UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 2, 2016 (November 1, 2016)
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)) | ||||
Item 2.02 | Results of Operations and Financial Condition. |
On November 2, 2016, Maiden Holdings, Ltd. (the “Company”) issued a press release announcing its results of operations for the fiscal quarter ended September 30, 2016. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.
The information contained in this Item 2.02 and in the accompanying exhibit 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, or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 8.01 | Other Events. |
On November 1, 2016, the Company issued a press release announcing the following quarterly dividends:
Dividend per Share | Payable on: | Record date: | ||||||
Common shares | $ | 0.15 | January 17, 2017 | January 3, 2017 | ||||
Preference shares - Series A | $ | 0.515625 | December 15, 2016 | December 1, 2016 | ||||
Preference shares - Series C | $ | 0.445313 | December 15, 2016 | December 1, 2016 | ||||
A copy of the press release is hereby filed with the Commission and incorporated by reference herein as Exhibit 99.2.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibit
Exhibit | ||
No. | Description | |
99.1 | Press Release of Maiden Holdings, Ltd., dated November 2, 2016 | |
99.2 | Press Release of Maiden Holdings, Ltd., dated November 1, 2016 | |
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: November 2, 2016 | MAIDEN HOLDINGS, LTD. | |
By: | /s/ Lawrence F. Metz | |
Lawrence F. Metz | ||
Executive Vice President, General Counsel and Secretary | ||
EXHIBIT INDEX
Exhibit | ||
No. | Description | |
99.1 | Press Release of Maiden Holdings, Ltd., dated November 2, 2016 | |
99.2 | Press Release of Maiden Holdings, Ltd., dated November 1, 2016 | |
Exhibit 99.1
PRESS RELEASE
Maiden Holdings, Ltd. Announces Third Quarter 2016 Net Income Attributable to Common Shareholders of $31.8 Million or $0.40 Per Diluted Common Share and Operating Earnings(1) of $30.2 Million or $0.39 Per Diluted Common Share
Highlights for the quarter ended September 30, 2016
• | Net income attributable to Maiden common shareholders of $31.8 million, or $0.40 per diluted common share compared with net income attributable to Maiden common shareholders of $22.5 million, or $0.30 per diluted common share in the third quarter of 2015; |
• | Annualized return on common equity of 11.6% compared to 9.8% in the third quarter of 2015; |
• | Net operating earnings(1) of $30.2 million, or $0.39 per diluted common share compared with net operating earnings of $25.8 million, or $0.34 per diluted common share in the third quarter of 2015; |
• | Annualized operating return on common equity(7) of 11.0% compared to 11.3% in the third quarter of 2015; |
• | Gross premiums written increased 12.5% to $706.9 million compared to the third quarter of 2015; |
• | Net premiums written increased 15.3% to $690.7 million compared to the third quarter of 2015; |
• | Combined ratio(12) of 98.5% compared to 99.6% in the third quarter of 2015; |
• | Net investment income was $35.7 million compared to $32.8 million in the third quarter of 2015; |
• | Book value per common share(4) of $14.40 at September 30, 2016 increased 1.6% versus at June 31, 2016; and |
• | In September, Maiden’s mandatory convertible preference shares converted into common shares, increasing common shares outstanding by 12,069,090. |
Highlights for the nine months ended September 30, 2016
• | Net income attributable to Maiden common shareholders of $90.0 million or $1.15 per diluted common share compared with $75.4 million, or $0.99 per diluted common share in the first nine months of 2015; |
• | Annualized return on common equity of 12.2% compared to 11.0% in the first three quarters of 2015; |
• | Net operating earnings(1) of $87.0 million, or $1.11 per diluted common share compared with net operating earnings of $80.8 million, or $1.05 per diluted common share in the first nine months of 2015; |
• | Annualized operating return on common equity(1) of 11.8% compared to 11.8% in the first three quarters of 2015; |
• | Gross premiums written were $2.3 billion, an increase of 5.7% compared to the first nine months of 2015; |
• | Net premiums written increased 5.3% to $2.1 billion in the first three quarters of 2016 compared to the same period last year; |
• | Combined ratio(12) of 98.7% was lower than the 99.1% in the first nine months of 2015; and |
• | Net investment income was $107.3 million, an increase of 11.5% compared to the first three quarters of 2015. |
HAMILTON, Bermuda - Maiden Holdings, Ltd. (NASDAQ: MHLD) (“Maiden” or “the Company”) today reported third quarter 2016 net income attributable to Maiden common shareholders of $31.8 million or $0.40 per diluted common share compared to net income attributable to Maiden common shareholders of $22.5 million or $0.30 per diluted common share in the third quarter of 2015. Net operating earnings(1) were $30.2 million, or $0.39 per diluted common share compared with net operating earnings of $25.8 million, or $0.34 per diluted common share in the third quarter of 2015.
