x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
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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)
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98-0570192
(IRS Employer
Identification No.)
|
|
|
94 Pitts Bay Road, Pembroke, Bermuda
(Address of principal executive offices)
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HM08
(Zip Code)
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Large accelerated filer x
|
|
Accelerated filer o
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Non-accelerated filer o
|
|
(Do not check if a smaller reporting company)
|
|
|
Smaller reporting company o
|
|
|
Emerging growth company o
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|
|
|
|
||||
Investments:
|
|
|
|
|
||||
Fixed maturities, available-for-sale, at fair value (amortized cost 2018: $2,867,251; 2017: $2,699,297)
|
|
$
|
2,781,553
|
|
|
$
|
2,707,516
|
|
Fixed maturities, held-to-maturity, at amortized cost (fair value 2018: $1,019,741; 2017: $1,125,626)
|
|
1,032,885
|
|
|
1,097,801
|
|
||
Other investments, at fair value
|
|
22,586
|
|
|
6,600
|
|
||
Total investments
|
|
3,837,024
|
|
|
3,811,917
|
|
||
Cash and cash equivalents
|
|
94,578
|
|
|
54,470
|
|
||
Restricted cash and cash equivalents
|
|
169,996
|
|
|
94,905
|
|
||
Accrued investment income
|
|
29,658
|
|
|
28,798
|
|
||
Reinsurance balances receivable, net (includes $125,046 and $94,597 from related parties in 2018 and 2017, respectively)
|
|
161,436
|
|
|
72,494
|
|
||
Loan to related party
|
|
167,975
|
|
|
167,975
|
|
||
Deferred commission and other acquisition expenses (includes $396,799 and $379,395 from related parties in 2018 and 2017, respectively)
|
|
419,265
|
|
|
380,204
|
|
||
Other assets
|
|
41,083
|
|
|
131,608
|
|
||
Assets held for sale
|
|
1,615,486
|
|
|
1,901,818
|
|
||
Total assets
|
|
$
|
6,536,501
|
|
|
$
|
6,644,189
|
|
LIABILITIES
|
|
|
|
|
||||
Reserve for loss and loss adjustment expenses (includes $2,749,601 and $2,337,096 from related parties in 2018 and 2017, respectively)
|
|
$
|
2,851,685
|
|
|
$
|
2,386,722
|
|
Unearned premiums (includes $1,223,736 and $1,170,397 from related parties in 2018 and 2017, respectively)
|
|
1,298,933
|
|
|
1,230,882
|
|
||
Accrued expenses and other liabilities
|
|
18,460
|
|
|
90,069
|
|
||
Senior notes - principal amount
|
|
262,500
|
|
|
262,500
|
|
||
Less: unamortized debt issuance costs
|
|
7,860
|
|
|
8,018
|
|
||
Senior notes, net
|
|
254,640
|
|
|
254,482
|
|
||
Liabilities held for sale
|
|
1,339,618
|
|
|
1,449,408
|
|
||
Total liabilities
|
|
5,763,336
|
|
|
5,411,563
|
|
||
Commitments and Contingencies
|
|
|
|
|
|
|
||
EQUITY
|
|
|
|
|
||||
Preference shares
|
|
465,000
|
|
|
465,000
|
|
||
Common shares ($0.01 par value; 87,932,287 and 87,730,054 shares issued in 2018 and 2017, respectively; 82,942,737 and 82,974,895 shares outstanding in 2018 and 2017, respectively)
|
|
879
|
|
|
877
|
|
||
Additional paid-in capital
|
|
749,214
|
|
|
748,113
|
|
||
Accumulated other comprehensive (loss) income
|
|
(116,369
|
)
|
|
13,354
|
|
||
(Accumulated deficit) retained earnings
|
|
(294,656
|
)
|
|
35,472
|
|
||
Treasury shares, at cost (4,989,550 and 4,755,159 shares in 2018 and 2017, respectively)
|
|
(31,514
|
)
|
|
(30,642
|
)
|
||
Total Maiden shareholders’ equity
|
|
772,554
|
|
|
1,232,174
|
|
||
Noncontrolling interests in subsidiaries
|
|
611
|
|
|
452
|
|
||
Total equity
|
|
773,165
|
|
|
1,232,626
|
|
||
Total liabilities and equity
|
|
$
|
6,536,501
|
|
|
$
|
6,644,189
|
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
||||||||
Gross premiums written
|
|
$
|
484,494
|
|
|
$
|
443,001
|
|
|
$
|
1,629,347
|
|
|
$
|
1,650,762
|
|
Net premiums written
|
|
$
|
482,806
|
|
|
$
|
432,677
|
|
|
$
|
1,626,485
|
|
|
$
|
1,603,414
|
|
Change in unearned premiums
|
|
37,271
|
|
|
24,601
|
|
|
(85,207
|
)
|
|
(90,977
|
)
|
||||
Net premiums earned
|
|
520,077
|
|
|
457,278
|
|
|
1,541,278
|
|
|
1,512,437
|
|
||||
Other insurance revenue
|
|
1,870
|
|
|
2,488
|
|
|
7,629
|
|
|
7,816
|
|
||||
Net investment income
|
|
34,419
|
|
|
30,950
|
|
|
101,548
|
|
|
91,597
|
|
||||
Net realized (losses) gains on investment
|
|
(225
|
)
|
|
5,859
|
|
|
(282
|
)
|
|
8,316
|
|
||||
Total other-than-temporary impairment losses
|
|
(479
|
)
|
|
—
|
|
|
(479
|
)
|
|
—
|
|
||||
Total revenues
|
|
555,662
|
|
|
496,575
|
|
|
1,649,694
|
|
|
1,620,166
|
|
||||
Expenses
|
|
|
|
|
|
|
|
|
||||||||
Net loss and loss adjustment expenses
|
|
600,296
|
|
|
370,847
|
|
|
1,323,503
|
|
|
1,090,608
|
|
||||
Commission and other acquisition expenses
|
|
167,618
|
|
|
145,352
|
|
|
497,026
|
|
|
487,771
|
|
||||
General and administrative expenses
|
|
18,936
|
|
|
15,439
|
|
|
48,343
|
|
|
38,161
|
|
||||
Interest and amortization expenses
|
|
4,829
|
|
|
4,829
|
|
|
14,487
|
|
|
18,430
|
|
||||
Accelerated amortization of senior note issuance cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,809
|
|
||||
Foreign exchange losses (gains)
|
|
552
|
|
|
3,550
|
|
|
(1,862
|
)
|
|
12,193
|
|
||||
Total expenses
|
|
792,231
|
|
|
540,017
|
|
|
1,881,497
|
|
|
1,649,972
|
|
||||
Loss from continuing operations before income taxes
|
|
(236,569
|
)
|
|
(43,442
|
)
|
|
(231,803
|
)
|
|
(29,806
|
)
|
||||
Less: income tax (benefit) expense
|
|
(7,437
|
)
|
|
1,704
|
|
|
(930
|
)
|
|
(1,978
|
)
|
||||
Net loss from continuing operations
|
|
(229,132
|
)
|
|
(45,146
|
)
|
|
(230,873
|
)
|
|
(27,828
|
)
|
||||
Loss from discontinued operations, net of income tax
|
|
(71,100
|
)
|
|
(9,908
|
)
|
|
(44,336
|
)
|
|
(17,060
|
)
|
||||
Net loss
|
|
(300,232
|
)
|
|
(55,054
|
)
|
|
(275,209
|
)
|
|
(44,888
|
)
|
||||
Add: net (income) loss from continuing operations attributable to noncontrolling interests
|
|
(62
|
)
|
|
3
|
|
|
(180
|
)
|
|
34
|
|
||||
Net loss attributable to Maiden
|
|
(300,294
|
)
|
|
(55,051
|
)
|
|
(275,389
|
)
|
|
(44,854
|
)
|
||||
Dividends on preference shares
|
|
(8,545
|
)
|
|
(8,545
|
)
|
|
(25,636
|
)
|
|
(20,611
|
)
|
||||
Net loss attributable to Maiden common shareholders
|
|
$
|
(308,839
|
)
|
|
$
|
(63,596
|
)
|
|
$
|
(301,025
|
)
|
|
$
|
(65,465
|
)
|
Basic and diluted loss from continuing operations per share attributable to Maiden common shareholders
|
|
$
|
(2.86
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(3.09
|
)
|
|
$
|
(0.56
|
)
|
Basic and diluted loss from discontinued operations per share attributable to Maiden common shareholders
|
|
$
|
(0.86
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.53
|
)
|
|
$
|
(0.20
|
)
|
Basic and diluted loss per share attributable to Maiden common shareholders
|
|
$
|
(3.72
|
)
|
|
$
|
(0.74
|
)
|
|
$
|
(3.62
|
)
|
|
$
|
(0.76
|
)
|
Dividends declared per common share
|
|
$
|
0.05
|
|
|
$
|
0.15
|
|
|
$
|
0.35
|
|
|
$
|
0.45
|
|
Weighted average number of common shares - basic and diluted
|
|
83,089,172
|
|
|
85,859,201
|
|
|
83,085,441
|
|
|
86,256,481
|
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net loss
|
|
$
|
(300,232
|
)
|
|
$
|
(55,054
|
)
|
|
$
|
(275,209
|
)
|
|
$
|
(44,888
|
)
|
Other comprehensive (loss) income
|
|
|
|
|
|
|
|
|
||||||||
Net unrealized holdings (losses) gains on available-for-sale fixed maturities arising during the period
|
|
(24,658
|
)
|
|
25,019
|
|
|
(141,926
|
)
|
|
68,798
|
|
||||
Adjustment for reclassification of net realized losses (gains) recognized in net income
|
|
785
|
|
|
(3,650
|
)
|
|
40
|
|
|
1,123
|
|
||||
Foreign currency translation adjustment
|
|
4,458
|
|
|
(10,828
|
)
|
|
12,123
|
|
|
(38,803
|
)
|
||||
Other comprehensive (loss) income, before tax
|
|
(19,415
|
)
|
|
10,541
|
|
|
(129,763
|
)
|
|
31,118
|
|
||||
Income tax benefit (expense) related to components of other comprehensive income
|
|
2
|
|
|
(25
|
)
|
|
19
|
|
|
5
|
|
||||
Other comprehensive (loss) income, after tax
|
|
(19,413
|
)
|
|
10,516
|
|
|
(129,744
|
)
|
|
31,123
|
|
||||
Comprehensive loss
|
|
(319,645
|
)
|
|
(44,538
|
)
|
|
(404,953
|
)
|
|
(13,765
|
)
|
||||
Net (income) loss attributable to noncontrolling interests
|
|
(62
|
)
|
|
3
|
|
|
(180
|
)
|
|
34
|
|
||||
Other comprehensive loss (income) attributable to noncontrolling interests
|
|
3
|
|
|
(12
|
)
|
|
21
|
|
|
(41
|
)
|
||||
Comprehensive (income) loss attributable to noncontrolling interests
|
|
(59
|
)
|
|
(9
|
)
|
|
(159
|
)
|
|
(7
|
)
|
||||
Comprehensive loss attributable to Maiden
|
|
$
|
(319,704
|
)
|
|
$
|
(44,547
|
)
|
|
$
|
(405,112
|
)
|
|
$
|
(13,772
|
)
|
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
||||
Preference shares - Series A, C and D
|
|
|
|
|
||||
Beginning balance
|
|
$
|
465,000
|
|
|
$
|
315,000
|
|
Issuance of Preference Shares – Series D
|
|
—
|
|
|
150,000
|
|
||
Ending balance
|
|
465,000
|
|
|
465,000
|
|
||
Common shares
|
|
|
|
|
||||
Beginning balance
|
|
877
|
|
|
873
|
|
||
Exercise of options and issuance of shares
|
|
2
|
|
|
4
|
|
||
Ending balance
|
|
879
|
|
|
877
|
|
||
Additional paid-in capital
|
|
|
|
|
||||
Beginning balance
|
|
748,113
|
|
|
749,256
|
|
||
Exercise of options and issuance of common shares
|
|
13
|
|
|
1,072
|
|
||
Share-based compensation expense
|
|
1,088
|
|
|
2,194
|
|
||
Issuance costs of Preference Shares - Series D
|
|
—
|
|
|
(5,058
|
)
|
||
Ending balance
|
|
749,214
|
|
|
747,464
|
|
||
Accumulated other comprehensive (loss) income
|
|
|
|
|
||||
Beginning balance
|
|
13,354
|
|
|
14,997
|
|
||
Change in net unrealized (losses) gains on investment
|
|
(141,867
|
)
|
|
69,926
|
|
||
Foreign currency translation adjustment
|
|
12,144
|
|
|
(38,844
|
)
|
||
Ending balance
|
|
(116,369
|
)
|
|
46,079
|
|
||
(Accumulated deficit) retained earnings
|
|
|
|
|
||||
Beginning balance
|
|
35,472
|
|
|
285,662
|
|
||
Net loss attributable to Maiden
|
|
(275,389
|
)
|
|
(44,854
|
)
|
||
Dividends on preference shares
|
|
(25,636
|
)
|
|
(20,611
|
)
|
||
Dividends on common shares
|
|
(29,103
|
)
|
|
(38,687
|
)
|
||
Ending balance
|
|
(294,656
|
)
|
|
181,510
|
|
||
Treasury shares
|
|
|
|
|
||||
Beginning balance
|
|
(30,642
|
)
|
|
(4,991
|
)
|
||
Shares repurchased
|
|
(872
|
)
|
|
(14,912
|
)
|
||
Ending balance
|
|
(31,514
|
)
|
|
(19,903
|
)
|
||
Noncontrolling interests in subsidiaries
|
|
|
|
|
||||
Beginning balance
|
|
452
|
|
|
355
|
|
||
Net income (loss) attributable to noncontrolling interests
|
|
180
|
|
|
(34
|
)
|
||
Foreign currency translation adjustment
|
|
(21
|
)
|
|
41
|
|
||
Ending balance
|
|
611
|
|
|
362
|
|
||
Total equity
|
|
$
|
773,165
|
|
|
$
|
1,421,389
|
|
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
||||
Cash flows from operating activities
|
|
|
|
|
||||
Net loss
|
|
$
|
(275,209
|
)
|
|
$
|
(44,888
|
)
|
Less: net loss from discontinued operations
|
|
44,336
|
|
|
17,060
|
|
||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation, amortization and share-based compensation
|
|
4,774
|
|
|
8,464
|
|
||
Net realized losses (gains) on investment
|
|
282
|
|
|
(8,316
|
)
|
||
Total other-than-temporary impairment losses
|
|
479
|
|
|
—
|
|
||
Foreign exchange (gains) losses
|
|
(1,862
|
)
|
|
12,193
|
|
||
Changes in assets – (increase) decrease:
|
|
|
|
|
||||
Reinsurance balances receivable, net
|
|
(92,904
|
)
|
|
(22,098
|
)
|
||
Accrued investment income
|
|
(1,000
|
)
|
|
1,124
|
|
||
Deferred commission and other acquisition expenses
|
|
(40,097
|
)
|
|
(38,773
|
)
|
||
Other assets
|
|
91,422
|
|
|
(22,804
|
)
|
||
Changes in liabilities – increase (decrease):
|
|
|
|
|
||||
Reserve for loss and loss adjustment expenses
|
|
481,227
|
|
|
325,221
|
|
||
Unearned premiums
|
|
72,200
|
|
|
94,489
|
|
||
Accrued expenses and other liabilities
|
|
(66,401
|
)
|
|
6,877
|
|
||
Net cash provided by continuing operations
|
|
217,247
|
|
|
328,549
|
|
||
Net cash (used in) provided by discontinued operations
|
|
(54,624
|
)
|
|
46,265
|
|
||
Net cash provided by operating activities
|
|
162,623
|
|
|
374,814
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchases of fixed-maturities – available-for-sale
|
|
(517,839
|
)
|
|
(538,429
|
)
|
||
Purchases of other investments
|
|
(17,532
|
)
|
|
(986
|
)
|
||
Proceeds from sales of fixed-maturities – available-for-sale
|
|
185,089
|
|
|
116,306
|
|
||
Proceeds from maturities, paydowns and calls of fixed maturities – available-for-sale
|
|
196,275
|
|
|
224,940
|
|
||
Proceeds from maturities and calls of fixed maturities – held to maturity
|
|
62,018
|
|
|
20,744
|
|
||
Proceeds from sale and redemption of other investments
|
|
2,160
|
|
|
11,119
|
|
||
Other, net
|
|
(2,985
|
)
|
|
(1,997
|
)
|
||
Net cash used in investing activities for continuing operations
|
|
(92,814
|
)
|
|
(168,303
|
)
|
||
Net cash provided by (used in) investing activities for discontinued operations
|
|
119,965
|
|
|
(16,710
|
)
|
||
Net cash provided by (used in) investing activities
|
|
27,151
|
|
|
(185,013
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Repurchase of common shares, net of issuance
|
|
(857
|
)
|
|
(13,836
|
)
|
||
Dividends paid – Maiden common shareholders
|
|
(37,400
|
)
|
|
(38,935
|
)
|
||
Dividends paid – preference shares
|
|
(25,636
|
)
|
|
(20,611
|
)
|
||
Preference shares, net of issuance costs
|
|
