x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Bermuda (State or other jurisdiction of incorporation or organization) | 98-0570192 (IRS Employer Identification No.) |
131 Front Street, Hamilton, Bermuda (Address of principal executive offices) | HM12 (Zip Code) |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | (Do not check if a smaller reporting company) | |
Smaller reporting company o | ||
Emerging growth company o |
INDEX | ||
Page | ||
PART I - Financial Information | ||
Condensed Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016 (audited) | ||
Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2017 and 2016 (unaudited) | ||
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2017 and 2016 (unaudited) | ||
Condensed Consolidated Statements of Changes in Shareholders' Equity for the Nine Months Ended September 30, 2017 and 2016 (unaudited) | ||
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016 (unaudited) | ||
PART II - Other Information | ||
September 30, 2017 | December 31, 2016 | |||||||
(Unaudited) | (Audited) | |||||||
ASSETS | ||||||||
Investments: | ||||||||
Fixed maturities, available-for-sale, at fair value (amortized cost 2017: $3,844,996; 2016: $4,005,642) | $ | 3,884,587 | $ | 3,971,666 | ||||
Fixed maturities, held to maturity, at amortized cost (fair value 2017: $1,152,106; 2016: $766,135) | 1,118,368 | 752,212 | ||||||
Other investments, at fair value (cost 2017: $5,640; 2016: $10,057) | 7,041 | 13,060 | ||||||
Total investments | 5,009,996 | 4,736,938 | ||||||
Cash and cash equivalents | 182,677 | 45,747 | ||||||
Restricted cash and cash equivalents | 131,598 | 103,788 | ||||||
Accrued investment income | 35,547 | 36,517 | ||||||
Reinsurance balances receivable, net (includes $150,985 and $132,056 from related parties in 2017 and 2016, respectively) | 479,472 | 410,166 | ||||||
Reinsurance recoverable on unpaid losses (includes $2,374 and $5,085 from related parties in 2017 and 2016, respectively) | 140,629 | 99,936 | ||||||
Loan to related party | 167,975 | 167,975 | ||||||
Deferred commission and other acquisition expenses (includes $371,733 and $339,172 from related parties in 2017 and 2016, respectively) | 469,617 | 424,605 | ||||||
Goodwill and intangible assets, net | 76,116 | 77,715 | ||||||
Other assets | 145,470 | 148,912 | ||||||
Total assets | $ | 6,839,097 | $ | 6,252,299 | ||||
LIABILITIES | ||||||||
Reserve for loss and loss adjustment expenses (includes $2,131,851 and $1,776,784 from related parties in 2017 and 2016, respectively) | $ | 3,365,011 | $ | 2,896,496 | ||||
Unearned premiums (includes $1,238,085 and $1,152,484 from related parties in 2017 and 2016, respectively) | 1,601,069 | 1,475,506 | ||||||
Accrued expenses and other liabilities | 175,540 | 161,334 | ||||||
Liability for investments purchased | 21,658 | 6,402 | ||||||
Senior notes - principal amount | 262,500 | 362,500 | ||||||
Less: unamortized debt issuance costs | 8,070 | 11,091 | ||||||
Senior notes, net | 254,430 | 351,409 | ||||||
Total liabilities | 5,417,708 | 4,891,147 | ||||||
Commitments and Contingencies | ||||||||
EQUITY | ||||||||
Preference shares | 465,000 | 315,000 | ||||||
Common shares ($0.01 par value; 87,728,554 and 87,321,012 shares issued in 2017 and 2016, respectively; 84,624,829 and 86,271,109 shares outstanding in 2017 and 2016, respectively) | 877 | 873 | ||||||
Additional paid-in capital | 747,464 | 749,256 | ||||||
Accumulated other comprehensive income | 46,079 | 14,997 | ||||||
Retained earnings | 181,510 | 285,662 | ||||||
Treasury shares, at cost (3,103,725 and 1,049,903 shares in 2017 and 2016, respectively) | (19,903 | ) | (4,991 | ) | ||||
Total Maiden shareholders’ equity | 1,421,027 | 1,360,797 | ||||||
Noncontrolling interests in subsidiaries | 362 | 355 | ||||||
Total equity | 1,421,389 | 1,361,152 | ||||||
Total liabilities and equity | $ | 6,839,097 | $ | 6,252,299 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues | ||||||||||||||||
Gross premiums written | $ | 630,972 | $ | 706,854 | $ | 2,259,597 | $ | 2,259,290 | ||||||||