Commenting on the Company's results, Art Raschbaum, Chief Executive Officer of Maiden, said: “Maiden continued to deliver strong results with a year-over-year improvement in our combined ratio, double digit operating return on common equity, increased investment income, continued growth in book value and disciplined growth from virtually all business activities, despite an increasingly challenging operating environment with intensifying competition, as well as growing loss cost volatility. Maiden’s growth during the quarter emanated from existing client relationships and new business. Our recent rating upgrade from AM Best to A stable, will further strengthen Maiden's unique value proposition to our clients and prospects.”
Results for the quarter ended September 30, 2016
Maiden reported third quarter 2016 net income attributable to common shareholders of $31.8 million or $0.40 per diluted common share compared with $22.5 million or $0.30 per diluted common share in the third quarter of 2015. Net operating earnings(1) were $30.2 million, or $0.39 per diluted common share in the third quarter of 2016 compared with $25.8 million, or $0.34 per diluted common share in the third quarter of 2015.
In the third quarter of 2016, gross premiums written increased 12.5% to $706.9 million from $628.5 million in the third quarter of 2015. The Diversified Reinsurance segment’s gross premiums written totaled $186.8 million, an increase of 7.1% versus the third quarter of 2015, with growth from existing customers and new accounts developed over the course of the year. In the AmTrust Reinsurance segment, gross premiums written were $520.1 million, an increase of 14.5% compared to $454.2 million in the third quarter of 2015.
Net premiums written totaled $690.7 million in the third quarter of 2016, an increase of 15.3% compared to the third quarter of 2015.
Net premiums earned of $698.3 million increased 6.0% compared to the third quarter of 2015. In the Diversified Reinsurance segment, net premiums earned decreased 9.4% to $175.1 million compared to the third quarter of 2015. The AmTrust Reinsurance segment net premiums earned were $523.1 million, up 12.4% compared to the third quarter of 2015.
Net loss and loss adjustment expenses of $466.8 million were up 5.1% compared to the third quarter of 2015.
The loss ratio(8) of 66.6% was lower than the 67.2% reported in the third quarter of 2015.
Commission and other acquisition expenses, increased 4.6% to $206.7 million in the third quarter of 2016, compared to the same quarter a year ago. The expense ratio(11) decreased to 31.9% for the third quarter of 2016 compared with 32.4% in the same quarter last year, due to changes in the mix of quota share and excess of loss business. General and administrative expenses for the third quarter of 2016 totaled $17.0 million, a 3.0% increase compared with $16.5 million in the third quarter of 2015. The general and administrative expense ratio(10) was 2.4% in the third quarter of 2016, compared to 2.5% in the third quarter of 2015.
The combined ratio(12) for the third quarter of 2016 totaled 98.5% compared with 99.6% in the third quarter of 2015. The Diversified Reinsurance segment combined ratio was 102.2% in the third quarter of 2016, an improvement from 103.6% in the third quarter of 2015, as net adverse development from commercial auto business continued to impact results. The AmTrust Reinsurance segment combined ratio was 95.9% in the third quarter of 2016 compared to 95.4% in the third quarter of 2015.
Net investment income of $35.7 million in the third quarter of 2016 increased 8.6% compared to the third quarter of 2015. As of September 30, 2016, the average yield on the fixed income portfolio (excluding cash) is 3.20% with an average duration of 4.49 years. Cash and cash equivalents were $434.0 million at September 30, 2016 or $101.5 million higher than at year-end 2015.
Total assets increased 13.4% to $6.5 billion at September 30, 2016 compared to $5.7 billion at year-end 2015. Shareholders' equity was $1.6 billion, up 15.4% compared to December 31, 2015. Book value per common share was $14.40 at September 30, 2016 or 22.3% higher than at December 31, 2015.
During the third quarter of 2016, the Board of Directors declared dividends of $0.14 per common share, $0.515625 per Series A preference share, $0.90625 per Series B preference share and $0.445313 per Series C preference share.
Results for the nine months ended September 30, 2016
Net income attributable to Maiden common shareholders was $90.0 million or $1.15 per diluted common share in the first nine months of 2016 compared to net income attributable to Maiden common shareholders of $75.4 million or $0.99 per diluted common share in the first three quarters of 2015. Net operating earnings(1) for the first nine months of 2016 were $87.0 million, or $1.11 per diluted common share compared with $80.8 million, or $1.05 per diluted common share in the first three quarters of 2015.
In the first nine months of 2016, gross premiums written totaled $2.3 billion, an increase of 5.7% compared to the first nine months of 2015. Gross premiums written in the Diversified Reinsurance segment totaled $667.4 million, an increase of 5.7% versus the first three quarters of 2015. In the AmTrust Reinsurance segment, gross premiums written increased by 5.7% to $1.6 billion compared to the first three quarters of 2015.
In the first three quarters of 2016, net premiums written totaled $2.1 billion, an increase of 5.3% compared to the first nine months of 2015.
Net premiums earned of $2.0 billion increased 5.8% compared to the first nine months of 2015. Net premiums earned decreased 5.7% in the Diversified Reinsurance segment to $538.2 million compared to the first three quarters of 2015. The AmTrust Reinsurance segment net premiums earned were up 10.9% to $1.4 billion compared to the first three quarters 2015.