—
|
|
|
144,942
|
|
||
Redemption of 2012 senior notes
|
|
—
|
|
|
(100,000
|
)
|
||
Net cash used in financing activities
|
|
(63,893
|
)
|
|
(28,440
|
)
|
||
Effect of exchange rate changes on foreign currency cash and cash equivalents
|
|
(1,131
|
)
|
|
3,379
|
|
||
Net increase in cash and cash equivalents and restricted cash and cash equivalents
|
|
124,750
|
|
|
164,740
|
|
||
Cash and cash equivalents and restricted cash and cash equivalents, beginning of period
|
|
191,503
|
|
|
149,535
|
|
||
Cash and cash equivalents and restricted cash and cash equivalents, end of period
|
|
316,253
|
|
|
314,275
|
|
||
Less: cash and cash equivalents and restricted cash and cash equivalents of discontinued operations, end of period
|
|
(51,679
|
)
|
|
(88,606
|
)
|
||
Cash and cash equivalents and restricted cash and cash equivalents of continuing operations, end of period
|
|
$
|
264,574
|
|
|
$
|
225,669
|
|
Reconciliation of cash and cash equivalents, and restricted cash and cash equivalents reported within Condensed Consolidated Balance Sheets that sum to the total shown above:
|
|
|
|
|
||||
Cash and cash equivalents, end of period
|
|
$
|
94,578
|
|
|
$
|
154,152
|
|
Restricted cash and cash equivalents, end of period
|
|
169,996
|
|
|
71,517
|
|
||
Total cash and cash equivalents and restricted cash and cash equivalents, end of period
|
|
$
|
264,574
|
|
|
$
|
225,669
|
|
For the Three Months Ended September 30, 2018
|
|
Diversified Reinsurance
|
|
AmTrust Reinsurance
|
|
Other
|
|
Total
|
||||||||
Gross premiums written
|
|
$
|
31,699
|
|
|
$
|
452,795
|
|
|
$
|
—
|
|
|
$
|
484,494
|
|
Net premiums written
|
|
$
|
31,291
|
|
|
$
|
451,515
|
|
|
$
|
—
|
|
|
$
|
482,806
|
|
Net premiums earned
|
|
$
|
28,784
|
|
|
$
|
491,293
|
|
|
$
|
—
|
|
|
$
|
520,077
|
|
Other insurance revenue
|
|
1,870
|
|
|
—
|
|
|
—
|
|
|
1,870
|
|
||||
Net loss and loss adjustment expenses ("loss and LAE")
|
|
(19,764
|
)
|
|
(579,163
|
)
|
|
(1,369
|
)
|
|
(600,296
|
)
|
||||
Commission and other acquisition expenses
|
|
(8,961
|
)
|
|
(158,657
|
)
|
|
—
|
|
|
(167,618
|
)
|
||||
General and administrative expenses
|
|
(4,256
|
)
|
|
(952
|
)
|
|
—
|
|
|
(5,208
|
)
|
||||
Underwriting loss
|
|
$
|
(2,327
|
)
|
|
$
|
(247,479
|
)
|
|
$
|
(1,369
|
)
|
|
(251,175
|
)
|
|
Reconciliation to net loss from continuing operations
|
|
|
|
|
|
|
|
|
||||||||
Net investment income and realized losses on investment
|
|
|
|
|
|
|
|
34,194
|
|
|||||||
Total other-than-temporary impairment losses
|
|
|
|
|
|
|
|
(479
|
)
|
|||||||
Interest and amortization expenses
|
|
|
|
|
|
|
|
(4,829
|
)
|
|||||||
Foreign exchange losses
|
|
|
|
|
|
|
|
(552
|
)
|
|||||||
Other general and administrative expenses
|
|
|
|
|
|
|
|
(13,728
|
)
|
|||||||
Income tax benefit
|
|
|
|
|
|
|
|
7,437
|
|
|||||||
Net loss from continuing operations
|
|
|
|
|
|
|
|
$
|
(229,132
|
)
|
||||||
|
|
|
|
|
|
|
|
|
||||||||
Net loss and LAE ratio(1)
|
|
64.5
|
%
|
|
117.9
|
%
|
|
|
|
115.0
|
%
|
|||||
Commission and other acquisition expense ratio(2)
|
|
29.2
|
%
|
|
32.3
|
%
|
|
|
|
32.1
|
%
|
|||||
General and administrative expense ratio(3)
|
|
13.9
|
%
|
|
0.2
|
%
|
|
|
|
3.6
|
%
|
|||||
Expense ratio(4)
|
|
43.1
|
%
|
|
32.5
|
%
|
|
|
|
35.7
|
%
|
|||||
Combined ratio(5)
|
|
107.6
|
%
|
|
150.4
|
%
|
|
|
|
150.7
|
%
|
For the Three Months Ended September 30, 2017
|
|
Diversified Reinsurance
|
|
AmTrust Reinsurance
|
|
Other
|
|
Total
|
||||||||
Gross premiums written
|
|
$
|
22,982
|
|
|
$
|
420,019
|
|
|
$
|
—
|
|
|
$
|
443,001
|
|
Net premiums written
|
|
$
|
22,484
|
|
|
$
|
410,193
|
|
|
$
|
—
|
|
|
$
|
432,677
|
|
Net premiums earned
|
|
$
|
20,925
|
|
|
$
|
436,353
|
|
|
$
|
—
|
|
|
$
|
457,278
|
|
Other insurance revenue
|
|
2,488
|
|
|
—
|
|
|
—
|
|
|
2,488
|
|
||||
Net loss and LAE
|
|
(13,979
|
)
|
|
(355,030
|
)
|
|
(1,838
|
)
|
|
(370,847
|
)
|
||||
Commission and other acquisition expenses
|
|
(6,702
|
)
|
|
(138,650
|
)
|
|
—
|
|
|
(145,352
|
)
|
||||
General and administrative expenses
|
|
(4,158
|
)
|
|
(771
|
)
|
|
—
|
|
|
(4,929
|
)
|
||||
Underwriting loss
|
|
$
|
(1,426
|
)
|
|
$
|
(58,098
|
)
|
|
$
|
(1,838
|
)
|
|
(61,362
|
)
|
|
Reconciliation to net loss from continuing operations
|
|
|
|
|
|
|
|
|
||||||||
Net investment income and realized gains on investment
|
|
|
|
|
|
|
|
36,809
|
|
|||||||
Interest and amortization expenses
|
|
|
|
|
|
|
|
(4,829
|
)
|
|||||||
Foreign exchange losses
|
|
|
|
|
|
|
|
(3,550
|
)
|
|||||||
Other general and administrative expenses
|
|
|
|
|
|
|
|
(10,510
|
)
|
|||||||
Income tax expense
|
|
|
|
|
|
|
|
(1,704
|
)
|
|||||||
Net loss from continuing operations
|
|
|
|
|
|
|
|
$
|
(45,146
|
)
|
||||||
|
|
|
|
|
|
|
|
|
||||||||
Net loss and LAE ratio(1)
|
|
59.7
|
%
|
|
81.4
|
%
|
|
|
|
80.6
|
%
|
|||||
Commission and other acquisition expense ratio(2)
|
|
28.6
|
%
|
|
31.7
|
%
|
|
|
|
31.6
|
%
|
|||||
General and administrative expense ratio(3)
|
|
17.8
|
%
|
|
0.2
|
%
|
|
|
|
3.4
|
%
|
|||||
Expense ratio(4)
|
|
46.4
|
%
|
|
31.9
|
%
|
|
|
|
35.0
|
%
|
|||||
Combined ratio(5)
|
|
106.1
|
%
|
|
113.3
|
%
|
|
|
|
115.6
|
%
|
For the Nine Months Ended September 30, 2018
|
|
Diversified Reinsurance
|
|
AmTrust Reinsurance
|
|
Other
|
|
Total
|
||||||||
Gross premiums written
|
|
$
|
111,139
|
|
|
$
|
1,518,208
|
|
|
$
|
—
|
|
|
$
|
1,629,347
|
|
Net premiums written
|
|
$
|
109,279
|
|
|
$
|
1,517,206
|
|
|
$
|
—
|
|
|
$
|
1,626,485
|
|
Net premiums earned
|
|
$
|
82,838
|
|
|
$
|
1,458,440
|
|
|
$
|
—
|
|
|
$
|
1,541,278
|
|
Other insurance revenue
|
|
7,629
|
|
|
—
|
|
|
—
|
|
|
7,629
|
|
||||
Net loss and LAE
|
|
(51,828
|
)
|
|
(1,270,306
|
)
|
|
(1,369
|
)
|
|
(1,323,503
|
)
|
||||
Commission and other acquisition expenses
|
|
(28,261
|
)
|
|
(468,765
|
)
|
|
—
|
|
|
(497,026
|
)
|
||||
General and administrative expenses
|
|
(13,330
|
)
|
|
(2,954
|
)
|
|
—
|
|
|
(16,284
|
)
|
||||
Underwriting loss
|
|
$
|
(2,952
|
)
|
|
$
|
(283,585
|
)
|
|
$
|
(1,369
|
)
|
|
(287,906
|
)
|
|
Reconciliation to net loss from continuing operations
|
|
|
|
|
|
|
|
|
||||||||
Net investment income and realized losses on investment
|
|
|
|
|
|
|
|
101,266
|
|
|||||||
Total other-than-temporary impairment losses
|
|
|
|
|
|
|
|
(479
|
)
|
|||||||
Interest and amortization expenses
|
|
|
|
|
|
|
|
(14,487
|
)
|
|||||||
Foreign exchange gains
|
|
|
|
|
|
|
|
1,862
|
|
|||||||
Other general and administrative expenses
|
|
|
|
|
|
|
|
(32,059
|
)
|
|||||||
Income tax benefit
|
|
|
|
|
|
|
|
930
|
|
|||||||
Net loss from continuing operations
|
|
|
|
|
|
|
|
$
|
(230,873
|
)
|
||||||
|
|
|
|
|
|
|
|
|
||||||||
Net loss and LAE ratio(1)
|
|
57.3
|
%
|
|
87.1
|
%
|
|
|
|
85.5
|
%
|
|||||
Commission and other acquisition expense ratio(2)
|
|
31.3
|
%
|
|
32.1
|
%
|
|
|
|
32.1
|
%
|
|||||
General and administrative expense ratio(3)
|
|
14.7
|
%
|
|
0.2
|
%
|
|
|
|
3.1
|
%
|
|||||
Expense ratio(4)
|
|
46.0
|
%
|
|
32.3
|
%
|
|
|
|
35.2
|
%
|
|||||
Combined ratio(5)
|
|
103.3
|
%
|
|
119.4
|
%
|
|
|
|
120.7
|
%
|
For the Nine Months Ended September 30, 2017
|
|
Diversified Reinsurance
|
|
AmTrust Reinsurance
|
|
Other
|
|
Total
|
||||||||
Gross premiums written
|
|
$
|
75,085
|
|
|
$
|
1,575,677
|
|
|
$
|
—
|
|
|
$
|
1,650,762
|
|
Net premiums written
|
|
$
|
73,434
|
|
|
$
|
1,529,980
|
|
|
$
|
—
|
|
|
$
|
1,603,414
|
|
Net premiums earned
|
|
$
|
61,626
|
|
|
$
|
1,450,811
|
|
|
$
|
—
|
|
|
$
|
1,512,437
|
|
Other insurance revenue
|
|
7,816
|
|
|
—
|
|
|
—
|
|
|
7,816
|
|
||||
Net loss and LAE
|
|
(41,548
|
)
|
|
(1,047,222
|
)
|
|
(1,838
|
)
|
|
(1,090,608
|
)
|
||||
Commission and other acquisition expenses
|
|
(21,982
|
)
|
|
(465,789
|
)
|
|
—
|
|
|
(487,771
|
)
|
||||
General and administrative expenses
|
|
(11,831
|
)
|
|
(2,240
|
)
|
|
—
|
|
|
(14,071
|
)
|
||||
Underwriting loss
|
|
$
|
(5,919
|
)
|
|
$
|
(64,440
|
)
|
|
$
|
(1,838
|
)
|
|
(72,197
|
)
|
|
Reconciliation to net loss from continuing operations
|
|
|
|
|
|
|
|
|
||||||||
Net investment income and realized gains on investment
|
|
|
|
|
|
|
|
99,913
|
|
|||||||
Interest and amortization expenses
|
|
|
|
|
|
|
|
(18,430
|
)
|
|||||||
Accelerated amortization of senior note issuance cost
|
|
|
|
|
|
|
|
(2,809
|
)
|
|||||||
Foreign exchange losses
|
|
|
|
|
|
|
|
(12,193
|
)
|
|||||||
Other general and administrative expenses
|
|
|
|
|
|
|
|
(24,090
|
)
|
|||||||
Income tax benefit
|
|
|
|
|
|
|
|
1,978
|
|
|||||||
Net loss from continuing operations
|
|
|
|
|
|
|
|
$
|
(27,828
|
)
|
||||||
|
|
|
|
|
|
|
|
|
||||||||
Net loss and LAE ratio(1)
|
|
59.8
|
%
|
|
72.2
|
%
|
|
|
|
71.7
|
%
|
|||||
Commission and other acquisition expense ratio(2)
|
|
31.7
|
%
|
|
32.1
|
%
|
|
|
|
32.1
|
%
|
|||||
General and administrative expense ratio(3)
|
|
17.0
|
%
|
|
0.1
|
%
|
|
|
|
2.5
|
%
|
|||||
Expense ratio(4)
|
|
48.7
|
%
|
|
32.2
|
%
|
|
|
|
34.6
|
%
|
|||||
Combined ratio(5)
|
|
108.5
|
%
|
|
104.4
|
%
|
|
|
|
106.3
|
%
|
(1)
|
Calculated by dividing net loss and LAE by the sum of net premiums earned and other insurance revenue.
|
(2)
|
Calculated by dividing commission and other acquisition expenses by the sum of net premiums earned and other insurance revenue.
|
(3)
|
Calculated by dividing general and administrative expenses by the sum of net premiums earned and other insurance revenue.
|
(4)
|
Calculated by adding together the commission and other acquisition expense ratio and general and administrative expense ratio.
|
(5)
|
Calculated by adding together net loss and LAE ratio and the expense ratio.
|
September 30, 2018
|
|
Diversified Reinsurance
|
|
AmTrust Reinsurance
|
|
Total
|
||||||
Total assets - reportable segments
|
|
$
|
180,676
|
|
|
$
|
4,297,992
|
|
|
$
|
4,478,668
|
|
Corporate assets
|
|
—
|
|
|
—
|
|
|
442,347
|
|
|||
Assets held for sale
|
|
—
|
|
|
—
|
|
|
1,615,486
|
|
|||
Total Assets
|
|
$
|
180,676
|
|
|
$
|
4,297,992
|
|
|
$
|
6,536,501
|
|
|
|
|
|
|
|
|
||||||
December 31, 2017
|
|
Diversified Reinsurance
|
|
AmTrust Reinsurance
|
|
Total
|
||||||
Total assets - reportable segments
|
|
$
|
167,638
|
|
|
$
|
4,258,607
|
|
|
$
|
4,426,245
|
|
Corporate assets
|
|
—
|
|
|
—
|
|
|
316,126
|
|
|||
Assets held for sale
|
|
—
|
|
|
—
|
|
|
1,901,818
|
|
|||
Total Assets
|
|
$
|
167,638
|
|
|
$
|
4,258,607
|
|
|
$
|
6,644,189
|
|
For the Three Months Ended September 30,
|
|
2018
|
|
2017
|
||||||||||
Net premiums written
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
||||||
Diversified Reinsurance
|
|
|
|
|
|
|
|
|
||||||
International
|
|
$
|
31,291
|
|
|
6.5
|
%
|
|
$
|
22,503
|
|
|
5.2
|
%
|
Casualty
|
|
—
|
|
|
—
|
%
|
|
(19
|
)
|
|
—
|
%
|
||
Total Diversified Reinsurance
|
|
31,291
|
|
|
6.5
|
%
|
|
22,484
|
|
|
5.2
|
%
|
||
AmTrust Reinsurance
|
|
|
|
|
|
|
|
|
||||||
Small Commercial Business
|
|
232,163
|
|
|
48.1
|
%
|
|
295,499
|
|
|
68.3
|
%
|
||
Specialty Program
|
|
94,077
|
|
|
19.5
|
%
|
|
63,816
|
|
|
14.7
|
%
|
||
Specialty Risk and Extended Warranty
|
|
125,275
|
|
|
25.9
|
%
|
|
50,878
|
|
|
11.8
|
%
|
||
Total AmTrust Reinsurance
|
|
451,515
|
|
|
93.5
|
%
|
|
410,193
|
|
|
94.8
|
%
|
||
Total Net Premiums Written
|
|
$
|
482,806
|
|
|
100.0
|
%
|
|
$
|
432,677
|
|
|
100.0
|
%
|
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
||||||||||
Net premiums written
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
||||||
Diversified Reinsurance
|
|
|
|
|
|
|
|
|
||||||
International
|
|
$
|
109,238
|
|
|
6.7
|
%
|
|
$
|
73,475
|
|
|
4.6
|
%
|
Casualty
|
|
41
|
|
|
—
|
%
|
|
(41
|
)
|
|
—
|
%
|
||
Total Diversified Reinsurance
|
|
109,279
|
|
|
6.7
|
%
|
|
73,434
|
|
|
4.6
|
%
|
||
AmTrust Reinsurance
|
|
|
|
|
|
|
|
|
||||||
Small Commercial Business
|
|
879,403
|
|
|
54.1
|
%
|
|
1,028,905
|
|
|
64.2
|
%
|
||
Specialty Program
|
|
286,404
|
|
|
17.6
|
%
|
|
255,767
|
|
|
15.9
|
%
|
||
Specialty Risk and Extended Warranty
|
|
351,399
|
|
|
21.6
|
%
|
|
245,308
|
|
|
15.3
|
%
|
||
Total AmTrust Reinsurance
|
|
1,517,206
|
|
|
93.3
|
%
|
|
1,529,980
|
|
|
95.4
|
%
|
||
Total Net Premiums Written
|
|
$
|
1,626,485
|
|
|
100.0
|
%
|
|
$
|
1,603,414
|
|
|
100.0
|
%
|
For the Three Months Ended September 30,
|
|
2018
|
|
2017
|
||||||||||
Net premiums earned
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
||||||
Diversified Reinsurance
|
|
|
|
|
|
|
|
|
||||||
International
|
|
$
|
28,784
|
|
|
5.5
|
%
|
|
$
|
20,943
|
|
|
4.6
|
%
|
Casualty
|
|
—
|
|
|
—
|
%
|
|
(18
|
)
|
|
—
|
%
|
||
Total Diversified Reinsurance
|
|
28,784
|
|
|
5.5
|
%
|
|
20,925
|
|
|
4.6
|
%
|
||
AmTrust Reinsurance
|
|
|
|
|
|
|
|
|
||||||
Small Commercial Business
|
|
273,456
|
|
|
52.6
|
%
|
|
314,773
|
|
|
68.8
|
%
|
||
Specialty Program
|
|
98,359
|
|
|
18.9
|
%
|
|
59,143
|
|
|
12.9
|
%
|
||
Specialty Risk and Extended Warranty
|
|
119,478
|
|
|
23.0
|
%
|
|
62,437
|
|
|
13.7
|
%
|
||
Total AmTrust Reinsurance
|
|
491,293
|
|
|
94.5
|
%
|
|
436,353
|
|
|
95.4
|
%
|
||
Total Net Premiums Earned
|
|
$
|
520,077
|
|
|
100.0
|
%
|
|
$
|
457,278
|
|
|
100.0
|
%
|
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
||||||||||
Net premiums earned
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
||||||
Diversified Reinsurance
|
|
|
|
|
|
|
|
|
||||||
International
|
|
$
|
82,797
|
|
|
5.4
