adjustment expenses
|
(116.4 | ) | (99.2 | ) | (226.7 | ) | (198.6 | ) | ||||||||
Commissions and other acquisition expenses
|
(48.3 | ) | (48.4 | ) | (99.7 | ) | (88.9 | ) | ||||||||
General and administrative expenses
|
(8.3 | ) | (5.7 | ) | (16.3 | ) | (11.6 | ) | ||||||||
Underwriting (loss) income
|
$ | (0.5 | ) | $ | 8.5 | $ | 8.6 | $ | 13.8 | |||||||
Net loss and loss expense ratio
|
67.5 | % | 61.3 | % | 64.5 | % | 63.5 | % | ||||||||
Acquisition cost ratio
|
28.0 | % | 29.9 | % | 28.4 | % | 28.4 | % | ||||||||
General and administrative expense ratio
|
4.8 | % | 3.5 | % | 4.6 | % | 3.7 | % | ||||||||
Expense ratio
|
32.8 | % | 33.4 | % | 33.0 | % | 32.1 | % | ||||||||
Combined ratio
|
100.3 | % | 94.7 | % | 97.5 | % | 95.6 | % |
For the three months ended June 30,
|
Change In
|
|||||||||||||||
2011
|
2010
|
$
|
%
|
|||||||||||||
($ in Millions)
|
||||||||||||||||
Property
|
$ | 49.4 | $ | 36.3 | $ | 13.1 | 36.3 | % | ||||||||
Casualty
|
76.8 | 91.8 | (15.0 | ) | (16.4 | )% | ||||||||||
Accident and Health
|
5.8 | 8.6 | (2.8 | ) | (32.0 | )% | ||||||||||
International
|
26.0 | — | 26.0 |
NM
|
||||||||||||
Total Diversified Reinsurance
|
$ | 158.0 | $ | 136.7 | $ | 21.3 | 15.6 | % |
For the six months ended June 30,
|
Change In
|
|||||||||||||||
2011
|
2010
|
$
|
%
|
|||||||||||||
($ in Millions)
|
||||||||||||||||
Property
|
$ | 121.7 | $ | 94.3 | $ | 27.4 | 29.0 | % | ||||||||
Casualty
|
207.8 | 184.0 | 23.8 | 12.9 | % | |||||||||||
Accident and Health
|
23.5 | 26.3 | (2.8 | ) | (10.4 | ) % | ||||||||||
International
|
63.8 | — | 63.8 |
NM
|
||||||||||||
Total Diversified Reinsurance
|
$ | 416.8 | $ | 304.6 | $ | 112.2 | 36.8 | % |
For the three months ended June 30,
|
Change In
|
|||||||||||||||
2011
|
2010
|
$
|
%
|
|||||||||||||
($ in Millions)
|
||||||||||||||||
Property
|
$ | 43.9 | $ | 47.6 | $ | (3.7 | ) | (7.6 | )% | |||||||
Casualty
|
92.3 | 95.8 | (3.5 | ) | (3.7 | )% | ||||||||||
Accident and Health
|
11.5 | 18.4 | (6.9 | ) | (37.8 | )% | ||||||||||
International
|
22.6 | — | 22.6 |
NM
|
||||||||||||
Total Diversified Reinsurance
|
$ | 170.3 | $ | 161.8 | $ | 8.5 | 5.3 | % |
For the six months ended June 30,
|
Change In
|
|||||||||||||||
2011
|
2010
|
$
|
%
|
|||||||||||||
($ in Millions)
|
||||||||||||||||
Property
|
$ | 89.4 | $ | 89.3 | $ | 0.1 | 0.1 | % | ||||||||
Casualty
|
177.9 | 184.1 | (6.2 | ) | (3.3 | )% | ||||||||||
Accident and Health
|
23.1 | 39.5 | (16.4 | ) | (41.6 | )% | ||||||||||
International
|
54.1 | — | 54.1 |
NM
|
||||||||||||
Total Diversified Reinsurance
|
$ | 344.5 | $ | 312.9 | $ | 31.6 | 10.1 | % |
For the three months ended June 30,
|
For the six months ended June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
($ in Millions)
|
($ in Millions)
|
|||||||||||||||
Net premiums written
|
$ | 216.4 | $ | 109.1 | $ | 343.2 | $ | 230.7 | ||||||||
Net premiums earned
|
$ | 136.3 | $ | 101.7 | $ | 250.8 | $ | 212.3 | ||||||||
Net loss and loss adjustment expenses
|
(94.8 | ) | (63.4 | ) | (168.3 | ) | (133.0 | ) | ||||||||
Commissions and other acquisition expenses
|
(38.1 | ) | (33.1 | ) | (75.3 | ) | (69.2 | ) | ||||||||
General and administrative expenses
|
(0.6 | ) | (0.6 | ) | (1.3 | ) | (1.1 | ) | ||||||||
Underwriting income
|
$ | 2.8 | $ | 4.6 | $ | 5.9 | $ | 9.0 | ||||||||
Net loss and loss expense ratio
|
69.5 | % | 62.4 | % | 67.1 | % | 62.6 | % | ||||||||
Acquisition cost ratio
|
28.0 | % | 32.5 | % | 30.0 | % | 32.6 | % | ||||||||
General and administrative expense ratio
|
0.4 | % | 0.6 | % | 0.6 | % | 0.5 | % | ||||||||
Expense ratio
|
28.4 | % | 33.1 | % | 30.6 | % | 33.1 | % | ||||||||
Combined ratio
|
97.9 | % | 95.5 | % | 97.7 | % | 95.7 | % |
For the three months ended June 30,
|
Change In
|
|||||||||||||||
2011
|
2010
|
$
|
%
|
|||||||||||||
($ in Millions) | ||||||||||||||||
Small Commercial Business
|
$ | 54.9 | $ | 44.9 | $ | 10.0 | 22.3 | % | ||||||||
Specialty Program
|
27.0 | 20.8 | 6.2 | 29.5 | % | |||||||||||
Specialty Risk and Extended Warranty
|
134.5 | 43.4 | 91.1 | 210.0 | % | |||||||||||
Total AmTrust Quota Share Reinsurance
|
$ | 216.4 | $ | 109.1 | $ | 107.3 | 98.4 | % |
For the six months ended June 30,
|
Change In
|
|||||||||||||||
2011
|
2010
|
$
|
%
|
|||||||||||||
($ in Millions) | ||||||||||||||||
Small Commercial Business
|
$ | 116.6 | $ | 103.8 | $ | 12.8 | 12.3 | % | ||||||||
Specialty Program
|
35.5 | 30.9 | 4.6 | 14.7 | % | |||||||||||
Specialty Risk and Extended Warranty
|
191.1 | 96.0 | 95.1 | 99.2 | % | |||||||||||
Total AmTrust Quota Share Reinsurance
|
$ | 343.2 | $ | 230.7 | $ | 112.5 | 48.8 | % |
For the three months ended June 30,
|
Change In
|
|||||||||||||||
2011
|
2010
|
$
|
%
|
|||||||||||||
($ in Millions) | ||||||||||||||||
Small Commercial Business
|
$ | 51.3 | $ | 56.2 | $ | (4.9 | ) | (8.7 | )% | |||||||
Specialty Program
|
20.1 | 16.7 | 3.4 | 20.5 | % | |||||||||||
Specialty Risk and Extended Warranty
|
64.9 | 28.8 | 36.1 | 125.3 | % | |||||||||||
Total AmTrust Quota Share Reinsurance
|
$ | 136.3 | $ | 101.7 | $ | 34.6 | 34.1 | % |
For the six months ended June 30,
|
Change In
|
|||||||||||||||
2011
|
2010
|
$
|
%
|
|||||||||||||
($ in Millions) | ||||||||||||||||
Small Commercial Business
|
$ | 100.5 | $ | 108.1 | $ | (7.6 | ) | (7.1 | )% | |||||||
Specialty Program
|
36.5 | 31.5 | 5.0 | 16.1 | % | |||||||||||
Specialty Risk and Extended Warranty
|
113.8 | 72.7 | 41.1 | 56.4 | % | |||||||||||
Total AmTrust Quota Share Reinsurance
|
$ | 250.8 | $ | 212.3 | $ | 38.5 | 18.1 | % |
For the three months ended June 30,
|
For the six months ended June 30,
|
For the period from March 1 to June 30,
|
||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
($ in Millions)
|
($ in Millions)
|
|||||||||||||||
Net premiums written
|
$ | 62.5 | $ | 67.2 | $ | 126.5 | $ | 89.0 | ||||||||
Net premiums earned
|
$ | 61.2 | $ | 20.4 | $ | 119.0 | $ | 22.4 | ||||||||
Net loss and loss adjustment expenses
|
(39.5 | ) | (12.7 | ) | (76.8 | ) | (14.0 | ) | ||||||||
Commissions and other acquisitions expenses
|
(19.4 | ) | (7.0 | ) | (37.9 | ) | (7.7 | ) | ||||||||
General and administrative expenses