Net loss and loss adjustment expenses of $1.3 billion were up 4.9% compared to the first nine months of 2015. The loss ratio(8) of 66.2% was lower than the 66.7% in the first three quarters of 2015.
Commission and other acquisition expenses, increased $35.8 million to $587.5 million in the first nine months of 2016 versus the comparable period a year ago, while the expense ratio(11) rose to 32.5% for the first nine months of 2016 compared with 32.4% in the same period last year. General and administrative expenses for the first three quarters of 2016 totaled $49.7 million compared with $49.0 million in the first nine months of 2015. The general and administrative expense ratio(10) decreased to 2.5% in the first three quarters of 2016 versus 2.7% in the same period during 2015.
The combined ratio(12) for the first three quarters of 2016 was 98.7% and lower than the 99.1% combined ratio reported for the first nine months of 2015. The Diversified Reinsurance segment had a combined ratio of 102.8% in the first three quarters of 2016, which is the same as the first nine months of 2015. The AmTrust Reinsurance segment combined ratio was 95.4% in the first three quarters of 2016 compared to 95.1% in the comparable period in 2015.
Net investment income of $107.3 million in the first three quarters of 2016 increased 11.5% compared to the first three quarters of 2015.
(1)(4)(7) 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.
(8)(10)(11)(12) Loss ratio, general and administrative expense ratio, expense ratio and combined ratio are operating metrics. Please see the additional information on these measures under Segment information tables.
Conference Call
Maiden’s Chief Executive Officer, Art Raschbaum and Chief Financial Officer, Karen Schmitt will review these results tomorrow via teleconference and live audio webcast beginning at 12:00 p.m. ET.
To participate in the conference call, please access one of the following at least five minutes prior to the start time:
U.S. Callers: 1.877.734.5373
Outside U.S. Callers: 1.973.200.3059
Passcode: 5957381
Webcast: http://www.maiden.bm/news_events
A replay of the conference call will be available beginning at 3:00 p.m. ET on November 3, 2016 through 2:00 p.m. ET on November 10, 2016. To listen to the replay, please dial toll free: 1.855.859.2056 (U.S. Callers) or toll: 1.404.537.3406 (callers outside the U.S.) and enter the Passcode: 5957381; or access http://www.maiden.bm/news_events.
About Maiden Holdings, Ltd.
Maiden Holdings, Ltd. is a Bermuda-based holding company formed in 2007. Through its subsidiaries, which are each A rated (excellent) by A.M. Best, the Company is focused on providing non-catastrophic, customized reinsurance products and services to small and mid-size insurance companies in the United States and Europe. As of September 30, 2016, Maiden had $6.5 billion in assets and shareholders' equity of $1.6 billion.
The Maiden Holdings, Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5006
Forward Looking Statements
This release 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 the 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, 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 and unusual frequency of storm activity, 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. Additional information about these risks and uncertainties, as well as others that may 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, 2015 as updated in periodic filings with the SEC. The Company undertakes no obligation to publicly update any forward-looking statements, except as may be required by law.
CONTACT:
Noah Fields, Senior Vice President, Investor Relations
Maiden Holdings, Ltd.
Phone: 441.298.4927
E-mail: nfields@maiden.bm
Maiden Holdings, Ltd. | ||||||||
Balance Sheet | ||||||||
(in thousands of U.S. dollars, except share and per share data) | ||||||||
September 30, 2016 (Unaudited) | December 31, 2015 (Audited) | |||||||
ASSETS | ||||||||
Investments: | ||||||||
Fixed maturities, available-for-sale, at fair value (amortized cost 2016: $3,660,873; 2015: $3,562,864) | $ | 3,748,342 | $ | 3,508,088 | ||||
Fixed maturities, held-to-maturity, at amortized cost (fair value 2016: $798,081; 2015: $598,975) | 759,973 | 607,843 | ||||||
Other investments, at fair value (cost 2016: $10,860; 2015: $10,816) | 12,268 | 11,812 | ||||||
Total investments | 4,520,583 | 4,127,743 | ||||||