|
%
|
|
$
|
61,667
|
|
|
4.1
|
%
|
Casualty
|
|
41
|
|
|
—
|
%
|
|
(41
|
)
|
|
—
|
%
|
||
Total Diversified Reinsurance
|
|
82,838
|
|
|
5.4
|
%
|
|
61,626
|
|
|
4.1
|
%
|
||
AmTrust Reinsurance
|
|
|
|
|
|
|
|
|
||||||
Small Commercial Business
|
|
882,679
|
|
|
57.3
|
%
|
|
946,782
|
|
|
62.6
|
%
|
||
Specialty Program
|
|
283,592
|
|
|
18.4
|
%
|
|
251,153
|
|
|
16.6
|
%
|
||
Specialty Risk and Extended Warranty
|
|
292,169
|
|
|
18.9
|
%
|
|
252,876
|
|
|
16.7
|
%
|
||
Total AmTrust Reinsurance
|
|
1,458,440
|
|
|
94.6
|
%
|
|
1,450,811
|
|
|
95.9
|
%
|
||
Total Net Premiums Earned
|
|
$
|
1,541,278
|
|
|
100.0
|
%
|
|
$
|
1,512,437
|
|
|
100.0
|
%
|
a)
|
Fixed Maturities
|
September 30, 2018
|
|
Original or amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair value
|
||||||||
AFS fixed maturities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. treasury bonds
|
|
$
|
125
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
124
|
|
U.S. agency bonds – mortgage-backed
|
|
1,484,434
|
|
|
830
|
|
|
(58,068
|
)
|
|
1,427,196
|
|
||||
U.S. agency bonds – other
|
|
24,870
|
|
|
—
|
|
|
(1,180
|
)
|
|
23,690
|
|
||||
Non-U.S. government and supranational bonds
|
|
22,550
|
|
|
122
|
|
|
(1,827
|
)
|
|
20,845
|
|
||||
Asset-backed securities
|
|
226,652
|
|
|
552
|
|
|
(2,000
|
)
|
|
225,204
|
|
||||
Corporate bonds
|
|
1,108,620
|
|
|
8,834
|
|
|
(32,960
|
)
|
|
1,084,494
|
|
||||
Total AFS fixed maturities
|
|
2,867,251
|
|
|
10,338
|
|
|
(96,036
|
)
|
|
2,781,553
|
|
||||
Held-to-maturity ("HTM") fixed maturities:
|
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
|
974,947
|
|
|
6,103
|
|
|
(18,190
|
)
|
|
962,860
|
|
||||
Municipal bonds
|
|
57,938
|
|
|
—
|
|
|
(1,057
|
)
|
|
56,881
|
|
||||
Total HTM fixed maturities
|
|
1,032,885
|
|
|
6,103
|
|
|
(19,247
|
)
|
|
1,019,741
|
|
||||
Total fixed maturity investments
|
|
$
|
3,900,136
|
|
|
$
|
16,441
|
|
|
$
|
(115,283
|
)
|
|
$
|
3,801,294
|
|
December 31, 2017
|
|
Original or amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Fair value
|
||||||||
AFS fixed maturities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. treasury bonds
|
|
$
|
35,093
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
35,097
|
|
U.S. agency bonds – mortgage-backed
|
|
1,475,682
|
|
|
6,181
|
|
|
(13,723
|
)
|
|
1,468,140
|
|
||||
U.S. agency bonds – other
|
|
19,868
|
|
|
—
|
|
|
(149
|
)
|
|
19,719
|
|
||||
Non-U.S. government and supranational bonds
|
|
32,380
|
|
|
231
|
|
|
(1,713
|
)
|
|
30,898
|
|
||||
Asset-backed securities
|
|
225,015
|
|
|
3,457
|
|
|
(79
|
)
|
|
228,393
|
|
||||
Corporate bonds
|
|
911,259
|
|
|
28,423
|
|
|
(14,413
|
)
|
|
925,269
|
|
||||
Total AFS fixed maturities
|
|
2,699,297
|
|
|
38,296
|
|
|
(30,077
|
)
|
|
2,707,516
|
|
||||
HTM fixed maturities:
|
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
|
1,037,464
|
|
|
28,694
|
|
|
(913
|
)
|
|
1,065,245
|
|
||||
Municipal bonds
|
|
60,337
|
|
|
128
|
|
|
(84
|
)
|
|
60,381
|
|
||||
Total HTM fixed maturities
|
|
1,097,801
|
|
|
28,822
|
|
|
(997
|
)
|
|
1,125,626
|
|
||||
Total fixed maturity investments
|
|
$
|
3,797,098
|
|
|
$
|
67,118
|
|
|
$
|
(31,074
|
)
|
|
$
|
3,833,142
|
|
|
|
AFS fixed maturities
|
|
HTM fixed maturities
|
||||||||||||
September 30, 2018
|
|
Amortized cost
|
|
Fair value
|
|
Amortized cost
|
|
Fair value
|
||||||||
Maturity
|
|
|
|
|
|
|
|
|
||||||||
Due in one year or less
|
|
$
|
3,873
|
|
|
$
|
3,522
|
|
|
$
|
9,297
|
|
|
$
|
9,289
|
|
Due after one year through five years
|
|
596,895
|
|
|
583,069
|
|
|
371,750
|
|
|
372,294
|
|
||||
Due after five years through ten years
|
|
555,397
|
|
|
542,562
|
|
|
651,838
|
|
|
638,158
|
|
||||
|
|
1,156,165
|
|
|
1,129,153
|
|
|
1,032,885
|
|
|
1,019,741
|
|
||||
U.S. agency bonds – mortgage-backed
|
|
1,484,434
|
|
|
1,427,196
|
|
|
—
|
|
|
—
|
|
||||
Asset-backed securities
|
|
226,652
|
|
|
225,204
|
|
|
—
|
|
|
—
|
|
||||
Total fixed maturities
|
|
$
|
2,867,251
|
|
|
$
|
2,781,553
|
|
|
$
|
1,032,885
|
|
|
$
|
1,019,741
|
|
|
|
Less than 12 Months
|
|
12 Months or More
|
|
Total
|
||||||||||||||||||
September 30, 2018
|
|
Fair
value |
|
Unrealized
losses |
|
Fair
value |
|
Unrealized
losses |
|
Fair
value |
|
Unrealized
losses |
||||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. treasury bonds
|
|
$
|
124
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
124
|
|
|
$
|
(1
|
)
|
U.S. agency bonds – mortgage-backed
|
|
831,457
|
|
|
(25,160
|
)
|
|
595,740
|
|
|
(32,908
|
)
|
|
1,427,197
|
|
|
(58,068
|
)
|
||||||
U.S. agency bonds – other
|
|
23,689
|
|
|
(1,180
|
)
|
|
—
|
|
|
—
|
|
|
23,689
|
|
|
(1,180
|
)
|
||||||
Non–U.S. government and supranational bonds
|
|
6,637
|
|
|
(148
|
)
|
|
14,209
|
|
|
(1,679
|
)
|
|
20,846
|
|
|
(1,827
|
)
|
||||||
Asset-backed securities
|
|
221,300
|
|
|
(1,896
|
)
|
|
3,904
|
|
|
(104
|
)
|
|
225,204
|
|
|
(2,000
|
)
|
||||||
Corporate bonds
|
|
1,793,528
|
|
|
(31,031
|
)
|
|
253,825
|
|
|
(20,119
|
)
|
|
2,047,353
|
|
|
(51,150
|
)
|
||||||
Municipal bonds
|
|
56,882
|
|
|
(1,057
|
)
|
|
—
|
|
|
—
|
|
|
56,882
|
|
|
(1,057
|
)
|
||||||
Total temporarily impaired fixed maturities
|
|
$
|
2,933,617
|
|
|
$
|
(60,473
|
)
|
|
$
|
867,678
|
|
|
$
|
(54,810
|
)
|
|
$
|
3,801,295
|
|
|
$
|
(115,283
|
)
|
|
|
Less than 12 Months
|
|
12 Months or More
|
|
Total
|
||||||||||||||||||
December 31, 2017
|
|
Fair
value |
|
Unrealized
losses |
|
Fair
value |
|
Unrealized
losses |
|
Fair
value |
|
Unrealized
losses |
||||||||||||
Fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. agency bonds – mortgage-backed
|
|
$
|
632,142
|
|
|
$
|
(5,299
|
)
|
|
$
|
327,339
|
|
|
$
|
(8,424
|
)
|
|
$
|
959,481
|
|
|
$
|
(13,723
|
)
|
U.S. agency bonds – other
|
|
19,718
|
|
|
(149
|
)
|
|
—
|
|
|
—
|
|
|
19,718
|
|
|
(149
|
)
|
||||||
Non-U.S. government and supranational bonds
|
|
1,909
|
|
|
(2
|
)
|
|
25,192
|
|
|
(1,711
|
)
|
|
27,101
|
|
|
(1,713
|
)
|
||||||
Asset-backed securities
|
|
12,408
|
|
|
(30
|
)
|
|
3,017
|
|
|
(49
|
)
|
|
15,425
|
|
|
(79
|
)
|
||||||
Corporate bonds
|
|
161,661
|
|
|
(1,557
|
)
|
|
290,592
|
|
|
(13,769
|
)
|
|
452,253
|
|
|
(15,326
|
)
|
||||||
Municipal bonds
|
|
39,492
|
|
|
(84
|
)
|
|
—
|
|
|
—
|
|
|
39,492
|
|
|
(84
|
)
|
||||||
Total temporarily impaired fixed maturities
|
|
$
|
867,330
|
|
|
$
|
(7,121
|
)
|
|
$
|
646,140
|
|
|
$
|
(23,953
|
)
|
|
$
|
1,513,470
|
|
|
$
|
(31,074
|
)
|
Ratings(1) at September 30, 2018
|
|
Amortized cost
|
|
Fair value
|
|
% of Total
fair value |
|||||
U.S. treasury bonds
|
|
$
|
125
|
|
|
$
|
124
|
|
|
—
|
%
|
U.S. agency bonds
|
|
1,509,304
|
|
|
1,450,886
|
|
|
38.2
|
%
|
||
AAA
|
|
166,512
|
|
|
163,099
|
|
|
4.3
|
%
|
||
AA+, AA, AA-
|
|
174,111
|
|
|
169,207
|
|
|
4.4
|
%
|
||
A+, A, A-
|
|
1,136,634
|
|
|
1,113,761
|
|
|
29.3
|
%
|
||
BBB+, BBB, BBB-
|
|
851,348
|
|
|
839,940
|
|
|
22.1
|
%
|
||
BB+ or lower
|
|
62,102
|
|
|
64,277
|
|
|
1.7
|
%
|
||
Total fixed maturities
|
|
$
|
3,900,136
|
|
|
$
|
3,801,294
|
|
|
100.0
|
%
|
Ratings(1) at December 31, 2017
|
|
Amortized cost
|
|
Fair value
|
|
% of Total
fair value |
|||||
U.S. treasury bonds
|
|
$
|
35,093
|
|
|
$
|
35,097
|
|
|
0.9
|
%
|
U.S. agency bonds
|
|
1,495,550
|
|
|
1,487,859
|
|
|
38.8
|
%
|
||
AAA
|
|
156,631
|
|
|
159,682
|
|
|
4.2
|
%
|
||
AA+, AA, AA-
|
|
146,264
|
|
|
147,054
|
|
|
3.8
|
%
|
||
A+, A, A-
|
|
1,089,230
|
|
|
1,106,430
|
|
|
28.9
|
%
|
||
BBB+, BBB, BBB-
|
|
824,351
|
|
|
845,244
|
|
|
22.1
|
%
|
||
BB+ or lower
|
|
49,979
|
|
|
51,776
|
|
|
1.3
|
%
|
||
Total fixed maturities
|
|
$
|
3,797,098
|
|
|
$
|
3,833,142
|
|
|
100.0
|
%
|
(1)
|
Based on Standard & Poor’s ("S&P"), or equivalent, ratings
|
b)
|
Other Investments
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
|
|
Fair value
|
|
% of Total
fair value |
|
Fair value
|
|
% of Total
fair value |
||||||
Investment in limited partnerships
|
|
$
|
3,554
|
|
|
15.7
|
%
|
|
$
|
5,100
|
|
|
77.3
|
%
|
Other
|
|
19,032
|
|
|
84.3
|
%
|
|
1,500
|
|
|
22.7
|
%
|
||
Total other investments
|
|
$
|
22,586
|
|
|
100.0
|
%
|
|
$
|
6,600
|
|
|
100.0
|
%
|
c)
|
Net Investment Income
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Fixed maturities
|
|
$
|
32,443
|
|
|
$
|
30,496
|
|
|
$
|
97,485
|
|
|
$
|
91,954
|
|
Cash and cash equivalents
|
|
905
|
|
|
899
|
|
|
1,596
|
|
|
1,328
|
|
||||
Loan to related party
|
|
1,658
|
|
|
913
|
|
|
4,651
|
|
|
2,441
|
|
||||
Other
|
|
471
|
|
|
569
|
|
|
1,061
|
|
|
1,460
|
|
||||
|
|
35,477
|
|
|
32,877
|
|
|
104,793
|
|
|
97,183
|
|
||||
Investment expenses
|
|
(1,058
|
)
|
|
(1,927
|
)
|
|
(3,245
|
)
|
|
(5,586
|
)
|
||||
Net investment income
|
|
$
|
34,419
|
|
|
$
|
30,950
|
|
|
$
|
101,548
|
|
|
$
|
91,597
|
|
d)
|
Realized Gains (Losses) on Investment
|
For the Three Months Ended September 30, 2018
|
|
Gross gains
|
|
Gross losses
|
|
Net
|
||||||
AFS fixed maturities
|
|
$
|
40
|
|
|
$
|
(558
|
)
|
|
$
|
(518
|
)
|
Other investments
|
|
293
|
|
|
—
|
|
|
293
|
|
|||
Net realized gains (losses) on investment
|
|
$
|
333
|
|
|
$
|
(558
|
)
|
|
$
|
(225
|
)
|
|
|
|
|
|
|
|
||||||
For the Three Months Ended September 30, 2017
|
|
Gross gains
|
|
Gross losses
|
|
Net
|
||||||
AFS fixed maturities
|
|
$
|
1,366
|
|
|
$
|
(997
|
)
|
|
$
|
369
|
|
Other investments
|
|
5,490
|
|
|
—
|
|
|
5,490
|
|
|||
Net realized gains (losses) on investment
|
|
$
|
6,856
|
|
|
$
|
(997
|
)
|
|
$
|
5,859
|
|
|
|
|
|
|
|
|
||||||
For the Nine Months Ended September 30, 2018
|
|
Gross gains
|
|
Gross losses
|
|
Net
|
||||||
AFS fixed maturities
|
|
$
|
2,979
|
|
|
$
|
(5,256
|
)
|
|
$
|
(2,277
|
)
|
Other investments
|
|
1,995
|
|
|
—
|
|
|
1,995
|
|
|||
Net realized gains (losses) on investment
|
|
$
|
4,974
|
|
|
$
|
(5,256
|
)
|
|
$
|
(282
|
)
|
|
|
|
|
|
|
|
||||||
For the Nine Months Ended September 30, 2017
|
|
Gross gains
|
|
Gross losses
|
|
Net
|
||||||
AFS fixed maturities
|
|
$
|
3,854
|
|
|
$
|
(1,253
|
)
|
|
$
|
2,601
|
|
Other investments
|
|
5,715
|
|
|
—
|
|
|
5,715
|
|
|||
Net realized gains (losses) on investment
|
|
$
|
9,569
|
|
|
$
|
(1,253
|
)
|
|
$
|
8,316
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Fixed maturities
|
|
$
|
(119,919
|
)
|
|
$
|
20,586
|
|
Other investments
|
|
—
|
|
|
1,381
|
|
||
Total net unrealized (losses) gains
|
|
(119,919
|
)
|
|
21,967
|
|
||
Deferred income tax
|
|
(59
|
)
|
|
(78
|
)
|
||
Net unrealized (losses) gains, net of deferred income tax
|
|
$
|
(119,978
|
)
|
|
$
|
21,889
|
|
Change, net of deferred income tax
|
|
$
|
(141,867
|
)
|
|
$
|
42,605
|
|
For the Three Months Ended September 30,
|
|
2018
|
|
2017
|
||||
Net gains recognized in net income on other investments during the period
|
|
$
|
293
|
|
|
$
|
5,490
|
|
Net realized gains recognized on other investments divested during the period
|
|
(758
|
)
|
|
(5,490
|
)
|
||
Net unrealized losses recognized on other investments still held at end of period
|
|
$
|
(465
|
)
|
|
$
|
—
|
|
|
|
|
|
|
||||
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
||||
Net gains recognized in net income on other investments during the period
|
|
$
|
1,995
|
|
|
$
|
5,715
|
|
Net realized gains recognized on other investments divested during the period
|
|
(1,637
|
)
|
|
(5,715
|
)
|
||
Net unrealized gains recognized on other investments still held at end of period
|
|
$
|
358
|
|
|
$
|
—
|
|
e)
|
Restricted Cash and Cash Equivalents and Investments
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Restricted cash – third party agreements
|
|
$
|
20,884
|
|
|
$
|
21,889
|
|
Restricted cash – related party agreements
|
|
149,112
|
|
|
73,016
|
|
||
Total restricted cash
|
|
169,996
|
|
|
94,905
|
|
||
Restricted investments – in trust for third party agreements at fair value (amortized cost: 2018 – $75,279; 2017 – $212,507)
|
|
75,233
|
|
|
211,331
|
|
||
Restricted investments AFS – in trust for related party agreements at fair value (amortized cost: 2018 – $2,515,190; 2017 – $2,281,668)
|
|
2,447,970
|
|
|
2,294,367
|
|
||
Restricted investments HTM – in trust for related party agreements at fair value (amortized cost: 2018 – $1,032,885; 2017 – $1,097,801)
|
|
1,019,741
|
|
|
1,125,626
|
|
||
Total restricted investments
|
|
3,542,944
|
|
|
3,631,324
|
|
||
Total restricted cash and investments
|
|
$
|
3,712,940
|
|
|
$
|
3,726,229
|
|
•
|
Level 1 — Valuations based on unadjusted quoted market prices for identical assets or liabilities that we have the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation
|
•
|
Level 2 — Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical 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. Examples of assets and liabilities utilizing Level 2 inputs include: U.S. government-sponsored agency securities; non-U.S. government and supranational obligations; commercial mortgage-backed securities ("CMBS"); collateralized loan obligations ("CLO"); corporate and municipal bonds; and
|
•
|
Level 3 — Valuations based on models where significant inputs are not observable. The unobservable inputs reflect our own assumptions about assumptions that market participants would use. Examples of assets and liabilities utilizing Level 3 inputs include: an investment in preference shares of a start-up insurance producer.
