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):
March 5, 2018 (March 5, 2018)
MAIDEN HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)
Bermuda | 001-34042 | 98-0570192 | ||
(State or other jurisdiction | (Commission File | (IRS Employer | ||
of incorporation) | Number) | Identification No.) | ||
94 Pitts Bay Road
Pembroke HM 08, Bermuda
Pembroke HM 08, 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 7.01 Regulation FD Disclosure.
The slide presentation will be referenced during investor/analyst meetings during March 2018. 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.
Cautionary Statement Regarding Forward-Looking Statements
Any forward-looking statements made in the presentation in Exhibit 99.1 reflect our current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, which may cause actual results to differ materially from those set forth in these statements. For example, our forward-looking statements could be affected by pricing and policy term trends; increased competition; the impact of acts of terrorism and acts of war; greater frequency or severity of unpredictable catastrophic events; negative rating agency actions; the adequacy of our loss reserves; the Company or its subsidiaries becoming subject to significant income taxes in the United States or elsewhere; changes in regulations or tax laws; changes in the availability, cost or quality of reinsurance or retrocessional coverage; adverse general economic conditions; and judicial, legislative, political and other governmental developments, as well as management's response to these factors, and other factors identified in our filings with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We are under no obligation (and expressly disclaim any such obligation)
to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit | ||
No. | Description | |
99.1 | ||
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 5, 2018 | MAIDEN HOLDINGS, LTD. | |
By: | /s/ Lawrence F. Metz | |
Lawrence F. Metz | ||
Executive Vice President, General Counsel and Secretary | ||
Investor Presentation
March 2018
Forward Looking Statements
| Investor Presentation 2
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 current
expectations and beliefs of Maiden Holdings, Ltd. (the “Company”) 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 may cause actual results to differ materially from those projected is contained
in Item 1A. Risk Factors in the Company’s most recent Annual Report on Form 10-K.
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”). See the appendix of this presentation for a
reconciliation of non-GAAP measures used in this presentation to their most directly comparable
GAAP measures.
Non-GAAP Financial Measures
Maiden’s Value Proposition
| Investor Presentation 3
Significant line of business and geographical
diversity across low volatility underwriting
portfolio
Long-term relationships with targeted
regional and specialty P&C insurers –
35-year operating history
Successful, multi-year strategic reinsurance
relationship with AmTrust Financial Services,
Inc. (“AmTrust”) since 2007
Highly efficient and scalable operating
platform
Balance sheet scale and
capital efficiency supported by the
low-volatility model
Conservative investment portfolio
1
2
Maiden targets consistent underwriting profitability, above industry average growth
and a double-digit operating ROACE*
3
4
5
7
*ROACE is Return on Average Common Equity and is a Non-GAAP financial measure. We use ROACE as a measurement of profitability that focuses on the return to Maiden
shareholders rather than using solely net income. Please see the definition of non-GAAP financial measures on the final page of this presentation for additional important
information.
4 8Predictable and stable operating results
Strong commitment to rewarding
shareholders through dividends
Maiden’s History
| Investor Presentation 4
1 AmTrust’s founding shareholders were Michael Karfunkel, George Karfunkel, and Barry Zyskind. Michael Karfunkel passed away on April 27, 2016, thus the shares previously held by him are now controlled by his wife
Leah Karfunkel.
2 National General Holdings Corporation (“NGHC”), formerly known as American Capital Acquisition Corporation (“ACAC”), acquired GMAC Personal Lines Business in 2010. The Michael Karfunkel 2005 Family Trust (which
is controlled by Leah Karfunkel) and AmTrust own 41.8% and 1.6% of NGHC common stock, respectively.
3 As of most recent individual filings for Leah Karfunkel and Barry Zyskind. George Karfunkel owns or controls less than 5.0% of the outstanding shares of the Company at December 31, 2017 so there is no
longer a public filing requirement.
.