Cash and cash equivalents | 67,459 | 89,641 | ||||||
Restricted cash and cash equivalents | 366,563 | 242,859 | ||||||
Accrued investment income | 33,884 | 32,288 | ||||||
Reinsurance balances receivable, net | 535,015 | 377,318 | ||||||
Reinsurance recoverable on unpaid losses | 97,070 | 71,248 | ||||||
Loan to related party | 167,975 | 167,975 | ||||||
Deferred commission and other acquisition expenses, net | 451,698 | 397,548 | ||||||
Goodwill and intangible assets, net | 80,135 | 81,920 | ||||||
Other assets | 147,580 | 115,038 | ||||||
Total assets | $ | 6,467,962 | $ | 5,703,578 | ||||
LIABILITIES | ||||||||
Reserve for loss and loss adjustment expenses | $ | 2,759,518 | $ | 2,510,101 | ||||
Unearned premiums | 1,571,435 | 1,354,572 | ||||||
Accrued expenses and other liabilities | 150,741 | 135,897 | ||||||
Liability for securities purchased | 78,581 | 3,976 | ||||||
Senior Notes - principal amount | 362,500 | 360,000 | ||||||
Less unamortized debt issuance costs | 11,172 | 10,067 | ||||||
Senior notes, net | 351,328 | 349,933 | ||||||
Total liabilities | 4,911,603 | 4,354,479 | ||||||
Commitments and Contingencies | ||||||||
EQUITY | ||||||||
Preference shares | 315,000 | 480,000 | ||||||
Common shares | 872 | 747 | ||||||
Additional paid-in capital | 747,203 | 579,178 | ||||||
Accumulated other comprehensive income (loss) | 123,876 | (23,767 | ) | |||||
Retained earnings | 373,340 | 316,184 | ||||||
Treasury shares, at cost | (4,991 | ) | (4,521 | ) | ||||
Total Maiden shareholders’ equity | 1,555,300 | 1,347,821 | ||||||
Noncontrolling interest in subsidiaries | 1,059 | 1,278 | ||||||
Total equity | 1,556,359 | 1,349,099 | ||||||
Total liabilities and equity | $ | 6,467,962 | $ | 5,703,578 | ||||
Book value per common share(4) | $ | 14.40 | $ | 11.77 | ||||
Common shares outstanding | 86,128,999 | 73,721,140 | ||||||
Maiden Holdings, Ltd. | ||||||||||||||||
Income Statement | ||||||||||||||||
(in thousands of U.S. dollars, except share and per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the Three Months Ended September 30, 2016 | For the Three Months Ended September 30, 2015 | For the Nine Months Ended September 30, 2016 | For the Nine Months Ended September 30, 2015 | |||||||||||||
Revenues: | ||||||||||||||||
Gross premiums written | $ | 706,854 | $ | 628,501 | $ | 2,259,290 | $ | 2,136,935 | ||||||||
Net premiums written | $ | 690,653 | $ | 599,153 | $ | 2,133,911 | $ | 2,025,754 | ||||||||
Change in unearned premiums | 7,625 | 59,367 | (182,060 | ) | (180,495 | ) | ||||||||||
Net premiums earned | 698,278 | 658,520 | 1,951,851 | 1,845,259 | ||||||||||||
Other insurance revenue | 2,345 | 2,177 | 8,696 | 9,408 | ||||||||||||
Net investment income | 35,666 | 32,843 | 107,291 | 96,260 | ||||||||||||
Net realized gains on investment | 1,900 | 1,216 | 4,511 | 2,327 | ||||||||||||
Total other-than-temporary impairment losses | — | (1,060 | ) | — | (1,060 | ) | ||||||||||
Portion of loss recognized in other comprehensive income (loss) | — | — | — | — | ||||||||||||
Net impairment losses recognized in earnings | — | (1,060 | ) | — | (1,060 | ) | ||||||||||
Total revenues | 738,189 | 693,696 | 2,072,349 | 1,952,194 | ||||||||||||
Expenses: | ||||||||||||||||
Net loss and loss adjustment expenses | 466,751 | 444,172 | 1,297,361 | 1,236,505 | ||||||||||||
Commission and other acquisition expenses | 206,706 | 197,639 | 587,501 | 551,678 | ||||||||||||
General and administrative expenses | 16,952 | 16,453 | 49,738 | 48,951 | ||||||||||||
Total expenses | 690,409 | 658,264 | 1,934,600 | 1,837,134 | ||||||||||||
Income from operations(2) | 47,780 | 35,432 | 137,749 | 115,060 | ||||||||||||
Other expenses | ||||||||||||||||
Interest and amortization expenses | (6,856 | ) | (7,266 | ) | (21,314 | ) | (21,796 | ) | ||||||||
Accelerated amortization of senior note issuance cost | — | — | (2,345 | ) | — | |||||||||||
Amortization of intangible assets | (616 | ) | (710 | ) | (1,846 | ) | (2,130 | ) | ||||||||
Foreign exchange and other gains | 687 | 1,427 | 6,474 | 4,062 | ||||||||||||
Total other expenses | (6,785 | ) | (6,549 | ) | (19,031 | ) | (19,864 | ) | ||||||||
Income before income taxes | 40,995 | 28,883 | 118,718 | 95,196 | ||||||||||||
Income tax expense | 199 | 368 | 1,206 | 1,636 | ||||||||||||
Net income | 40,796 | 28,515 | 117,512 | 93,560 | ||||||||||||
Add: loss attributable to noncontrolling interest | 56 | 69 | 166 | 116 | ||||||||||||