|
(0.5 | ) | — | (1.0 | ) | — | ||||||||||
Underwriting income
|
$ | 1.8 | $ | 0.7 | $ | 3.3 | $ | 0.7 | ||||||||
Net loss and loss expense ratio
|
64.5 | % | 62.5 | % | 64.5 | % | 62.5 | % | ||||||||
Acquisition cost ratio
|
31.8 | % | 34.3 | % | 31.8 | % | 34.3 | % | ||||||||
General and administrative expense ratio
|
0.8 | % | — | 0.9 | % | — | ||||||||||
Expense ratio
|
32.6 | % | 34.3 | % | 32.7 | % | 34.3 | % | ||||||||
Combined ratio
|
97.1 | % | 96.8 | % | 97.2 | % | 96.8 | % |
For the three months ended June 30,
|
Change in
|
|||||||||||||||
2011
|
2010
|
$
|
%
|
|||||||||||||
($ in Millions) | ||||||||||||||||
Automobile liability
|
$ | 35.5 | $ | 38.5 | $ | (3.0 | ) | (7.9 | )% | |||||||
Automobile physical damage
|
27.0 | 28.7 | (1.7 | ) | (5.8 | )% | ||||||||||
Total ACAC Quota Share
|
$ | 62.5 | $ | 67.2 | $ | (4.7 | ) | (7.0 | )% |
For the six
months ended
June 30,
|
For the period
from March 1
to June 30,
|
Change in | ||||||||||||||
2011
|
2010
|
$ |
%
|
|||||||||||||
($ in Millions)
|
||||||||||||||||
Automobile liability
|
$ | 72.2 | $ | 51.0 | $ | 21.2 | 41.7 | % | ||||||||
Automobile physical damage
|
54.3 | 38.0 | 16.3 | 42.5 | % | |||||||||||
Total ACAC Quota Share
|
$ | 126.5 | $ | 89.0 | $ | 37.5 | 42.0 | % |
For the three months ended June 30,
|
Change in
|
|||||||||||||||
2011
|
2010
|
$
|
%
|
|||||||||||||
($ in Millions) | ||||||||||||||||
Automobile liability
|
$ | 35.0 | $ | 11.4 | $ | 23.6 | 206.1 | % | ||||||||
Automobile physical damage
|
26.2 | 8.9 | 17.3 | 194.2 | % | |||||||||||
Total ACAC Quota Share
|
$ | 61.2 | $ | 20.3 | $ | 40.9 | 200.9 | % |
For the six
months ended
June 30,
|
For the period
from March 1
to
June 30,
|
Change in
|
||||||||||||||
2011
|
2010
|
$
|
%
|
|||||||||||||
($ in Millions)
|
||||||||||||||||
Automobile liability
|
$ | 68.0 | $ | 12.6 | $ | 55.4 | 440.1 | % | ||||||||
Automobile physical damage
|
51.0 | 9.8 | 41.2 | 418.5 | % | |||||||||||
Total ACAC Quota Share
|
$ | 119.0 | $ | 22.4 | $ | 96.6 | 430.6 | % |
For the six months ended
June 30,
|
||||||||
2011
|
2010
|
|||||||
($ in Millions)
|
||||||||
Operating activities
|
$ | 43.6 | $ | 72.4 | ||||
Investing activities
|
39.0 | 33.6 | ||||||
Financing activities
|
18.5 | (33.6 | ) | |||||
Effect of foreign exchange
|
1.1 | (0.8 | ) | |||||
Total increase in cash and cash equivalents
|
$ | 102.2 | $ | 71.6 |
June 30, 2011
|
December 31, 2010
|
|||||||||||||||||||||||
Cash &
Equivalents
|
Fixed
Maturities
|
Total
|
Cash &
Equivalents
|
Fixed
Maturities
|
Total
|
|||||||||||||||||||
($ in Millions)
|
($ in Millions)
|
|||||||||||||||||||||||
Maiden US
|
$ | 12.0 | $ | 596.8 | $ | 608.8 | $ | 13.4 | $ | 558.1 | $ | 571.5 | ||||||||||||
Maiden Bermuda
|
35.6 | 323.0 | 358.6 | 49.0 | 515.8 | 564.8 | ||||||||||||||||||
Total Diversified Reinsurance Segment
|
47.6 | 919.8 | 967.4 | 62.4 | 1,073.9 | 1,136.3 | ||||||||||||||||||
Maiden Bermuda
|
18.9 | 387.6 | 406.5 | 18.1 | 340.5 | 358.6 | ||||||||||||||||||
Total AmTrust Quota Share Reinsurance Segment
|
18.9 | 387.6 | 406.5 | 18.1 | 340.5 | 358.6 | ||||||||||||||||||
Maiden Bermuda
|
0.7 | 47.2 | 47.9 | 9.3 | 14.7 | 24.0 | ||||||||||||||||||
ACAC Quota Share
|
0.7 | 47.2 | 47.9 | 9.3 | 14.7 | 24.0 | ||||||||||||||||||
Total
|
$ | 67.2 | $ | 1,354.6 | $ | 1,421.8 | $ | 89.8 | $ | 1,429.1 | $ | 1,518.9 |
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
Balance
|
% of Total
|
Balance
|
% of Total
|
|||||||||||||
($ in Millions)
|
($ in Millions)
|
|||||||||||||||
Fixed maturities, at fair value
|
$ | 102.9 | 70.8 | % | $ | 109.1 | 71.4 | % | ||||||||
Cash and cash equivalents
|
10.2 | 7.0 | % | 10.3 | 6.8 | % | ||||||||||
Funds held on underlying business
|
18.3 | 12.6 | % | 18.0 | 11.8 | % | ||||||||||
Insurance balances receivable and other
|
13.9 | 9.6 | % | 15.3 | 10.0 | % | ||||||||||
Total
|
$ | 145.3 | 100.0 | % | $ | 152.7 | 100.0 | % |
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
Fair Value
|
% of Total
|
Fair Value
|
% of Total
|
|||||||||||||
($ in Millions)
|
($ in Millions)
|
|||||||||||||||
United Kingdom
|
$ | 30.5 | 29.6 | % | $ | 29.8 | 27.3 | % | ||||||||
Germany
|
21.1 | 20.5 | % | 19.9 | 18.2 | % | ||||||||||
Italy
|
18.8 | 18.2 | % | 17.4 | 15.9 | % |
As of June 30, 2011
|
Original or
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
||||||||||||
($ in Millions)
|
||||||||||||||||
Corporate bonds
|
$ | 661.9 | $ | 52.4 | $ | (9.0 | ) | $ | 705.3 | |||||||
Non U.S. government bonds
|
14.7 | 1.5 | — | 16.2 | ||||||||||||
Municipal bonds
|
42.2 | 0.6 | (0.5 | ) | 42.3 | |||||||||||
U.S. Treasury bond
|
44.2 | 1.4 | — | 45.6 | ||||||||||||
U.S. agency bonds – mortgage backed
|
994.8 | 30.3 | (2.0 | ) | 1,023.1 | |||||||||||
U.S. agency bonds - other
|
16.8 | 1.5 | — | 18.3 | ||||||||||||
Total AFS fixed maturities
|
$ | 1,774.6 | $ | 87.7 | $ | (11.5 | ) | $ | 1,850.8 | |||||||
Other investments
|
$ | 1.8 | $ | 0.2 | $ | — | $ | 2.0 |
As of December 31, 2010
|
Original or
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
||||||||||||
($ in Millions)
|
||||||||||||||||
Corporate bonds
|
$ | 673.8 | $ | 46.6 | $ | (11.4 | ) | $ | 709.0 | |||||||
Non U.S. government bonds
|
15.5 | 0.4 | — | 15.9 | ||||||||||||
Municipal bonds
|
45.2 | 0.4 | (0.8 | ) | 44.8 | |||||||||||
U.S. Treasury bond
|
92.0 | 1.1 | (1.4 | ) | 91.7 | |||||||||||
U.S. agency bonds – mortgage backed
|
951.5 | 22.4 | (4.4 | ) | 969.5 | |||||||||||
U.S. agency bonds - other
|
41.8 | 1.7 | — | 43.5 | ||||||||||||
Total AFS fixed maturities
|
$ | 1,819.8 | $ | 72.6 | $ | (18.0 | ) | $ | 1,874.4 | |||||||
Other investments
|
$ | 5.8 | $ | 0.1 | $ | — | $ | 5.9 |
|
•
|
Historic and implied volatility of the security;
|
|
•
|
Length of time and extent to which the fair value has been less than amortized cost;
|
|
•
|
Adverse conditions specifically related to the security or to specific conditions in an industry or geographic area;
|
|
•
|
Failure, if any, of the issuer of the security to make scheduled payments; and
|
|
•
|
Recoveries or additional declines in fair value subsequent to the balance sheet date.
