UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No.1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(March 1, 2013)
MAIDEN HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)
Bermuda (State or other jurisdiction of incorporation) | 001-34042 (Commission File Number) | 98-0570192 (IRS Employer Identification No.) | ||
131 Front Street, Hamilton HM12, Bermuda
(Address of principal executive offices and zip code)
(441) 298-4900
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||
Explanatory Note
This Form 8-K/A amends Maiden Holdings, Ltd. (the "Company") Current Report on Form 8-K originally filed on March 1, 2013 (the "Original Filing"). The Company is refiling Item 7.01, Regulation FD Disclosure, and Item 9.01, Financial Statements and Exhibits, of the Original Filing to correct the information relating to the color coding of the Trust Preferred ("TRUPS") and the Senior Notes in the fourth quarter of 2012 in the chart located on page 10. The corrected chart has the TRUPS stated as $126 million and the Senior Notes stated as $208 million at the end of the fourth quarter of 2012.
Except as described above, no other changes have been made to the Original Filing.
Item 7.01 Regulation FD Disclosure.
The slide presentation will be referenced at investor/analyst meetings to be held in March and April 2013. A copy of the slide presentation is furnished as Exhibit 99.1 to this report.
The information under this Item 7.01 and the Investor Presentation attached to this Form 8-K as Exhibit 99.1 shall be deemed to be “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act. The furnishing of the information in this report is not intended to, and does not, constitute a determination or admission by the Company that the information in this report is material or complete, or that investors should consider this information before making an investment decision with respect to any security of the Company.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit | ||
No. | Description | |
99.1 | Slides from presentation by management. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: March 1, 2013 | MAIDEN HOLDINGS, LTD. | |
By: | /s/ Lawrence F. Metz | |
Lawrence F. Metz | ||
Senior Vice President, General Counsel and Secretary | ||
Maiden Holdings, Ltd. Investor Presentation March 2013
Forward Looking Statements This presentation contains “forward-looking statements” which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on the Company’s current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that actual developments will be those anticipated by the Company. Actual results may differ materially from those projected as a result of significant risks and uncertainties, including non-receipt of expected payments, changes in interest rates, effect of the performance of financial markets on investment income and fair values of investments, developments of claims and the effect on loss reserves, decreases in existing and new client projected premiums, accuracy in projecting loss reserves, the impact of competition and pricing environments, changes in the demand for the Company’s products, the effect of general economic conditions, adverse state and federal legislation, regulations and regulatory investigations into industry practices, developments relating to existing agreements, heightened competition, changes in pricing environments and changes in asset valuations. The Company undertakes no obligation to publicly update any forward- looking statements, except as may be required by law. Additional information about these risks and uncertainties, as well as others that many cause actual results to differ materially from those projected is contained in Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. 2
Overview • Differentiated specialty reinsurer • Focus on non-catastrophe working layer financial needs of targeted US and European regional and specialty insurers • Low volatility and predictable business model • Modeled 1-in-250 catastrophic exposure managed to < annual net income (more cat oriented reinsurers’ PMLs are double digit % of equity) • Specialized, highly efficient, scalable operating platform • Disciplined long-term relationship oriented market specialist • Bermuda domiciled • Operations in Bermuda, U.S. and Europe • Established June 2007 • Management has successful 29 year track record leading GMAC Reinsurance operations 3 Book Value per Common Share Growth Driven by Solid Risk Adjusted Returns 2012 Net Premiums Written by Segment Total NPW = $1,901m (*) Excluding the impact of Superstorm Sandy in 4Q12, Operating ROE in 2012 would have been 9.6% (**) Please see the non-GAAP reconciliation in the appendix of this presentation for additional important information. $ 9.02 $ 8.70 $ 9.62 $ 10.40 $ 10.64 $ 11.96 8.2% 11.6% 11.2% 10.2% 9.2% 5.9% 2007 2008 2009 2010 2011 2012* Book Value per Common Share Annualized Operating ROE** Diversified Reinsurance 40% AmTrust 44% ACAC 16%