|
September 30, 2018
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Fair Value Based on NAV Practical Expedient
|
|
Total Fair Value
|
||||||||||
AFS fixed maturities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. treasury bonds
|
|
$
|
124
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
124
|
|
U.S. agency bonds – mortgage-backed
|
|
—
|
|
|
1,427,196
|
|
|
—
|
|
|
—
|
|
|
1,427,196
|
|
|||||
U.S. agency bonds – other
|
|
—
|
|
|
23,690
|
|
|
—
|
|
|
—
|
|
|
23,690
|
|
|||||
Non-U.S. government and supranational bonds
|
|
—
|
|
|
20,845
|
|
|
—
|
|
|
—
|
|
|
20,845
|
|
|||||
Asset-backed securities
|
|
—
|
|
|
225,204
|
|
|
—
|
|
|
—
|
|
|
225,204
|
|
|||||
Corporate bonds
|
|
—
|
|
|
1,084,494
|
|
|
—
|
|
|
—
|
|
|
1,084,494
|
|
|||||
Other investments
|
|
—
|
|
|
—
|
|
|
19,032
|
|
|
3,554
|
|
|
22,586
|
|
|||||
Total
|
|
$
|
124
|
|
|
$
|
2,781,429
|
|
|
$
|
19,032
|
|
|
$
|
3,554
|
|
|
$
|
2,804,139
|
|
As a percentage of total assets
|
|
—
|
%
|
|
42.6
|
%
|
|
0.3
|
%
|
|
0.1
|
%
|
|
43.0
|
%
|
December 31, 2017
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Other Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Fair Value Based on NAV Practical Expedient
|
|
Total Fair Value
|
||||||||||
AFS fixed maturities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. treasury bonds
|
|
$
|
35,097
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35,097
|
|
U.S. agency bonds – mortgage-backed
|
|
—
|
|
|
1,468,140
|
|
|
—
|
|
|
—
|
|
|
1,468,140
|
|
|||||
U.S. agency bonds – other
|
|
—
|
|
|
19,719
|
|
|
—
|
|
|
—
|
|
|
19,719
|
|
|||||
Non-U.S. government and supranational bonds
|
|
—
|
|
|
30,898
|
|
|
—
|
|
|
—
|
|
|
30,898
|
|
|||||
Asset-backed securities
|
|
—
|
|
|
228,393
|
|
|
—
|
|
|
—
|
|
|
228,393
|
|
|||||
Corporate bonds
|
|
—
|
|
|
925,269
|
|
|
—
|
|
|
—
|
|
|
925,269
|
|
|||||
Other investments
|
|
—
|
|
|
—
|
|
|
1,500
|
|
|
5,100
|
|
|
6,600
|
|
|||||
Total
|
|
$
|
35,097
|
|
|
$
|
2,672,419
|
|
|
$
|
1,500
|
|
|
$
|
5,100
|
|
|
$
|
2,714,116
|
|
As a percentage of total assets
|
|
0.5
|
%
|
|
40.2
|
%
|
|
—
|
%
|
|
0.1
|
%
|
|
40.8
|
%
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
Financial Assets
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
HTM – corporate bonds
|
|
$
|
974,947
|
|
|
$
|
962,860
|
|
|
$
|
1,037,464
|
|
|
$
|
1,065,245
|
|
HTM – municipal bonds
|
|
57,938
|
|
|
56,881
|
|
|
60,337
|
|
|
60,381
|
|
||||
Total financial assets
|
|
$
|
1,032,885
|
|
|
$
|
1,019,741
|
|
|
$
|
1,097,801
|
|
|
$
|
1,125,626
|
|
|
|
|
|
|
|
|
|
|
||||||||
Financial Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Senior Notes - MHLA – 6.625%
|
|
$
|
110,000
|
|
|
$
|
75,812
|
|
|
$
|
110,000
|
|
|
$
|
101,200
|
|
Senior Notes - MHNC – 7.75%
|
|
152,500
|
|
|
124,135
|
|
|
152,500
|
|
|
149,029
|
|
||||
Total financial liabilities
|
|
$
|
262,500
|
|
|
$
|
199,947
|
|
|
$
|
262,500
|
|
|
$
|
250,229
|
|
|
|
Goodwill
|
|
Intangible Assets
|
|
Total
|
||||||
December 31, 2016
|
|
$
|
57,192
|
|
|
$
|
20,523
|
|
|
$
|
77,715
|
|
Amortization
|
|
—
|
|
|
(2,132
|
)
|
|
(2,132
|
)
|
|||
December 31, 2017
|
|
$
|
57,192
|
|
|
$
|
18,391
|
|
|
$
|
75,583
|
|
Amortization
|
|
—
|
|
|
(1,387
|
)
|
|
(1,387
|
)
|
|||
Impairment losses
|
|
(57,192
|
)
|
|
(17,004
|
)
|
|
(74,196
|
)
|
|||
September 30, 2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
September 30, 2018
|
|
Gross
|
|
Accumulated Amortization
|
|
Accumulated Impairment
|
|
Net
|
|
Useful Life
|
||||||||
Goodwill
|
|
$
|
58,992
|
|
|
$
|
—
|
|
|
$
|
(58,992
|
)
|
|
$
|
—
|
|
|
Indefinite
|
State licenses
|
|
4,527
|
|
|
—
|
|
|
(4,527
|
)
|
|
—
|
|
|
Indefinite
|
||||
Customer relationships
|
|
51,400
|
|
|
(38,923
|
)
|
|
(12,477
|
)
|
|
—
|
|
|
15 years double declining
|
||||
Net balance
|
|
$
|
114,919
|
|
|
$
|
(38,923
|
)
|
|
$
|
(75,996
|
)
|
|
$
|
—
|
|
|
|
December 31, 2017
|
|
Gross
|
|
Accumulated Amortization
|
|
Accumulated Impairment
|
|
Net
|
|
Useful Life
|
||||||||
Goodwill
|
|
$
|
58,992
|
|
|
$
|
—
|
|
|
$
|
(1,800
|
)
|
|
$
|
57,192
|
|
|
Indefinite
|
State licenses
|
|
4,527
|
|
|
—
|
|
|
—
|
|
|
4,527
|
|
|
Indefinite
|
||||
Customer relationships
|
|
51,400
|
|
|
(37,536
|
)
|
|
—
|
|
|
13,864
|
|
|
15 years double declining
|
||||
Net balance
|
|
$
|
114,919
|
|
|
$
|
(37,536
|
)
|
|
$
|
(1,800
|
)
|
|
$
|
75,583
|
|
|
|
September 30, 2018
|
|
2016 Senior Notes
|
|
2013 Senior Notes
|
|
Total
|
||||||
Principal amount
|
|
$
|
110,000
|
|
|
$
|
152,500
|
|
|
$
|
262,500
|
|
Less: unamortized issuance costs
|
|
3,622
|
|
|
4,238
|
|
|
7,860
|
|
|||
Carrying value
|
|
$
|
106,378
|
|
|
$
|
148,262
|
|
|
$
|
254,640
|
|
|
|
|
|
|
|
|
||||||
December 31, 2017
|
|
2016 Senior Notes
|
|
2013 Senior Notes
|
|
Total
|
||||||
Principal amount
|
|
$
|
110,000
|
|
|
$
|
152,500
|
|
|
$
|
262,500
|
|
Less: unamortized issuance costs
|
|
3,654
|
|
|
4,364
|
|
|
8,018
|
|
|||
Carrying value
|
|
$
|
106,346
|
|
|
$
|
148,136
|
|
|
$
|
254,482
|
|
|
|
|
|
|
|
|
||||||
Other details:
|
|
|
|
|
|
|
||||||
Original debt issuance costs
|
|
$
|
3,715
|
|
|
$
|
5,054
|
|
|
|
||
Maturity date
|
|
June 14, 2046
|
|
|
Dec 1, 2043
|
|
|
|
||||
Earliest redeemable date (for cash)
|
|
June 14, 2021
|
|
|
Dec 1, 2018
|
|
|
|
||||
Coupon rate
|
|
6.625
|
%
|
|
7.75
|
%
|
|
|
||||
Effective interest rate
|
|
7.07
|
%
|
|
8.04
|
%
|
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
|
(Unaudited)
|
||||||
ASSETS
|
|
|
|
|
||||
Fixed maturities, available-for-sale, at fair value
|
|
$
|
1,153,793
|
|
|
$
|
1,336,854
|
|
Cash and cash equivalents
|
|
16,723
|
|
|
13,449
|
|
||
Restricted cash and cash equivalents
|
|
34,956
|
|
|
28,679
|
|
||
Accrued investment income
|
|
6,575
|
|
|
6,195
|
|
||
Reinsurance balances receivable, net
|
|
227,454
|
|
|
272,549
|
|
||
Reinsurance recoverable on unpaid losses
|
|
75,197
|
|
|
92,728
|
|
||
Deferred commission and other acquisition expenses
|
|
50,532
|
|
|
59,393
|
|
||
Goodwill and intangible assets, net
|
|
—
|
|
|
75,583
|
|
||
Other assets
|
|
50,256
|
|
|
16,388
|
|
||
Total assets held for sale
|
|
$
|
1,615,486
|
|
|
$
|
1,901,818
|
|
LIABILITIES
|
|
|
|
|
||||
Reserve for loss and loss adjustment expenses
|
|
$
|
1,098,119
|
|
|
$
|
1,160,526
|
|
Unearned premiums
|
|
224,794
|
|
|
246,156
|
|
||
Accrued expenses and other liabilities
|
|
16,705
|
|
|
42,726
|
|
||
Total liabilities held for sale
|
|
$
|
1,339,618
|
|
|
$
|
1,449,408
|
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Gross premiums written
|
|
$
|
130,200
|
|
|
$
|
187,971
|
|
|
$
|
492,222
|
|
|
$
|
608,835
|
|
Net premiums written
|
|
$
|
128,398
|
|
|
$
|
184,653
|
|
|
$
|
479,640
|
|
|
$
|
598,536
|
|
Net premiums earned
|
|
170,579
|
|
|
196,588
|
|
|
502,156
|
|
|
562,038
|
|
||||
Net investment income
|
|
9,675
|
|
|
9,873
|
|
|
29,729
|
|
|
31,895
|
|
||||
Net loss and loss adjustment expenses
|
|
(129,414
|
)
|
|
(165,121
|
)
|
|
(371,085
|
)
|
|
(454,549
|
)
|
||||
Commission and other acquisition expenses
|
|
(44,158
|
)
|
|
(48,110
|
)
|
|
(122,109
|
)
|
|
(137,759
|
)
|
||||
General and administrative expenses
|
|
(10,929
|
)
|
|
(4,053
|
)
|
|
(21,046
|
)
|
|
(14,091
|
)
|
||||
Amortization of intangible assets
|
|
(462
|
)
|
|
(533
|
)
|
|
(1,387
|
)
|
|
(1,599
|
)
|
||||
(Loss) income from discontinued operations before income taxes
|
|
(4,709
|
)
|
|
(11,356
|
)
|
|
16,258
|
|
|
(14,065
|
)
|
||||
Loss on disposal of discontinued operations
|
|
(66,697
|
)
|
|
—
|
|
|
(66,697
|
)
|
|
—
|
|
||||
Income tax benefit (expense)
|
|
306
|
|
|
1,448
|
|
|
6,103
|
|
|
(2,995
|
)
|
||||
Loss from discontinued operations, net of income tax
|
|
$
|
(71,100
|
)
|
|
$
|
(9,908
|
)
|
|
$
|
(44,336
|
)
|
|
$
|
(17,060
|
)
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Reserve for reported loss and LAE
|
|
$
|
1,577,494
|
|
|
$
|
1,393,560
|
|
Reserve for losses incurred but not reported ("IBNR")
|
|
1,274,191
|
|
|
993,162
|
|
||
Reserve for loss and LAE
|
|
$
|
2,851,685
|
|
|
$
|
2,386,722
|
|
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
||||
Gross loss and LAE reserves, January 1
|
|
$
|
2,386,722
|
|
|
$
|
1,845,407
|
|
Less: reinsurance recoverable on unpaid losses, January 1
|
|
24,883
|
|
|
35,948
|
|
||
Net loss and LAE reserves, January 1
|
|
2,361,839
|
|
|
1,809,459
|
|
||
Net incurred losses related to:
|
|
|
|
|
||||
Current year
|
|
1,073,052
|
|
|
979,416
|
|
||
Prior years
|
|
250,451
|
|
|
111,192
|
|
||
|
|
1,323,503
|
|
|
1,090,608
|
|
||
Net paid losses related to:
|
|
|
|
|
||||
Current year
|
|
(283,477
|
)
|
|
(273,050
|
)
|
||
Prior years
|
|
(555,718
|
)
|
|
(501,799
|
)
|
||
|
|
(839,195
|
)
|
|
(774,849
|
)
|
||
Commuted recoverables
|
|
19,929
|
|
|
—
|
|
||
Effect of foreign exchange movements
|
|
(16,202
|
)
|
|
48,622
|
|
||
Net loss and LAE reserves, September 30
|
|
2,849,874
|
|
|
2,173,840
|
|
||
Reinsurance recoverable on unpaid losses, September 30
|
|
1,811
|
|
|
45,643
|
|
||
Gross loss and LAE reserves, September 30
|
|
$
|
2,851,685
|
|
|
$
|
2,219,483
|
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Gross and net premiums written
|
|
$
|
452,795
|
|
|
$
|
420,019
|
|
|
$
|
1,518,208
|
|
|
$
|
1,575,677
|
|
Net premiums earned
|
|
491,613
|
|
|
451,372
|
|
|
1,472,614
|
|
|
1,492,948
|
|
||||
Net loss and LAE
|
|
(579,240
|
)
|
|
(364,574
|
)
|
|
(1,275,723
|
)
|
|
(1,080,480
|
)
|
||||
Commission expenses
|
|
(152,511
|
)
|
|
(138,171
|
)
|
|
(456,861
|
)
|
|
(460,667
|
)
|
a)
|
Concentrations of Credit Risk
|
b)
|
Concentrations of Revenue
|
c)
|
Dividends Declared
|
|
|
Dividend per Share
|
|
Payable on:
|
|
Record date:
|
Common shares
|
|
$0.05
|
|
October 15, 2018
|
|
October 1, 2018
|
d)
|
Redemption of 2013 Senior Notes
|
e)
|
Legal Proceedings
|
For the Three Months Ended September 30,
|
|
2018
|
|
2017
|
||||
Numerator:
|
|
|
|
|
||||
Net loss from continuing operations
|
|
$
|
(229,132
|
)
|
|
$
|
(45,146
|
)
|
Add: net (income) loss from continuing operations attributable to noncontrolling interests
|
|
(62
|
)
|
|
3
|
|
||
Net loss attributable to Maiden from continuing operations
|
|
(229,194
|
)
|
|
(45,143
|
)
|
||
Loss from discontinued operations, net of income tax expense
|
|
(71,100
|
)
|
|
(9,908
|
)
|
||
Net loss attributable to Maiden
|
|
(300,294
|
)
|
|
(55,051
|
)
|
||
Dividends on preference shares – Series A, C and D
|
|
(8,545
|
)
|
|
(8,545
|
)
|
||
Amount allocated to participating common shareholders(1)
|
|
(8
|
)
|
|
(6
|
)
|
||
Net loss allocated to Maiden common shareholders
|
|
$
|
(308,847
|
)
|
|
$
|
(63,602
|
)
|
Denominator:
|
|
|
|
|
||||
Weighted average number of common shares – basic and diluted
|
|
83,089,172
|
|
|
85,859,201
|
|
||
Basic and diluted loss from continuing operations per share attributable to Maiden common shareholders
|
|
$
|
(2.86
|
)
|
|
$
|
(0.62
|
)
|
Basic and diluted loss from discontinued operations per share attributable to Maiden common shareholders
|
|
(0.86
|
)
|
|
(0.12
|
)
|
||
Basic and diluted loss per share attributable to Maiden common shareholders:
|
|
$
|
(3.72
|
)
|
|
$
|
(0.74
|
)
|
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
||||
Numerator:
|
|
|
|
|
||||
Net loss from continuing operations
|
|
$
|
(230,873
|
)
|
|
$
|
(27,828
|
)
|
Add: net (income) loss from continuing operations attributable to noncontrolling interests
|
|
(180
|
)
|
|
34
|
|
||
Net loss attributable to Maiden from continuing operations
|
|
(231,053
|
)
|
|
(27,794
|
)
|
||
Loss from discontinued operations, net of income tax expense
|
|
(44,336
|
)
|
|
(17,060
|
)
|
||
Net loss attributable to Maiden
|
|
(275,389
|
)
|
|
(44,854
|
)
|
||
Dividends on preference shares – Series A, C and D
|
|
(25,636
|
)
|
|
(20,611
|
)
|
||
Amount allocated to participating common shareholders(1)
|
|
(17
|
)
|
|
(17
|
)
|
||
Net loss allocated to Maiden common shareholders
|
|
$
|
(301,042
|
)
|
|
$
|
(65,482
|
)
|
Denominator:
|
|
|
|
|
||||
Weighted average number of common shares – basic and diluted
|
|
83,085,441
|
|
|
86,256,481
|
|
||
Basic and diluted loss from continuing operations per share attributable to Maiden common shareholders
|
|
$
|
(3.09
|
)
|
|
$
|
(0.56
|
)
|
Basic and diluted loss from discontinued operations per share attributable to Maiden common shareholders
|
|
(0.53
|
)
|
|
(0.20
|
)
|
||
Basic and diluted loss per share attributable to Maiden common shareholders:
|
|
$
|
(3.62
|
)
|
|
$
|
(0.76
|
)
|
(1)
|
This represents earnings allocated to the holders of non-vested restricted shares issued to the Company's employees under the 2007 Share Incentive Plan.
