PEMBROKE,
Non-GAAP operating earnings(5) were
Maiden's book value per common share(1) was
Commenting on the first quarter of 2020 financial results,
Consolidated Results for the Quarter Ended
Net income for the three months ended
-
net income from continuing operations of
$20.9 million compared to net loss from continuing operations of$33.9 million for the same period in 2019 largely due to the following factors:-
underwriting loss(4) of
$3.7 million compared to$42.7 million in the same period in 2019. The reduction in the underwriting loss was due to:-
the impact of lower loss ratios combined with lower current year premiums earned during the three months ended
March 31, 2020 compared to the same period in 2019; and -
favorable prior year loss development of
$0.5 million in the first quarter of 2020 compared to adverse prior year loss development of$7.3 million during the same period in 2019 which had been incurred primarily within the AmTrust Reinsurance segment.
-
the impact of lower loss ratios combined with lower current year premiums earned during the three months ended
-
realized gains on investment of
$11.0 million for the three months endedMarch 31, 2020 compared to realized losses of$11.1 million for the same period in 2019; and -
foreign exchange and other gains of
$8.2 million for the three months endedMarch 31, 2020 compared to foreign exchange and other gains of$5.0 million for the same period in 2019.
-
underwriting loss(4) of
-
No net income or loss from discontinued operations for the three months ended
March 31, 2020 compared to a net loss from discontinued operations of$2.7 million for the same period in 2019.
Net premiums written for the three months ended
Net premiums earned decreased by
Net investment income decreased by
Net loss and LAE decreased by
Total general and administrative expenses decreased by
Non-GAAP Operating Results for the three months ended
Non-GAAP operating earnings(5) was
In addition to other adjustments, management has adjusted the GAAP net operating loss and underwriting results by recognizing the unamortized deferred gain arising from the LPT/ADC Agreement which is fully recoverable from Cavello to show the ultimate economic benefit of the LPT/ADC Agreement to Maiden. The amount recognized as an unamortized deferred gain liability pursuant to this agreement was
For the three months ended
Similar to the reported GAAP result, the improvement in the non-GAAP operating results for the three months ended
Quarterly Report on Form 10-Q for the Three Months Ended
The Company’s Quarterly Report on Form 10-Q for the three months ended
Total assets were
The Company has discontinued the presentation of certain non-GAAP measures such as combined ratio and its related components in this news release, as it believes that as the run-off of its reinsurance portfolios progresses, such ratios are increasingly not meaningful and of less value to readers as they evaluate the financial results of the Company. The Company has, for the time being, continued to utilize such non-GAAP measures on a quarterly basis in its Quarterly Report on Form 10-Q for the three months ended
Quarterly Dividends
The Company's Board of Directors did not authorize any quarterly dividends related to either its common shares or any series of its preferred shares.
About
(1)(2)(4)(5) Please see the Non-GAAP Financial Measures table for additional information on these non-GAAP financial measures and reconciliation of these measures to GAAP measures.