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Gross Premiums Written
(“GPW”)
$247 $727 $1,049 $1,298 $1,813 $2,001 $2,204 $2,507 $2,663 $2,831 $2,816
Employees 5 129 139 204 213 214 185 194 204 211 219
Founding Shareholders¹
Ownership
18.6% 30.1% 30.1% 28.3% 28.3% 28.4% 28.4% 28.1% 20.3% 17.4% 15.9%3
2007 2008 2009 2010 2011 2012 2013 2014 2015
AmTrust’s founding shareholders¹
formed Maiden
Entered into 40% Quota Share
with AmTrust
Redeemed 14% TRUPS
January 15, 2014
Entered into 25% NGHC²
Quota Share
Acquired international insurance
business (IIS) from Ally
Sold property Excess & Surplus
(“E&S”) lines business
NGHC Quota Share discontinued
Acquired a reinsurance platform with
25 years of operations, GMAC RE,
with renewal rights, client relationships,
and infrastructure
(GPW in $ millions)
2016
1
2
3
4
5
6
7
8 9
10 11
Diverse Portfolio of Low Volatility Business
Low-hazard, profitable workers’
compensation business
• 41% of gross premiums
written in 2017
• Focus on small premium,
small-employer policies
• Lower workers’ compensation loss
ratio vs. industry mainly reflecting
AmTrust’s specialization and leading
position in low-hazard segment
| Investor Presentation 5
2017 GROSS PREMIUMS WRITTEN
2017
Gross Premiums Written = $2.82 billion
1. Workers' compensation 41%
2. Personal auto 13%
3. Commercial auto 11%
4. Other liability 9%
5. Warranty 9%
6. Commercial multi-peril 7%
7. Accident & Health 3%
8. Fire, allied lines and
inland marine 3%
9. European hospital liability 2%
10. Homeowners’ 1%
11. Other 1%
Majority of business comprised of lower volatility proportional reinsurance
Personal Auto
31%
Other Casualty
23%
Property
20%
Accident & Health
11%
Commercial
Auto
5%
International
10%
2017
Gross Premiums Written = $823 million
Diversified Reinsurance Segment
Focus on lower volatility “working layer” reinsurance needs
of regional and specialty P&C insurers in the U.S. and select international markets
Underwriting /
Distribution
DUAL UNDERWRITING
DISTRIBUTION:
• 49% direct / 51% brokered
distribution*
COMPETITIVE ADVANTAGES:
• Lasting, profitable, long-term
relationships with clients –
35-year operating history
• Dedicated Financial Trust®
offers highly rated security
• Deep multi-functional client service
support
• Purpose built balance sheet
and operating platform
* As of December 31, 2017
IN THE U.S.:
Multi-Functional Teams:
• Underwriters, actuaries, accountants,
legal and claims specialists
Focus on traditional lines:
• Personal auto, including non-standard
• General liability, including low hazard
umbrella
• Commercial multi--peril
• Non-cat property
• Workers’ compensation
• Commercial auto
IN SELECT INTERNATIONAL MARKETS:
OEM oriented business development team:
• Personal Auto
• Credit Life
Bermuda team - offering capital
solutions in Europe:
• Multi-line regional opportunities
| Investor Presentation 6
Small Commercial
Business
64%
Specialty Program
18%
Specialty Risk &
Extended Warranty
18%
UNDERWRITING:
• Multi-year quota-share reinsurance
relationship since 2007
— Master Agreement in place through
June 2019 with negotiated contract
modifications occurring independent of
renewal cycle twice previously
— Actively managed by Maiden to
preserve targeted economics
• Strong controls and governance
— Independent underwriting and
reserving
— All related party transactions require
independent Audit Committee
approvals
AmTrust Reinsurance Segment
| Investor Presentation 7
2017
Gross Premiums Written = $2.0 billion
Small Commercial
Business
Specialty Risk and
Extended Warranty
Specialty Program
• U.S. workers’ compensation
• Commercial package
• Commercial lines
• U.K. consumer and
commercial goods warranty
• European hospital liability
• Other
• Commercial package for
specialty risks/segments
AMTRUST’S STRENGTHS:
• Significant driver of growth with
profitable combined ratios
• AmTrust’s leading competitive
position in specialty markets
• Highly efficient with strong
technological core competency
| Investor Presentation 8
Industry Combined Ratios in 2017
A record year for losses & a challenging year for the industry
1 Expense ratio adjusted to incorporate all S,G & A and corporate expenses
Source: SNL and Company Financials
100.
9
82.
5
9
6
.9
102.
1
56.
9 86.
0 101.
9
89.