Net premiums written | $ | 617,330 | $ | 690,653 | $ | 2,201,950 | $ | 2,133,911 | ||||||||
Change in unearned premiums | 36,536 | 7,625 | (127,475 | ) | (182,060 | ) | ||||||||||
Net premiums earned | 653,866 | 698,278 | 2,074,475 | 1,951,851 | ||||||||||||
Other insurance revenue | 2,488 | 2,345 | 7,816 | 8,696 | ||||||||||||
Net investment income | 40,823 | 35,666 | 123,492 | 107,291 | ||||||||||||
Net realized gains on investment | 5,859 | 1,900 | 8,316 | 4,511 | ||||||||||||
Total revenues | 703,036 | 738,189 | 2,214,099 | 2,072,349 | ||||||||||||
Expenses | ||||||||||||||||
Net loss and loss adjustment expenses | 535,968 | 466,751 | 1,545,157 | 1,297,361 | ||||||||||||
Commission and other acquisition expenses | 193,462 | 206,706 | 625,530 | 587,501 | ||||||||||||
General and administrative expenses | 19,492 | 16,952 | 52,252 | 49,738 | ||||||||||||
Interest and amortization expenses | 4,829 | 6,856 | 18,430 | 21,314 | ||||||||||||
Accelerated amortization of senior note issuance cost | — | — | 2,809 | 2,345 | ||||||||||||
Amortization of intangible assets | 533 | 616 | 1,599 | 1,846 | ||||||||||||
Foreign exchange losses (gains) | 3,550 | (687 | ) | 12,193 | (6,474 | ) | ||||||||||
Total expenses | 757,834 | 697,194 | 2,257,970 | 1,953,631 | ||||||||||||
(Loss) income before income taxes | (54,798 | ) | 40,995 | (43,871 | ) | 118,718 | ||||||||||
Less: income tax expense | 256 | 199 | 1,017 | 1,206 | ||||||||||||
Net (loss) income | (55,054 | ) | 40,796 | (44,888 | ) | 117,512 | ||||||||||
Add: net loss attributable to noncontrolling interests | 3 | 56 | 34 | 166 | ||||||||||||
Net (loss) income attributable to Maiden | (55,051 | ) | 40,852 | (44,854 | ) | 117,678 | ||||||||||
Dividends on preference shares | (8,545 | ) | (9,023 | ) | (20,611 | ) | (27,723 | ) | ||||||||
Net (loss) income attributable to Maiden common shareholders | $ | (63,596 | ) | $ | 31,829 | $ | (65,465 | ) | $ | 89,955 | ||||||
Basic (loss) earnings per share attributable to Maiden common shareholders | $ | (0.74 | ) | $ | 0.42 | $ | (0.76 | ) | $ | 1.20 | ||||||
Diluted (loss) earnings per share attributable to Maiden common shareholders | $ | (0.74 | ) | $ | 0.40 | $ | (0.76 | ) | $ | 1.15 | ||||||
Dividends declared per common share | $ | 0.15 | $ | 0.14 | $ | 0.45 | $ | 0.42 | ||||||||
Weighted average number of common shares - basic | 85,859,201 | 75,993,451 | 86,256,481 | 74,625,839 | ||||||||||||
Adjusted weighted average number of common shares and assumed conversions - diluted | 85,859,201 | 86,150,951 | 86,256,481 | 86,018,019 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net (loss) income | $ | (55,054 | ) | $ | 40,796 | $ | (44,888 | ) | $ | 117,512 | ||||||
Other comprehensive income | ||||||||||||||||
Net unrealized holdings gains on available-for-sale fixed maturities arising during the period | 25,019 | 8,888 | 68,798 | 155,052 | ||||||||||||
Adjustment for reclassification of net realized (gains) losses recognized in net income | (3,650 | ) | (1,202 | ) | 1,123 | 578 | ||||||||||
Foreign currency translation adjustment | (10,828 | ) | (2,730 | ) | (38,803 | ) | (7,927 | ) | ||||||||
Other comprehensive income, before tax | 10,541 | 4,956 | 31,118 | 147,703 | ||||||||||||
Income tax (expense) benefit related to components of other comprehensive income | (25 | ) | 11 | 5 | (28 | ) | ||||||||||
Other comprehensive income, after tax | 10,516 | 4,967 | 31,123 | 147,675 | ||||||||||||
Comprehensive (loss) income | (44,538 | ) | 45,763 | (13,765 | ) | 265,187 | ||||||||||
Net loss attributable to noncontrolling interests | 3 | 56 | 34 | 166 | ||||||||||||
Other comprehensive income attributable to noncontrolling interests | (12 | ) | (17 | ) | (41 | ) | (32 | ) | ||||||||
Comprehensive (income) loss attributable to noncontrolling interests | (9 | ) | 39 | (7 | ) | 134 | ||||||||||
Comprehensive (loss) income attributable to Maiden | $ | (44,547 | ) | $ | 45,802 | $ | (13,772 | ) | $ | 265,321 |
For the Nine Months Ended September 30, | 2017 | 2016 | ||||||