Special Note about Forward Looking Statements
Certain statements in this press release, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results and the assumptions upon which those statements are based are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include general statements both with respect to the Company and the insurance industry and generally are identified with the words "anticipate", "believe", "expect", "predict", "estimate", "intend", "plan", "project", "seek", "potential", "possible", "could", "might", "may", "should", "will", "would", "will be", "will continue", "will likely result" and similar expressions. In light of the risks and uncertainties inherent in all forward-looking statements, the inclusion of such statements in this press release should not be considered as a representation by the Company or any other person that the Company’s objectives or plans or other matters described in any forward-looking statement will be achieved. These statements are based on current plans, estimates, assumptions and expectations. Actual results may differ materially from those projected in such forward-looking statements and therefore, you should not place undue reliance on them. Important factors that could cause actual results to differ materially from those in such forward-looking statements are set forth in Item 1A "Risk Factors" in the Company’s Annual Report on Form 10-K for the year ended
The Company cautions that the list of important risk factors in its Quarterly Report on Form 10-Q for the three months ended
| Consolidated Balance Sheets | ||||||
| (in thousands (000's), except per share data) | ||||||
| (Unaudited) | (Audited) | |||||
| Assets | ||||||
| Fixed maturities, available-for-sale, at fair value (amortized cost 2020: |
$ |
1,508,544 |
$ |
1,835,518 |
||
| Other investments |
34,088 |
31,748 |
||||
| Total investments |
1,542,632 |
1,867,266 |
||||
| Cash and cash equivalents |
60,059 |
48,197 |
||||
| Restricted cash and cash equivalents |
117,903 |
59,081 |
||||
| Accrued investment income |
19,897 |
18,331 |
||||
| Reinsurance balances receivable, net |
14,560 |
12,181 |
||||
| Reinsurance recoverable on unpaid losses |
620,882 |
623,422 |
||||
| Loan to related party |
167,975 |
167,975 |
||||
| Deferred commission and other acquisition expenses, net |
69,109 |
77,356 |
||||
| Funds withheld receivable |
696,076 |
684,441 |
||||
| Other assets |
12,664 |
9,946 |
||||
| Total Assets |
$ |
3,321,757 |
$ |
3,568,196 |
||
| Liabilities and Equity | ||||||
| Liabilities | ||||||
| Reserve for loss and loss adjustment expenses |
$ |
2,249,045 |
$ |
2,439,907 |
||
| Unearned premiums |
197,094 |
220,269 |
||||
| Deferred gain on retroactive reinsurance |
112,950 |
112,950 |
||||
| Accrued expenses and other liabilities |
22,708 |
32,444 |
||||
| Senior notes - principal amount |
262,500 |
262,500 |
||||
| Less: unamortized debt issuance costs |
7,538 |
7,592 |
||||
| Senior notes, net |
254,962 |
254,908 |
||||
| Total Liabilities |
2,836,759 |
3,060,478 |
||||
| Commitments and Contingencies | ||||||
| Equity | ||||||
| Preference Shares |
465,000 |
465,000 |
||||
| Common shares |
890 |
882 |
||||
| Additional paid-in capital |
751,862 |
751,327 |
||||
| Accumulated other comprehensive (loss) income |
(26,288) |
17,836 |
||||
| Accumulated deficit |
(674,933) |
(695,794) |
||||
|
(31,533) |
(31,533) |
|||||
| Total Equity |
484,998 |
507,718 |
||||
| Total Liabilities and Equity |
$ |
3,321,757 |
$ |
3,568,196 |
||
| Book value per common share(1) |
$ |
0.24 |
$ |
0.51 |
||
| Common shares outstanding |
83,969,991 |
83,148,458 |
||||
| Consolidated Statements of Income | ||||||||||
| (in thousands (000's), except per share data) | ||||||||||
| (Unaudited) | ||||||||||
|
For the Three Months Ended |
||||||||||
|