Net income attributable to Maiden | 40,852 | 28,584 | 117,678 | 93,676 | ||||||||||||
Dividends on preference shares(6) | (9,023 | ) | (6,085 | ) | (27,723 | ) | (18,253 | ) | ||||||||
Net income attributable to Maiden common shareholders | $ | 31,829 | $ | 22,499 | $ | 89,955 | $ | 75,423 | ||||||||
Net operating earnings attributable to Maiden common shareholders(1) | $ | 30,196 | $ | 25,758 | $ | 86,974 | $ | 80,791 | ||||||||
Basic earnings per common share attributable to Maiden shareholders | $ | 0.42 | $ | 0.31 | $ | 1.20 | $ | 1.03 | ||||||||
Diluted earnings per common share attributable to Maiden shareholders | $ | 0.40 | $ | 0.30 | $ | 1.15 | $ | 0.99 | ||||||||
Basic operating earnings per common share attributable to Maiden shareholders | $ | 0.40 | $ | 0.35 | $ | 1.16 | $ | 1.10 | ||||||||
Diluted operating earnings per common share attributable to Maiden shareholders | $ | 0.39 | $ | 0.34 | $ | 1.11 | $ | 1.05 | ||||||||
Dividends declared per common share | $ | 0.14 | $ | 0.13 | $ | 0.42 | $ | 0.39 | ||||||||
Weighted average number of common shares - basic | 75,993,451 | 73,638,980 | 74,625,839 | 73,403,998 | ||||||||||||
Adjusted weighted average number of common shares and assumed conversions - diluted | 86,150,951 | 85,743,005 | 86,018,019 | 85,486,002 | ||||||||||||
Net loss and LAE ratio(8) | 66.6 | % | 67.2 | % | 66.2 | % | 66.7 | % | ||||||||
Commission and other acquisition expense ratio(9) | 29.5 | % | 29.9 | % | 30.0 | % | 29.7 | % | ||||||||
General and administrative expense ratio(10) | 2.4 | % | 2.5 | % | 2.5 | % | 2.7 | % | ||||||||
Expense ratio(11) | 31.9 | % | 32.4 | % | 32.5 | % | 32.4 | % | ||||||||
Combined ratio(12) | 98.5 | % | 99.6 | % | 98.7 | % | 99.1 | % | ||||||||
Annualized return on common equity | 11.6 | % | 9.8 | % | 12.2 | % | 11.0 | % | ||||||||
Annualized operating return on common equity(7) | 11.0 | % | 11.3 | % | 11.8 | % | 11.8 | % | ||||||||
Maiden Holdings, Ltd. | ||||||||||||||||
Non - GAAP Financial Measure | ||||||||||||||||
(in thousands of U.S. dollars, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the Three Months Ended September 30, 2016 | For the Three Months Ended September 30, 2015 | For the Nine Months Ended September 30, 2016 | For the Nine Months Ended September 30, 2015 | |||||||||||||
Reconciliation of net income attributable to Maiden common shareholders to net operating earnings: | ||||||||||||||||
Net income attributable to Maiden common shareholders | $ | 31,829 | $ | 22,499 | $ | 89,955 | $ | 75,423 | ||||||||
Add (subtract) | ||||||||||||||||
Net realized gains on investment | (1,900 | ) | (1,216 | ) | (4,511 | ) | (2,327 | ) | ||||||||
Net impairment losses recognized in earnings | — | 1,060 | — | 1,060 | ||||||||||||
Foreign exchange and other gains | (687 | ) | (1,427 | ) | (6,474 | ) | (4,062 | ) | ||||||||
Amortization of intangible assets | 616 | 710 | 1,846 | 2,130 | ||||||||||||
Divested excess and surplus ("E&S") business and NGHC run-off | 47 | 3,841 | 2,942 | 7,696 | ||||||||||||
Accelerated amortization of senior note issuance cost | — | — | 2,345 | — | ||||||||||||
Non-cash deferred tax expense | 291 | 291 | 871 | 871 | ||||||||||||
Net operating earnings attributable to Maiden common shareholders(1) | $ | 30,196 | $ | 25,758 | $ | 86,974 | $ | 80,791 | ||||||||
Operating earnings per common share attributable to Maiden shareholders: | ||||||||||||||||
Basic earnings per common share attributable to Maiden shareholders | $ | 0.40 | $ | 0.35 | $ | 1.16 | $ | 1.10 | ||||||||
Diluted earnings per common share attributable to Maiden shareholders | $ | 0.39 | $ | 0.34 | $ | 1.11 | $ | 1.05 | ||||||||
Reconciliation of net income attributable to Maiden to income from operations: | ||||||||||||||||
Net income attributable to Maiden | $ | 40,852 | $ | 28,584 | $ | 117,678 | $ | 93,676 | ||||||||
Add (subtract) | ||||||||||||||||
Foreign exchange and other gains | (687 | ) | (1,427 | ) | (6,474 | ) | (4,062 | ) | ||||||||
Amortization of intangible assets | 616 | 710 | 1,846 | 2,130 | ||||||||||||
Interest and amortization expenses | 6,856 | 7,266 | 21,314 | 21,796 | ||||||||||||
Accelerated amortization of senior note issuance cost | — | — | 2,345 | — | ||||||||||||
Income tax expense | 199 | 368 | 1,206 | 1,636 | ||||||||||||
Loss attributable to noncontrolling interest | (56 | ) | (69 | ) | (166 | ) | (116 | ) | ||||||||