|
Less Than 12 Months
|
12 Months or More
|
Total
|
||||||||||||||||||||||
As of June 30, 2011
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
||||||||||||||||||
($ in Millions) | ||||||||||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||||||||||
U.S. agency bonds – mortgage backed
|
$ | 218.9 | $ | (2.0 | ) | $ | — | $ | — | $ | 218.9 | $ | (2.0 | ) | ||||||||||
Corporate bonds
|
55.1 | (1.0 | ) | 129.5 | (8.0 | ) | 184.6 | (9.0 | ) | |||||||||||||||
Municipal bonds
|
15.9 | (0.5 | ) | — | — | 15.9 | (0.5 | ) | ||||||||||||||||
Total temporarily impaired AFS securities
|
$ | 289.9 | $ | (3.5 | ) | $ | 129.5 | $ | (8.0 | ) | $ | 419.4 | $ | (11.5 | ) |
Less Than 12 Months
|
12 Months or More
|
Total | ||||||||||||||||||||||
As of December 31, 2010
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
Fair
Value
|
Unrealized
Losses
|
||||||||||||||||||
($ in Millions)
|
||||||||||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||||||||||
U.S. treasury bonds
|
$ | 47.2 | $ | (1.4 | ) | $ | — | $ | — | $ | 47.2 | $ | (1.4 | ) | ||||||||||
U.S. agency bonds – mortgage backed
|
315.4 | (4.3 | ) | — | — | 315.4 | (4.3 | ) | ||||||||||||||||
Corporate bonds
|
86.9 | (1.6 | ) | 166.1 | (9.9 | ) | 253.0 | (11.5 | ) | |||||||||||||||
Municipal bonds
|
27.3 | (0.8 | ) | — | — | 27.3 | (0.8 | ) | ||||||||||||||||
Total temporarily impaired AFS securities
|
$ | 476.8 | $ | (8.1 | ) | $ | 166.1 | $ | (9.9 | ) | $ | 642.9 | $ | (18.0 | ) |
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
($ in
Millions)
|
% of
Total
|
($ in
Millions)
|
% of
Total
|
|||||||||||||
Due in one year or less
|
$
|
66.5
|
3.6
|
%
|
$
|
65.4
|
3.5
|
%
|
||||||||
Due after one year through five years
|
228.1
|
12.3
|
%
|
180.2
|
9.6
|
%
|
||||||||||
Due after five years through ten years
|
455.9
|
24.6
|
%
|
578.7
|
30.9
|
%
|
||||||||||
Due after ten years
|
77.2
|
4.2
|
%
|
80.6
|
4.3
|
%
|
||||||||||
U.S. agency bonds - mortgage-backed securities
|
1,023.1
|
55.3
|
%
|
969.5
|
51.7
|
%
|
||||||||||
Total
|
$
|
1,850.8
|
100.0
|
%
|
$
|
1,874.4
|
100.0
|
%
|
Ratings as of June 30, 2011
|
Amortized
Cost
|
Fair
Market
Value
|
% of Total
Fair Market
Value
|
|||||||||
($ in Millions) | ||||||||||||
U.S. treasury bonds
|
$ | 44.2 | $ | 45.6 | 2.4 | % | ||||||
U.S. agency bonds
|
1,011.6 | 1,041.4 | 56.3 | % | ||||||||
AAA
|
57.2 | 60.5 | 3.3 | % | ||||||||
AA+, AA, AA-
|
83.6 | 90.5 | 4.9 | % | ||||||||
A+, A, A-
|
323.5 | 331.4 | 17.9 | % | ||||||||
BBB+, BBB, BBB-
|
232.4 | 258.8 | 14.0 | % | ||||||||
BB+ or lower
|
22.1 | 22.6 | 1.2 | % | ||||||||
Total
|
$ | 1,774.6 | $ | 1,850.8 | 100.0 | % |
Ratings as of December 31, 2010
|
Amortized
Cost
|
Fair
Market
Value
|
% of Total
Fair Market
Value
|
|||||||||
($ in Millions)
|
||||||||||||
U.S. treasury bonds
|
$ | 92.0 | $ | 91.7 | 4.9 | % | ||||||
U.S. agency bonds
|
993.2 | 1,013.0 | 54.0 | % | ||||||||
AAA
|
74.7 | 78.5 | 4.2 | % | ||||||||
AA+, AA, AA-
|
74.5 | 79.4 | 4.2 | % | ||||||||
A+, A, A-
|
325.3 | 329.1 | 17.6 | % | ||||||||
BBB+, BBB, BBB-
|
222.5 | 244.1 | 13.0 | % | ||||||||
BB+ or lower
|
37.6 | 38.6 | 2.1 | % | ||||||||
Total
|
$ | 1,819.8 | $ | 1,874.4 | 100.0 | % |
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
Fair Value
|
% of Total
|
Fair Value
|
% of Total
|
|||||||||||||
($ in Millions)
|
($ in Millions)
|
|||||||||||||||
Mortgage-backed securities (“MBS”)
|
||||||||||||||||
Residential mortgage-backed (“RMBS”)
|
||||||||||||||||
GNMA – Fixed Rate
|
$ | 258.5 | 24.8 | % | $ | 273.5 | 27.0 | % | ||||||||
FNMA – Fixed Rate
|
512.9 | 49.3 | % | 465.7 | 46.0 | % | ||||||||||
FNMA – Variable Rate
|
86.0 | 8.3 | % | 80.0 | 7.9 | % | ||||||||||
FHLMC – Fixed Rate
|
165.7 | 15.9 | % | 150.3 | 14.8 | % | ||||||||||
Total agency RMBS
|
1,023.1 | 98.3 | % | 969.5 | 95.7 | % | ||||||||||
Total mortgage-backed securities
|
1,023.1 | 98.3 | % | 969.5 | 95.7 | % | ||||||||||
Non-MBS fixed rate Agency securities
|
18.3 | 1.7 | % | 43.5 | 4.3 | % | ||||||||||
Total US Agency bonds
|
$ | 1,041.4 | 100.0 | % | $ | 1,013.0 | 100.0 | % |
June 30, 2011
|
December 31, 2010
|
||||||||||||||||
Fair Value
|
% of Total
|
Fair Value
|
% of Total
|
||||||||||||||
($ in Millions) | ($ in Millions) | ||||||||||||||||
Corporate Securities
|
|||||||||||||||||
Financial Institutions
|
$ | 529.1 | 75.0 | % | $ | 486.1 | 68.6 | % | |||||||||
Industrials
|
121.0 | 17.2 | % | 161.5 | 22.8 | % | |||||||||||
Utilities/Other
|
55.2 | 7.8 | % | 61.4 | 8.6 | % | |||||||||||
Total Corporate Securities
|
$ | 705.3 | 100.0 | % | $ | 709.0 | 100.0 | % |
Fair Value
|
% of Holdings Based on Fair Value of
All Fixed Income Securities
|
|||||||
|
($ in Millions)
|
|
||||||
Morgan Stanley FLT, Due 10/18/2016
(1)
|
$
|
36.8
|
1.9
|
%
|
||||
Citigroup Inc. FLT, Due 6/9/2016
(1)
|
24.8
|
1.3
|
%
|
|||||
Barclays Bank PLC FLT Due 2/24/2020
|
20.2
|
1.1
|
%
|
|||||
Merrill Lynch FLT, Due 6/5/2012
(1)
|
20.0
|
1.0
|
%
|
|||||
Bear Stearns FLT Due 11/21/2016
(1)
|
19.1
|
1.0
|
%
|
|||||
HSBC Finance FLT, Due 6/1/2016
(1)
|
19.0
|
1.0
|
%
|
|||||
SLM Corp FLT, Due 1/27/2014
(1)
|
19.0
|
1.0
|
%
|
|||||
JPMorgan Chase FLT, Due 6/13/2016
(1)
|
18.7
|
1.0
|
%
|
|||||
PartnerRe Finance LLC Due 6/1/2020
|
15.1
|
0.8
|
%
|
|||||
GE Capital Corp FLT, Due 3/20/2014
(1)
|
14.7
|
0.8
|
%
|
|||||
Total
|
$
|
207.4
|
10.9
|
%
|
(1)
|
Securities with the notation FLT are floating rate securities.