|
a)
|
Common Shares
|
b)
|
Treasury Shares
|
c)
|
Accumulated Other Comprehensive (Loss) Income
|
For the Three Months Ended September 30, 2018
|
|
Change in net unrealized gains on investment
|
|
Foreign currency translation adjustments
|
|
Total
|
||||||
Beginning balance
|
|
$
|
(96,107
|
)
|
|
$
|
(918
|
)
|
|
$
|
(97,025
|
)
|
Other comprehensive (loss) income before reclassifications
|
|
(24,656
|
)
|
|
4,458
|
|
|
(20,198
|
)
|
|||
Amounts reclassified from AOCI to net income, net of tax
|
|
785
|
|
|
—
|
|
|
785
|
|
|||
Net current period other comprehensive (loss) income
|
|
(23,871
|
)
|
|
4,458
|
|
|
(19,413
|
)
|
|||
Ending balance
|
|
(119,978
|
)
|
|
3,540
|
|
|
(116,438
|
)
|
|||
Less: AOCI attributable to noncontrolling interest
|
|
—
|
|
|
(69
|
)
|
|
(69
|
)
|
|||
Ending balance, Maiden shareholders
|
|
$
|
(119,978
|
)
|
|
$
|
3,609
|
|
|
$
|
(116,369
|
)
|
|
|
|
|
|
|
|
||||||
For the Three Months Ended September 30, 2017
|
|
Change in net unrealized gains on investment
|
|
Foreign currency translation adjustments
|
|
Total
|
||||||
Beginning balance
|
|
$
|
27,866
|
|
|
$
|
7,629
|
|
|
$
|
35,495
|
|
Other comprehensive income (loss) before reclassifications
|
|
24,994
|
|
|
(10,828
|
)
|
|
14,166
|
|
|||
Amounts reclassified from AOCI to net income, net of tax
|
|
(3,650
|
)
|
|
—
|
|
|
(3,650
|
)
|
|||
Net current period other comprehensive income (loss)
|
|
21,344
|
|
|
(10,828
|
)
|
|
10,516
|
|
|||
Ending balance
|
|
49,210
|
|
|
(3,199
|
)
|
|
46,011
|
|
|||
Less: AOCI attributable to noncontrolling interest
|
|
—
|
|
|
(68
|
)
|
|
(68
|
)
|
|||
Ending balance, Maiden shareholders
|
|
$
|
49,210
|
|
|
$
|
(3,131
|
)
|
|
$
|
46,079
|
|
For the Nine Months Ended September 30, 2018
|
|
Change in net unrealized gains on investment
|
|
Foreign currency translation adjustments
|
|
Total
|
||||||
Beginning balance
|
|
$
|
21,889
|
|
|
$
|
(8,583
|
)
|
|
$
|
13,306
|
|
Other comprehensive (loss) income before reclassifications
|
|
(141,907
|
)
|
|
12,123
|
|
|
(129,784
|
)
|
|||
Amounts reclassified from AOCI to net income, net of tax
|
|
40
|
|
|
—
|
|
|
40
|
|
|||
Net current period other comprehensive (loss) income
|
|
(141,867
|
)
|
|
12,123
|
|
|
(129,744
|
)
|
|||
Ending balance
|
|
(119,978
|
)
|
|
3,540
|
|
|
(116,438
|
)
|
|||
Less: AOCI attributable to noncontrolling interest
|
|
—
|
|
|
(69
|
)
|
|
(69
|
)
|
|||
Ending balance, Maiden shareholders
|
|
$
|
(119,978
|
)
|
|
$
|
3,609
|
|
|
$
|
(116,369
|
)
|
|
|
|
|
|
|
|
||||||
For the Nine Months Ended September 30, 2017
|
|
Change in net unrealized gains on investment
|
|
Foreign currency translation adjustments
|
|
Total
|
||||||
Beginning balance
|
|
$
|
(20,716
|
)
|
|
$
|
35,604
|
|
|
$
|
14,888
|
|
Other comprehensive income (loss) before reclassifications
|
|
68,803
|
|
|
(38,803
|
)
|
|
30,000
|
|
|||
Amounts reclassified from AOCI to net income, net of tax
|
|
1,123
|
|
|
—
|
|
|
1,123
|
|
|||
Net current period other comprehensive income (loss)
|
|
69,926
|
|
|
(38,803
|
)
|
|
31,123
|
|
|||
Ending balance
|
|
49,210
|
|
|
(3,199
|
)
|
|
46,011
|
|
|||
Less: AOCI attributable to noncontrolling interest
|
|
—
|
|
|
(68
|
)
|
|
(68
|
)
|
|||
Ending balance, Maiden shareholders
|
|
$
|
49,210
|
|
|
$
|
(3,131
|
)
|
|
$
|
46,079
|
|
For the Three Months Ended September 30,
|
|
2018
|
|
2017
|
|
Change
|
||||||
Summary Consolidated Statement of Income Data:
|
|
($ in thousands except per share data)
|
||||||||||
Net loss
|
|
$
|
(300,232
|
)
|
|
$
|
(55,054
|
)
|
|
$
|
(245,178
|
)
|
Net loss attributable to Maiden common shareholders
|
|
(308,839
|
)
|
|
(63,596
|
)
|
|
(245,243
|
)
|
|||
Non-GAAP operating loss(1)
|
|
(235,114
|
)
|
|
(54,159
|
)
|
|
(180,955
|
)
|
|||
Basic and diluted loss per common share(9):
|
|
|
|
|
|
|
||||||
Net loss attributable to Maiden common shareholders(2)
|
|
(3.72
|
)
|
|
(0.74
|
)
|
|
(2.98
|
)
|
|||
Non-GAAP operating loss attributable to Maiden common shareholders(1)
|
|
(2.83
|
)
|
|
(0.63
|
)
|
|
(2.20
|
)
|
|||
Dividends per common share
|
|
0.05
|
|
|
0.15
|
|
|
(0.10
|
)
|
|||
Gross premiums written
|
|
484,494
|
|
|
443,001
|
|
|
41,493
|
|
|||
Net premiums earned
|
|
520,077
|
|
|
457,278
|
|
|
62,799
|
|
|||
Underwriting loss(1)(3)
|
|
(251,175
|
)
|
|
(61,362
|
)
|
|
(189,813
|
)
|
|||
Net investment income
|
|
34,419
|
|
|
30,950
|
|
|
3,469
|
|
|||
Combined ratio(4)
|
|
150.7
|
%
|
|
115.6
|
%
|
|
35.1
|
|
|||
Annualized non-GAAP operating return on average common shareholders' equity(1)
|
|
(196.7
|
)%
|
|
(21.6
|
)%
|
|
(175.1
|
)
|
|||
|
|
|
|
|
|
|
||||||
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
|
Change
|
||||||
Summary Consolidated Statement of Income Data:
|
|
($ in thousands except per share data)
|
||||||||||
Net loss
|
|
$
|
(275,209
|
)
|
|
$
|
(44,888
|
)
|
|
$
|
(230,321
|
)
|
Net loss attributable to Maiden common shareholders
|
|
(301,025
|
)
|
|
(65,465
|
)
|
|
(235,560
|
)
|
|||
Non-GAAP operating loss(1)
|
|
(256,421
|
)
|
|
(39,881
|
)
|
|
(216,540
|
)
|
|||
Basic and diluted loss per common share(9):
|
|
|
|
|
|
|
||||||
Net loss attributable to Maiden common shareholders(2)
|
|
(3.62
|
)
|
|
(0.76
|
)
|
|
(2.86
|
)
|
|||
Non-GAAP operating loss attributable to Maiden common shareholders(1)
|
|
(3.09
|
)
|
|
(0.46
|
)
|
|
(2.63
|
)
|
|||
Dividends per common share
|
|
0.35
|
|
|
0.45
|
|
|
(0.10
|
)
|
|||
Gross premiums written
|
|
1,629,347
|
|
|
1,650,762
|
|
|
(21,415
|
)
|
|||
Net premiums earned
|
|
1,541,278
|
|
|
1,512,437
|
|
|
28,841
|
|
|||
Underwriting loss(1)(3)
|
|
(287,906
|
)
|
|
(72,197
|
)
|
|
(215,709
|
)
|
|||
Net investment income
|
|
101,548
|
|
|
91,597
|
|
|
9,951
|
|
|||
Combined ratio(4)
|
|
120.7
|
%
|
|
106.3
|
%
|
|
14.4
|
|
|||
Annualized non-GAAP operating return on average common shareholders' equity(1)
|
|
(63.8
|
)%
|
|
(5.3
|
)%
|
|
(58.5
|
)
|
|
|
September 30, 2018
|
|
December 31, 2017
|
|
Change
|
||||||
Consolidated Financial Condition
|
|
($ in thousands except per share data)
|
||||||||||
Total investments and cash and cash equivalents(5)
|
|
$
|
4,101,598
|
|
|
$
|
3,961,292
|
|
|
$
|
140,306
|
|
Total assets
|
|
6,536,501
|
|
|
6,644,189
|
|
|
(107,688
|
)
|
|||
Reserve for loss and loss adjustment expenses ("loss and LAE")
|
|
2,851,685
|
|
|
2,386,722
|
|
|
464,963
|
|
|||
Senior notes - principal amount
|
|
262,500
|
|
|
262,500
|
|
|
—
|
|
|||
Maiden common shareholders' equity
|
|
307,554
|
|
|
767,174
|
|
|
(459,620
|
)
|
|||
Maiden shareholders' equity
|
|
772,554
|
|
|
1,232,174
|
|
|
(459,620
|
)
|
|||
Total capital resources(6)
|
|
1,035,054
|
|
|
1,494,674
|
|
|
(459,620
|
)
|
|||
Ratio of debt to total capital resources
|
|
25.4
|
%
|
|
17.6
|
%
|
|
7.8
|
|
|||
|
|
|
|
|
|
|
||||||
Book Value
|
|
|
|
|
|
|
||||||
Book value per common share(7)
|
|
$
|
3.71
|
|
|
$
|
9.25
|
|
|
$
|
(5.54
|
)
|
Accumulated dividends per common share
|
|
4.27
|
|
|
3.92
|
|
|
0.35
|
|
|||
Book value per common share plus accumulated dividends
|
|
$
|
7.98
|
|
|
$
|
13.17
|
|
|
$
|
(5.19
|
)
|
|
|
|
|
|
|
|
||||||
Diluted book value per common share(8)
|
|
$
|
3.70
|
|
|
$
|
9.18
|
|
|
$
|
(5.48
|
)
|
(1)
|
Non-GAAP operating loss, non-GAAP operating loss per common share, non-GAAP operating return on average common equity and underwriting loss income are non-GAAP financial measures. See "Key Financial Measures" for additional information and a reconciliation to the nearest U.S. GAAP financial measure net income.
|
(2)
|
Please refer to "Notes to Condensed Consolidated Financial Statements (unaudited) Note 12. Earnings per Common Share" for the calculation of basic and diluted loss per common share.
|
(3)
|
Underwriting loss is a non-GAAP measure and is calculated as net premiums earned plus other insurance revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities.
|
(4)
|
Calculated by adding together the net loss and LAE ratio and the expense ratio.
|
(5)
|
Total investments and cash and cash equivalents includes both restricted and unrestricted.
|
(6)
|
Total capital resources is the sum of the Company's principal amount of debt and Maiden shareholders' equity. See "Key Financial Measures" for additional information.
|
(7)
|
Book value per common share is calculated using Maiden common shareholders’ equity (shareholders' equity excluding the aggregate liquidation value of our preference shares) divided by the number of common shares outstanding.
|
(8)
|
Diluted book value per common share is calculated by dividing Maiden common shareholders' equity, adjusted for assumed proceeds from the exercise of dilutive options, by the number of outstanding common shares plus dilutive options and restricted share units (assuming exercise of all dilutive share based awards).
|
(9)
|
During a period of loss, the basic weighted average common shares outstanding is used in the denominator of the diluted loss per common share computation
|
For the Three Months Ended September 30,
|
|
2018
|
|
2017
|
||||
|
|
($ in thousands except per share data)
|
||||||
Net loss attributable to Maiden common shareholders
|
|
$
|
(308,839
|
)
|
|
$
|
(63,596
|
)
|
Add (subtract):
|
|
|
|
|
||||
Net realized losses (gains) on investment
|
|
225
|
|
|
(5,859
|
)
|
||
Total other-than-temporary impairment losses
|
|
479
|
|
|
—
|
|
||
Foreign exchange losses
|
|
552
|
|
|
3,550
|
|
||
Loss from discontinued operations, net of income tax
|
|
71,100
|
|
|
9,908
|
|
||
Loss from divested NGHC Quota Share run-off
|
|
1,369
|
|
|
1,838
|
|
||
Non-GAAP operating loss attributable to Maiden common shareholders
|
|
$
|
(235,114
|
)
|
|
$
|
(54,159
|
)
|
|
|
|
|
|
||||
Diluted loss per share attributable to Maiden common shareholders
|
|
$
|
(3.72
|
)
|
|
$
|
(0.74
|
)
|
Add (subtract):
|
|
|
|
|
||||
Net realized losses (gains) on investment
|
|
—
|
|
|
(0.07
|
)
|
||
Total other-than-temporary impairment losses
|
|
0.01
|
|
|
—
|
|
||
Foreign exchange losses
|
|
0.01
|
|
|
0.04
|
|
||
Loss from discontinued operations, net of income tax
|
|
0.85
|
|
|
0.12
|
|
||
Loss from divested NGHC Quota Share run-off
|
|
0.02
|
|
|
0.02
|
|
||
Non-GAAP diluted operating loss per common share
|
|
$
|
(2.83
|
)
|
|
$
|
(0.63
|
)
|
|
|
|
|
|
||||
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
||||
|
|
($ in thousands except per share data)
|
||||||
Net loss attributable to Maiden common shareholders
|
|
$
|
(301,025
|
)
|
|
$
|
(65,465
|
)
|
Add (subtract):
|
|
|
|
|
||||
Net realized losses (gains) on investment
|
|
282
|
|
|
(8,316
|
)
|
||
Total other-than-temporary impairment losses
|
|
479
|
|
|
—
|
|
||
Foreign exchange (gains) losses
|
|
(1,862
|
)
|
|
12,193
|
|
||
Loss from discontinued operations, net of income tax
|
|
44,336
|
|
|
17,060
|
|
||
Loss from divested NGHC Quota Share run-off
|
|
1,369
|
|
|
1,838
|
|
||
Accelerated amortization of senior note issuance cost
|
|
—
|
|
|
2,809
|
|
||
Non-GAAP operating loss attributable to Maiden common shareholders
|
|
$
|
(256,421
|
)
|
|
$
|
(39,881
|
)
|
|
|
|
|
|
||||
Diluted loss per share attributable to Maiden common shareholders
|
|
$
|
(3.62
|
)
|
|
$
|
(0.76
|
)
|
Add (subtract):
|
|
|
|
|
||||
Net realized losses (gains) on investment
|
|
—
|
|
|
(0.10
|
)
|
||
Total other-than-temporary impairment losses
|
|
0.01
|
|
|
—
|
|
||
Foreign exchange (gains) losses
|
|
(0.03
|
)
|
|
0.14
|
|
||
Loss from discontinued operations, net of income tax
|
|
0.53
|
|
|
0.20
|
|
||
Loss from divested NGHC Quota Share run-off
|
|
0.02
|
|
|
0.02
|
|
||
Accelerated amortization of senior note issuance cost
|
|
—
|
|
|
0.04
|
|
||
Non-GAAP diluted operating loss per common share
|
|
$
|
(3.09
|
)
|
|
$
|
(0.46
|
)
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
($ in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Non-GAAP operating loss attributable to Maiden common shareholders
|
|
$
|
(235,114
|
)
|
|
$
|
(54,159
|
)
|
|
$
|
(256,421
|
)
|
|
$
|
(39,881
|
)
|
Opening Maiden common shareholders’ equity
|
|
640,742
|
|
|
1,035,399
|
|
|
767,174
|
|
|
1,045,797
|
|
||||
Ending Maiden common shareholders’ equity
|
|
307,554
|
|
|
956,027
|
|
|
307,554
|
|
|
956,027
|
|
||||
Average Maiden common shareholders’ equity
|
|
474,148
|
|
|
995,713
|
|
|
537,364
|
|
|
1,000,912
|
|
||||
Non-GAAP Operating ROACE
|
|
(196.7
|
)%
|
|
(21.6
|
)%
|
|
(63.8
|
)%
|
|
(5.3
|
)%
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
|
($ in thousands except share and per share data)
|
||||||
Ending Maiden common shareholders’ equity
|
|
$
|
307,554
|
|
|
$
|
767,174
|
|
Proceeds from assumed conversion of dilutive options
|
|
583
|
|
|
9,416
|
|
||
Numerator for diluted book value per common share calculation
|
|
$
|
308,137
|
|
|
$
|
776,590
|
|
|
|
|
|
|
||||
Common shares outstanding
|
|
82,942,737
|
|
|
82,974,895
|
|
||
Shares issued from assumed conversion of dilutive options and restricted share units
|
|
349,368
|
|
|
1,627,236
|
|
||
Denominator for diluted book value per common share calculation
|
|
83,292,105
|
|
|
84,602,131
|
|
||
|
|
|
|
|
||||
Book value per common share
|
|
$
|
3.71
|
|
|
$
|
9.25
|
|
Diluted book value per common share
|
|
$
|
3.70
|
|
|
$
|
9.18
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
|
($ in thousands)
|
||||||
Senior notes - principal amount
|
|
$
|
262,500
|
|
|
$
|
262,500
|
|
Maiden shareholders’ equity
|
|
772,554
|
|
|
1,232,174
|
|
||
Total capital resources
|
|
$
|
1,035,054
|
|
|
$
|
1,494,674
|
|
Ratio of debt to total capital resources
|
|
25.4
|
%
|
|
17.6
|
%
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
($ in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Gross premiums written
|
|
$
|
484,494
|
|
|
$
|
443,001
|
|
|
$
|
1,629,347
|
|
|
$
|
1,650,762
|
|
Net premiums written
|
|
$
|
482,806
|
|
|
$
|
432,677
|
|
|
$
|
1,626,485
|
|
|
$
|
1,603,414
|
|
Net premiums earned
|
|
$
|
520,077
|
|
|
$
|
457,278
|
|
|
$
|
1,541,278
|
|
|
$
|
1,512,437
|
|
Other insurance revenue
|
|
1,870
|
|
|
2,488
|
|
|
7,629
|
|
|
7,816
|
|
||||
Net loss and LAE
|
|
(600,296
|
)
|
|
(370,847
|
)
|
|
(1,323,503
|
)
|
|
(1,090,608
|
)
|
||||
Commission and other acquisition expenses
|
|
(167,618
|
)
|
|
(145,352
|
)
|
|
(497,026
|
)
|
|
(487,771
|
)
|
||||
General and administrative expenses(1)
|
|
(5,208
|
)
|
|
(4,929
|
)
|
|
(16,284
|
)
|
|
(14,071
|
)
|
||||
Underwriting loss(2)
|
|
(251,175
|
)
|
|
(61,362
|
)
|
|
(287,906
|
)
|
|
(72,197
|
)
|
||||
Other general and administrative expenses(1)
|
|
(13,728
|
)
|
|
(10,510
|
)
|
|
(32,059
|
)
|
|
(24,090
|
)
|
||||
Net investment income
|
|
34,419
|
|
|
30,950
|
|
|
101,548
|
|
|
91,597
|
|
||||
Net realized (losses) gains on investment
|
|
(225
|
)
|
|
5,859
|
|
|
(282
|
)
|
|
8,316
|
|
||||
Total other-than-temporary impairment losses
|
|
(479
|
)
|
|
—
|
|
|
(479
|
)
|
|
—
|
|
||||
Accelerated amortization of senior note issuance cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,809
|
)
|
||||
Foreign exchange (losses) gains
|
|
(552
|
)
|
|
(3,550
|
)
|
|
1,862
|
|
|
(12,193
|
)
|
||||
Interest and amortization expenses
|
|
(4,829
|
)
|
|
(4,829
|
)
|
|
(14,487
|
)
|
|
(18,430
|
)
|
||||
Income tax benefit (expense)
|
|
7,437
|
|
|
(1,704
|
)
|
|
930
|
|
|
1,978
|
|
||||
Net loss from continuing operations
|
|
(229,132
|
)
|
|
(45,146
|
)
|
|
(230,873
|
)
|
|
(27,828
|
)
|
||||
Loss from discontinued operations, net of income tax
|
|
(71,100
|
)
|
|
(9,908
|
)
|
|
(44,336
|
)
|
|
(17,060
|
)
|
||||
(Income) loss attributable to noncontrolling interests
|
|
(62
|
)
|
|
3
|
|
|
(180
|
)
|
|
34
|
|
||||
Dividends on preference shares
|
|
(8,545
|
)
|
|
(8,545
|
)
|
|
(25,636
|
)
|
|
(20,611
|
)
|
||||
Net loss attributable to Maiden common shareholders
|
|
$
|
(308,839
|
)
|
|
$
|
(63,596
|
)
|
|
$
|
(301,025
|
)
|
|
$
|
(65,465
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Ratios
|
|
|
|
|
|
|
|
|
||||||||
Net loss and LAE ratio(3)
|
|
115.0
|
%
|
|
80.6
|
%
|
|
85.5
|
%
|
|
71.7
|
%
|
||||
Commission and other acquisition expense ratio(4)
|
|
32.1
|
%
|
|
31.6
|
%
|
|
32.1
|
%
|
|
32.1
|
%
|
||||
General and administrative expense ratio(5)
|
|
3.6
|
%
|
|
3.4
|
%
|
|
3.1
|
%
|
|
2.5
|
%
|
||||
Expense ratio(6)
|
|
35.7
|
%
|
|
35.0
|
%
|
|
35.2
|
%
|
|
34.6
|
%
|
||||
Combined ratio(7)
|
|
150.7
|
%
|
|
115.6
|
%
|
|
120.7
|
%
|
|
106.3
|
%
|
(1)
|
Underwriting related general and administrative expenses is a non-GAAP measure. Please refer to "General and Administrative Expenses" below for additional information related to these corporate expenses and the reconciliation to those presented in our Condensed Consolidated Statements of Income.
