Bermuda
(State or other jurisdiction
of incorporation)
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001-34042
(Commission File
Number)
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98-0570192
(IRS Employer
Identification No.)
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o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01
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Entry into Material Definitive Agreements.
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Item 1.02
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Termination of Material Definitive Agreements.
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Item 9.01
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Financial Statements and Exhibits.
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Date:
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January 30, 2019
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MAIDEN HOLDINGS, LTD.
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By:
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/s/ Denis M. Butkovic
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Denis M. Butkovic
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Senior Vice President, General Counsel and
Secretary
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1.
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Section 1.4 of the Agreement is hereby amended by deleting subparagraphs (a), (b), (c), (d), (e) and (j) in their entirety.
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2.
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Section 2.1 of the Agreement is hereby deleted in its entirety.
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3.
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Except as amended, the Agreement shall continue to apply to the run-off of QS Agreement and European QS Agreement to the extent applicable to such run-off.
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1.
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The definition of Maturity Date in Section 1.1 is hereby deleted and the following is substituted in its place:
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2.
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All other terms and conditions of the Agreement, as amended, which pertain to outstanding Loans and Advances remain in effect.
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1.
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The Agreement, as amended, shall terminate on a run-off basis.
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2.
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Following the Effective Time, the reinsurance of all Policies ceded to the Reinsurer, except for business subject to the Partial Termination Endorsement effective January 1, 2019, shall remain in force until such Policies’ expiration dates, anniversary dates or prior termination dates.
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3.
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The Reinsurer agrees that Paragraph A of ARTICLE XXIII - UNAUTHORIZED REINSURANCE is amended to permit the Company to use Withheld Funds to the extent that the Company or an Affiliate determines is required to permit the Company or an Affiliate to fund statutory deposit requirements, subject to the Company’s payment of interest on Withheld Funds as set forth below.
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a.
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Provided that Obligations are fully secured, within sixty (60) days of the end of each calendar quarter, the Company will pay Maiden a fixed annual interest rate of 3.50% (the “Interest Rate”) on the Withheld Funds balance. The Company may retain any interest payable to the Reinsurer to the extent that the Reinsurer, pursuant to the Company’s calculation based on the current calendar quarter’s data, has not fully secured the Obligations. Any interest so retained will be added to Withheld Funds immediately. The parties agree that for each calendar quarter interest shall be calculated based on the average daily Withheld Funds balance for the subject calendar quarter.
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b.
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The Interest Rate and any reset Interest Rate as determined below shall apply only to the assets constituting the Withheld Funds balance as of January 14, 2019, including substitutions of assets with respect thereto.
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c.
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The Interest Rate for calendar year 2020 and each succeeding calendar year will reset as set forth herein on an annual basis on December 31, 2019 and each succeeding December 31, respectively (“
Reset Date
”).
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d.
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On each Reset Date, the reset Interest Rate shall be mutually determined by the parties, in good faith, based on the current market yield on a portfolio similar to the portfolio of Reinsurer Trust Assets maintained by the Reinsurer for the benefit of the Company as of December 31, 2018. The parties shall consider, without limitation, (i) principal reinvestment that may have taken place over time at market yields in effect at the time of principal receipt, (ii) the reduced duration of the portfolio that likely would have occurred over time, (iii) potential mark to market movements that may have occurred on the portfolio based on shifting portfolio market yields, and (iv) any other factors that both parties agree are relevant. If the parties are not able to reach an agreement on a reset Interest Rate, the Interest Rate as of the immediately prior December 31 shall remain in effect.
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e.
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The parties further agree that a reasonable benchmark for current and historical market yields is USD US Corporate A+, A, A- five year corporate yield from the Bloomberg BVSC0074 Index, which is quoted as a 3.495% yield as of January 9, 2019.
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4.
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All other terms and conditions of the Agreement, as amended, which pertain to business ceded to the Reinsurer shall remain in effect until the final resolution of Ultimate Net Loss on all ceded business.
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1.
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The Contract, as amended, shall terminate on a run-off basis.
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2.
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Following the Effective Time, the reinsurance of all business ceded to the Reinsurer shall remain in force until the policies’ expiration dates or with respect to multi-year policies, the next anniversary date, or prior termination dates.
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3.
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As of January 24, 2019, part of the Security is being funded by payments payable to Reinsurer under the Contract which are being withheld by the Company (“
Withheld Funds
”). It is anticipated that the Company will remit the Withheld Funds to the Reinsurer for deposit into a reinsurance trust account as soon as practicable. It is agreed that the Company is not taking any investment risk on the Withheld Funds. Subject to the foregoing, the Company shall pay to the Reinsurer interest on the Withheld Funds as set forth below:
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a.
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The Company shall invest the Withheld Funds in short term Euro-denominated commercial paper and short term Euro-denominated corporate bonds.
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b.
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Provided that the Security is fully-funded, within sixty (60) days of the end of each calendar quarter, the Company will pay Maiden a fixed annual interest rate of fifty (50) basis points (the “
Interest Rate
”) on the Withheld Funds balance. The Company may retain any interest payable to the Reinsurer to the extent that the Reinsurer, pursuant to the Company’s calculation based on the current calendar quarter’s data, has not fully-funded the required Security. Any interest so retained will be added to the Withheld Funds immediately. The parties agree that for each calendar quarter interest shall be calculated based on the average daily Withheld Funds balance for the subject calendar quarter, commencing January 24, 2019 for the first quarter of 2019.
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c.
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The Interest Rate for calendar year 2020 and each succeeding calendar year will reset on an annual basis on December 31, 2019 and each succeeding December 31, respectively (“
Reset Date
”).
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d.
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On each Reset Date, the reset Interest Rate shall be mutually determined by the parties, in good faith, as set forth in Paragraphs 3(c) and 3(d) to the Termination Endorsement, effective January 1, 2019, to the
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e.
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At such time as the Company remits the Withheld Funds to the Reinsurer for deposit into a reinsurance trust account:
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i.
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The Reinsurer shall receive the benefit of any investment gain and assume any investment loss on the Withheld Funds portfolio. In the event of a loss in the Withheld Funds portfolio, the Reinsurer shall be required to fund any deficiency in the required Security as a result thereof;
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ii.
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The Company shall receive the accrued interest on Withheld Funds portfolio earned from January 24, 2019 through the date that the Withheld Funds are deposited in a reinsurance trust account;
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4.
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All other terms and conditions of the Contract, as amended, which pertain to business ceded to the Reinsurer shall remain in effect until the final resolution of all Losses reinsured hereunder.
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