|
June 30, 2011
|
December 31, 2010
|
|||||||||||||||
Fair value
|
% of Total
|
Fair value
|
% of Total
|
|||||||||||||
($ in Millions)
|
($ in Millions)
|
|||||||||||||||
Germany
|
$ | 10.1 | 62.6 | % | $ | 11.6 | 73.0 | % | ||||||||
Netherlands
|
2.4 | 15.1 | % | 1.5 | 9.6 | % | ||||||||||
Belgium
|
2.0 | 12.6 | % | 1.5 | 9.5 | % |
June 30,
2011
|
December 31,
2010
|
|||||||
($ in Millions)
|
||||||||
Reinsurance balances receivable, net
|
$
|
379.8
|
$
|
226.3
|
||||
Prepaid reinsurance premiums
|
37.6
|
29.0
|
||||||
Deferred commission and other acquisition costs
|
245.4
|
203.6
|
||||||
Reserve for loss and loss adjustment expenses
|
(1,279.7
|
)
|
(1,226.8
|
)
|
||||
Unearned premiums
|
(841.0
|
)
|
(657.6
|
)
|
June 30,
2011
|
December 31,
2010
|
|||||||
($ in Millions)
|
||||||||
Junior Subordinated Debt
|
$
|
215.2
|
$
|
215.2
|
||||
Senior Notes
|
107.5
|
—
|
||||||
Maiden shareholders’ equity
|
759.3
|
750.2
|
||||||
Total capital resources
|
$
|
1,082.0
|
$
|
965.4
|
||||
Ratio of debt to total capitalization
|
29.8
|
%
|
22.3
|
%
|
June 30, 2011
|
December 31, 2010
|
|||||||
($ in Millions) | ||||||||
Foreign currency translation adjustment at beginning of period
|
$
|
(0.4
|
)
|
$
|
—
|
|||
Change in foreign currency translation adjustment included in
accumulated other comprehensive income
|
1.9
|
(0.4
|
)
|
|||||
Foreign currency translation adjustment at end of period
|
$
|
1.5
|
$
|
(0.4
|
)
|
Fair Value
|
Estimated Change in Fair Value
|
Hypothetical
Percentage
Increase (Decrease)
in Shareholders’
Equity
|
||||||||||
($ in Millions)
|
||||||||||||
200 basis point increase
|
$
|
1,743.8
|
$
|
(156.8
|
)
|
(20.7
|
)%
|
|||||
100 basis point increase
|
1,818.7
|
(81.9
|
)
|
(10.8
|
)%
|
|||||||
No change
|
1,900.6
|
—
|
—
|
%
|
||||||||
100 basis point decrease
|
1,982.8
|
82.2
|
10.8
|
%
|
||||||||
200 basis point decrease
|
2,072.8
|
172.2
|
22.7
|
%
|
Exhibit
|
||
Number
|
Description
|
|
10.1
|
Amended and Restated Maiden Holdings, Ltd. 2007 Share Incentive Plan as of July 26, 2011
|
|
10.2
|
Form of Performance-Based Restricted Share Unit Agreement for Employee Recipients of Restricted Share Units under the Amended and Restated 2007 Share Incentive Plan
|
|
10.3
|
Endorsement No. 1 to the Amended and Restated Quota Share Reinsurance Agreement by and between Maiden Insurance Company Ltd. and AmTrust International Insurance, Ltd. dated as of July 26, 2011
|
|
10.4
|
Quota Share Reinsurance Contract by and between Maiden Insurance Company Ltd. and AmTrust Europe Limited and/or AmTrust International Underwriters Limited dated as of April 1, 2011
|
|
10.5
|
Endorsement No. 1 to the Quota Share Reinsurance Contract by and between Maiden Insurance Company Ltd. and AmTrust Europe Limited and/or AmTrust International Underwriters Limited dated as of July 26, 2011
|
|
10.6
|
First Amendment to Amended and Restated Declaration of Trust, dated as of July 14, 2011, by and among Maiden Holdings North America, Ltd., Arturo M. Raschbaum, John M. Marshaleck and Karen L. Schmitt, as all of the Administrators , and Wilmington Trust Company, as Institutional Trustee and Delaware Trustee
|
|
31.1
|
Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended June 30, 2011.
|
|
31.2
|
Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a), for the quarter ended June 30, 2011.
|
|
32.1
|
Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, for the quarter ended June 30, 2011.
|
|
32.2
|
Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, for the quarter ended June 30, 2011.
|
|
101
|
The following materials from Maiden Holdings, Ltd. Quarterly Report on Form 10-Q, formatted in XBRL (eXtensive Business Reporting Language): (i) the unaudited Condensed Balance Sheets, (ii) the unaudited Condensed Consolidated Statements of Income, (iii) the unaudited Condensed Consolidated Statements of Comprehensive Income, (iv) the unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity, (v) the unaudited Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.**
|
MAIDEN HOLDINGS, LTD.
(Registrant)
|
|
Date: August 8, 2011
|
/s/ ARTURO M. RASCHBAUM
|
Arturo M. Raschbaum
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
/s/ JOHN M. MARSHALECK
|
|
John M. Marshaleck
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
|
(a)
|
provide selected officers, directors, employees and consultants with additional incentive to promote the success of the Company’s business;
|
|
(b)
|
encourage such persons to remain in the service of the Company; and
|
|
(c)
|
enable such persons to acquire proprietary interests in the Company.
|
|
(i)
|
any “person” (as such term is used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than any Subsidiary or any employee benefit plan of the Company or a Subsidiary or former Subsidiary, is or becomes a beneficial owner, directly or indirectly, of shares of the Company representing 25% or more of the total voting power of the Company’s then outstanding shares;
|
|
(ii)
|
a tender offer (for which a filing has been made with the SEC which purports to comply with the requirements of Section 14(d) of the Securities Exchange Act of 1934 and the corresponding SEC rules) is made for the shares of the Company. In case of a tender offer described in this paragraph (ii), the “Change of Control” will be deemed to have occurred upon the first to occur of (A) any time during the offer when the person (using the definition in (i) above) making the offer owns or has accepted for payment shares of the Company with 25% or more of the total voting power of the Company’s outstanding shares or (B) three business days before the offer is to terminate unless the offer is withdrawn first, if the person making the offer could own, by the terms of the offer plus any shares owned by this person, shares with 50% or more of the total voting power of the Company’s outstanding shares when the offer terminates; or
|
|
(iii)
|
individuals who were the Board’s nominees for election as directors of the Company immediately prior to a meeting of the shareholders of the Company involving a contest for the election of directors shall not constitute a majority of the Board following the election.