Preference shares | ||||||||
Beginning balance | $ | 315,000 | $ | 480,000 | ||||
Issuance of Preference Shares – Series D | 150,000 | — | ||||||
Mandatory conversion of Preference Shares - Series B | — | (165,000 | ) | |||||
Ending balance | 465,000 | 315,000 | ||||||
Common shares | ||||||||
Beginning balance | 873 | 747 | ||||||
Exercise of options and issuance of shares | 4 | 4 | ||||||
Shares issued on mandatory conversion of Preference Shares - Series B | — | 121 | ||||||
Ending balance | 877 | 872 | ||||||
Additional paid-in capital | ||||||||
Beginning balance | 749,256 | 579,178 | ||||||
Exercise of options and issuance of common shares | 1,072 | 662 | ||||||
Share-based compensation expense | 2,194 | 2,625 | ||||||
Issuance costs of Preference Shares - Series D | (5,058 | ) | — | |||||
Mandatory conversion of Preference Shares - Series B | — | 164,879 | ||||||
Others | — | (141 | ) | |||||
Ending balance | 747,464 | 747,203 | ||||||
Accumulated other comprehensive income | ||||||||
Beginning balance | 14,997 | (23,767 | ) | |||||
Change in net unrealized gains on investment | 69,926 | 155,602 | ||||||
Foreign currency translation adjustment | (38,844 | ) | (7,959 | ) | ||||
Ending balance | 46,079 | 123,876 | ||||||
Retained earnings | ||||||||
Beginning balance | 285,662 | 316,184 | ||||||
Net (loss) income attributable to Maiden | (44,854 | ) | 117,678 | |||||
Dividends on preference shares | (20,611 | ) | (27,723 | ) | ||||
Dividends on common shares | (38,687 | ) | (32,799 | ) | ||||
Ending balance | 181,510 | 373,340 | ||||||
Treasury shares | ||||||||
Beginning balance | (4,991 | ) | (4,521 | ) | ||||
Shares repurchased | (14,912 | ) | (470 | ) | ||||
Ending balance | (19,903 | ) | (4,991 | ) | ||||
Noncontrolling interests in subsidiaries | ||||||||
Beginning balance | 355 | 1,278 | ||||||
Change in minority interest | — | (54 | ) | |||||
Dividend paid to noncontrolling interest | — | (31 | ) | |||||
Net loss attributable to noncontrolling interests | (34 | ) | (166 | ) | ||||
Foreign currency translation adjustment | 41 | 32 | ||||||
Ending balance | 362 | 1,059 | ||||||
Total equity | $ | 1,421,389 | $ | 1,556,359 |
For the Nine Months Ended September 30, | 2017 | 2016 | ||||||
Cash flows from operating activities | ||||||||
Net (loss) income | $ | (44,888 | ) | $ | 117,512 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation, amortization and share-based compensation | 10,472 | 16,841 | ||||||
Net realized gains on investment | (8,316 | ) | (4,511 | ) | ||||
Foreign exchange losses (gains) | 12,193 | (6,474 | ) | |||||
Changes in assets – (increase) decrease: | ||||||||
Reinsurance balances receivable, net | (62,517 | ) | (154,091 | ) | ||||
Reinsurance recoverable on unpaid losses | (40,455 | ) | (26,281 | ) | ||||
Accrued investment income | 1,545 | (1,537 | ) | |||||
Deferred commission and other acquisition expenses | (43,171 | ) | (49,713 | ) | ||||
Other assets | (1,865 | ) | (32,027 | ) | ||||
Changes in liabilities – increase (decrease): | ||||||||
Reserve for loss and loss adjustment expenses | 419,660 | 250,937 | ||||||
Unearned premiums | 117,882 | 204,752 | ||||||
Accrued expenses and other liabilities | 14,239 | 10,749 | ||||||
Net cash provided by operating activities | 374,779 | 326,157 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of investments: | ||||||||
Purchases of fixed-maturities – available-for-sale | (715,838 | ) | (732,001 | ) | ||||
Purchases of other investments | (986 | ) | (167 | ) | ||||
Sale of investments: | ||||||||
Proceeds from sales of fixed-maturities – available-for-sale | 199,751 | 101,923 | ||||||
Proceeds from maturities and calls of fixed maturities – available-for-sale | 302,496 | 442,490 | ||||||
Proceeds from maturities and calls of fixed maturities – held to maturity | 20,744 | — | ||||||
Proceeds from sale and redemption of other investments | 11,119 | 572 | ||||||
Increase in restricted cash and cash equivalents | (27,040 | ) | (103,685 | ) | ||||
Other, net | (2,299 | ) | (521 | ) | ||||