9 1
1
1
.5
8
3
.2 98.
4
105.
8
86.
4
100.
1
97.
6
55.
3 90.
5
98.
4
72.
5
111.
3
82.
5
9
6
.6114.
1
112.
9 152.
1
152.
9
455.
1
1
6
3
.6
124.
7
245.
6
121.
1
200.
5
149.
5
125.
5
87.
4
135.
6
100.
7
102.
0
70.
0
115.
5
103.
5
115.
4
111.3
92.7
121.9
113.1
2
0
1.3
103.5
108.6
139.0
114.2
122.6
111.6
0
50
100
150
200
250
300
350
400
450
500
Maiden
Holdings, Ltd.
Arch Capital
Group Ltd.
Aspen
Insurance
Holdings
Limited
AXIS Capital
Holdings
Limited
Blue Capital
Reinsurance
Holdings
Everest Re
Group, Ltd.
Greenlight
Capital Re, Ltd.
RenaissanceRe
Holdings
Third Point
Reinsurance
Ltd.
Validus
Holdings, Ltd.
XL Group
Reinsurance Companies Combined Ratios
Calculated ratio including corporate expenses
1Q17 2Q17 3Q17 4Q17 FY 2017
| Investor Presentation 9
• Segment experienced adverse development primarily due to commercial auto
– Absent the impact of commercial auto the balance of Maiden’s US business has
performed within expectation
– Heavily reduced amount of commercial auto exposure since the 2014 UY
– Accounts renewed during 2015, 2016, and 2017 received needed rate increases; others
were non-renewed
• Fourth quarter 2017 adverse development was primarily from 2 commercial auto accounts that
are in run off
Reserve Development
• AmTrust has undertaken significant claims operational improvements that are distorting loss
development patterns
– Maiden has taken a more conservative view of the observed loss emergence and made
adjustments to loss development patterns
– Most significant changes made in the workers’ compensation and general liability lines
AmTrust Segment
Diversified Segment
$1,298
$1,813
$2,001
$2,204
$2,507 $2,663
$2,831 $2,816
3.5% 3.5%
2.9% 2.9%
2.8%
2.7%
2.6% 2.6%
2010 2011 2012 2013 2014 2015 2016 2017
Gross Premiums Written ($mm) G&A Expense Ratio
Unique Operating Platform and Business Model
Drive Highly Efficient Expense Relativities
| Investor Presentation 10
1 Aspen, Arch, Axis, EverestRe, PartnerRe, RenRe, Validus
Source: SNL and Company Financials
2017 G&A Expense Ratio
Maiden: 2.6%
Selected P&C (Re)Insurers1: 10.8%
Access to capital markets has enabled Maiden to
fund growth with long-term and perpetual securities
• January 2009: 14% Junior Subordinated Debt (“TRUPS” or
“Trust Preferred”) (Called in January 2014)
• June 2011: 30-Year, 8.25% Senior Notes Offering of $107.5 million,
replacing a portion of 14% TRUPS (Redeemed June 15, 2016)
• March 2012: 30-Year, 8% Senior Notes Offering of $100 million
(Redeemed June 27, 2017)
• August 2012: 8.25% Non-Cumulative Perpetual Preference
Shares Offering of $150 million (NYSE:MHPRA)*
• October 2013: 7.25% Mandatory Convertible Preference Shares
Offering of $165 million, supporting reinsurance business growth
(NASDAQ:MHLDO)* - Converted to common equity on September
15, 2016
• November 2013: 30-Year, 7.75% Senior Notes Offering of $152.5
million, proceeds used to redeem remaining 14% TRUPS on
January 15, 2014 (NYSE:MHNC)*
• November 2015: 7.125% Non-Cumulative Perpetual Preference
Shares Offering of $165 million (NYSE:MHPRC)*
• June 2016: 30-Year, 6.625% Senior Notes Offering of $110 million
(NYSE:MHLA)* Proceeds used to redeem $107.5 million 8.25%
Senior Notes.
• June 2017: 6.70% Non-Cumulative Perpetual Preference Shares
Offering of $150 million (NYSE:MHPRD)*
• Use of retrocessional reinsurance began in 2015
• Ongoing exploration of shareholder friendly, diverse and alternative
sources of capital
*MHNC, MHLA, MHPRA, MHPRC, MHPRD preference shares have 5 year call provisions at par (at Maiden’s option only).