|
|
(i)
|
any significant diminution in the Participant’s title, authority, or responsibilities from and after a Change of Control;
|
|
(ii)
|
any reduction in the base compensation payable to the Participant from and after a Change of Control; or
|
|
(iii)
|
the relocation after a Change of Control of the Company’s place of business at which the Participant is principally located to a location that is greater than 50 miles from the site immediately prior to the Change of Control.
|
|
(a)
|
to construe and interpret the Plan;
|
|
(b)
|
to establish, amend and rescind appropriate rules and regulations relating to the Plan;
|
|
(c)
|
subject to the terms of the Plan, to select the individuals who will receive Awards, the times when they will receive them, the number of Options, Restricted Shares and Restricted Share Units to be subject to each Award, the Option Price, the vesting schedule (including any performance targets to be achieved in connection with the vesting of any Award), the expiration date applicable to each Award and other terms, provisions and restrictions of the Awards (which need not be identical) and subject to Section 16 hereof, to amend or modify any of the terms of outstanding Awards;
|
|
(d)
|
to contest on behalf of the Company or Participants, at the expense of the Company, any ruling or decision on any matter relating to the Plan or to any Awards;
|
|
(e)
|
generally, to administer the Plan, and to take all such steps and make all such determinations in connection with the Plan and the Awards granted thereunder as it may deem necessary or advisable; and
|
|
(f)
|
to determine the form in which tax withholding under Section 14 of this Plan will be made (
i.e.
, cash, Ordinary Shares or a combination thereof).
|
|
(i)
|
the date on which it is forfeited under the provisions of Section 10.1;
|
|
(ii)
|
10 years from the Award Date;
|
|
(iii)
|
in the case of a Participant who is an employee of the Company or a Subsidiary, three months after the Participant’s termination of employment with the Company and its Subsidiaries for any reason other than for Cause or death or total and permanent disability;
|
|
(iv)
|
in the case of a Participant who is a member of the board of directors of the Company or a Subsidiary, but not an employee of the Company or a Subsidiary, three months after the Participant’s retirement from such board for any reason other than for Cause or death or total and permanent disability or the sale, merger or consolidation, or similar extraordinary transaction involving the Company or Subsidiary, as the case may be;
|
|
(v)
|
immediately upon the Participant’s termination of employment with the Company and its Subsidiaries or service on the board of directors of the Company or a Subsidiary for Cause;
|
|
(vi)
|
12 months after the Participant’s death or total and permanent disability; or
|
|
(vii)
|
any other date specified by the Committee when the NSO is granted.
|
(i)
|
the date on which it is forfeited under the provisions of Section 10.1;
|
|
(ii)
|
10 years from the Award Date, except as set forth in Section 7.02 below;
|
|
(iii)
|
immediately upon the Participant’s termination of employment with the Company and its Subsidiaries for Cause;
|
|
(iv)
|
three months after the Participant’s termination of employment with the Company and its Subsidiaries for any reason other than for Cause or death or total and permanent disability;
|
|
(v)
|
12 months after the Participant’s death or total and permanent disability; or
|
|
(vi)
|
any other date (within the limits of the Code) specified by the Committee when the ISO is granted.
|
|
(a)
|
Restricted Period
. Restricted Shares and the Ordinary Shares underlying Restricted Share Units awarded under this Section 8 may not be sold, assigned, transferred, pledged or otherwise encumbered before they vest.
|
|
(b)
|
Vesting
. Unless otherwise determined by the Committee and set forth in the agreement evidencing an Award, Restricted Share Awards and Restricted Share Units under this Section 8 shall vest in accordance with Section 10.2.
|
|
(c)
|
Certificate Legend
. Each certificate issued in respect of Restricted Shares awarded under this Section 8 shall be registered in the name of the Participant and shall bear the following (or a similar) legend until such shares have vested:
|
|
(d)
|
Escrow
. Any Restricted Shares issued pursuant to this Section 8 shall be held by the Company in escrow for the benefit of the Participant to whom the Restricted Shares are awarded. Upon vesting, a certificate for the vested shares shall be issued to the participant free of the restrictive legend required by Section 8(c).
|
|
(a)
|
two years from the date the ISOs were granted; or
|
|
(b)
|
one year after the transfer of the Ordinary Shares to the Participant;
|
Number of Months
Since Award Date
|
Vested Percentage
|
|||
fewer than 12 months
|
0.0 | % | ||
12 months
|
25.00 | % | ||
15 months
|
31.25 | % | ||
18 months
|
37.50 | % | ||
21 months
|
43.75 | % | ||
24 months
|
50.00 | % | ||
27 months
|
56.25 | % | ||
30 months
|
62.50 | % | ||
33 months
|
68.75 | % | ||
36 months
|
75.00 | % | ||
39 months
|
81.25 | % | ||
42 months
|
87.50 | % | ||
45 months
|
93.75 | % | ||
48 months or more
|
100.00 | % |
|
1.
|
Grant of Units
.
|
|
2.
|
Vesting of Units and Provisions for Termination and Change in Control
.
|
|
3.
|
Delivery of Shares or Cash
.
|
|
4.
|
Transferability of Units
.
|
|
5.
|
Rights as a Shareholder
.
|
|
6.
|
Confidentiality
.
|
|
7.
|
Non-Competition
.
|
|
8.
|
Non-Solicitation
.
|
|
9.
|
No Right to Employment
.
|
|
10.
|
Recapitalization
.
|
|
11.
|
Extraordinary Corporate Transaction
.
|
|
12.
|
Compliance with Laws and Regulations.
|
|
13.
|
Withholding
.
|
|
14.
|
Miscellaneous
.
|
|
15.
|
Section 409A and 457A Compliance
.
|
By:
|
||
Name:
|
||
Title:
|
Signature:
|
||
Name:
|
[NAME]
|
|
Address:
|
[ADDRESS]
|
|
Date:
|
Measure
|
Weight
|
Threshold Goal
|
Target Goal
|
Maximum Goal
|
||||||||||||
Return on Equity
|
40 | % | 10.1 | % | 13.5 | % | 20.25 | % | ||||||||
Underwriting Performance
|
30 | % | 3 | % | 4 | % | 6 | % | ||||||||
Revenue Growth
|
20 | % | 7.5 | % | 10 | % | 15 | % | ||||||||
Operating Expense
|
10 | % | 5 | % | 4 | % | 2 | % |
“A.
|
This Agreement shall remain in effect until July 1, 2014, and shall automatically renew for successive three-year periods thereafter, unless the Reinsurer or Company elects to terminate this Agreement effective as of July 1, 2014 or as of the expiration of any successive three-year period. If the Reinsurer or Company elects to so terminate this Agreement, it shall give written notice to the other party hereto not less than nine months prior to either July 1, 2014 or the expiration of any successive three-year period.”
|
“A.
|
The Reinsurer will timely fund or provide security for its share of the Obligations (as defined below) by:
|
|
1.
|
transferring to the Company assets (the "Reinsurer Trust Assets") for deposit into one or more trust accounts established or to be established by Company for the sole benefit of such Affiliate (each, a “Trust Account”) with a trustee (the “Trustee”), which Trustee shall be at the time a Trust Account is established, and shall continue to be, a member of the Federal Reserve System and shall not be a parent, subsidiary or affiliate of the Reinsurer, Company or such Affiliate, pursuant to a trust agreement meeting the applicable requirements of the jurisdictions having regulatory authority over each applicable Affiliate (each a “Trust Agreement”);
|
|
2.
|
delivering one or more clean, unconditional and irrevocable letters of credit to such Affiliate (each, a "Letter of Credit") in form and substance satisfying the requirements of the jurisdictions having regulatory authority over such Affiliate; and/or
|
|
3.
|
requesting that the Company cause such Affiliate to withhold Subject Premium in lieu of remitting Affiliate Subject Premium to the Company (the "Subject Withheld Funds", together with any other Affiliate Subject Premium that shall be withheld under an Underlying Reinsurance Agreement, the “Withheld Funds”) in accordance with the terms of the Underlying Reinsurance Agreement with such Affiliate.