Income from operations(2) | $ | 47,780 | $ | 35,432 | $ | 137,749 | $ | 115,060 | ||||||||
September 30, 2016 | December 31, 2015 | |||||||||||||||
Investable assets: | ||||||||||||||||
Total investments | $ | 4,520,583 | $ | 4,127,743 | ||||||||||||
Cash and cash equivalents | 67,459 | 89,641 | ||||||||||||||
Restricted cash and cash equivalents | 366,563 | 242,859 | ||||||||||||||
Loan to related party | 167,975 | 167,975 | ||||||||||||||
Total investable assets(3) | $ | 5,122,580 | $ | 4,628,218 | ||||||||||||
September 30, 2016 | December 31, 2015 | |||||||||||||||
Capital: | ||||||||||||||||
Preference shares | $ | 315,000 | $ | 480,000 | ||||||||||||
Common shareholders' equity | 1,240,300 | 867,821 | ||||||||||||||
Total Maiden shareholders' equity | 1,555,300 | 1,347,821 | ||||||||||||||
2011 Senior Notes | — | 107,500 | ||||||||||||||
2012 Senior Notes | 100,000 | 100,000 | ||||||||||||||
2013 Senior Notes | 152,500 | 152,500 | ||||||||||||||
2016 Senior Notes | 110,000 | — | ||||||||||||||
Total capital resources(5) | $ | 1,917,800 | $ | 1,707,821 | ||||||||||||
(1) Net operating earnings is a non-GAAP financial measure defined by the Company as net income attributable to Maiden common shareholders excluding realized and unrealized investment gains and losses, net impairment losses recognized in earnings, foreign exchange and other gains and losses, amortization of intangible assets, divested excess and surplus business and NGHC run-off, accelerated amortization of senior note issuance cost and non-cash deferred tax expense and should not be considered as an alternative to net income. The Company's management believes that net operating earnings is a useful indicator of trends in the Company's underlying operations. The Company's measure of net operating earnings may not be comparable to similarly titled measures used by other companies. | ||||||
(2) Income from Operations is a non-GAAP financial measure defined by the Company as net income attributable to Maiden excluding foreign exchange and other gains and losses, amortization of intangible assets, interest and amortization expenses, accelerated amortization of senior note issuance cost, income tax expense and income or loss attributable to noncontrolling interest and should not be considered as an alternative to net income. The Company’s management believes that income from operations is a useful measure of the Company’s underlying earnings fundamentals based on its underwriting and investment income before financing costs. This income from operations enables readers of this information to more clearly understand the essential operating results of the Company. The Company’s measure of income from operations may not be comparable to similarly titled measures used by other companies. | ||||||
(3) Investable assets is the total of the Company's investments, cash and cash equivalents and loan to a related party. | ||||||
(4) 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. | ||||||
(5) Total capital resources is the sum of the Company's principal amount of debt and Maiden shareholders' equity. | ||||||
(6) Dividends on preference shares consist of $3,094 and $9,282 paid to Preference Shares - Series A and $2,991 and $8,971 paid to Preference shares - Series B during the three and nine months ended September 30, 2016 and 2015, respectively, and $2,938 and $9,470 paid to Preference shares - Series C during the three and nine months ended September 30, 2016, respectively. | ||||||
(7) Operating return on average common equity is a non-GAAP financial measure. Management uses operating return on average common shareholders' equity as a measure of profitability that focuses on the return to Maiden common shareholders. It is calculated using operating earnings available to common shareholders divided by average Maiden common shareholders' equity. For the three and nine months ended September 30, 2016, the average common shareholders' equity is adjusted for the period the Mandatory Convertible Preference Shares - Series B are outstanding (prior to mandatory conversion date of September 15, 2016). | ||||||
Maiden Holdings, Ltd. | ||||||||
Supplemental Financial Data - Segment Information | ||||||||
(in thousands of U.S. dollars) | ||||||||
(Unaudited) | ||||||||
For the Three Months Ended September 30, 2016 | Diversified Reinsurance | AmTrust Reinsurance | Other | Total | ||||||||||||