2020 |
|
2019 |
||||||||
| Revenues: |
|
|||||||||
| Gross premiums written |
$ |
11,734 |
$ |
(561,139) |
||||||
| Net premiums written |
$ |
10,372 |
$ |
(561,530) |
||||||
| Change in unearned premiums |
20,843 |
744,632 |
||||||||
| Net premiums earned |
31,215 |
183,102 |
||||||||
| Other insurance revenue |
408 |
812 |
||||||||
| Net investment income |
17,964 |
32,022 |
||||||||
| Net realized gains (losses) on investment |
11,038 |
(11,101) |
||||||||
| Total other-than-temporary impairment losses |
(1,506) |
- |
||||||||
| Portion of loss recognized in other comprehensive income (loss) |
- |
- |
||||||||
| Net impairment losses recognized in earnings |
(1,506) |
- |
||||||||
| Total revenues |
59,119 |
204,835 |
||||||||
| Expenses: | ||||||||||
| Net loss and loss adjustment expenses |
21,086 |
152,689 |
||||||||
| Commission and other acquisition expenses |
11,973 |
69,617 |
||||||||
| General and administrative expenses |
8,550 |
16,619 |
||||||||
| Total expenses |
41,609 |
238,925 |
||||||||
| Other expenses: | ||||||||||
| Interest and amortization expenses |
(4,831) |
(4,829) |
||||||||
| Foreign exchange and other gains |
8,197 |
4,979 |
||||||||
| Total other expenses |
3,366 |
150 |
||||||||
| Income (loss) before income taxes |
20,876 |
(33,940) |
||||||||
| Less: income tax expense (benefit) |
15 |
(38) |
||||||||
| Net income (loss) from continuing operations |
20,861 |
(33,902) |
||||||||
| Loss from discontinued operations, net of income tax |
- |
(2,734) |
||||||||
| Net income (loss) |
$ |
20,861 |
$ |
(36,636) |
||||||
| Basic and diluted earnings (loss) from continuing operations per share attributable to Maiden common shareholders(9) |
$ |
0.25 |
$ |
(0.41) |
||||||
| Basic and diluted loss from discontinued operations per share attributable to Maiden common shareholders(9) |
- |
(0.03) |
||||||||
| Basic and diluted earnings (loss) per share attributable to Maiden common shareholders(9) |
$ |
0.25 |
$ |
(0.44) |
||||||
| Annualized return on average common equity |
267.6% |
-142.5% |
||||||||
| Weighted average number of common shares - basic and diluted(9) |
83,256,223 |
82,965,156 |
||||||||
| Supplemental Financial Data - Segment Information | ||||||||||||
| (in thousands (000's)) | ||||||||||||
| (Unaudited) | ||||||||||||
| For the Three Months Ended |
Diversified Reinsurance |
|
AmTrust Reinsurance |
|
Other |
|
Total |
|||||
| Gross premiums written |
$ |
11,734 |
$ |
- |
$ |
- |
$ |
11,734 |
||||
| Net premiums written |
$ |
10,372 |
$ |
- |
$ |
- |
$ |
10,372 |
||||
| Net premiums earned |
$ |
12,531 |
$ |
18,684 |
$ |
- |
$ |
31,215 |
||||
| Other insurance revenue |
408 |
- |
- |
408 |
||||||||
| Net loss and loss adjustment expenses ("loss and LAE") |
(7,041) |
(14,045) |
- |
(21,086) |
||||||||
| Commissions and other acquisition expenses |
(4,979) |
(6,994) |
- |
(11,973) |
||||||||
| General and administrative expenses(3) |
(1,613) |
(644) |
- |
(2,257) |
||||||||
| Underwriting loss(4) |
$ |
(694) |
$ |
(2,999) |
$ |
- |
$ |
(3,693) |
||||
| Reconciliation to net income from continuing operations | ||||||||||||
| Net investment income and realized gains on investment |
29,002 |
|||||||||||
| Total other-than-temporary impairment losses |
(1,506) |
|||||||||||
| Interest and amortization expenses |
(4,831) |
|||||||||||
| Foreign exchange and other gains |
8,197 |
|||||||||||
| Other general and administrative expenses(3) |
(6,293) |
|||||||||||
| Income tax expense |
(15) |
|||||||||||
| Net income from continuing operations |
$ |
20,861 |
||||||||||
| For the Three Months Ended |
Diversified Reinsurance |
|
AmTrust Reinsurance |
|
Other |
|
Total |
|||||
| Gross premiums written |
$ |
15,338 |
$ |
(576,477) |
$ |
- |
$ |
(561,139) |
||||
| Net premiums written |
$ |
14,947 |
$ |
(576,477) |
$ |
- |
$ |