|
“C.
|
The Reinsurer shall allow the Company a commission on all Subject Premium ceded hereunder and attributable to Covered Business determined in accordance with the provisions of Schedule B to this Agreement. The Company shall allow the Reinsurer return commission on return premiums at the rate in effect when the return premiums were originally ceded to the Reinsurer. It is expressly agreed that the ceding commission allowed the Company includes provision for all commissions, taxes, assessments (other than assessments based on losses of an Affiliate, as a ceding company under an Underlying Reinsurance Agreement) and all other expenses of whatever nature of the Company and Affiliates, except loss adjustment expenses.”
|
A.
|
The Reinsurer shall allow the Company a provisional 31% commission on all Subject Premium ceded hereunder and attributable to Covered Business (excluding UBI related business as described in Paragraph C. below), which shall be subject to the following adjustment:
|
|
1.
|
Greater than or equal to 42% of the total ceded premium for Covered Business for those three quarters, the commission for the subject quarter shall be reduced from 31% to 30%;
|
|
2.
|
Greater than or equal to 38% of the total ceded premium for Covered Business for those three quarters but less than 42%, the commission for the subject quarter shall be reduced from 31% to 30.5%.
|
B.
|
The Company shall include its calculation of the percentage of ceded premium for Covered Business attributable to Specialty Risk and Extended Warranty business with its quarterly report to the Reinsurer in accordance with Article VII of the Agreement.
|
C.
|
The Reinsurer shall allow the Company a 34.375% commission on Subject Premium related to Retail Commercial Package Business.”
|
By:
|
/s/ Michael Bott
|
|
Dated:
|
July 26, 2011
|
By:
|
/s/ David A. Lamneck
|
|
Dated:
|
July 26, 2011
|
EUR 5,000,000 (Five Million Euros) or currency equivalent (on a 100% (One Hundred Percent) basis) per original claim any one original policy.
|
||
The Reinsured may submit risks that are not otherwise subject to this Contract, including but not limited to risks with limits greater than EUD 5,000,000, to the Reinsurer for Special Acceptance (“Acceptance”). Such risks, if accepted by the Reinsurer in its sole judgment, will be subject to the terms of this Contract except to the extent that such terms are modified in the Acceptance. For any such risks, the Reinsurer shall confirm its Acceptance in writing, along with any modification of the Contract terms for such Acceptance. The Reinsurer’s written confirmation of the Acceptance will become part of the Contract.
|
||
It is agreed that the liability of the Reinsurer on all business ceded hereunder shall commence and cease simultaneously with that of the original Policies and shall follow the original terms, clauses, conditions and settlements of the said Policies,
subject to the terms and conditions of this Contract.
|
||
Original Net Premium
|
In respect of the risks ceded hereunder the Reinsured shall pay to the Reinsurer their proportion of the Original Net Premiums.
|
|
Original Net Premium shall mean the gross premium written by the Reinsured on business protected hereunder during the period of this Contract less taxes, cancellations, returned premiums and original commissions.
|
||
Territorial Scope
|
The territorial scope of this Contract shall be as provided in the risks ceded hereunder for insureds located in Italy.
|
|
Commission
|
The Reinsurer shall allow the Reinsured a Fixed Commission of 3.5% (Three and one half Percent) on Original Net Premium ceded hereunder.
|
|
The Reinsurer shall further allow the Reinsured a Profit Share on Original Net Premiums ceded hereunder, being in addition to the 3.5% Fixed Commission.
|
||
The Profit Share will apply separately to each twelve month period this Contract remains in effect (“Contract Year”) and will be adjusted quarterly, the first adjustment to be made 1
st
April 2013. Reinsured’s Profit Share is 50% of the amount by which Incurred Net Loss Ratio is below 65% of the Original Net Premium. For purposes of calculating profit share, multi-year policies shall be split into individual years so that the maximum original policy period in a Contract Year shall be 12 months plus odd time not exceeding 18 months in all. In the event that the Reinsured exercises its Inforce Option as described above, the premium and losses reinsured under that option will be combined with the first Contract Year for the calculation of the Profit Share. The first Contract Year will be- April 2, 2011 through March 31, 2012, both days inclusive, and subsequent Contract Years will begin April 1 of each year)
|
||
“Incurred Net Loss Ratio” shall be defined as net paid and outstanding Losses (inclusive of IBNR as established by the Reinsured after consultation with the Reinsurer), being paid and outstanding Losses (“Losses” being further defined under the Loss Settlement Clause) less third party recoveries, divided by Original Net Premium (as defined above) for risks attaching during the Contract Year, as a percentage.
|
||
Brokerage
|
|
1.25% on Original Net Premium ceded.
|
Accounts
|
Accounts of the transactions between the Reinsured and the Reinsurer hereunder both in respect of premiums and Losses and all items relative to these risks, separately for each Contract Year, shall be rendered by the Reinsured to the Reinsurer quaterly and received by the Reinsuer within 30 (Thirty) days after the end of each quarter. After receipt of the account by the Reinsurer the balance due hereon shall be paid within 30 (Thirty) days thereafter.
|
|
The Reinsured shall provide a full individual claim listing quarterly for each of the risks ceded hereunder.
|
||
Cash Loss Limit
|
Should any claim payment hereunder in respect of any loss to this Contract exceed EUR 50,000 (Fifty thousand Euros) (for 100%) or currency equivalent then the Reinsured may request special payment by the Reinsurer of the relative amount of such Cash Claim on submission in writing of full loss details. Amounts falling to the share of the Reinsurer will be due immediately (and in any event within 30 days).
|
|
Reinsurer Contract Documentation
|
This document details the contract terms entered into by the Reinsurer and constitutes the contract document.
|
|
With the exception of Contract Endorsements, which may become necessary to formalise any amendments or alterations to this Contract, no further evidence of cover will be issued.
|
||
Security
|
The Reinsurer will post security equal to 100% of the ceded unearned premium and outstanding Losses including IBNR/ calculated by the Reinsured at 75% confidence factor immediately upon being asked to do so and adjusted quarterly. Security shall only be required if the Reinsurer’s Bests rating is reduced to lower than A minus stable or if the Reinsurer’s surplus is less than $600,000,000.
|
|
Conditions
|
Reinsurance Clause
|
|
It is agreed that the liability of the Reinsurer on all business ceded hereunder shall commence and cease simultaneously with that of the original policies and shall follow the original terms of the said policies, subject to the terms of this Contract.
|
||
Offset Clause
|
||
The Reinsured and the Reinsurer, each at its option, may offset any balance or balances, whether on account of premiums, claims and losses, loss expenses or salvages due from one party to the other under this Contract.
|
||
Loss Settlement Clause
|
||
“Losses” as defined herein include all loss settlements made or to be made by the Reinsured, provided the same are within the terms of the original policies, - including loss adjustment costs and expenses allocable to a specific claim incurred by the Reinsured in the investigation, appraisal, adjustment, settlement, litigation, defence or appeal of a specific claim. Losses shall be unconditionally binding upon the Reinsurer and amounts falling to the share of the Reinsurer shall be payable by them upon reasonable evidence of the amount paid being given by the Reinsured.
|
||
Currency Conversion Clause
|
||
|
For the purpose of this Contract currencies other than the currency in which this Contract is written shall be converted into that currency at the rates of exchange used in the Reinsured’s books or where there is a specific remittance for a loss settlement at the rates of exchange used in making such remittance.
|
Inspection Clause
|
||
For as long as either party remains under any liability hereunder the Reinsured shall, upon request by the Reinsurer, make available at the Reinsured’s head office or wherever the same may be located, for inspection at any reasonable time by such representatives as may be authorised by the Reinsurer for that purpose, all non-privileged information (meaning information which would not breach an applicable privilege by being shared) relating to business reinsured hereunder in the Reinsured’s possession or under its control and the said representatives may arrange for copies to be made at the Reinsurer’s expense of any of the records containing such information as they may require.