60% 80% 100% 120% 140% 160% 4Q 0 7 1Q 0 8 2Q 0 8 3Q 0 8 4Q 0 8 1Q 0 9 2Q 0 9 3Q 0 9 4Q 0 9 1Q 1 0 2Q 1 0 3Q 1 0 4Q 1 0 1Q 1 1 2Q 1 1 3Q 1 1 4Q 1 1 1Q 1 2 2Q 1 2 3Q 1 2 4Q 1 2 CR Quarterly Combined Ratio 4Q07 to 4Q12 Maiden Bermuda P&C Companies 2.9% 15.5% 0% 5% 10% 15% 20% Maiden Bermuda P&C Companies Unique Business Model • Dedicated to predictable and stable operating performance • Focus on traditional, lower volatility lines of business • Target non-catastrophe client needs • Targeted customer focus • Long-term relationships with targeted regional and specialty P&C insurers • Strategic multi-year quota share relationships with specialty insurer AmTrust and personal lines underwriter ACAC, which provides substantial earnings stability • Provide customized reinsurance products and ancillary services • Unique collateral trust provides exceptional security • Efficient highly specialized operating platform • Lower volatility risk profile allows for more efficient capital utilization • Emphasis on significant relationships with clients • 2012 general and administrative expense ratio of 2.9% excluding non-recurring items Lower Volatility and Consistent Underwriting 2012 G&A Expense Ratio Bermuda P&C Companies include Aspen, Alterra, Arch, Axis, Awac, Endurance, EverestRe, Montpelier, PartnerRe, Platinum, RenRe, Validus, XL Source: SNL and Company Financials 4
Available Levers to Strengthen ROE 1. Improve underwriting returns • Continued underwriting discipline and catastrophe exposure management • One point lower on the combined ratio can benefit operating ROE by approximately two percentage points 2. Eventual refinancing of 14% junior subordinated debt associated with 2009 Trust Preferred Offering 3. Recovery of investment yields and full deployment of investable cash • Near-term interest rate environment dampening returns • Maintain conservative risk profile of investment portfolio 5 • Medium-term ROE > 15% • Combined ratio < 96% • G&A expense ratio < 4% • NPW CAGR of 10%+ • Core regional insurer client retention rate of > 85% • Modeled exposure to a one-in- 250 cat event < annual net income Targeted Operating Metrics Operating Targets More Achievable as Underwriting Results Improve, Cost of Capital Decreases and Investment Environment Becomes More Favorable
2012 Operating Highlights (1) Please see the non-GAAP reconciliation table at the end of this presentation for additional important information. • Book value per common share of $11.96 on December 31, 2012, up 12.4% versus year-end 2011 • Net operating earnings(1) of $48.5 million, or $0.66 per diluted common share, for the year ended December 31, 2012 compared with $69.6 million, or $0.96 per diluted common share, in the year ended December 31, 2011 • Combined ratio of 99.5% for the year ended December 31, 2012 compared to 98.1% in 2011 • Excluding the impact of Superstorm Sandy, 2012 combined ratio was 97.8%, diluted operating earnings(1) per diluted share of $1.09 and operating ROE(1) of 9.6%. • Net premiums written for the year ended December 31, 2012 increased 10.3% to $1.9 billion compared to the year ended December 31, 2011 • Net investment income was $81.2 million for the year ended December 31, 2012, an increase of 8.4% compared to 2011 • Total investments increased 29.6% in 2012 to $2.6 billion compared to 2011 • Capital raised in 2012 totaled $250 million, including $100 million of 30-Year, 8% Senior Notes issued in March and $150 million of 8.25% Preference Shares issued in August • Support and development of reinsurance business • Common share repurchase authorized • Additional flexibility to repurchase outstanding 14% 30-year trust preferred following January 20, 2014 call date 6