|
(2)
|
Underwriting loss is a non-GAAP measure and is calculated as net premiums earned plus other insurance revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities.
|
(3)
|
Calculated by dividing net loss and LAE by the sum of net premiums earned and other insurance revenue.
|
(4)
|
Calculated by dividing commission and other acquisition expenses by the sum of net premiums earned and other insurance revenue.
|
(5)
|
Calculated by dividing general and administrative expenses by the sum of net premiums earned and other insurance revenue.
|
(6)
|
Calculated by adding together commission and other acquisition expense ratio and general and administrative expense ratio.
|
(7)
|
Calculated by adding together net loss and LAE ratio and the expense ratio.
|
•
|
increased underwriting loss of $251.2 million compared to an underwriting loss of $61.4 million in the same period in 2017. The higher underwriting loss was principally due to:
|
◦
|
higher adverse prior year loss development for the AmTrust Reinsurance segment which was $210.4 million during the three months ended September 30, 2018 compared to $61.1 million for the same period in 2017; and
|
◦
|
partially offset by the impact of higher premiums earned which increased in both our operating segments compared to the same period in 2017.
|
•
|
realized losses on investment of $0.2 million for the three months ended September 30, 2018 compared to realized gains of $5.9 million for the same period in 2017; and
|
•
|
total general and administrative expenses increased by $3.5 million for the three months ended September 30, 2018 compared to the same period in 2017 due to increases in compensation benefits paid under certain executive separation agreements, greater corporate insurance costs incurred and higher technology-related expenses.
|
•
|
net investment income increased by $3.5 million or 11.2%, for the three months ended September 30, 2018 compared to the same period in 2017 due to an increase in average yields to 3.3% during the three months ended September 30, 2018 compared to 3.1% during the same period in 2017. Also, average investable assets increased by 5.5% from the same period in 2017. Please refer to the Net Investment Income section below for further discussion of the movement in average yields.
|
•
|
an underwriting loss of $287.9 million compared to an underwriting loss of $72.2 million during the nine months ended September 30, 2017. The deterioration in the underwriting result was principally due to:
|
◦
|
higher adverse prior year loss development for the AmTrust Reinsurance segment which was $247.3 million during the nine months ended September 30, 2018 compared to $100.9 million for the same period in 2017; and
|
◦
|
partially offset by the impact of higher premiums earned which increased in both our operating segments compared to the same period in 2017.
|
•
|
realized losses on investment of $0.3 million for the nine months ended September 30, 2018 compared to realized gains of $8.3 million for the same period in 2017;
|
•
|
total general and administrative expenses increased by $10.2 million for the nine months ended September 30, 2018 compared to the same period in 2017 due to increases in compensation benefits paid under certain executive separation agreements, higher audit, legal and other professional fees incurred and higher technology-related expenses; and
|
•
|
higher dividends paid to preference shareholders of $25.6 million for the nine months ended September 30, 2018 compared to $20.6 million for the same period in 2017 due to the issuance of Preference Shares - Series D on June 15, 2017.
|
•
|
net investment income increased by $10.0 million or 10.9%, for the nine months ended September 30, 2018 compared to the same period in 2017 largely due to higher average investable assets which grew by 7.9% from the same period in 2017. Please refer to the Net Investment Income section below for further discussion of the movement in average yields which remained at 3.2% for the nine months ended September 30, 2018 compared to the same period in 2017;
|
•
|
lower interest and amortization expenses which decreased by $3.9 million or 21.4% compared to the same period in 2017 due to the redemption of the 2012 Senior Notes on June 27, 2017. The prior period also included a charge of $2.8 million resulting from the acceleration of the amortization of the 2012 Senior Notes issuance cost; and
|
•
|
foreign exchange gains of $1.9 million for the nine months ended September 30, 2018 compared to foreign exchange losses of $12.2 million for the same period in 2017 due to the recent weakening of the euro and British pound against the U.S. dollar.
|
For the Three Months Ended September 30,
|
|
2018
|
|
2017
|
|
Change in
|
|||||||||||||||
($ in thousands)
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
|
$
|
|
%
|
|||||||||
Diversified Reinsurance
|
|
$
|
31,291
|
|
|
6.5
|
%
|
|
$
|
22,484
|
|
|
5.2
|
%
|
|
$
|
8,807
|
|
|
39.2
|
%
|
AmTrust Reinsurance
|
|
451,515
|
|
|
93.5
|
%
|
|
410,193
|
|
|
94.8
|
%
|
|
41,322
|
|
|
10.1
|
%
|
|||
Total
|
|
$
|
482,806
|
|
|
100.0
|
%
|
|
$
|
432,677
|
|
|
100.0
|
%
|
|
$
|
50,129
|
|
|
11.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
|
Change in
|
|||||||||||||||
($ in thousands)
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
|
$
|
|
%
|
|||||||||
Diversified Reinsurance
|
|
$
|
109,279
|
|
|
6.7
|
%
|
|
$
|
73,434
|
|
|
4.6
|
%
|
|
$
|
35,845
|
|
|
48.8
|
%
|
AmTrust Reinsurance
|
|
1,517,206
|
|
|
93.3
|
%
|
|
1,529,980
|
|
|
95.4
|
%
|
|
(12,774
|
)
|
|
(0.8
|
)%
|
|||
Total
|
|
$
|
1,626,485
|
|
|
100.0
|
%
|
|
$
|
1,603,414
|
|
|
100.0
|
%
|
|
$
|
23,071
|
|
|
1.4
|
%
|
•
|
AmTrust Reinsurance segment increased by $41.3 million or 10.1% generated by growth in specialty lines of business partially offset by reduced premiums in workers compensation due to a combination of market conditions and underwriting measures applied by AmTrust during the period. The increase in net premiums written was also due to the reduction in the utilization of retrocessional capacity in 2018 compared to the same period in 2017; and
|
•
|
Diversified Reinsurance segment increased by $8.8 million or 39.2% generated by new account growth and expansion of client relationships in our European capital solutions business.
|
•
|
Diversified Reinsurance segment increased by $35.8 million or 48.8% due to new account growth and expansion of the Australia Warranty program, German Auto program and other client relationships in our European capital solutions business during 2018 as well as new business development; and
|
•
|
AmTrust Reinsurance segment decreased by $12.8 million or 0.8% mainly due to a combination of market conditions and underwriting measures applied by AmTrust during the period on Small Commercial Business, particularly workers compensation.
|
For the Three Months Ended September 30,
|
|
2018
|
|
2017
|
|
Change in
|
|||||||||||||||
($ in thousands)
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
|
$
|
|
%
|
|||||||||
Diversified Reinsurance
|
|
$
|
28,784
|
|
|
5.5
|
%
|
|
$
|
20,925
|
|
|
4.6
|
%
|
|
$
|
7,859
|
|
|
37.6
|
%
|
AmTrust Quota Share Reinsurance
|
|
491,293
|
|
|
94.5
|
%
|
|
436,353
|
|
|
95.4
|
%
|
|
54,940
|
|
|
12.6
|
%
|
|||
Total
|
|
$
|
520,077
|
|
|
100.0
|
%
|
|
$
|
457,278
|
|
|
100.0
|
%
|
|
$
|
62,799
|
|
|
13.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
|
Change in
|
|||||||||||||||
($ in thousands)
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
|
$
|
|
%
|
|||||||||
Diversified Reinsurance
|
|
$
|
82,838
|
|
|
5.4
|
%
|
|
$
|
61,626
|
|
|
4.1
|
%
|
|
$
|
21,212
|
|
|
34.4
|
%
|
AmTrust Quota Share Reinsurance
|
|
1,458,440
|
|
|
94.6
|
%
|
|
1,450,811
|
|
|
95.9
|
%
|
|
7,629
|
|
|
0.5
|
%
|
|||
Total
|
|
$
|
1,541,278
|
|
|
100.0
|
%
|
|
$
|
1,512,437
|
|
|
100.0
|
%
|
|
$
|
28,841
|
|
|
1.9
|
%
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
($ in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Average investable assets(1)
|
|
$
|
4,226,404
|
|
|
$
|
4,004,898
|
|
|
$
|
4,172,955
|
|
|
$
|
3,868,964
|
|
Average book yield(2)
|
|
3.3
|
%
|
|
3.1
|
%
|
|
3.2
|
%
|
|
3.2
|
%
|
(1)
|
The average of the Company's investments, cash and cash equivalents, restricted cash and cash equivalents and loan to related party at each quarter-end during the period.
|
(2)
|
Ratio of net investment income over average investable assets at fair value.
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
($ in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
General and administrative expenses – segments
|
|
$
|
5,208
|
|
|
$
|
4,929
|
|
|
$
|
16,284
|
|
|
$
|
14,071
|
|
General and administrative expenses – corporate
|
|
13,728
|
|
|
10,510
|
|
|
32,059
|
|
|
24,090
|
|
||||
Total general and administrative expenses
|
|
$
|
18,936
|
|
|
$
|
15,439
|
|
|
$
|
48,343
|
|
|
$
|
38,161
|
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
($ in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Gross premiums written
|
|
$
|
31,699
|
|
|
$
|
22,982
|
|
|
$
|
111,139
|
|
|
$
|
75,085
|
|
Net premiums written
|
|
31,291
|
|
|
22,484
|
|
|
109,279
|
|
|
73,434
|
|
||||
Net premiums earned
|
|
28,784
|
|
|
20,925
|
|
|
82,838
|
|
|
61,626
|
|
||||
Other insurance revenue
|
|
1,870
|
|
|
2,488
|
|
|
7,629
|
|
|
7,816
|
|
||||
Net loss and LAE
|
|
(19,764
|
)
|
|
(13,979
|
)
|
|
(51,828
|
)
|
|
(41,548
|
)
|
||||
Commission and other acquisition expenses
|
|
(8,961
|
)
|
|
(6,702
|
)
|
|
(28,261
|
)
|
|
(21,982
|
)
|
||||
General and administrative expenses
|
|
(4,256
|
)
|
|
(4,158
|
)
|
|
(13,330
|
)
|
|
(11,831
|
)
|
||||
Underwriting loss
|
|
$
|
(2,327
|
)
|
|
$
|
(1,426
|
)
|
|
$
|
(2,952
|
)
|
|
$
|
(5,919
|
)
|
Ratios
|
|
|
|
|
|
|
|
|
||||||||
Net loss and LAE ratio
|
|
64.5
|
%
|
|
59.7
|
%
|
|
57.3
|
%
|
|
59.8
|
%
|
||||
Commission and other acquisition expense ratio
|
|
29.2
|
%
|
|
28.6
|
%
|
|
31.3
|
%
|
|
31.7
|
%
|
||||
General and administrative expense ratio
|
|
13.9
|
%
|
|
17.8
|
%
|
|
14.7
|
%
|
|
17.0
|
%
|
||||
Expense ratio
|
|
43.1
|
%
|
|
46.4
|
%
|
|
46.0
|
%
|
|
48.7
|
%
|
||||
Combined ratio
|
|
107.6
|
%
|
|
106.1
|
%
|
|
103.3
|
%
|
|
108.5
|
%
|
•
|
combined ratio increased by 1.5 points for the three months ended September 30, 2018 compared to the same period in 2017 which reflects higher initial loss ratios on current year premiums earned during the period partially offset by lower adverse prior year loss development of $0.7 million compared to $1.1 million during the third quarter of 2017; and
|
•
|
excluding prior year loss development, the combined ratio for the three months ended September 30, 2018 would have been 105.4% compared to 101.5% for the same period in 2017.
|
•
|
lower net adverse prior year loss development which was $1.8 million during the nine months ended September 30, 2018, compared to $8.5 million for the same period in 2017. The 2018 development was due to adverse facultative reinsurance run-off partially offset by favorable development in International Auto. Prior year adverse loss development during 2017 was primarily from facultative reinsurance run-off lines as well as claims activity in International auto programs; and
|
•
|
excluding prior year loss development, the combined ratio for the nine months ended September 30, 2018 would have been 101.3% compared to 96.3% for the same period in 2017, reflecting higher initial loss ratios on current year premiums earned during the period.
|
For the Three Months Ended September 30,
|
|
2018
|
|
2017
|
|
Change in
|
|||||||||||||||
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
|
$
|
|
%
|
|||||||||
Net Premiums Written
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|||||||||
International
|
|
31,291
|
|
|
100.0
|
%
|
|
22,503
|
|
|
100.1
|
%
|
|
8,788
|
|
|
39.1
|
%
|
|||
Casualty
|
|
—
|
|
|
—
|
%
|
|
(19
|
)
|
|
(0.1
|
)%
|
|
19
|
|
|
(100.0
|
)%
|
|||
Total Diversified Reinsurance
|
|
$
|
31,291
|
|
|
100.0
|
%
|
|
$
|
22,484
|
|
|
100.0
|
%
|
|
$
|
8,807
|
|
|
39.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
|
Change in
|
|||||||||||||||
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
|
$
|
|
%
|
|||||||||
Net Premiums Written
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|||||||||
International
|
|
109,238
|
|
|
100.0
|
%
|
|
73,475
|
|
|
100.1
|
%
|
|
35,763
|
|
|
48.7
|
%
|
|||
Casualty
|
|
41
|
|
|
—
|
%
|
|
(41
|
)
|
|
(0.1
|
)%
|
|
82
|
|
|
(200.0
|
)%
|
|||
Total Diversified Reinsurance
|
|
$
|
109,279
|
|
|
100.0
|
%
|
|
$
|
73,434
|
|
|
100.0
|
%
|
|
$
|
35,845
|
|
|
48.8
|
%
|
For the Three Months Ended September 30,
|
|
2018
|
|
2017
|
|
Change in
|
|||||||||||||||
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
|
$
|
|
%
|
|||||||||
Net Premiums Earned
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|||||||||
International
|
|
28,784
|
|
|
100.0
|
%
|
|
20,943
|
|
|
100.1
|
%
|
|
7,841
|
|
|
37.4
|
%
|
|||
Casualty
|
|
—
|
|
|
—
|
%
|
|
(18
|
)
|
|
(0.1
|
)%
|
|
18
|
|
|
(100.0
|
)%
|
|||
Total Diversified Reinsurance
|
|
$
|
28,784
|
|
|
100.0
|
%
|
|
$
|
20,925
|
|
|
100.0
|
%
|
|
$
|
7,859
|
|
|
37.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
|
Change in
|
|||||||||||||||
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
|
$
|
|
%
|
|||||||||
Net Premiums Earned
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|||||||||
International
|
|
82,797
|
|
|
100.0
|
%
|
|
61,667
|
|
|
100.1
|
%
|
|
21,130
|
|
|
34.3
|
%
|
|||
Casualty
|
|
41
|
|
|
—
|
%
|
|
(41
|
)
|
|
(0.1
|
)%
|
|
82
|
|
|
(200.0
|
)%
|
|||
Total Diversified Reinsurance
|
|
$
|
82,838
|
|
|
100.0
|
%
|
|
$
|
61,626
|
|
|
100.0
|
%
|
|
$
|
21,212
|
|
|
34.4
|
%
|
•
|
higher initial loss ratios on current year premiums earned during the period partially offset by lower adverse prior year loss development which was $0.7 million during the three months ended September 30, 2018, compared to $1.1 million for the same period in 2017; and
|
•
|
excluding prior year loss development, the net loss and LAE ratio for the three months ended September 30, 2018 would have been 62.3% compared to 55.1% for the same period in 2017.
|
•
|
lower adverse prior year loss development which was $1.8 million during the nine months ended September 30, 2018, compared to $8.5 million for the same period in 2017. The 2018 development was from facultative reinsurance run-off lines partially offset by favorable development in International auto programs. The development in 2017 was primarily due to adverse development in facultative reinsurance run-off lines as well as claims activity in International auto programs; and
|
•
|
excluding prior year loss development, the net loss and LAE ratio for the nine months ended September 30, 2018 would have been 55.3% compared to 47.6% for the same period in 2017 which reflects higher initial loss ratios on current year premiums earned during the period factoring in both market conditions and recent loss trends and experience.