Net cash used in investing activities | (212,053 | ) | (291,389 | ) | ||||
Cash flows from financing activities: | ||||||||
Preference shares, net of issuance costs | 144,942 | — | ||||||
Senior notes, net of issuance costs | — | 106,424 | ||||||
Redemption of 2012 senior notes | (100,000 | ) | — | |||||
Redemption of 2011 senior notes | — | (107,500 | ) | |||||
Issuance of common shares | 1,076 | 666 | ||||||
Repurchase of common shares | (14,912 | ) | (470 | ) | ||||
Dividends paid – Maiden common shareholders | (38,935 | ) | (31,062 | ) | ||||
Dividends paid – preference shares | (20,611 | ) | (27,723 | ) | ||||
Net cash used in financing activities | (28,440 | ) | (59,665 | ) | ||||
Effect of exchange rate changes on foreign currency cash | 2,644 | 2,715 | ||||||
Net increase (decrease) in cash and cash equivalents | 136,930 | (22,182 | ) | |||||
Cash and cash equivalents, beginning of period | 45,747 | 89,641 | ||||||
Cash and cash equivalents, end of period | $ | 182,677 | $ | 67,459 |
For the Three Months Ended September 30, 2017 | Diversified Reinsurance | AmTrust Reinsurance | Other | Total | ||||||||||||
Gross premiums written | $ | 210,953 | $ | 420,019 | $ | — | $ | 630,972 | ||||||||
Net premiums written | $ | 207,137 | $ | 410,193 | $ | — | $ | 617,330 | ||||||||
Net premiums earned | $ | 217,513 | $ | 436,353 | $ | — | $ | 653,866 | ||||||||
Other insurance revenue | 2,488 | — | — | 2,488 | ||||||||||||
Net loss and loss adjustment expense ("loss and LAE") | (172,273 | ) | (355,030 | ) | (8,665 | ) | (535,968 | ) | ||||||||
Commission and other acquisition expenses | (54,810 | ) | (138,650 | ) | (2 | ) | (193,462 | ) | ||||||||
General and administrative expenses | (8,595 | ) | (771 | ) | — | (9,366 | ) | |||||||||
Underwriting loss | $ | (15,677 | ) | $ | (58,098 | ) | $ | (8,667 | ) | (82,442 | ) | |||||
Reconciliation to net loss | ||||||||||||||||
Net investment income and net realized gains on investment | 46,682 | |||||||||||||||
Interest and amortization expenses | (4,829 | ) | ||||||||||||||
Amortization of intangible assets | (533 | ) | ||||||||||||||
Foreign exchange losses | (3,550 | ) | ||||||||||||||
Other general and administrative expenses | (10,126 | ) | ||||||||||||||
Income tax expense | (256 | ) | ||||||||||||||
Net loss | $ | (55,054 | ) | |||||||||||||
Net loss and LAE ratio(1) | 78.3 | % | 81.4 | % | 81.6 | % | ||||||||||
Commission and other acquisition expense ratio(2) | 24.9 | % | 31.7 | % | 29.5 | % | ||||||||||
General and administrative expense ratio(3) | 3.9 | % | 0.2 | % | 3.0 | % | ||||||||||
Expense ratio(4) | 28.8 | % | 31.9 | % | 32.5 | % | ||||||||||
Combined ratio(5) | 107.1 | % | 113.3 | % | 114.1 | % |
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 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 (loss) income | $ | (3,816 | ) | $ | 21,232 | $ | (47 | ) | 17,369 | |||||||
Reconciliation to net income | ||||||||||||||||
Net investment income and net realized gains on investment | 37,566 | |||||||||||||||
Interest and amortization expenses | (6,856 | ) | ||||||||||||||
Amortization of intangible assets | (616 | ) | ||||||||||||||
Foreign exchange gains | 687 | |||||||||||||||
Other general and administrative expenses | (7,155 | ) | ||||||||||||||
Income tax expense | (199 | ) | ||||||||||||||
Net income | $ | 40,796 | ||||||||||||||
Net loss and LAE ratio(1) | 74.6 | % | 63.9 | % | 66.6 | % | ||||||||||
Commission and other acquisition expense ratio(2) | 22.5 | % | 31.9 | % | 29.5 | % | ||||||||||
General and administrative expense ratio(3) | 5.1 | % | 0.1 | % | 2.4 | % | ||||||||||
Expense ratio(4) | 27.6 | % | 32.0 | % | 31.9 | % | ||||||||||
Combined ratio(5) | 102.2 | % | 95.9 | % | 98.5 | % |
For the Nine Months Ended September 30, 2017 | Diversified Reinsurance | AmTrust Reinsurance | Other | Total | ||||||||||||
Gross premiums written | $ | 683,839 | $ | 1,575,677 | $ | 81 | $ | 2,259,597 | ||||||||
Net premiums written | $ | 671,880 | $ | 1,529,980 | $ | 90 | $ | 2,201,950 | ||||||||
Net premiums earned | $ | 623,574 | $ | 1,450,811 | $ | 90 | $ | 2,074,475 | ||||||||