(561,530) |
||||
| Net premiums earned |
$ |
25,292 |
$ |
157,810 |
$ |
- |
$ |
183,102 |
||||
| Other insurance revenue |
812 |
- |
- |
812 |
||||||||
| Net loss and LAE |
(14,391) |
(138,070) |
(228) |
(152,689) |
||||||||
| Commissions and other acquisition expenses |
(9,261) |
(60,356) |
- |
(69,617) |
||||||||
| General and administrative expenses(3) |
(3,031) |
(1,266) |
- |
(4,297) |
||||||||
| Underwriting loss(4) |
$ |
(579) |
$ |
(41,882) |
$ |
(228) |
$ |
(42,689) |
||||
| Reconciliation to net loss from continuing operations | ||||||||||||
| Net investment income and realized losses on investment |
20,921 |
|||||||||||
| Interest and amortization expenses |
(4,829) |
|||||||||||
| Foreign exchange and other gains |
4,979 |
|||||||||||
| Other general and administrative expenses(3) |
(12,322) |
|||||||||||
| Income tax benefit |
38 |
|||||||||||
| Net loss from continuing operations |
$ |
(33,902) |
||||||||||
| Non - GAAP Financial Measures | ||||||
| (in thousands (000's), except per share data) | ||||||
| (Unaudited) | ||||||
|
For the Three Months Ended |
||||||
|
2020 |
|
2019 |
||||
| Non-GAAP operating earnings (loss)(5) |
$ |
3,132 |
$ |
(27,552) |
||
| Non-GAAP basic and diluted operating earnings (loss) per share attributable to Maiden common shareholders |
$ |
0.04 |
$ |
(0.33) |
||
| Annualized non-GAAP operating return on average common equity(6) |
40.2% |
-107.2% |
||||
| Reconciliation of net income (loss) to non-GAAP operating earnings (loss): | ||||||
| Net income (loss) |
$ |
20,861 |
$ |
(36,636) |
||
| Add (subtract) | ||||||
| Net realized (gains) losses on investment |
(11,038) |
11,101 |
||||
| Total other-than-temporary impairment losses |
1,506 |
- |
||||
| Foreign exchange and other gains |
(8,197) |
(4,979) |
||||
| Loss from discontinued operations, net of income tax |
- |
2,734 |
||||
| Loss from NGHC Quota Share run-off |
- |
228 |
||||
| Non-GAAP operating earnings (loss)(5) |
$ |
3,132 |
$ |
(27,552) |
||
| Weighted average number of common shares - basic and diluted |
83,256,223 |
82,965,156 |
||||
| Reconciliation of diluted earnings (loss) per share attributable to Maiden common shareholders to non-GAAP diluted operating earnings (loss) per share attributable to Maiden common shareholders: | ||||||
| Diluted earnings (loss) per share attributable to Maiden common shareholders |
$ |
0.25 |
$ |
(0.44) |
||
| Add (subtract) | ||||||
| Net realized (gains) losses on investment |
(0.13) |
0.13 |
||||
| Total other-than-temporary impairment losses |
0.02 |
- |
||||
| Foreign exchange and other gains |
(0.10) |
(0.06) |
||||
| Loss from discontinued operations, net of income tax |
- |
0.03 |
||||
| Loss from NGHC Quota Share run-off |
- |
0.01 |
||||
| Non-GAAP diluted operating earnings (loss) per share attributable to Maiden common shareholders |
$ |
0.04 |
$ |
(0.33) |
||
|
|
|
|
||||
| Reconciliation of total shareholders' equity to adjusted shareholders' equity: | ||||||
| Total Shareholders’ Equity |
$ |
484,998 |
$ |
507,718 |
||
| Unamortized deferred gain on retroactive reinsurance |
112,950 |
112,950 |
||||
| Adjusted shareholders' equity(2) |
$ |
597,948 |
$ |
620,668 |
||
| Reconciliation of book value per common share to adjusted book value per common share: | ||||||
| Book value per common share |
$ |
0.24 |
$ |
0.51 |
||
| Unamortized deferred gain on retroactive reinsurance |
1.35 |
1.36 |
||||
| Adjusted book value per common share(2) |
$ |
1.59 |
$ |
1.87 |
||
| Non - GAAP Financial Measures | |||||
| (in thousands (000's), except per share data) | |||||
| (Unaudited) | |||||
|
|
|
||||
| Investable assets: | |||||
| Total investments |
$ |
1,542,632 |
$ |
1,867,266 |
|
| Cash and cash equivalents |
60,059 |
48,197 |
|||
| Restricted cash and cash equivalents |
117,903 |
59,081 |
|||