Balanced & Diversified Capital Structure
| Investor Presentation 11
BALANCED AND DIVERSIFIED CAPITAL STRUCTURE
(In $ millions)
644 696 705
724 782
830 892
1,031
754
108
208
360
360
360
363
263
215
215
126
126
126
150
315
315
480
315
465
$859
$911
$939
$1,208
$1,583
$1,505
$1,732 $1,709
$1,482
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7
T
O
T
A
L
CAPI
T
A
L
(E
X
CLUDIN
G
A
O
CI
)
Common Equity excluding AOCI Senior Notes Trust Preferred Preference Shares
BB+ or lower
1%
AAA
5%
AA
4%
A
27%
BBB
22%
US Agency
41%
Cash & Cash
Equiv.
3%
U.S. Agency
37%
Corporate
Bonds
48%
Other2
9% Loan to Related
Party
3%
Maiden Maintains a Conservative
Investment Portfolio
• Continued emphasis on investing in GSE and high-grade corporate debt; new money yield on fixed maturities
in 4Q 2017 was 3.04%; overall 4Q 2017 book yield (excluding cash equivalents) was 3.10%
• December 31, 2017 average duration of investable assets (including cash equivalents) of 4.4 years compared
to duration of liabilities of 3.6 years
• Profitable growth & positive cash flow have expanded invested assets that will enhance earnings
• Cash and cash equivalent position was $191.5 million as of December 31, 2017.
| Investor Presentation 12
INVESTABLE ASSETS1 COMPOSITION
1 Investable assets include cash and cash equivalents, fixed maturities, other investments and loan to related party
2 “Other” includes loan to related party, investment grade commercial mortgage backed securities, collateralized loan obligations, municipal bonds
and non-U.S. government bonds
3 As of December 31, 2017
4 Credit quality ratings assigned by Standard & Poor’s (or equivalent) and include those with a + or – modifier
Total: $5.5bn3
STRONG CREDIT QUALITY OF INVESTMENTS4
Total: $5.1bn3
$ 62.9
$ 71.6 $ 74.9
$ 81.2
$ 91.4
$ 117.2
$ 131.1
$ 145.9
$ 166.3
2009 2010 2011 2012 2013 2014 2015 2016 2017
Low-Volatility Business Model Supporting Asset
and Investment Income Growth
GROWING NET INVESTMENT INCOME ($MM) EXPANDING INVESTABLE ASSETS BASE ($MM)
**Investable assets at December 31, 2013 include net proceeds of $147.4 million from November 2013 Senior Note
offering. Maiden primarily utilized the proceeds of its Senior Notes offering in November 2013, as well as cash on hand,
to redeem the $152.5 million face value TRUPs on January 15, 2014.
| Investor Presentation 13
$ 2,088
$ 2,234
$ 2,494
$ 3,003
$ 3,552
$ 4,030
$ 4,628
$ 5,054
$ 5,508
2009 2010 2011 2012 2013** 2014 2015 2016 2017
Strategic Initiatives
• Maiden capital solutions activity in Europe actively marketing and entertaining
numerous prospect quoting opportunities
– Opportunities under development in multiple global markets
– Currently actively marketing throughout Europe
• Maiden International Insurance Services (IIS) is continuing to develop OEM opportunities
with additional expansion under development
• Payment protection insurance (PPI) European pipeline under development
• Maiden Re team in U.S. continues to identify opportunities to expand existing
client relationships and customers
| Investor Presentation 14
Investment Opportunity
• Differentiated P&C reinsurance business model with focus on low-volatility,
predictable lines of business and strong long-lasting client relationships
• Despite recent adverse development, demonstrated predictable, stable and
highly efficient operating performance targeting a double-digit ROACE*
– Even at a 99.5% combined ratio, Maiden expects to produce double digit
ROACE*
• Extremely limited exposure to natural catastrophes
• Shareholder-friendly capital management
• Well-positioned for continued disciplined growth; significant opportunities to
further enhance profitability
| Investor Presentation 15
*Please see the definition of non-GAAP financial measures on the final page of this presentation for additional important information.