Gross premiums written | $ | 186,750 | $ | 520,104 | $ | — | $ | 706,854 | ||||||||
Net premiums written | $ | 179,092 | $ | 511,561 | $ | — | $ | 690,653 | ||||||||
Net premiums earned | $ | 175,141 | $ | 523,137 | $ | — | $ | 698,278 | ||||||||
Other insurance revenue | 2,345 | — | — | 2,345 | ||||||||||||
Net loss and loss adjustment expenses ("LAE") | (132,396 | ) | (334,310 | ) | (45 | ) | (466,751 | ) | ||||||||
Commission and other acquisition expenses | (39,868 | ) | (166,836 | ) | (2 | ) | (206,706 | ) | ||||||||
General and administrative expenses | (9,038 | ) | (759 | ) | — | (9,797 | ) | |||||||||
Underwriting income (loss) | $ | (3,816 | ) | $ | 21,232 | $ | (47 | ) | $ | 17,369 | ||||||
Reconciliation to net income | ||||||||||||||||
Net investment income and realized gains on investment | 37,566 | |||||||||||||||
Interest and amortization expenses | (6,856 | ) | ||||||||||||||
Amortization of intangible assets | (616 | ) | ||||||||||||||
Foreign exchange and other gains | 687 | |||||||||||||||
Other general and administrative expenses | (7,155 | ) | ||||||||||||||
Income tax expense | (199 | ) | ||||||||||||||
Net income | $ | 40,796 | ||||||||||||||
Net loss and LAE ratio(8) | 74.6 | % | 63.9 | % | 66.6 | % | ||||||||||
Commission and other acquisition expense ratio(9) | 22.5 | % | 31.9 | % | 29.5 | % | ||||||||||
General and administrative expense ratio(10) | 5.1 | % | 0.1 | % | 2.4 | % | ||||||||||
Combined ratio(12) | 102.2 | % | 95.9 | % | 98.5 | % | ||||||||||
For the Three Months Ended September 30, 2015 | Diversified Reinsurance | AmTrust Reinsurance | Other | Total | ||||||||||||
Gross premiums written | $ | 174,307 | $ | 454,194 | $ | — | $ | 628,501 | ||||||||
Net premiums written | $ | 163,710 | $ | 435,443 | $ | — | $ | 599,153 | ||||||||
Net premiums earned | $ | 193,207 | $ | 465,313 | $ | — | $ | 658,520 | ||||||||
Other insurance revenue | 2,177 | — | — | 2,177 | ||||||||||||
Net loss and LAE | (142,468 | ) | (297,780 | ) | (3,924 | ) | (444,172 | ) | ||||||||
Commission and other acquisition expenses | (51,714 | ) | (146,008 | ) | 83 | (197,639 | ) | |||||||||
General and administrative expenses | (8,218 | ) | (656 | ) | — | (8,874 | ) | |||||||||
Underwriting income (loss) | $ | (7,016 | ) | $ | 20,869 | $ | (3,841 | ) | $ | 10,012 | ||||||
Reconciliation to net income | ||||||||||||||||
Net investment income and realized gains on investment | 34,059 | |||||||||||||||
Net impairment losses recognized in earnings | (1,060 | ) | ||||||||||||||
Interest and amortization expenses | (7,266 | ) | ||||||||||||||
Amortization of intangible assets | (710 | ) | ||||||||||||||
Foreign exchange and other gains | 1,427 | |||||||||||||||
Other general and administrative expenses | (7,579 | ) | ||||||||||||||
Income tax expense | (368 | ) | ||||||||||||||
Net income | $ | 28,515 | ||||||||||||||
Net loss and LAE ratio(8) | 72.9 | % | 63.9 | % | 67.2 | % | ||||||||||
Commission and other acquisition expense ratio(9) | 26.5 | % | 31.4 | % | 29.9 | % | ||||||||||
General and administrative expense ratio(10) | 4.2 | % | 0.1 | % | 2.5 | % | ||||||||||
Combined ratio(12) | 103.6 | % | 95.4 | % | 99.6 | % | ||||||||||
Maiden Holdings, Ltd. | ||||||||
Supplemental Financial Data - Segment Information | ||||||||
(in thousands of U.S. dollars) | ||||||||
(Unaudited) | ||||||||
For the Nine Months Ended September 30, 2016 | Diversified Reinsurance | AmTrust Reinsurance | Other | Total | ||||||||||||
Gross premiums written | $ | 667,388 | $ | 1,591,902 | $ | — | $ | 2,259,290 | ||||||||
Net premiums written | $ | 626,522 | $ | 1,507,389 | $ | — | $ | 2,133,911 | ||||||||
Net premiums earned | $ | 538,152 | $ | 1,413,699 | $ | — | $ | 1,951,851 | ||||||||
Other insurance revenue | 8,696 | — | — | 8,696 | ||||||||||||
Net loss and LAE | (395,718 | ) | (898,703 | ) | (2,940 | ) | (1,297,361 | ) | ||||||||
Commission and other acquisition expenses | (139,895 | ) | (447,604 | ) | (2 | ) | (587,501 | ) | ||||||||
General and administrative expenses | (26,717 | ) | (2,308 | ) | — | (29,025 | ) | |||||||||
Underwriting income (loss) | $ | (15,482 | ) | $ | 65,084 | $ | (2,942 | ) | $ | 46,660 | ||||||
Reconciliation to net income | ||||||||||||||||
Net investment income and realized gains on investment | 111,802 | |||||||||||||||
Interest and amortization expenses | (21,314 | ) | ||||||||||||||