Summary Balance Sheet 7 2008 2009 2010 2011 2012 Invested Assets Investments $ 1,125.2 $ 1,667.2 $ 1,880.3 $ 2,022.9 $ 2,621.6 Cash & Cash Equivalents 541.2 252.3 185.9 303.0 213.8 Loan to Related Party 168.0 168.0 168.0 168.0 168.0 Total Invested Assets 1,834.4 2,087.5 2,234.2 2,493.9 3,003.4 Net Reinsurance Receivable 71.9 211.3 226.3 423.4 522.6 Deferred Acquisition Costs 104.5 173.0 203.6 248.4 270.7 Other Assets 117.8 164.3 318.5 229.4 341.5 Total Assets $ 2,128.6 $ 2,636.1 $ 2,982.6 $ 3,395.1 $ 4,138.2 Loss and LAE Reserve $ 897.7 $ 1,002.7 $ 1,226.8 $ 1,398.4 $ 1,740.3 Unearned Premiums 444.5 583.5 657.6 832.0 936.5 Senior Notes - - - 107.5 207.5 Trust Preferred Securities - 215.1 215.2 126.3 126.3 Other Liabilities 276.6 158.3 132.5 161.9 112.0 Total Liabilities 1,618.8 1,959.6 2,232.1 2,626.1 3,122.6 Equity 509.8 676.5 750.5 769.0 1,015.6 Total Liabilities & Equity $ 2,128.6 $ 2,636.1 $ 2,982.6 $ 3,395.1 $ 4,138.2 Book Value per Basic Share $ 8.70 $ 9.62 $ 10.40 $ 10.64 $ 11.96 Growth in Total Invested Assets 186.8% 13.8% 7.0% 11.6% 20.4% Ratio of Total Invested Assets to Equity 359.8% 308.6% 297.7% 324.3% 295.7%
Income Statement Highlights * 2011 includes $35.4 million in charges related to Senior Note Offering which consist of $20.3 million of accelerated amortization of discount on junior subordinated debt and $15.1 million charge related to repurchase of junior subordinated debt. 2011 also Includes $9.5 million or 0.6% in loss ratio and combined ratio impact from U.S thunderstorm and tornado activity in 2Q11. Please see the non-GAAP reconciliation table in the appendix of this presentation for additional important information. 8 2008 2009 2010 2011 2012 Net Premium Written $ 727.4 $ 1,030.4 $ 1,227.8 $ 1,723.5 $ 1,901.3 Net Earned Premium $ 420.1 $ 919.9 $ 1,169.8 $ 1,552.4 $ 1,803.8 Net Investment Income 37.2 62.9 71.6 74.9 81.2 Interest and Amortization Expense - 34.4 36.5 34.1 36.4 Net Income $ 18.8 $ 61.1 $ 69.9 $ 28.5 $ 46.5 Operating Earnings * $ 60.6 $ 66.2 $ 72.7 $ 69.6 $ 48.5 Operating EPS * $ 1.02 $ 0.95 $ 1.02 $ 0.96 $ 0.66 Operating ROE * 11.6% 11.2% 10.2% 9.2% 5.9% Loss Ratio 62.8% 66.2% 64.6% 66.6% 69.5% Expense Ratio 32.0% 29.7% 32.3% 31.5% 30.0% Combined Ratio 94.8% 95.9% 96.9% 98.1% 99.5%
Maiden Maintains a Conservative Investment Portfolio Investments Composition1 (1) As of December 31, 2012 Total: $2.6bn Strong Credit Quality of Investments1 Total: $2.6bn • Continued emphasis on investing in GSE and high-grade corporate debt; new money yield on fixed maturities in 4Q12 is 3.01%; overall 4Q12 book yield (excluding cash equivalents) is 3.48% • December 31, 2012 average fixed maturity duration of 3.55 years compared to 2.78 years as of December 31, 2011 • Profitable growth & positive cash flow has expanded invested assets that will enhance earnings 9 U.S. Treasuries 2% Other 3% Municipal Bonds 5% Corporate Bonds 52% US Agency 38% A 20% AA 8% AAA 7% Below Inv. Grade 1% BBB 24% US Agency 38% U.S. Treasuries 2%
• Access to capital markets has enabled Maiden to enhance capital in a shareholder friendly manner • 30-Year, 8.25% Senior Notes Offering of $107.5 million closed on June 24, 2011 (NYSE:MHNA) replacing a portion of higher coupon TRUPS • 30-Year, 8% Senior Notes Offering of $100 million closed on March 27, 2012 (NYSE:MHNB) • 8.25% Non-Cumulative Perpetual Preferred Share offering of $150 million closed on August 29, 2012 (NYSE:MHPRA) • Strong Balance sheet increasingly optimized to efficiently utilize capital and strengthen returns • Continued focus on replacing 14% TRUPS issued in early 2009 with lower cost capital • Flexibility to repurchase common shares and eventually repurchase TRUPS in January 2014 Growing, Balanced and Diversified Capital Structure Strong Capital Position (In $ millions) 10 537 510 677 750 769 811 825 878 865 215 215 126 126 126 126 126 108 208 208 208 208 150 150 400 600 800 1,000 1,200 1,400 2007 2008 2009 2010 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 To tal Ca p ita l Common Equity Trust Preferred ("TRUPS") Senior Notes Preference Shares
Delivering Shareholder Value • Maiden is well positioned as a market specialist with significant competitive advantages • Disciplined approach to underwriting and pricing • Multi-year strategic quota-share relationships enhance revenue/profit stability • Focused on delivering stable operating performance and strengthening returns • Highly differentiated business model • Strong historical dividend growth 11 Committed to Driving Continued Value Creation (1) Source SNL Financial. Total return of a security 11/11/2008 to 2/21/2013, including price appreciation and the reinvestment of dividends. Dividends are assumed to be reinvested at the closing price of the security on the ex-date of the dividend. (*) Bermuda P&C Companies include: Aspen, Alterra, Arch, Axis, Awac, Endurance, EverestRe, Montpelier, PartnerRe, Platinum, RenRe, Validus, XL 270% 124% 84% 0% 50% 100% 150% 200% 250% 300% Maiden Index of Bermuda P&C Companies* S&P 500 Total Return1 Following Transformational Acquisition of GMACRe