Appendix
• AmTrust Privatization Announcement
• Targeted Operating Metrics
• Summary Balance Sheet
• Summary Income Statement
• Non-GAAP Financial Measures – Reconciliation
• Non-GAAP Financial Measures – Reconciliation ROACE
• Non-GAAP Financial Measures
| Investor Presentation 17
AmTrust Privatization Announcement
• The Karfunkel-Zyskind Family own or controls approximately 43% of AmTrust common
shares.
• On March 1st, Stone Point Capital and Barry Zyskind, Chairman and CEO of AmTrust
and the Karfunkel family announced a definitive agreement to acquire approximately
45% of the common stock that the Karfunkel-Zyskind Family and affiliates do not own
for $13.50 per share in cash.
• The transaction values the fully diluted equity of the Company at $2.7 billion, excluding
the Company’s preferred stock.
• The stated goal of the proposal is to allow AmTrust to “focus on the long term without
the emphasis on short-term results”.
• The proposal must be approved by a special committee of independent directors of
AmTrust board of directors and approved by the stockholders.
• The proposed merger is anticipated to close in the second half of 2018.
| Investor Presentation 18 Appendix
Targets Achievable Over Time
| Investor Presentation 19
• Medium-term double-digit Operating ROACE*
• Risk adjusted underwriting profit
— G&A expense ratio < 4%
• NPW compounded annual growth rate of 10%+
• Core regional insurer client retention rate of > 85%
• 1 in 250 year modeled annual aggregate exposure to cat events < annual net
income
Double-digit operating ROACE* attainable over medium-term with improved underwriting
results, growth in invested assets and current capital structure
*Please see the definition of non-GAAP financial measures on the final page of this presentation for additional important information.
TARGETED OPERATING METRICS
Appendix
2011 2012 2013 2014 2015 2016 2017
($ in millions)
Investable Assets
Investments $ 2,022.9 $ 2,621.6 $ 3,167.2 $ 3,469.5 $ 4,127.7 $ 4,736.9 $ 5,148.8
Cash & Cash Equivalents 303.0 213.8 217.2 392.5 332.5 149.5 191.5
Loan to Related Party 168.0 168.0 168.0 168.0 168.0 168.0 168.0
Total Investable Assets 2,493.9 3,003.4 3,552.4 4,030.0 4,628.2 5,054.4 5,508.3
Net Reinsurance Receivable 423.4 522.6 560.1 513.0 377.3 410.2 345.0
Deferred Acquisition Costs 248.4 270.7 304.9 372.5 397.5 424.6 439.6
Other Assets 229.4 341.5 296.0 248.6 300.6 363.1 351.3
Total Assets $ 3,395.1 $ 4,138.2 $ 4,713.4 $ 5,164.1 $ 5,703.6 $ 6,252.3 $ 6,644.2
Loss and LAE Reserve $ 1,398.4 $ 1,740.3 $ 1,957.8 $ 2,271.3 $ 2,510.1 $ 2,896.5 $ 3,547.2
Unearned Premiums 832.0 936.5 1,034.8 1,207.7 1,354.6 1,475.5 1,477.0
Senior Notes 107.5 207.5 360.0 360.0 349.9 351.4 254.5
Trust Preferred Securities 126.3 126.3 126.4 - - - -
Other Liabilities 161.9 112.0 110.1 83.9 139.9 167.7 132.9
Total Liabilities 2,626.1 3,122.6 3,589.1 3,922.9 4,354.5 4,891.1 5,411.6
Equity 769.0 1,015.6 1,124.3 1,241.2 1,349.1 1,361.2 1,232.6
Total Liabilities & Equity $ 3,395.1 $ 4,138.2 $ 4,713.4 $ 5,164.1 $ 5,703.6 $ 6,252.3 $ 6,644.2
Book Value per Common Share $ 10.64 $ 11.96 $ 11.14 $ 12.69 $ 11.77 $ 12.12 $ 9.25
Growth in Total Investable Assets 11.6% 20.4% 18.3% 13.4% 14.8% 25.4% 9.0%
Ratio of Total Investable Assets to Equity 324.3% 295.7% 316.0% 324.7% 343.1% 371.3% 446.9%
Summary Balance Sheet
| Investor Presentation 20 Appendix
*Senior notes from 2015 onwards are reported net of deferred issuance costs due to a change in U.S. GAAP
Summary Income Statement
| Investor Presentation 21
*2011 Includes $9.5 million or 0.6% in loss ratio and combined ratio impact from U.S. thunderstorm and tornado activity in 2Q11.