Other insurance revenue | 7,816 | — | — | 7,816 | ||||||||||||
Net loss and LAE | (487,759 | ) | (1,047,222 | ) | (10,176 | ) | (1,545,157 | ) | ||||||||
Commission and other acquisition expenses | (159,744 | ) | (465,789 | ) | 3 | (625,530 | ) | |||||||||
General and administrative expenses | (25,819 | ) | (2,240 | ) | — | (28,059 | ) | |||||||||
Underwriting loss | $ | (41,932 | ) | $ | (64,440 | ) | $ | (10,083 | ) | (116,455 | ) | |||||
Reconciliation to net loss | ||||||||||||||||
Net investment income and net realized gains on investment | 131,808 | |||||||||||||||
Interest and amortization expenses | (18,430 | ) | ||||||||||||||
Accelerated amortization of senior note issuance cost | (2,809 | ) | ||||||||||||||
Amortization of intangible assets | (1,599 | ) | ||||||||||||||
Foreign exchange losses | (12,193 | ) | ||||||||||||||
Other general and administrative expenses | (24,193 | ) | ||||||||||||||
Income tax expense | (1,017 | ) | ||||||||||||||
Net loss | $ | (44,888 | ) | |||||||||||||
Net loss and LAE ratio(1) | 77.2 | % | 72.2 | % | 74.2 | % | ||||||||||
Commission and other acquisition expense ratio(2) | 25.3 | % | 32.1 | % | 30.0 | % | ||||||||||
General and administrative expense ratio(3) | 4.1 | % | 0.1 | % | 2.5 | % | ||||||||||
Expense ratio(4) | 29.4 | % | 32.2 | % | 32.5 | % | ||||||||||
Combined ratio(5) | 106.6 | % | 104.4 | % | 106.7 | % |
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 (loss) income | $ | (15,482 | ) | $ | 65,084 | $ | (2,942 | ) | 46,660 | |||||||
Reconciliation to net income | ||||||||||||||||
Net investment income and net 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 gains | 6,474 | |||||||||||||||
Other general and administrative expenses | (20,713 | ) | ||||||||||||||
Income tax expense | (1,206 | ) | ||||||||||||||
Net income | $ | 117,512 | ||||||||||||||
Net loss and LAE ratio(1) | 72.4 | % | 63.5 | % | 66.2 | % | ||||||||||
Commission and other acquisition expense ratio(2) | 25.6 | % | 31.7 | % | 30.0 | % | ||||||||||
General and administrative expense ratio(3) | 4.8 | % | 0.2 | % | 2.5 | % | ||||||||||
Expense ratio(4) | 30.4 | % | 31.9 | % | 32.5 | % | ||||||||||
Combined ratio(5) | 102.8 | % | 95.4 | % | 98.7 | % |
(1) | Calculated by dividing net loss and LAE by the sum of net premiums earned and other insurance revenue. |
(2) | Calculated by dividing commission and other acquisition expenses by the sum of net premiums earned and other insurance revenue. |
(3) | Calculated by dividing general and administrative expenses by the sum of net premiums earned and other insurance revenue. |
(4) | Calculated by adding together the commission and other acquisition expense ratio and general and administrative expense ratio. |
(5) | Calculated by adding together net loss and LAE ratio and the expense ratio. |
September 30, 2017 | Diversified Reinsurance | AmTrust Reinsurance | Total | |||||||||
Total assets - reportable segments | $ | 1,898,036 | $ | 4,362,008 | $ | 6,260,044 | ||||||
Corporate assets | — | — | 579,053 | |||||||||
Total Assets | $ | 1,898,036 | $ | 4,362,008 | $ | 6,839,097 | ||||||
December 31, 2016 | Diversified Reinsurance | AmTrust Reinsurance | Total | |||||||||
Total assets - reportable segments | $ | 1,787,320 | $ | 3,900,067 | $ | 5,687,387 | ||||||
Corporate assets | — | — | 564,912 | |||||||||
Total Assets | $ | 1,787,320 | $ | 3,900,067 | $ | 6,252,299 |
For the Three Months Ended September 30, | 2017 | 2016 | ||||||||||||
Total | % of Total | Total | % of Total | |||||||||||
Net premiums written | ||||||||||||||
Diversified Reinsurance | ||||||||||||||
Property | $ | 37,962 | 6.2 | % | $ | 30,606 | 4.4 | % | ||||||
Casualty | 129,726 | 21.0 | % | 115,360 | 16.7 | % | ||||||||
Accident and Health | 16,946 | 2.7 | % | 14,845 | 2.2 | % | ||||||||
International | 22,503 | 3.7 | % | 18,281 | 2.6 | % | ||||||||
Total Diversified Reinsurance | 207,137 | 33.6 | % | 179,092 | 25.9 | % | ||||||||
AmTrust Reinsurance | ||||||||||||||
Small Commercial Business | 295,499 | 47.9 | % | 314,677 | 45.6 | % | ||||||||