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
($ in thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Gross premiums written
|
|
$
|
452,795
|
|
|
$
|
420,019
|
|
|
$
|
1,518,208
|
|
|
$
|
1,575,677
|
|
Net premiums written
|
|
451,515
|
|
|
410,193
|
|
|
1,517,206
|
|
|
1,529,980
|
|
||||
Net premiums earned
|
|
491,293
|
|
|
436,353
|
|
|
1,458,440
|
|
|
1,450,811
|
|
||||
Net loss and LAE
|
|
(579,163
|
)
|
|
(355,030
|
)
|
|
(1,270,306
|
)
|
|
(1,047,222
|
)
|
||||
Commission and other acquisition expenses
|
|
(158,657
|
)
|
|
(138,650
|
)
|
|
(468,765
|
)
|
|
(465,789
|
)
|
||||
General and administrative expenses
|
|
(952
|
)
|
|
(771
|
)
|
|
(2,954
|
)
|
|
(2,240
|
)
|
||||
Underwriting loss
|
|
$
|
(247,479
|
)
|
|
$
|
(58,098
|
)
|
|
$
|
(283,585
|
)
|
|
$
|
(64,440
|
)
|
Ratios
|
|
|
|
|
|
|
|
|
||||||||
Net loss and LAE ratio
|
|
117.9
|
%
|
|
81.4
|
%
|
|
87.1
|
%
|
|
72.2
|
%
|
||||
Commission and other acquisition expense ratio
|
|
32.3
|
%
|
|
31.7
|
%
|
|
32.1
|
%
|
|
32.1
|
%
|
||||
General and administrative expense ratio
|
|
0.2
|
%
|
|
0.2
|
%
|
|
0.2
|
%
|
|
0.1
|
%
|
||||
Expense ratio
|
|
32.5
|
%
|
|
31.9
|
%
|
|
32.3
|
%
|
|
32.2
|
%
|
||||
Combined ratio
|
|
150.4
|
%
|
|
113.3
|
%
|
|
119.4
|
%
|
|
104.4
|
%
|
•
|
higher adverse prior year loss development which was $210.4 million during the third quarter of 2018 compared to $61.1 million for the same period in 2017. The adverse prior year loss development in 2018 was largely from Workers Compensation which represented nearly half of the adverse development and was primarily driven by accident years 2014 to 2017, and to a lesser extent, development in European hospital liability, Commercial Auto and General liability. Prior year adverse loss development in 2017 was primarily related to Worker's Compensation, General liability as well as Commercial Auto liability lines for both Specialty Programs and Small Commercial Business where elevated loss activity had been observed; and
|
•
|
excluding prior year loss development, the combined ratio for the current period would have been 107.6% compared to 99.3% for 2017, reflecting higher initial loss ratios for current year premiums earned during the period factoring in both market conditions and recent loss trends and experience as well as elevated actual current year activity in the Specialty Risk and Extended Warranty lines.
|
•
|
higher adverse prior year loss development which was $247.3 million in 2018, compared to $100.9 million for the same period in 2017. Prior year adverse loss development in 2018 was largely from Workers Compensation and European hospital liability, with a smaller contribution from General and Commercial Auto Liability. Prior year adverse loss development in 2017 was from General liability as well as Auto liability and Workers Compensation lines for both Specialty Programs and Small Commercial Business where elevated loss activity had been observed; and
|
•
|
excluding prior year loss development, the combined ratio for the current period would have been 102.4% compared to 97.4% for 2017 reflecting higher initial loss ratios for current year premiums earned during the period factoring in both market conditions and recent loss trends and experience as well as elevated actual current year activity in the Specialty Risk and Extended Warranty lines.
|
For the Three Months Ended September 30,
|
|
2018
|
|
2017
|
|
Change in
|
|||||||||||||||
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
|
$
|
|
%
|
|||||||||
Net Premiums Written
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|||||||||
Small Commercial Business
|
|
$
|
232,163
|
|
|
51.4
|
%
|
|
$
|
295,499
|
|
|
72.0
|
%
|
|
$
|
(63,336
|
)
|
|
(21.4
|
)%
|
Specialty Program
|
|
94,077
|
|
|
20.8
|
%
|
|
63,816
|
|
|
15.6
|
%
|
|
30,261
|
|
|
47.4
|
%
|
|||
Specialty Risk and Extended Warranty
|
|
125,275
|
|
|
27.8
|
%
|
|
50,878
|
|
|
12.4
|
%
|
|
74,397
|
|
|
146.2
|
%
|
|||
Total AmTrust Reinsurance
|
|
$
|
451,515
|
|
|
100.0
|
%
|
|
$
|
410,193
|
|
|
100.0
|
%
|
|
$
|
41,322
|
|
|
10.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
|
Change in
|
|||||||||||||||
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
|
$
|
|
%
|
|||||||||
Net Premiums Written
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|||||||||
Small Commercial Business
|
|
$
|
879,403
|
|
|
57.9
|
%
|
|
$
|
1,028,905
|
|
|
67.3
|
%
|
|
$
|
(149,502
|
)
|
|
(14.5
|
)%
|
Specialty Program
|
|
286,404
|
|
|
18.9
|
%
|
|
255,767
|
|
|
16.7
|
%
|
|
30,637
|
|
|
12.0
|
%
|
|||
Specialty Risk and Extended Warranty
|
|
351,399
|
|
|
23.2
|
%
|
|
245,308
|
|
|
16.0
|
%
|
|
106,091
|
|
|
43.2
|
%
|
|||
Total AmTrust Reinsurance
|
|
$
|
1,517,206
|
|
|
100.0
|
%
|
|
$
|
1,529,980
|
|
|
100.0
|
%
|
|
$
|
(12,774
|
)
|
|
(0.8
|
)%
|
For the Three Months Ended September 30,
|
|
2018
|
|
2017
|
|
Change in
|
|||||||||||||||
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
|
$
|
|
%
|
|||||||||
Net Premiums Earned
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|||||||||
Small Commercial Business
|
|
$
|
273,456
|
|
|
55.7
|
%
|
|
$
|
314,773
|
|
|
72.1
|
%
|
|
$
|
(41,317
|
)
|
|
(13.1
|
)%
|
Specialty Program
|
|
98,359
|
|
|
20.0
|
%
|
|
59,143
|
|
|
13.6
|
%
|
|
39,216
|
|
|
66.3
|
%
|
|||
Specialty Risk and Extended Warranty
|
|
119,478
|
|
|
24.3
|
%
|
|
62,437
|
|
|
14.3
|
%
|
|
57,041
|
|
|
91.4
|
%
|
|||
Total AmTrust Reinsurance
|
|
$
|
491,293
|
|
|
100.0
|
%
|
|
$
|
436,353
|
|
|
100.0
|
%
|
|
$
|
54,940
|
|
|
12.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
|
Change in
|
|||||||||||||||
|
|
Total
|
|
% of Total
|
|
Total
|
|
% of Total
|
|
$
|
|
%
|
|||||||||
Net Premiums Earned
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
|||||||||
Small Commercial Business
|
|
$
|
882,679
|
|
|
60.5
|
%
|
|
$
|
946,782
|
|
|
65.3
|
%
|
|
$
|
(64,103
|
)
|
|
(6.8
|
)%
|
Specialty Program
|
|
283,592
|
|
|
19.5
|
%
|
|
251,153
|
|
|
17.3
|
%
|
|
32,439
|
|
|
12.9
|
%
|
|||
Specialty Risk and Extended Warranty
|
|
292,169
|
|
|
20.0
|
%
|
|
252,876
|
|
|
17.4
|
%
|
|
39,293
|
|
|
15.5
|
%
|
|||
Total AmTrust Reinsurance
|
|
$
|
1,458,440
|
|
|
100.0
|
%
|
|
$
|
1,450,811
|
|
|
100.0
|
%
|
|
$
|
7,629
|
|
|
0.5
|
%
|
•
|
higher adverse prior year loss development which was $210.4 million during the three months ended September 30, 2018, compared to $61.1 million for the same period in 2017. The 2018 development was largely from Workers Compensation which represented nearly half of the adverse development and was primarily driven by accident years 2014 to 2017, and to a lesser extent, development in European hospital liability and Commercial Auto and General Liability lines of business. The development in 2017 was primarily due to Worker's Compensation, General liability as well as Commercial Auto liability lines of business for both Specialty Programs and Small Commercial Business where elevated loss activity had been observed; and
|
•
|
excluding prior year loss development, the net loss and LAE ratio for the three months ended September 30, 2018 would have been 75.1% compared to 67.4% for the same period in 2017, reflecting higher initial loss ratios on current year premiums earned during the period factoring in both market conditions and recent loss trends and experience as well as elevated actual current year activity in Specialty Risk and Extended Warranty lines.
|
•
|
higher adverse prior year loss development which was $247.3 million during the nine months ended September 30, 2018, compared to $100.9 million recorded in the same period in 2017. The adverse prior year loss development in 2018 was largely from Workers Compensation and European hospital liability, with a smaller contribution from Commercial Auto and General liability. The 2017 adverse development was primarily related to General liability line of business as well as Auto liability and Workers Compensation lines for both Specialty Programs and Small Commercial Business where elevated loss activity had been observed; and
|
•
|
excluding prior year loss development, the net loss and LAE ratio for the current period in 2018 would have been 70.1% compared to 65.2% for 2017, reflecting higher initial loss ratios on current year premiums earned during the period factoring in both market conditions and recent loss trends and experience as well as elevated actual current year activity in Specialty Risk and Extended Warranty lines.
|
For the Nine Months Ended September 30,
|
|
2018
|
|
2017
|
||||
|
|
($ in thousands)
|
||||||
Operating activities
|
|
$
|
162,623
|
|
|
$
|
374,814
|
|
Investing activities
|
|
27,151
|
|
|
(185,013
|
)
|
||
Financing activities
|
|
(63,893
|
)
|
|
(28,440
|
)
|
||
Effect of exchange rate changes on foreign currency cash
|
|
(1,131
|
)
|
|
3,379
|
|
||
Total increase in cash and cash equivalents (including restricted)
|
|
124,750
|
|
|
164,740
|
|
||
Less: increase in cash and cash equivalents (including restricted) of discontinued operations
|
|
9,551
|
|
|
49,473
|
|
||
Total increase in cash and cash equivalents (including restricted) of continuing operations
|
|
$
|
115,199
|
|
|
$
|
115,267
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
Fixed maturities and cash and cash equivalents
|
|
4.4
|
|
4.4
|
Reserve for loss and LAE
|
|
3.8
|
|
3.6
|
September 30, 2018
|
|
Original or Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Average yield(1)
|
|
Average duration(2)
|
||||||||||
AFS fixed maturities
|
|
($ in thousands)
|
|
|
|
|
||||||||||||||||
U.S. treasury bonds
|
|
$
|
125
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
124
|
|
|
1.3
|
%
|
|
0.6
|
|
U.S. agency bonds – mortgage-backed
|
|
1,484,434
|
|
|
830
|
|
|
(58,068
|
)
|
|
1,427,196
|
|
|
3.0
|
%
|
|
5.5
|
|
||||
U.S. agency bonds – other
|
|
24,870
|
|
|
—
|
|
|
(1,180
|
)
|
|
23,690
|
|
|
3.3
|
%
|
|
5.4
|
|
||||
Non-U.S. government and supranational bonds
|
|
22,550
|
|
|
122
|
|
|
(1,827
|
)
|
|
20,845
|
|
|
3.3
|
%
|
|
4.5
|
|
||||
Asset-backed securities
|
|
226,652
|
|
|
552
|
|
|
(2,000
|
)
|
|
225,204
|
|
|
4.2
|
%
|
|
2.4
|
|
||||
Corporate bonds
|
|
1,108,620
|
|
|
8,834
|
|
|
(32,960
|
)
|
|
1,084,494
|
|
|
2.9
|
%
|
|
4.3
|
|
||||
Total AFS fixed maturities
|
|
2,867,251
|
|
|
10,338
|
|
|
(96,036
|
)
|
|
2,781,553
|
|
|
3.1
|
%
|
|
4.8
|
|
||||
HTM fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate bonds
|
|
974,947
|
|
|
6,103
|
|
|
(18,190
|
)
|
|
962,860
|
|
|
3.7
|
%
|
|
4.6
|
|
||||
Municipal Bonds
|
|
57,938
|
|
|
—
|
|
|
(1,057
|
)
|
|
56,881
|
|
|
3.2
|
%
|
|
4.2
|
|
||||
Total HTM fixed maturities
|
|
1,032,885
|
|
|
6,103
|
|
|
(19,247
|
)
|
|
1,019,741
|
|
|
3.6
|
%
|
|
4.6
|
|
||||
Cash and cash equivalents
|
|
264,574
|
|
|
—
|
|
|
—
|
|
|
264,574
|
|
|
2.2
|
%
|
|
0.0
|
|
||||
Total
|
|
$
|
4,164,710
|
|
|
$
|
16,441
|
|
|
$
|
(115,283
|
)
|
|
$
|
4,065,868
|
|
|
3.1
|
%
|
|
4.4
|
|
December 31, 2017
|
|
Original or Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Average yield(1)
|
|
Average duration(2)
|
||||||||||
AFS fixed maturities
|
|
($ in thousands)
|
|
|
|
|
||||||||||||||||
U.S. treasury bonds
|
|
$
|
35,093
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
35,097
|
|
|
1.2
|
%
|
|
0.1
|
|
U.S. agency bonds – mortgage-backed
|
|
1,475,682
|
|
|
6,181
|
|
|
(13,723
|
)
|
|
1,468,140
|
|
|
2.9
|
%
|
|
4.8
|
|
||||
U.S. agency bonds – other
|
|
19,868
|
|
|
—
|
|
|
(149
|
)
|
|
19,719
|
|
|
3.1
|
%
|
|
8.7
|
|
||||
Non-U.S. government and supranational bonds
|
|
32,380
|
|
|
231
|
|
|
(1,713
|
)
|
|
30,898
|
|
|
2.7
|
%
|
|
3.3
|
|
||||
Asset-backed securities
|
|
225,015
|
|
|
3,457
|
|
|
(79
|
)
|
|
228,393
|
|
|
4.4
|
%
|
|
2.4
|
|
||||
Corporate bonds
|
|
911,259
|
|
|
28,423
|
|
|
(14,413
|
)
|
|
925,269
|
|
|
2.7
|
%
|
|
4.6
|
|
||||
Total AFS fixed maturities
|
|
2,699,297
|
|
|
38,296
|
|
|
(30,077
|
)
|
|
2,707,516
|
|
|
2.9
|
%
|
|
4.5
|
|
||||
HTM fixed maturities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate bonds
|
|
1,037,464
|
|
|
28,694
|
|
|
(913
|
)
|
|
1,065,245
|
|
|
3.6
|
%
|
|
5.0
|
|
||||
Municipal bonds
|
|
60,337
|
|
|
128
|
|
|
(84
|
)
|
|
60,381
|
|
|
3.2
|
%
|
|
4.8
|
|
||||
Total HTM fixed maturities
|
|
1,097,801
|
|
|
28,822
|
|
|
(997
|
)
|
|
1,125,626
|
|
|
3.6
|
%
|
|
5.0
|
|
||||
Cash and cash equivalents
|
|
149,375
|
|
|
—
|
|
|
—
|
|
|
149,375
|
|
|
0.2
|
%
|
|
0.0
|
|
||||
Total
|
|
$
|
3,946,473
|
|
|
$
|
67,118
|
|
|
$
|
(31,074
|
)
|
|
$
|
3,982,517
|
|
|
2.9
|
%
|
|
4.4
|
|
(1)
|
Average yield is calculated by dividing annualized investment income for each sub-component of AFS and HTM securities and cash and cash equivalents (including amortization of premium or discount) by amortized cost.
|
(2)
|
Average duration in years.
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
($ in thousands)
|
|
AFS fixed maturities
|
|
HTM fixed maturities
|
|
AFS fixed maturities
|
|
HTM fixed maturities
|
||||||||
|
|
Fair Value
|
|
Amortized cost
|
|
Fair Value
|
|
Amortized Cost
|
||||||||
Due in one year or less
|
|
$
|
3,522
|
|
|
$
|
9,297
|
|
|
$
|
64,996
|
|
|
$
|
40,533
|
|
Due after one year through five years
|
|
583,069
|
|
|
371,750
|
|
|
440,560
|
|
|
333,003
|
|
||||
Due after five years through ten years
|
|
542,562
|
|
|
651,838
|
|
|
487,592
|
|
|
724,265
|
|
||||
Due after ten years
|
|
—
|
|
|
—
|
|
|
17,835
|
|
|
—
|
|
||||
|
|
1,129,153
|
|
|
1,032,885
|
|
|
1,010,983
|
|
|
1,097,801
|
|
||||
U.S. agency bonds – mortgage-backed
|
|
1,427,196
|
|
|
—
|
|
|
1,468,140
|
|
|
—
|
|
||||
Asset-backed securities
|
|
225,204
|
|
|
—
|
|
|
228,393
|
|
|
—
|
|
||||
Total fixed maturities
|
|
$
|
2,781,553
|
|
|
$
|
1,032,885
|
|
|
$
|
2,707,516
|
|
|
$
|
1,097,801
|
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
|
|
Fair Value
|
|
% of Total
|
|
Fair Value
|
|
% of Total
|
||||||
U.S. agency bonds - mortgage-backed
|
|
($ in thousands)
|
|
|
|
($ in thousands)
|
|
|
||||||
Residential mortgage-backed ("RMBS")
|
|
|
|
|
|
|
|
|
||||||
GNMA – fixed rate
|
|
$
|
155,684
|
|
|
10.7
|
%
|
|
$
|
191,118
|
|
|
12.8
|
%
|
GNMA – variable rate
|
|
10,873
|
|
|
0.8
|
%
|
|
—
|
|
|
—
|
%
|
||
FNMA – fixed rate
|
|
720,157
|
|
|
49.6
|
%
|
|
743,461
|
|
|
50.0
|
%
|
||
FHLMC – fixed rate
|
|
540,482
|
|
|
37.3
|
%
|
|
533,561
|
|
|
35.9
|
%
|
||
Total U.S. agency bonds - mortgage-backed
|
|
1,427,196
|
|
|
98.4
|
%
|
|
1,468,140
|
|
|
98.7
|
%
|
||
U.S. agency bonds - fixed rate
|
|
23,690
|
|
|
1.6
|
%
|
|
19,719
|
|
|
1.3
|
%
|
||
Total U.S. agency bonds
|
|
$
|
1,450,886
|
|
|
100.0
|
%
|
|
$
|
1,487,859
|
|
|
100.0
|
%
|
|
|
Ratings(1)
|
|
|
|
|
||||||||||||||||
September 30, 2018
|
|
AAA
|
|
AA+, AA, AA-
|
|
A+, A, A-
|
|
BBB+, BBB, BBB-
|
|
BB+ or lower
|
|
Fair Value
|
|
% of Corporate bonds portfolio
|
||||||||
Corporate bonds
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands)
|
|
|
||||||||
Basic Materials
|
|
—
|
%
|
|
2.6
|
%
|
|
0.8
|
%
|
|
—
|
%
|
|
0.6
|
%
|
|
$
|
83,048
|
|
|
4.0
|
%
|
Communications
|
|
—
|
%
|
|
5.0
|
%
|
|
2.5
|
%
|
|
0.5
|
%
|
|
—
|
%
|
|
162,599
|
|
|
8.0
|
%
|
|
Consumer
|
|
—
|
%
|
|
15.2
|
%
|
|
13.4
|
%
|
|
0.5
|
%
|
|
1.0
|
%
|
|
616,520
|
|
|
30.1
|
%
|
|
Energy
|
|
—
|
%
|
|
3.9
|
%
|
|
4.7
|
%
|
|
0.8
|
%
|
|
0.8
|
%
|
|
209,139
|
|
|
10.2
|
%
|
|
Financial Institutions
|
|
1.6
|
%
|
|
10.1
|
%
|
|
23.7
|
%
|
|
3.1
|
%
|
|
—
|
%
|
|
786,440
|
|
|
38.5
|
%
|
|
Industrials
|
|
—
|
%
|
|
2.7
|
%
|
|
2.7
|
%
|
|
—
|
%
|
|
—
|
%
|
|
112,210
|
|
|
5.4
|
%
|
|
Technology
|
|
—
|
%
|
|
0.9
|
%
|
|
1.6
|
%
|
|
0.6
|
%
|
|
0.7
|
%
|
|
77,398
|
|
|
3.8
|
%
|
|
Total
|
|
1.6
|
%
|
|
40.4
|
%
|
|
49.4
|
%
|
|
5.5
|
%
|
|
3.1
|
%
|
|
$
|
2,047,354
|
|
|
100.0
|
%
|
(1)
|
Ratings as assigned by S&P, or equivalent
|
September 30, 2018
|
|
Fair Value
|
|
% of Holdings
Based on Fair Value of All Fixed Income Securities |
|
Rating(1)
|
|||
|
|
($ in thousands)
|
|
|
|
|
|||
BNP Paribas, 5.00% Due 1/15/2021
|
|
$
|
19,760
|
|
|
0.5
|
%
|
|
A
|
Brookfield Asset Management Inc, 4.00%, Due 1/15/2025
|
|
19,660
|
|
|
0.5
|
%
|
|
A-
|
|
Gilead Sciences Inc, 3.65% Due 3/1/2026
|
|
19,640
|
|
|
0.5
|
%
|
|
A
|
|
AT&T Inc, 2.625%, Due 12/1/2022
|
|
19,285
|
|
|
0.5
|
%
|
|
BBB
|
|
Rabobank Nederland Utrec, 3.875% Due 2/8/2022
|
|
19,244
|
|
|
0.5
|
%
|
|
A+
|
|
Bank of Montreal, 2.35% Due 9/11/2022
|
|
19,182
|
|
|
0.5
|
%
|
|
A+
|
|
Electricite de France, 4.625%, Due 9/11/2024
|
|
18,223
|
|
|
0.5
|
%
|
|
A-
|
|
Wells Fargo & Co. 1.125%, Due 10/29/2021
|
|
17,856
|
|
|
0.5
|
%
|
|
A-
|
|
Australia and New Zealand Banking Group, 3.70%, Due 11/16/2025
|
|
17,812
|
|
|
0.5
|
%
|
|
AA-
|
|
UBS Group Funding (Jersey) Ltd, 2.65%, Due 2/1/2022
|
|
16,433
|
|
|
0.4
|
%
|
|
A-
|
|
Total
|
|
$
|
187,095
|
|
|
4.9
|
%
|
|
|
(1)
|
Ratings as assigned by S&P, or equivalent
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
($ in thousands)
|
|
Fair Value
|
|
% of Total
|
|
Fair Value
|
|
% of Total
|
||||||
Non-U.S. dollar denominated corporate bonds
|
|
$
|
420,397
|
|
|
95.3
|
%
|
|
$
|
434,963
|
|
|
93.4
|
%
|
Non-U.S. government and supranational bonds
|
|
20,846
|
|
|
4.7
|
%
|
|
30,899
|
|
|
6.6
|
%
|
||
Total non-U.S. dollar denominated AFS securities
|
|
$
|
441,243
|
|
|
100.0
|
%
|
|
$
|
465,862
|
|
|
100.0
|
%
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