2012 includes $31.1 million or 1.7% in loss ratio and combined ratio impact from Superstorm Sandy in 4Q12.
2016 includes $108.9 million reserve charge taken in 4Q16.
2017 includes $321.5 million reserve charge.
Please see the non-GAAP reconciliation table in the appendix of this presentation for additional important information.
Appendix
2011 2012 2013 2014 2015 2016 2017
($ in millions)
Gross Premiums Written $ 1,812.6 $ 2,001.0 $ 2,204.2 $ 2,507.4 $ 2,662.8 $ 2,831.3 $ 2,816.1
Net Premiums Written $ 1,723.5 $ 1,901.3 $ 2,096.3 $ 2,458.1 $ 2,514.1 $ 2,655.0 $ 2,762.0
Net Premiums Earned $ 1,552.4 $ 1,803.8 $ 2,000.9 $ 2,251.7 $ 2,429.1 $ 2,568.2 $ 2,732.8
Net Investment Income 74.9 81.2 91.4 117.2 131.1 145.9 166.3
Interest and Amortization Expenses 34.1 36.4 39.8 30.0 29.1 28.2 23.3
Net income (loss) attributable to Maiden
common shareholders $ 28.5 $ 46.5 $ 87.9 $ 77.1 $ 100.1 $ 15.2 $ (199.1)
Non-GAAP Operating Earnings (Loss)* $ 69.6 $ 48.5 $ 87.5 $ 117.7 $ 107.2 $ 17.3 $ (184.9)
Non-GAAP Operating EPS * $ 0.96 $ 0.66 $ 1.18 $ 1.53 $ 1.39 $ 0.22 $ (2.16)
Non-GAAP Operating ROE * 9.2% 5.9% 10.5% 13.6% 12.0% 1.9% (20.4%)
Loss Ratio 66.6% 69.5% 67.0% 66.1% 66.9% 70.6% 78.8%
Expense Ratio 31.5% 30.0% 30.5% 31.9% 32.4% 32.6% 32.5%
Combined Ratio 98.1% 99.5% 97.5% 98.0% 99.3% 103.2% 111.3%
Non-GAAP Financial Measures Reconciliation
| Investor Presentation 22
Note: Please see the definition of non-GAAP financial measures on final page for additional important information.
Appendix
2011 2012 2013 2014 2015 2016 2017
($ in millions)
Net income $ 28.5 $ 50.2 $ 102.8 $ 101.5 $ 124.2 $ 48.1 $ (169.7)
(Income) loss attributable to noncontrolling interest - (0.1) (0.1) (0.1) 0.2 0.8 (0.2)
Dividends on preference shares - (3.6) (14.8) (24.3) (24.3) (33.7) (29.1)
Add (subtract):
Net realized (gains) losses on investment (0.5) (1.9) (3.6) (1.2) (2.5) (6.8) (12.2)
Net impairment losses recognized in earnings - - - 2.4 1.1 - -
Foreign exchange and other (gains) losses (0.3) (1.6) (2.8) (4.2) (7.8) (11.6) 14.9
Amortization of intangible assets 5.0 4.4 3.8 3.3 2.8 2.5 2.1
Divested excess and surplus business and NGHC run-off - - - 10.4 12.3 14.5 10.4
Junior subordinated debt repurchase expense 15.1 - - - - - -
Accelerated amortization of debt discount and issuance cost 20.3 - - 28.2 - 2.3 2.8
Interest expense incurred related to 2013 Senior Notes prior to
actual redemption of the junior subordinated debt - - 1.2 0.5 - - -
Non-recurring general and administrative expenses relating to - -
IIS Acquisition (2010) 0.2 - - - - - -
Non-cash deferred tax expense 1.3 1.1 1.0 1.2 1.2 1.2 (3.9)
Operating earnings (loss) $ 69.6 $ 48.5 $ 87.5 $ 117.7 $ 107.2 $ 17.3 $ (184.9)
Earnings (loss) per common share:
Basic earnings (loss) per share $ 0.40 $ 0.64 $ 1.21 $ 1.06 $ 1.36 $ 0.20 $ (2.32)
Diluted earnings (loss) per share $ 0.39 $ 0.64 $ 1.18 $ 1.04 $ 1.31 $ 0.19 $ (2.32)
Operating earnings (loss) per common share:
Basic operating earnings (loss) per share $ 0.97 $ 0.67 $ 1.21 $ 1.61 $ 1.46 $ 0.22 $ (2.16)
Diluted operating earnings (loss) per share $ 0.96 $ 0.66 $ 1.18 $ 1.53 $ 1.39 $ 0.22 $ (2.16)
Non-GAAP Financial Measures Reconciliation -
ROACE
| Investor Presentation 23
Note: Please see the definition of non-GAAP financial measures on final page for additional important information.