Specialty Program | 63,816 | 10.3 | % | 98,895 | 14.3 | % | ||||||||
Specialty Risk and Extended Warranty | 50,878 | 8.2 | % | 97,989 | 14.2 | % | ||||||||
Total AmTrust Reinsurance | 410,193 | 66.4 | % | 511,561 | 74.1 | % | ||||||||
Total Net Premiums Written | $ | 617,330 | 100.0 | % | $ | 690,653 | 100.0 | % |
For the Nine Months Ended September 30, | 2017 | 2016 | ||||||||||||
Total | % of Total | Total | % of Total | |||||||||||
Net premiums written | ||||||||||||||
Diversified Reinsurance | ||||||||||||||
Property | $ | 132,398 | 6.0 | % | $ | 123,991 | 5.8 | % | ||||||
Casualty | 391,503 | 17.8 | % | 365,332 | 17.1 | % | ||||||||
Accident and Health | 74,504 | 3.4 | % | 68,140 | 3.2 | % | ||||||||
International | 73,475 | 3.3 | % | 69,059 | 3.2 | % | ||||||||
Total Diversified Reinsurance | 671,880 | 30.5 | % | 626,522 | 29.3 | % | ||||||||
AmTrust Reinsurance | ||||||||||||||
Small Commercial Business | 1,028,905 | 46.7 | % | 983,601 | 46.1 | % | ||||||||
Specialty Program | 255,767 | 11.6 | % | 268,193 | 12.6 | % | ||||||||
Specialty Risk and Extended Warranty | 245,308 | 11.2 | % | 255,595 | 12.0 | % | ||||||||
Total AmTrust Reinsurance | 1,529,980 | 69.5 | % | 1,507,389 | 70.7 | % | ||||||||
Other | 90 | — | % | — | — | % | ||||||||
Total Net Premiums Written | $ | 2,201,950 | 100.0 | % | $ | 2,133,911 | 100.0 | % |
For the Three Months Ended September 30, | 2017 | 2016 | ||||||||||||
Total | % of Total | Total | % of Total | |||||||||||
Net premiums earned | ||||||||||||||
Diversified Reinsurance | ||||||||||||||
Property | $ | 43,362 | 6.6 | % | $ | 29,921 | 4.3 | % | ||||||
Casualty | 130,428 | 20.0 | % | 105,893 | 15.2 | % | ||||||||
Accident and Health | 22,780 | 3.5 | % | 18,436 | 2.6 | % | ||||||||
International | 20,943 | 3.2 | % | 20,891 | 3.0 | % | ||||||||
Total Diversified Reinsurance | 217,513 | 33.3 | % | 175,141 | 25.1 | % | ||||||||
AmTrust Reinsurance | ||||||||||||||
Small Commercial Business | 314,773 | 48.1 | % | 320,596 | 45.9 | % | ||||||||
Specialty Program | 59,143 | 9.1 | % | 89,856 | 12.9 | % | ||||||||
Specialty Risk and Extended Warranty | 62,437 | 9.5 | % | 112,685 | 16.1 | % | ||||||||
Total AmTrust Reinsurance | 436,353 | 66.7 | % | 523,137 | 74.9 | % | ||||||||
Total Net Premiums Earned | $ | 653,866 | 100.0 | % | $ | 698,278 | 100.0 | % |
For the Nine Months Ended September 30, | 2017 | 2016 | ||||||||||||
Total | % of Total | Total | % of Total | |||||||||||
Net premiums earned | ||||||||||||||
Diversified Reinsurance | ||||||||||||||
Property | $ | 122,888 | 5.9 | % | $ | 103,023 | 5.3 | % | ||||||
Casualty | 375,141 | 18.1 | % | 313,736 | 16.1 | % | ||||||||
Accident and Health | 63,878 | 3.1 | % | 55,788 | 2.8 | % | ||||||||
International | 61,667 | 3.0 | % | 65,605 | 3.4 | % | ||||||||
Total Diversified Reinsurance | 623,574 | 30.1 | % | 538,152 | 27.6 | % | ||||||||
AmTrust Reinsurance | ||||||||||||||
Small Commercial Business | 946,782 | 45.6 | % | 864,699 | 44.3 | % | ||||||||
Specialty Program | 251,153 | 12.1 | % | 251,543 | 12.9 | % | ||||||||
Specialty Risk and Extended Warranty | 252,876 | 12.2 | % | 297,457 | 15.2 | % | ||||||||
Total AmTrust Reinsurance | 1,450,811 | 69.9 | % | 1,413,699 | 72.4 | % | ||||||||
Other | 90 | — | % | — | — | % | ||||||||
Total Net Premiums Earned | $ | 2,074,475 | 100.0 | % | $ | 1,951,851 | 100.0 | % |
a) | Fixed Maturities and Other Investments |
September 30, 2017 | Original or amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | ||||||||||||
Available-for-sale ("AFS") fixed maturities : | ||||||||||||||||
U.S. treasury bonds | $ | 5,194 | $ | 150 | $ | (8 | ) | $ | 5,336 | |||||||
U.S. agency bonds – mortgage-backed | 2,004,645 | 14,208 | (12,451 | ) | 2,006,402 | |||||||||||
Non-U.S. government and supranational bonds | 33,392 | 216 | (2,012 | ) | 31,596 | |||||||||||
Asset-backed securities | 257,969 | 4,456 | (164 | ) | 262,261 | |||||||||||
Corporate bonds | 1,541,296 | 52,717 | (17,624 | ) | 1,576,389 | |||||||||||