Accelerated amortization of senior note issuance cost | (2,345 | ) | ||||||||||||||
Amortization of intangible assets | (1,846 | ) | ||||||||||||||
Foreign exchange and other gains | 6,474 | |||||||||||||||
Other general and administrative expenses | (20,713 | ) | ||||||||||||||
Income tax expense | (1,206 | ) | ||||||||||||||
Net income | $ | 117,512 | ||||||||||||||
Net loss and LAE ratio(8) | 72.4 | % | 63.5 | % | 66.2 | % | ||||||||||
Commission and other acquisition expense ratio(9) | 25.6 | % | 31.7 | % | 30.0 | % | ||||||||||
General and administrative expense ratio(10) | 4.8 | % | 0.2 | % | 2.5 | % | ||||||||||
Combined ratio(12) | 102.8 | % | 95.4 | % | 98.7 | % | ||||||||||
For the Nine Months Ended September 30, 2015 | Diversified Reinsurance | AmTrust Reinsurance | Other | Total | ||||||||||||
Gross premiums written | $ | 631,294 | $ | 1,505,642 | $ | (1 | ) | $ | 2,136,935 | |||||||
Net premiums written | $ | 602,693 | $ | 1,423,060 | $ | 1 | $ | 2,025,754 | ||||||||
Net premiums earned | $ | 570,694 | $ | 1,274,563 | $ | 2 | $ | 1,845,259 | ||||||||
Other insurance revenue | 9,408 | — | — | 9,408 | ||||||||||||
Net loss and LAE | (417,846 | ) | (811,016 | ) | (7,643 | ) | (1,236,505 | ) | ||||||||
Commission and other acquisition expenses | (152,332 | ) | (399,291 | ) | (55 | ) | (551,678 | ) | ||||||||
General and administrative expenses | (25,976 | ) | (2,200 | ) | — | (28,176 | ) | |||||||||
Underwriting income (loss) | $ | (16,052 | ) | $ | 62,056 | $ | (7,696 | ) | $ | 38,308 | ||||||
Reconciliation to net income | ||||||||||||||||
Net investment income and realized gains on investment | 98,587 | |||||||||||||||
Net impairment losses recognized in earnings | (1,060 | ) | ||||||||||||||
Interest and amortization expenses | (21,796 | ) | ||||||||||||||
Amortization of intangible assets | (2,130 | ) | ||||||||||||||
Foreign exchange and other gains | 4,062 | |||||||||||||||
Other general and administrative expenses | (20,775 | ) | ||||||||||||||
Income tax expense | (1,636 | ) | ||||||||||||||
Net income | $ | 93,560 | ||||||||||||||
Net loss and LAE ratio(8) | 72.0 | % | 63.6 | % | 66.7 | % | ||||||||||
Commission and other acquisition expense ratio(9) | 26.3 | % | 31.3 | % | 29.7 | % | ||||||||||
General and administrative expense ratio(10) | 4.5 | % | 0.2 | % | 2.7 | % | ||||||||||
Combined ratio(12) | 102.8 | % | 95.1 | % | 99.1 | % | ||||||||||
(8) Calculated by dividing net loss and LAE by the sum of net premiums earned and other insurance revenue. | |
(9) Calculated by dividing commission and other acquisition expenses by the sum of net premiums earned and other insurance revenue. | |
(10) Calculated by dividing general and administrative expenses by the sum of net premiums earned and other insurance revenue. | |
(11) Calculated by adding together the commission and other acquisition expense ratio and general and administrative expense ratio. | |
(12) Calculated by adding together the net loss and LAE ratio and expense ratio. | |
Exhibit 99.2 PRESS RELEASE
Maiden Holdings Increases Quarterly Dividend on Common Shares by 7.1% and Declares Dividends on Preference Shares
HAMILTON, Bermuda, November 1, 2016 -- Maiden Holdings, Ltd. (NASDAQ: MHLD) today announced that its Board of Directors approved a quarterly cash dividend of $0.15 per share of common stock, an increase of $0.01 per share or 7.1% from the previous rate. The dividend will be payable on January 17, 2017 to shareholders of record as of January 3, 2017.
Maiden’s Board of Directors also approved the following cash dividends on its preference shares that are payable on December 15, 2016 to shareholders of record as of December 1, 2016:
• | Series A 8.25% Non-Cumulative Preference Shares of $0.515625 per Preference Share |
• | Series C 7.125% Non-Cumulative Preference Shares of $0.445313 per Preference Share |
About Maiden Holdings, Ltd.
Maiden Holdings, Ltd. is a Bermuda-based holding company formed in 2007. Through its subsidiaries, which are each A rated (excellent) by A.M. Best, the Company is focused on providing non-catastrophic, customized reinsurance products and services to small and mid-size insurance companies in the United States and Europe. As of June 30, 2016, Maiden had $6.3 billion in assets and shareholders' equity of $1.5 billion.
CONTACT:
Noah Fields, Senior Vice President, Investor Relations
Maiden Holdings, Ltd.
Phone: 441.298.4927
E-mail: nfields@maiden.bm