Appendix
2011 2012 2013 2014 2015 2016 2017
($ in millions)
Net income (loss) attributable to Maiden common shareholders $ 28.5 $ 46.5 $ 87.9 $ 77.1 $ 100.1 $ 15.2 $ (199.1)
Non-GAAP net operating earnings (loss) attributable to Maiden common
shareholders 69.6 48.5 87.5 117.7 107.2 17.3 (184.9)
Opening common shareholders' equity 750.2 768.6 865.2 808.8 925.7 867.8 1,045.8
Ending common shareholders' equity 768.6 865.2 808.8 925.7 867.8 1,045.8 767.2
Average common shareholders' equity 759.4 816.9 837.0 867.3 896.8 923.0 906.5
Annualized return on average common equity 3.8% 5.7% 10.5% 8.9% 11.2% 1.6% (22.0%)
Annualized non-GAAP operating return on average common equity 9.2% 5.9% 10.5% 13.6% 12.0% 1.9% (20.4%)
Non-GAAP Financial Measures
| Investor Presentation 24
In presenting the Company’s results, management has included and discussed in this presentation 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 U.S.
generally accepted accounting principles (“U.S. GAAP”).
Operating Earnings and Operating Earnings per Common Share: In addition to presenting net income determined in accordance with U.S. 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 on a recurring basis, net realized and unrealized gains or losses on investment, foreign exchange and other gains or losses,
amortization of intangible assets and non-cash deferred tax (benefit) expenses. We exclude net realized and unrealized gains or losses on investment and
foreign exchange and other gains or losses 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. In Q4 2017, we recognized $3.9 million of deferred tax benefit
mainly due to the rate change resulting from the Tax Cuts and Jobs Act that was signed into law on December 22, 2017, which lowered the corporate U.S.
tax rate to 21%. We also exclude certain non-recurring expenditures that are material to understanding our results of operations. During the third quarter of
2014 and 2015, we exclude impairment losses. Beginning in the second quarter of 2014, we exclude our divested E&S business as it has been in run-off for
over one year following the sale to Brit effective May 1, 2013. Similarly, beginning in the fourth quarter of 2014, we exclude results from NGHC as this
business segment has been in run-off for one year following the mutual cancellation on a run-off basis of our contract. Furthermore, in Q1 of 2014 and Q2 of
2011, we exclude the accelerated amortization of the Junior Subordinated Debt discount and the write off of the associated issuance costs. In Q2 2016 and
Q2 2017, we also excluded the write off of the amortized issuance cost related to the 8.25% Senior Notes redeemed in June 2016 and 8.0% Senior Notes
redeemed in June 2017. In Q1 2014 and Q4 2013, we also exclude the interest expense incurred on our 2013 Senior Notes prior to the redemption of the
outstanding Junior Subordinated Debt given the one time nature of the additional funding cost.
Operating Return on Average Common Equity ("Operating ROACE"): 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 (as defined above) divided by average Maiden common shareholders' equity. Average common shareholders’ equity for the twelve months
ended December 31, 2016 is adjusted for the period the Mandatory Convertible Preference Shares - Series B are outstanding (prior to mandatory conversion
date of September 15, 2016). Management has set as a target a long-term average of 15% Operating ROACE, which management believes provides an
attractive return to shareholders for the risk assumed from our business.
See the previous two pages of this presentation for a reconciliation of non-GAAP measures used in this presentation to their most directly comparable
GAAP measures.
Appendix