Municipal bonds | 2,500 | 103 | — | 2,603 | ||||||||||||
Total AFS fixed maturities | 3,844,996 | 71,850 | (32,259 | ) | 3,884,587 | |||||||||||
Held-to-maturity ("HTM") fixed maturities: | ||||||||||||||||
Corporate bonds | 1,057,943 | 34,027 | (748 | ) | 1,091,222 | |||||||||||
Municipal bonds | 60,425 | 459 | — | 60,884 | ||||||||||||
Total HTM fixed maturities | 1,118,368 | 34,486 | (748 | ) | 1,152,106 | |||||||||||
Other investments | 5,640 | 1,401 | — | 7,041 | ||||||||||||
Total investments | $ | 4,969,004 | $ | 107,737 | $ | (33,007 | ) | $ | 5,043,734 |
December 31, 2016 | Original or amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | ||||||||||||
AFS fixed maturities: | ||||||||||||||||
U.S. treasury bonds | $ | 5,186 | $ | 238 | $ | (11 | ) | $ | 5,413 | |||||||
U.S. agency bonds – mortgage-backed | 1,720,436 | 12,867 | (17,265 | ) | 1,716,038 | |||||||||||
U.S. agency bonds – other | 18,082 | 20 | — | 18,102 | ||||||||||||
Non-U.S. government and supranational bonds | 35,158 | 73 | (5,297 | ) | 29,934 | |||||||||||
Asset-backed securities | 217,232 | 3,713 | (69 | ) | 220,876 | |||||||||||
Corporate bonds | 1,947,347 | 30,951 | (62,093 | ) | 1,916,205 | |||||||||||
Municipal bonds | 62,201 | 2,897 | — | 65,098 | ||||||||||||
Total AFS fixed maturities | 4,005,642 | 50,759 | (84,735 | ) | 3,971,666 | |||||||||||
HTM fixed maturities: | ||||||||||||||||
Corporate bonds | 752,212 | 16,370 | (2,447 | ) | 766,135 | |||||||||||
Total HTM fixed maturities | 752,212 | 16,370 | (2,447 | ) | 766,135 | |||||||||||
Other investments | 10,057 | 3,003 | — | 13,060 | ||||||||||||
Total investments | $ | 4,767,911 | $ | 70,132 | $ | (87,182 | ) | $ | 4,750,861 |
AFS fixed maturities | HTM fixed maturities | |||||||||||||||
September 30, 2017 | Amortized cost | Fair value | Amortized cost | Fair value | ||||||||||||
Maturity | ||||||||||||||||
Due in one year or less | $ | 40,440 | $ | 38,784 | $ | 49,293 | $ | 49,298 | ||||||||
Due after one year through five years | 577,760 | 583,569 | 335,922 | 346,747 | ||||||||||||
Due after five years through ten years | 961,682 | 990,968 | 723,297 | 746,131 | ||||||||||||
Due after ten years | 2,500 | 2,603 | 9,856 | 9,930 | ||||||||||||
1,582,382 | 1,615,924 | 1,118,368 | 1,152,106 | |||||||||||||
U.S. agency bonds – mortgage-backed | 2,004,645 | 2,006,402 | — | — | ||||||||||||
Asset-backed securities | 257,969 | 262,261 | — | — | ||||||||||||
Total fixed maturities | $ | 3,844,996 | $ | 3,884,587 | $ | 1,118,368 | $ | 1,152,106 |
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
September 30, 2017 | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||||||
Fixed maturities | ||||||||||||||||||||||||
U.S. treasury bonds | $ | — | $ | — | $ | 592 | $ | (8 | ) | $ | 592 | $ | (8 | ) | ||||||||||
U.S. agency bonds – mortgage-backed | 700,173 | (5,545 | ) | 390,211 | (6,906 | ) | 1,090,384 | (12,451 | ) | |||||||||||||||
Non–U.S. government and supranational bonds | 12,678 | (1,116 | ) | 15,132 | (896 | ) | 27,810 | (2,012 | ) | |||||||||||||||
Asset-backed securities | 21,499 | (105 | ) | 3,323 | (59 | ) | 24,822 | (164 | ) | |||||||||||||||
Corporate bonds | 152,959 | (4,437 | ) | 262,782 | (13,935 | ) | 415,741 | (18,372 | ) | |||||||||||||||
Total temporarily impaired fixed maturities | $ | 887,309 | $ | (11,203 | ) | $ | 672,040 | $ | (21,804 | ) | $ | 1,559,349 | $ | (33,007 | ) |
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
December 31, 2016 | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||||||
Fixed maturities | ||||||||||||||||||||||||
U.S. treasury bonds | $ | 589 | $ | (11 | ) | $ | — | $ | — | $ | 589 | $ | (11 | ) | ||||||||||
U.S. agency bonds – mortgage-backed | 997,943 | (14,440 | ) | 47,969 | (2,825 | ) | 1,045,912 | (17,265 | ) | |||||||||||||||
Non-U.S. government and supranational bonds | 3,169 | (160 | ) | 25,236 | (5,137 | ) | 28,405 | (5,297 | ) | |||||||||||||||
Asset-backed securities | 30,589 | (69 | ) | — | — | 30,589 | (69 | ) | ||||||||||||||||
Corporate bonds | 642,599 | (15,058 | ) | 357,954 | (49,482 | ) | 1,000,553 | (64,540 | ) | |||||||||||||||