Appendix 12 • Non-GAAP Financial Measures • Non-GAAP Financial Measures – Reconciliation
Non-GAAP Financial Measures • In presenting the Company’s results, management has included and discussed in this presentation certain non generally accepted accounting principles (“non-GAAP”) financial measures within the meaning of Regulation G as promulgated by the U.S. Securities and Exchange Commission. Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain the company’s results of operations in a manner that allows for a more complete understanding of the underlying trends in the Company’s business. However, these measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles (“U.S. GAAP”). • Operating Earnings and Operating Earnings per Share: In addition to presenting net income determined in accordance with GAAP, we believe that showing operating earnings enables investors, analysts, rating agencies and other users of our financial information to more easily analyze our results of operations in a manner similar to how management analyzes our underlying business performance. Operating earnings should not be viewed as a substitute for U.S. GAAP net income. Operating earnings are an internal performance measure used in the management of our operations and represents operating results excluding, as applicable, realized investment gains or losses, foreign exchange gain or loss, the amortization of intangible assets and non-cash deferred tax expenses. We also exclude certain non-recurring expenditures that are material to understanding our results of operations. For 2011 and 2010, we exclude transaction expenses related to the IIS Acquisition as these are non-recurring. In 2011, as a result of the Senior Notes Offering, we exclude the junior subordinated debt repurchase expense and the accelerated amortization of junior subordinated debt discount and issuance costs, as both are non- recurring. We exclude net realized investment gains or losses and foreign exchange gain or loss as we believe that both are heavily influenced in part by market opportunities and other factors. We do not believe amortization of intangible assets are representative of our ongoing business. We believe all of these amounts are largely independent of our business and underwriting process and including them distorts the analysis of trends in our operations. • Operating Return on Equity ("Operating ROE"): Management uses operating return on average common shareholders' equity as a measure of profitability that focuses on the return to common shareholders. It is calculated using operating earnings available to common shareholders (realized gains or losses on investments, foreign exchange gains and losses, and amortization of intangible assets) divided by average common shareholders' equity. Management has set as a target a medium-term average of 15% Operating ROE, which management believes provides an attractive return to shareholders for the risk assumed. • See the following slide for a reconciliation of non-GAAP measures used in this presentation to their most directly comparable GAAP measures. 13 Appendix
Non-GAAP Financial Measures - Reconciliation 14 NOTE - Please see the definition of non-GAAP financial measures on the previous slide for additional important information. Appendix 2008 2009 2010 2011 2012 Net income $ 18.8 $ 61.1 $ 69.9 $ 28.5 $ 46.5 Add (subtract): Net realized investment (gains) losses 37.5 (0.3) (6.6) (0.5) (1.9) Foreign exchange and other losses (gains) 1.4 (2.5) 0.6 (0.3) (1.6) Amortization of intangibles 1.3 6.6 5.8 5.0 4.4 Junior subordinated debt repurchase expense - - - 15.1 - Accelerated amortization of subordinated debt discouny and issuance cost - - - 20.3 - Non-recurring general and administrative expenses relating to IIS Acquisition (2010) and GMAC Acquisition (2008) 1.6 - 1.8 0.2 - Non-cash deferred tax expense - 1.3 1.2 1.3 1.1 Operating earnings $ 60.6 $ 66.2 $ 72.7 $ 69.6 $ 48.5 Operating earnings per common share: Basic operating earnings per share $ 1.02 $ 0.95 $ 1.03 $ 0.97 $ 0.67 Diluted operating eanings per share $ 1.02 $ 0.95 $ 1.02 $ 0.96 $ 0.66