($ in thousands)
|
|
Fair Value
|
|
% of Total
|
|
Fair Value
|
|
% of Total
|
||||||
Euro
|
|
$
|
372,562
|
|
|
84.5
|
%
|
|
$
|
398,680
|
|
|
85.6
|
%
|
British Pound
|
|
41,867
|
|
|
9.5
|
%
|
|
43,252
|
|
|
9.3
|
%
|
||
Australian Dollar
|
|
19,524
|
|
|
4.4
|
%
|
|
14,182
|
|
|
3.0
|
%
|
||
Canadian Dollar
|
|
5,031
|
|
|
1.1
|
%
|
|
5,254
|
|
|
1.1
|
%
|
||
All other
|
|
2,259
|
|
|
0.5
|
%
|
|
4,494
|
|
|
1.0
|
%
|
||
Total non-U.S. dollar denominated AFS securities
|
|
$
|
441,243
|
|
|
100.0
|
%
|
|
$
|
465,862
|
|
|
100.0
|
%
|
Ratings(1)
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||
($ in thousands)
|
|
Fair Value
|
|
% of Total
|
|
Fair Value
|
|
% of Total
|
||||||
AAA
|
|
$
|
31,843
|
|
|
7.6
|
%
|
|
$
|
37,719
|
|
|
8.7
|
%
|
AA+, AA, AA-
|
|
42,171
|
|
|
10.0
|
%
|
|
35,686
|
|
|
8.2
|
%
|
||
A+, A, A-
|
|
182,355
|
|
|
43.4
|
%
|
|
176,657
|
|
|
40.6
|
%
|
||
BBB+, BBB, BBB-
|
|
158,567
|
|
|
37.7
|
%
|
|
184,901
|
|
|
42.5
|
%
|
||
BB+ or lower
|
|
5,461
|
|
|
1.3
|
%
|
|
—
|
|
|
—
|
%
|
||
Total non-U.S. dollar denominated corporate bonds
|
|
$
|
420,397
|
|
|
100.0
|
%
|
|
$
|
434,963
|
|
|
100.0
|
%
|
(1)
|
Ratings as assigned by S&P, or equivalent
|
($ in thousands)
|
|
September 30, 2018
|
|
December 31, 2017
|
|
Change
|
|
Change %
|
|||||||
Reinsurance balances receivable, net
|
|
$
|
161,436
|
|
|
$
|
72,494
|
|
|
$
|
88,942
|
|
|
122.7
|
%
|
Deferred commission and other acquisition expenses, net
|
|
419,265
|
|
|
380,204
|
|
|
39,061
|
|
|
10.3
|
%
|
|||
Reserve for loss and LAE
|
|
2,851,685
|
|
|
2,386,722
|
|
|
464,963
|
|
|
19.5
|
%
|
|||
Unearned premiums
|
|
1,298,933
|
|
|
1,230,882
|
|
|
68,051
|
|
|
5.5
|
%
|
($ in thousands)
|
|
September 30, 2018
|
|
December 31, 2017
|
|
Change
|
|
Change %
|
|||||||
Preference shares
|
|
$
|
465,000
|
|
|
$
|
465,000
|
|
|
$
|
—
|
|
|
—
|
%
|
Common shareholders' equity
|
|
307,554
|
|
|
767,174
|
|
|
(459,620
|
)
|
|
(59.9
|
)%
|
|||
Total Maiden shareholders' equity
|
|
772,554
|
|
|
1,232,174
|
|
|
(459,620
|
)
|
|
(37.3
|
)%
|
|||
Senior Notes - principal amount
|
|
262,500
|
|
|
262,500
|
|
|
—
|
|
|
—
|
%
|
|||
Total capital resources
|
|
$
|
1,035,054
|
|
|
$
|
1,494,674
|
|
|
$
|
(459,620
|
)
|
|
(30.8
|
)%
|
•
|
a net decrease in AOCI of $129.7 million which arose due to: 1) an increase in net unrealized losses on investment of $141.9 million resulting from the net decrease in our investment portfolio relating to market price movements due to rising interest rates and widening credit spreads during the nine months ended September 30, 2018; and partially offset by 2) an increase in cumulative translation adjustments of $12.1 million due to the effect of the recent depreciation of
|
•
|
dividends declared of $54.7 million related to the Company’s common and preferred shares;
|
•
|
net loss attributable to Maiden of $275.4 million. Please see "Results of Operations" on page 43 for a discussion of the Company’s net loss for the nine months ended September 30, 2018; partially offset by
|
•
|
net increase in share based transactions of $0.2 million.
|
Hypothetical Change in Interest Rates
|
|
Fair Value
|
|
Estimated Change in Fair Value
|
|
Hypothetical % (Decrease) Increase in Shareholders’ Equity
|
|||||
|
|
($ in thousands)
|
|
|
|||||||
200 basis point increase
|
|
$
|
2,502,106
|
|
|
$
|
(279,447
|
)
|
|
(36.2
|
)%
|
100 basis point increase
|
|
2,641,798
|
|
|
(139,755
|
)
|
|
(18.1
|
)%
|
||
No change
|
|
2,781,553
|
|
|
—
|
|
|
—
|
%
|
||
100 basis point decrease
|
|
2,917,453
|
|
|
135,900
|
|
|
17.6
|
%
|
||
200 basis point decrease
|
|
3,043,134
|
|
|
261,581
|
|
|
33.9
|
%
|
Ratings(1)
|
|
September 30, 2018
|
|
December 31, 2017
|
||
AA+ or better
|
|
43.0
|
%
|
|
43.4
|
%
|
AA, AA-, A+, A, A-
|
|
33.2
|
%
|
|
33.2
|
%
|
BBB+, BBB, BBB-
|
|
22.1
|
%
|
|
22.1
|
%
|
BB+ or lower
|
|
1.7
|
%
|
|
1.3
|
%
|
|
|
100.0
|
%
|
|
100.0
|
%
|
(1)
|
Ratings as assigned by S&P, or equivalent
|
•
|
The proposed transaction may disrupt our current business plans and operations.
|
•
|
Our management’s attention may be directed towards the completion of the transaction and diverted away from our day-to-day business operations and the execution of our current business plans.
|
•
|
Current and prospective employees may experience uncertainty about their future roles with us, which might adversely effect our ability to attract and retain employees who generate and service our business.
|
•
|
Uncertainties regarding our business could cause brokers, customers and other counterparties to change existing business relationships which could negatively affect our revenues, earnings and cash flows.
|
•
|
Third-party rating agencies may downgrade or revoke our financial strength or debt ratings in connection with the Master Transaction Agreement and the Enstar Master Agreement.
|
•
|
We may incur significantly higher transaction costs than we currently anticipate, such as legal, financing and accounting fees, and other costs, fees, expenses and charges related to the transaction, whether or not the Master Transaction Agreement and the Enstar Master Agreement are completed.
|
•
|
We could be subject to litigation related to the proposed transaction, which could result in significant costs and expenses.
|
•
|
The Master Transaction Agreement and the Enstar Master Agreement may not be completed, which may have an adverse effect on our stock price to the extent that the current market price reflects assumption that the transaction will be completed, result in negative reactions from our shareholder and other investors, rating agencies, employees, brokers or customers, and adversely affect our future business and financial results.
|
For the Three Months Ended September 30, 2018
|
|
Total number of shares repurchased
|
|
Average price paid per share
|
|
Total number of shares purchased as part of publicly announced plans or programs (a)
|
|
Dollar amount still available under trading plan
|
||||||
|
|
|
|
|
|
|
|
($ in thousands)
|
||||||
July 1, 2018 - July 31, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
74,924
|
|
|
August 1, 2018 - August 31, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
74,924
|
|
|
September 1, 2018 - September 30, 2018
|
|
205,000
|
|
|
$
|
3.31
|
|
|
205,000
|
|
|
$
|
74,245
|
|
Total
|
|
205,000
|
|
|
$
|
3.31
|
|
|
205,000
|
|
|
$
|
74,245
|
|
Exhibit
No.
|
|
Description
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
101.1
|
|
The following materials from Maiden Holdings, Ltd. Quarterly Report on Form 10-Q, formatted in XBRL (eXtensive Business Reporting Language): (i) the unaudited Condensed Consolidated 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 unaudited Condensed Consolidated Financial Statements.
|
|
MAIDEN HOLDINGS, LTD.
|
|
|
By:
|
|
November 9, 2018
|
|
/s/ Lawrence F. Metz
|
|
|
Lawrence F. Metz
President and Chief Executive Officer
|
|
|
|
|
|
/s/ Patrick J. Haveron
|
|
|
Patrick J. Haveron
Chief Financial Officer
|
|
|
|
|
|
/s/ Michael J. Tait
|
|
|
Michael J. Tait
Chief Accounting Officer
|
1.
|
Paragraph A of Article IV - DEFINITIONS is deleted in its entirety and the following is substituted therefor:
|
A.
|
“Affiliate” means Technology and each other direct and indirect participant the U.S. Pool, AEL, AIU and each other insurance company more than fifty percent (50%) of the voting securities of which are directly or indirectly controlled by AmTrust Financial Services, Inc. (“AmTrust’) for so long as AmTrust continues to so directly or indirectly control such entity.
|
2.
|
Paragraph A of Article IV - DEFINITIONS is revised by replacing the term “IGI” with the term “AEL” each place it appears.
|
3.
|
Paragraph G of Article IV - DEFINITIONS is deleted in its entirety and the following is substituted therefor:
|
G.
|
“Subject Premium” means: (i) for each Affiliate except AEL, the percentage of premium ceded to the Company under the Underlying Reinsurance Agreement to which such Affiliate is a party equal to forty percent (40%) of Affiliate Subject Premium, in respect of Covered Business in accordance with the terms of the Underlying Reinsurance Agreements, to the extent the Affiliates shall have collected such premiums, to the Company, and (ii) for AEL, the percentage of premium ceded to the Company under the AEL Quota Share, not to exceed forty percent (40%) of AEL’s Affiliate Subject Premium.
|
4.
|
Paragraph I of Article IV - DEFINITIONS is deleted in its entirety and the following is substituted therefor:
|
I.
|
“Underlying Reinsurance Agreement” means each of the following agreements:
|
i.
|
The U.S. Quota Share;
|
ii.
|
The AEL Quota Share; and
|
iii.
|
The Quota Share Reinsurance Agreement, effective as of May 1, 2007, by and between AmTrust International Underwriters DAC (formerly known as AmTrust International Underwriters, Ltd.) (“AIU”) and the Company.
|
5.
|
Paragraph A. 1 of Article V - LIABILITY OF THE REINSURER is deleted in its entirety and the following is substituted therefor:
|
A.
|
1. Commencing as of the Effective Time, except as otherwise provided on Schedule A, as now stated and as amended for time to time with respect to Additional Business and Excess Retention Business, the Company hereby agrees to cede to the Reinsurer, and the Reinsurer agrees to accept and reinsure, the Ultimate Net Loss of the Company with respect to Covered Business ceded to the Company equal to (i) forty percent (40%) of the Affiliate Ultimate Net Loss for each Affiliate except AEL, and (ii) for AEL, the percentage of AEL’s Affiliate Ultimate Net Loss equal to the related percentage of ceded Affiliate Subject Premium, in each case subject to all other terms and conditions set forth in this Agreement. For purposes of this Agreement, “Affiliate Ultimate Net Loss” means the sum actually paid or to be paid by such Affiliate in settlement of losses for which it is liable in respect of the Covered Business, after making deductions for all inuring reinsurance
|
6.
|
The parties agree that the formation of the U.S. Pool effective October 1, 2017 is not intended to modify any of the Reinsurer’s or Company’s rights or obligations with respect to business ceded to the Reinsurer on or before September 30, 2017.
|
7.
|
All other provisions of the Agreement remain in full force and effect.
|
|
MAIDEN HOLDINGS, LTD.
___________________________________
Lawrence F. Metz
President and Chief Executive Officer
Date:
|
|
EXECUTIVE
___________________________________
Arturo M. Raschbaum
Date:
|
SIGNED: __________________________
Arturo M. Raschbaum
|
DATED: __________________________
|
•
|
Executive Vice President of the Company based in Bermuda. Reporting to the Company’s Chief Executive Officer (CEO), Employee will provide service and assistance to the Company to assist in the transition of her role to the new Chief Financial Officer of the Company as well as to provide advice and counsel to the new CEO.
|
•
|
Employee shall endeavor to adhere in all material respects to the Company’s material standards of conduct, policies, rules and regulations.
|
•
|
The Company will provide the Employee her current level of base compensation, health, car, housing and welfare and pension benefits in accordance with specific Maiden benefit and pension plan requirements during such time; provided, however, that the Company retains its right to amend, modify, or discontinue any of its health, welfare and pension plans in its sole discretion, in which event Employee will receive such benefits at the same level and under the same terms as other executives at her level.
|
a.
|
a lump sum payment for the amount of $3,325,000 (“Lump Sum”), which amount includes payment in satisfaction of Employee’s three current Long Term Incentive Plan (“LTIP”) grants, which Employee hereby waives. Such sum shall be paid to Employee as follows: $2,000,000 on or about August 31, 2018, (or, if the Agreement has not become effective by that date, as soon as practicable following the effective date of this Agreement), and the remainder of $1,325,000 (the “Second Payment”) within one week following the
|
b.
|
Employee shall have the option to convert all of her remaining Company share options into a cash payment as calculated pursuant to a Black-Scholes computation based upon the closing share price on December 3, 2018, which shall be furnished by the Company to Employee by December 10, 2018. In the event Employee thereafter elects such cash payment option, the Company shall promptly remit such payment to Employee. If Employee elects to retain all of her share options, then vested share options held by Employee at the time of the Termination Date shall retain their full expiration date of 10 years from the original grant date.
|
c.
|
Company shall promptly provide for tax gross up and tax return prep fees for the 2018 and 2019 fiscal years.
|
d.
|
By the Termination Date, the Company will provide Employee a repatriation lump sum allowance, for moving of household goods from Bermuda, up to $15,000 upon receipt of the bill(s) for such services.
|
e.
|
If the Termination Date is prior to March 1, 2019, the Company shall pay the remaining base salary and equivalent cost of the benefits which would have otherwise been payable hereunder, and shall continue to pay Employee’s car and housing allowances, through March 1, 2019.
|
f.
|
Effective as of the Termination Date, the Employee hereby irrevocably resigns from (1) all Board of Directors positions (including Board committee positions) she has with Maiden Holdings, Ltd., and any other member of the Group (defined below in Paragraph 5(a) with respect to which she has not already resigned, and (2) all fiduciary positions (including as trustee) she holds with respect to any pension plans or trusts established by any member of the Group. The Employee agrees that this Agreement will serve as her written notice of resignation and that she will execute any documents necessary to formalize or carry out such resignations.
|
Date:____________
|
Lawrence F. Metz
EVP, General Counsel & Secretary
|
_______________________________
Signature
|
Date:____________
|
Karen Schmitt
_________________________
NAME
|
_______________________________
Signature
|
1.
|
This document refers to the Separation Agreement and First General Release (“Agreement”) between Karen Schmitt (“Employee”) and Maiden Holdings, Ltd. (the “Company”), dated August 14, 2018. (the “Agreement.”)
|
2.
|
By signing this document, and in consideration of the Second Payment to be made to her under the Agreement (as such term is defined therein), Employee acknowledges and reaffirms all of the terms of the Agreement as of the date she signs this Second General Release and Waiver of Rights and Claims (“Second Release”), including but not limited to her waiver and release of claims in Section 5 of the Agreement, subject to the exceptions set forth therein, and her post-termination obligations specified under the Agreement. Employee understands and agrees that for purposes of this reaffirmation, the “date she signs this Agreement” (or equivalent phrases) referred to in Section 5 of the Agreement, shall be the date she signs this Second Release. Therefore, she is releasing all claims, as set forth in that Agreement, subject to the exceptions set forth therein, up to and including the date she signs this Second Release.
|
3.
|
By signing this document, and in consideration of Employee’s promises and release of claims under this Second Release, the Company acknowledges and reaffirms all of the terms of the Agreement as of the date this Second Release is signed on its behalf, including but not limited to its waiver and release of claims in Section 5 of the Agreement, subject to the exceptions set forth therein, and its post-termination obligations under the Agreement. The Company understands and agrees that for
|
4.
|
Employee acknowledges that she was given at least 21 days to consider this Second Release following her last day of employment, that she was advised to and did consult with an attorney before signing this Second Release, and that she has 7 days after signing it to revoke it if she changes her mind. This Second Release agreement shall become effective on the eighth day after Employee signs this Second Release, provided that she has not timely revoked it prior to such time pursuant to Section 4 above (this Second Release’s “Effective Date”).
|
Date:____________
|
Lawrence F. Metz
EVP, General Counsel & Secretary
|
_______________________________
Signature
|
Date:____________
|
Karen Schmitt
_________________________
NAME
|
_______________________________
Signature
|
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.
|
November 9, 2018
|
|
/s/ LAWRENCE F. METZ
|
|
|
|
Lawrence F. Metz
|
|
|
|
President and Chief 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
|
|
(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.
|
November 9, 2018
|
|
/s/ PATRICK J. HAVERON
|
|
|
|
Patrick J. Haveron
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
November 9, 2018
|
By:
|
/s/ LAWRENCE F. METZ
|
|
|
|
Lawrence F. Metz
|
|
|
|
President and Chief Executive Officer
|
|
November 9, 2018
|
By:
|
/s/ PATRICK J. HAVERON
|
|
|
|
Patrick J. Haveron
|
|
|
|
Chief Financial Officer
|
|