|
||
If required by the Reinsured, the Reinsurer agrees to enter into a confidentiality agreement prior to undertaking any inspection of records. This would provide that all terms and conditions of this Contract and any information provided in the course of inspection shall be kept confidential by the Reinsurer as against third parties, unless the disclosure is in line with those scenarios detailed in the “Confidentiality” Clause.
|
||
Confidentiality Clause
|
||
The Reinsurer shall regard the transactions under this Contract as strictly confidential and shall not at any time, during its currency or thereafter, make any use, either directly or indirectly, of the information afforded of the business and connections of the Reinsured which shall or may in any way operate to the prejudice or detriment of the latter.
|
||
The restrictions as outlined in the Clause shall not apply to communication or disclosures that the Reinsurer is required to make to its statutory auditors, retrocessionaires, associates, legal counsel, arbitrators involved in any arbitration procedures under this Contract or disclosures required upon subpoena or other duly issued order of a court of other governmental agency or regulatory authority.
|
||
Follow the Fortunes
|
||
A. Any business ceded hereunder is subject to the terms and conditions of the Reinsured’s Original Policy or Policies and automatically follows all changes in coverage and all endorsements made a part of such policy or policies. Should any regulatory or other legal restriction of any state require modification of any subject policy to which this Contract applies, the liability of the Reinsurer will follow that of the Reinsured.
|
||
B. Nothing herein will in any manner create any obligations or establish any rights against the Reinsurer in favour of any third parties or any persons not parties to this Contract except as provided in the Insolvency Clause.
|
||
Errors and Omissions Clause
|
||
|
Any inadvertent error or omission on the part of either the Reinsured or the Reinsurer shall not relieve either party from any liability which would have attached hereunder, provided that such error or omission is rectified immediately upon discovery
|
Special Termination Clause
|
||
The Reinsurer may terminate this Contract in the event of any of the following (clauses 1 through 5 below, collectively, the “Reinsured Special Termination Events”) by written notice to the Reinsured no later than thirty (30) days (or in the case of a Reinsured Special Termination Event described in subsection (1) below, ten (10) days) following actual knowledge of the applicable Reinsured Special Termination Event by the Reinsurer:
|
||
1) the Reinsured is thirty (30) or more days in arrears on payment due to the Reinsurer under this Contract, and has not cured such breach within thirty (30) days following written notice thereof from the Reinsurer (unless the amount not so paid is the subject of a good faith dispute) (a “Reinsured Payment Default”);
|
||
2) the Reinsured has ceased writing new or renewal business and has elected to run off its existing business or an insurance or other regulatory authority has ordered such party to cease writing new or renewal business;
|
||
3) the Reinsured has become insolvent, or has been placed into liquidation or receivership (whether voluntary or involuntary), or there have been instituted against it proceedings for the appointment of a receiver, liquidator, rehabilitator, conservator, or trustee in bankruptcy or other agent known by whatever name, to take possession of its assets or control of its operations
|
||
4) a Reinsured Change of Control has occurred. For purposes of this Agreement, a “Reinsured Change of Control” will be deemed to occur with respect to the Reinsured when either (a) an individual person, corporation or other entity, or a group of commonly controlled persons, corporations or entities, acquires, including through merger, directly or indirectly, more than fifty percent (50%) of the voting securities of the Reinsured or obtains the power to vote (directly or through proxies) more than fifty percent (50%) of the voting securities of the Reinsured, except if such individual person, corporation or other entity is under common control with such Reinsured, or (b) AmTrust Financial Services, Inc. (“AmTrust”) no longer directly or indirectly controls the power to vote more than fifty percent (50%) of the voting securities of the Reinsured;
provided
that in no event shall the acquisition, including through merger, of more than fifty percent (50%) of the voting securities of AmTrust or of the power to vote (directly or through proxies) more than fifty percent (50%) of the voting securities of AmTrust, or the merger, combination or amalgamation of AmTrust into any person, or similar transaction pursuant to which AmTrust shall not be the surviving entity, be deemed a " Reinsured Change of Control"; or
|
||
5) the combined shareholders' equity of the Reinsured and the Affiliates is reduced to 50% or less of the amount of such shareholders’ equity at either the inception of this Contract or at the latest renewal or anniversary date of this Contract.
|
||
Termination as a result of a Reinsured Payment Default shall be effective upon not less than ten (10) days prior written notice from the Reinsurer to the Reinsured, and termination as a result of any other Reinsured Special Termination Event shall be effective upon not less than thirty (30) days prior written notice from the Reinsurer to the Reinsured. For greater certainty, the Reinsurer may not terminate this Contract as a result of a Reinsured Special Termination Event unless such event is continuing on the date it delivers its notice of termination to the Reinsured.
|
||
|
The Reinsured may terminate this Contract, in the event of any of the following (clauses 1 through 6 below, collectively, the “Reinsurer Special Termination Events”) by written notice to the Reinsurer no later than thirty (30) days (or in the case of a Reinsurer Special Termination Event described in subsection (1) below, ten (10) days) following actual knowledge of the applicable Reinsurer Special Termination Event by the Reinsured:
|
1) the Reinsurer is thirty (30) or more days in arrears on payment due to the Reinsured under this Contract and the Reinsurer has not cured such breach within thirty (30) days following written notice thereof from the Reinsured (unless the amount not so paid is the subject of a good faith dispute) (a “Reinsurer Payment Default”);
|
||
2) the Reinsurer has ceased writing new or renewal business and has elected to run off its existing business or an insurance or other regulatory authority has ordered the party to cease writing new or renewal business;
|
||
3) the Reinsurer has become insolvent, or has been placed into liquidation or receivership (whether voluntary or involuntary), or there have been instituted against it proceedings for the appointment of a receiver, liquidator, rehabilitator, conservator, or trustee in bankruptcy or other agent known by whatever name, to take possession of its assets or control of its operations;
|
||
4) a Reinsurer Change of Control has occurred. For purposes of this Agreement, a “Reinsurer Change of Control” will be deemed to occur when either (a) an individual person, corporation or other entity, or a group of commonly controlled persons, corporations or entities, acquires, including through merger, directly or indirectly, more than fifty percent (50%) of the voting securities of the Reinsurer or obtains the power to vote (directly or through proxies) more than fifty percent (50%) of the voting securities of the Reinsurer, except if such individual person, corporation or other entity is under common control with the Reinsurer or (b) Maiden Holdings, Ltd. no longer directly or indirectly controls the power to vote more than fifty percent (50%) of the voting securities of the Reinsurer;
|
||
5) the Reinsurer's shareholders' equity is reduced to 50% or less of the amount of its shareholders’ equity at either the inception of this Contract or at the latest renewal or anniversary date of this Contract; or
|
||
6)
T
he Reinsurer fails to maintain an A.M. Best rating of A- (Stable) or better.
|
||
Termination as a result of a Reinsurer Payment Default shall be effective upon not less than ten (10) days prior written notice from the Reinsured to the Reinsurer, and termination as a result of any other Reinsurer Special Termination Event shall be effective upon not less than thirty (30) days prior written notice from the Reinsured to the Reinsurer. For greater certainty, the Reinsured may not terminate this Contract as a result of a Reinsurer Special Termination Event unless such event is continuing on the date the applicable Reinsured delivers its notice of termination to the Reinsurer.
|
||
|
Following the effective date of the termination of this Contract as described in this termination clause all reinsurance hereunder shall remain in force until the expiration date, anniversary date, or prior termination date of all Policies included therein, unless, not later than thirty (30) days following such effective date of termination of this Contract, the Reinsured shall elect that the Reinsurer shall not be liable for any Losses that occur, accrue or arise on or after the effective date of termination. If the Reinsured shall make such election, within thirty (30) days following the date of such election, the Reinsurer shall return to the Reinsured the unearned premium applicable to such Policies in force at the time and date of termination, less the unearned portion of the ceding commission paid thereon.
|
Insolvency Clause (G86)
|
||
1. Where an Insolvency Event occurs in relation to the Reinsured the following terms shall apply (and, in the event of any inconsistency between these terms and any other terms of this Contract, these terms shall prevail):
|
||
(1) Notwithstanding any requirement in this Contract that the Reinsured shall actually make payment in discharge of its liability to its policyholder before becoming entitled to payment from the Reinsurer.