| Loan to related party |
167,975 |
167,975 |
|||
| Funds withheld receivable |
696,076 |
684,441 |
|||
| Total investable assets(7) |
$ |
2,584,645 |
$ |
2,826,960 |
|
|
|
|
||||
| Capital: | |||||
| Preference shares |
$ |
465,000 |
$ |
465,000 |
|
| Common shareholders' equity |
19,998 |
42,718 |
|||
| Total shareholders' equity |
484,998 |
507,718 |
|||
| 2016 Senior Notes |
110,000 |
110,000 |
|||
| 2013 Senior Notes |
152,500 |
152,500 |
|||
| Total capital resources(8) |
$ |
747,498 |
$ |
770,218 |
|
| (1) Book value per common share is calculated using common shareholders’ equity (shareholders' equity excluding the aggregate liquidation value of our preference shares) divided by the number of common shares outstanding. | ||||||
| (2) Adjusted Total Shareholders' Equity and Adjusted Book Value per Common Share: Management has adjusted GAAP shareholders' equity by adding the unamortized deferred gain on retroactive reinsurance arising from the LPT/ADC Agreement relating to losses incurred subject to that agreement to shareholders' equity. As a result, by virtue of this adjustment, management has also computed the Adjusted Book Value per Common Share. The deferred gain represents amounts fully recoverable from Cavello and management believes adjusting for this shows the ultimate economic benefit of the LPT/ADC Agreement. We believe reflecting the economic benefit of this retroactive reinsurance agreement is helpful for understanding future trends in our operations, which will improve shareholders' equity over the settlement period. | ||||||
| (3) Underwriting related general and administrative expenses is a non-GAAP measure and includes expenses which are segregated for analytical purposes as a component of underwriting loss. | ||||||
| (4) Underwriting loss is a non-GAAP measure and is calculated as net premiums earned plus other insurance revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities. Management believes that this measure is important in evaluating the underwriting performance of the Company and its segments. This measure is also a useful tool to measure the profitability of the Company separately from the investment results and is also a widely used performance indicator in the insurance industry. | ||||||
| (5) Non-GAAP operating earnings (loss) is a non-GAAP financial measure defined by the Company as net income (loss) excluding realized investment gains and losses, total other-than-temporary impairment losses, foreign exchange and other gains and losses, loss from discontinued operations, net of income tax and income (loss) from NGHC Quota Share run-off and should not be considered as an alternative to net income (loss). The Company's management believes that non-GAAP operating earnings (loss) is a useful indicator of trends in the Company's underlying operations. The Company's measure of non-GAAP operating earnings (loss) may not be comparable to similarly titled measures used by other companies. | ||||||
| (6) Non-GAAP operating return on average common equity is a non-GAAP financial measure. Management uses non-GAAP operating return on average common shareholders' equity as a measure of profitability that focuses on the return to common shareholders. It is calculated using non-GAAP operating earnings (loss) divided by average common shareholders' equity. | ||||||
| (7) Investable assets is the total of the Company's investments, cash and cash equivalents, loan to a related party and funds withheld receivable. | ||||||
| (8) Total capital resources is the sum of the Company's principal amount of debt and shareholders' equity. | ||||||
| (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 as the effect of including potential dilutive shares would be anti-dilutive. | ||||||
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