|
||
a) the Reinsurer shall be liable to pay the Reinsured even though the Reinsured is unable to actually pay, or to discharge its liability to, its policyholder, but
|
||
b) nothing in this Clause shall operate to accelerate the date for payment by the Reinsurer of any sum which may be payable to the Reinsured, which sum shall only become payable as and when the Reinsured would have discharged, by actual payment, its liability for its current net loss but for it being the subject of an Insolvency Event.
|
||
(2) The existence, quantum, valuation and date for payment of any sum which the Reinsurer is liable to pay the Reinsured under this Contract shall be those and only those for which the Reinsurer would be liable to the Reinsured if the liability of the Reinsured to its policyholders had been determined without reference to any term in any composition or scheme of arrangement or any similar such arrangement, entered into between the Reinsured and all or any part of its policyholders, unless and until the Reinsurer serves written notice to the contrary on the Reinsured in relation to any composition or scheme of arrangement.
|
||
(3) The Reinsurer shall be entitled (but not obliged) to set-off, against any sum which it may be liable to pay the Reinsured, any sum for which the Reinsured is liable to pay the Reinsurer.
|
||
2. An Insolvency Event shall occur if:
|
||
(A) i) (in relation to (1), (2) and (3) above) a winding up petition is presented in respect of the Reinsured or a provisional liquidator is appointed over it or if the Reinsured goes into administration, administrative receivership or receivership or if the Reinsured has a scheme of arrangement or voluntary arrangement proposed in relation to all or any parts of its affairs; or
|
||
ii) (in relation to (1) above) if the Reinsured goes into compulsory or voluntary liquidation; or
|
||
in each case, if the Reinsured becomes subject to any other similar insolvency process (whether under the laws of England and Wales or elsewhere); and
|
||
(B) the Reinsured is unable to pay its debts as and when they fall due within the meaning of section 123 of the Insolvency Act 1986 (or any statutory amendment or re-enactment of that section).
|
||
Contracts (Rights of Third Parties) Act 1999 Clarification Clause NMA 2852
|
||
|
A person who is not a party to this Contract has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Contract but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
|
Intermediary Clause
|
||
All communications and notices served in accordance with any of the provisions of this Contract shall be addressed to the party concerned through the offices of AII Reinsurance Broker Ltd., Hamilton, Bermuda who are hereby recognised by all parties as the Intermediary.
|
||
Amendments Clause
|
||
It is understood and agreed that any mutually agreed modifications to this Contract (whether by Addendum/Endorsement or other written correspondence) shall be binding on both parties and shall be deemed to form a part of this Contract, and attached hereto.
|
||
Arbitration
|
All disputes and differences arising under or in connection with this Contract shall be referred to arbitration under ARIAS Arbitration Rules.
|
|
The Arbitration Tribunal shall consist of three arbitrators, one to be appointed by the Claimant, one to be appointed by the Respondent and the third to be appointed by the two appointed arbitrators.
|
||
The third member of the Tribunal shall be appointed as soon as practicable (and no later than 28 days) after the appointment of the two party-appointed arbitrators. The Tribunal shall be constituted upon the appointment of the third arbitrator.
|
||
The Arbitrators shall be persons (including those who have retired) with not less than ten years’ experience of insurance or reinsurance within the industry or as lawyers or other professional advisers serving the industry.
|
||
Where a party fails to appoint an arbitrator within 14 days of being called upon to do so or where the two party-appointed arbitrators fail to appoint a third within 28 days of their appointment, then upon application ARIAS (UK) will appoint an arbitrator to fill the vacancy. At any time prior to the appointment by ARIAS (UK) the party or arbitrators in default may make such appointment.
|
||
The Tribunal may in its sole discretion make such orders and directions as it considers to be necessary for the final determination of the matters in dispute. The Tribunal shall have the widest discretion permitted under the law governing the arbitral procedure when making such orders or directions.
|
||
The seat of arbitration shall be London, England.
|
||
The proper law of this Contract shall be the law of England.
|
||
Non-Waiver
|
|
The failure of the Reinsured or the Reinsurer to insist on compliance with this Contract or to exercise any right or remedy hereunder shall not constitute a waiver of any rights or remedy contained herein nor estop either party from thereafter demanding full and complete compliance nor prevent either party from exercising such rights or remedy in the future.
|
No Third Party Rights
|
Nothing in this Contract, express or implied, is intended to or shall confer upon any person, other than the parties hereto, any rights, benefits or remedies of any nature whatsoever under or by reason of this Contract.
|
|
Right to Associate
|
The Reinsurer shall have the right, but not the obligation, to associate at its own expense in the defense or settlement of all claims impacting this Contract, and the Reinsured shall cooperate with the Reinsurer in this regard. However, nothing in this clause shall over-ride the provisions of the Loss Settlements Clause.
|
|
Choice of Law & Jurisdiction
|
|
The validity, construction and performance of this Contract shall be governed by the law of England and Wales and the Courts of England and Wales shall have exclusive jurisdiction in any dispute hereunder
|
AmTrust Europe, Limited
|
||
BY:
|
/s/ Jeremy Cadle
|
|
Dated
|
April 1, 2011
|
|
AmTrust International Underwriters, Limited
|
||
BY:
|
/s/ Edward Bennett, CEO
|
|
Dated
|
April 1, 2011
|
|
Maiden Insurance Company, Limited
|
||
BY:
|
/s/ David A. Lamneck, Senior Vice President
|
|
Dated
|
April 1, 2011
|
1)
|
The section entitled “Class and Period of Business” of this Contract shall be deleted and the following substituted therefor:
|
2)
|
The section entitled “Commission” of this Contract shall be deleted and the following substituted therefor:
|
3)
|
The section entitled “Conditions” of this Contract shall be amended by the inclusion of the following subsection directly after the subsection entitled “Loss Settlement Clause”:
|
4)
|
The section entitled “Security” of this Contract shall be deleted and the following substituted therefor:
|
5)
|
The name of the Reinsurer shall be corrected to “Maiden Insurance Company Ltd.” in all places it appears in the Contract.
|
AmTrust Europe, Limited
|
||
BY:
|
/s/ Jeremy Cadle
|
|
Dated
|
July 26, 2011
|
|
AmTrust International Underwriters, Limited
|
||
BY:
|
/s/ Ronan Conboy
|
|
Dated
|
July 26, 2011
|
|
Maiden Insurance Company Ltd.
|
||
BY:
|
/s/ David A. Lamneck
|
|
Dated
|
July 26, 2011
|
Sponsor
|
||
MAIDEN HOLDINGS NORTH AMERICA, LTD.
|
||
By:
|
/s/ Paul Hawk
|
|
Name: Paul Hawk
|
||
Title:
|
||
Administrator
|
||
/s/ Arturo M. Raschbaum
|
||
Name: Arturo M. Raschbaum
|
||
Administrator
|
||
/s/ John M. Marshaleck
|
||
Name: John M. Marshaleck
|
||
Administrator
|
||
/s/ Karen L. Schmitt
|
||
Name: Karen L. Schmitt
|
Institutional Trustee
|
||
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as trustee
|
||
By:
|
/s/ Michael H. Wass
|
|
Name: Michael H. Wass
|
||
Title: Financial Services Officer
|
||
Delaware Trustee
|
||
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as trustee
|
||
By:
|
/s/ Michael H. Wass
|
|
Name: Michael H. Wass
|
||
Title: Financial Services Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Maiden Holdings, Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including any consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 8, 2011
|
/s/ ARTURO M. RASCHBAUM
|
|
Arturo M. Raschbaum
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Maiden Holdings, Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including any consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated: August 8, 2011
|
/s/ JOHN M. MARSHALECK
|
John M. Marshaleck
|
|
Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
Date: August 8, 2011
|
By:
|
/s/ ARTURO M. RASCHBAUM
|
Name: Arturo M. Raschbaum
|
||
Title: President and Chief Executive Officer
|
Date: August 8, 2011
|
By:
|
/s/ JOHN M. MARSHALECK
|
Name: John M. Marshaleck
|
||
Title: Chief Financial Officer
|