Total temporarily impaired fixed maturities | $ | 1,674,889 | $ | (29,738 | ) | $ | 431,159 | $ | (57,444 | ) | $ | 2,106,048 | $ | (87,182 | ) |
Ratings(1) at September 30, 2017 | Amortized cost | Fair value | % of Total fair value | ||||||||
U.S. treasury bonds | $ | 5,194 | $ | 5,336 | 0.1 | % | |||||
U.S. agency bonds | 2,004,645 | 2,006,402 | 39.8 | % | |||||||
AAA | 169,514 | 173,589 | 3.4 | % | |||||||
AA+, AA, AA- | 238,268 | 244,507 | 4.9 | % | |||||||
A+, A, A- | 1,395,001 | 1,421,504 | 28.3 | % | |||||||
BBB+, BBB, BBB- | 1,093,491 | 1,125,119 | 22.3 | % | |||||||
BB+ or lower | 57,251 | 60,236 | 1.2 | % | |||||||
Total fixed maturities | $ | 4,963,364 | $ | 5,036,693 | 100.0 | % |
Ratings(1) at December 31, 2016 | Amortized cost | Fair value | % of Total fair value | ||||||||
U.S. treasury bonds | $ | 5,186 | $ | 5,413 | 0.1 | % | |||||
U.S. agency bonds | 1,738,518 | 1,734,140 | 36.6 | % | |||||||
AAA | 170,515 | 171,090 | 3.6 | % | |||||||
AA+, AA, AA- | 238,315 | 237,169 | 5.0 | % | |||||||
A+, A, A- | 1,386,023 | 1,374,860 | 29.0 | % | |||||||
BBB+, BBB, BBB- | 1,053,529 | 1,047,376 | 22.2 | % | |||||||
BB+ or lower | 165,768 | 167,753 | 3.5 | % | |||||||
Total fixed maturities | $ | 4,757,854 | $ | 4,737,801 | 100.0 | % |
(1) | Based on Standard & Poor’s ("S&P"), or equivalent, ratings |
b) | Other Investments |
September 30, 2017 | December 31, 2016 | |||||||||||||
Fair value | % of Total fair value | Fair value | % of Total fair value | |||||||||||
Investment in limited partnerships | $ | 5,541 | 78.7 | % | $ | 5,474 | 41.9 | % | ||||||
Investment in quoted equity | — | — | % | 6,586 | 50.4 | % | ||||||||
Other | 1,500 | 21.3 | % | 1,000 | 7.7 | % | ||||||||
Total other investments | $ | 7,041 | 100.0 | % | $ | 13,060 | 100.0 | % |
c) | Net Investment Income |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Fixed maturities | $ | 40,369 | $ | 35,769 | $ | 123,849 | $ | 108,018 | ||||||||
Cash and cash equivalents | 899 | 506 | 1,328 | 1,147 | ||||||||||||
Loan to related party | 913 | 599 | 2,441 | 1,729 | ||||||||||||
Other | 569 | 572 | 1,460 | 1,519 | ||||||||||||
42,750 | 37,446 | 129,078 | 112,413 | |||||||||||||
Investment expenses | (1,927 | ) | (1,780 | ) | (5,586 | ) | (5,122 | ) | ||||||||
Net investment income | $ | 40,823 | $ | 35,666 | $ | 123,492 | $ | 107,291 |
d) | Realized Gains (Losses) on Investment |
For the Three Months Ended September 30, 2017 | Gross gains | Gross losses | Net | |||||||||
AFS fixed maturities | $ | 1,366 | $ | (997 | ) | $ | 369 | |||||
Other investments | 5,490 | — | 5,490 | |||||||||
Net realized gains on investment | $ | 6,856 | $ | (997 | ) | $ | 5,859 | |||||
For the Three Months Ended September 30, 2016 | Gross gains | Gross losses | Net | |||||||||
AFS fixed maturities | $ | 1,813 | $ | — | $ | 1,813 | ||||||
Other investments | 87 | — | 87 | |||||||||
Net realized gains on investment | $ | 1,900 | $ | — | $ | 1,900 | ||||||
For the Nine Months Ended September 30, 2017 | Gross gains | Gross losses | Net | |||||||||
AFS fixed maturities | $ | 3,854 | $ | (1,253 | ) | $ | 2,601 | |||||
Other investments | 5,715 | — | 5,715 | |||||||||
Net realized gains on investment | $ | 9,569 | $ | (1,253 | ) | $ | 8,316 | |||||
For the Nine Months Ended September 30, 2016 | Gross gains | Gross losses | Net | |||||||||
AFS fixed maturities | $ | 4,953 | $ | (891 | ) | $ | 4,062 | |||||
Other investments | 449 | — | 449 | |||||||||
Net realized gains on investment | $ | 5,402 | $ | (891 | ) | $ | 4,511 |
September 30, 2017 | December 31, 2016 | |||||||
Fixed maturities | $ | 47,888 | $ | (23,635 | ) | |||
Other investments | 1,401 | 3,003 | ||||||
Total net unrealized gains (losses) | 49,289 | (20,632 | ) | |||||
Deferred income tax | (79 | ) | (84 | ) | ||||
Net unrealized gains (losses), net of deferred income tax | $ | 49,210 | $ | (20,716 | ) | |||
Change, net of deferred income tax | $ | 69,926 |
e) | Restricted Cash and Cash Equivalents and Investments |
September 30, 2017 | December 31, 2016 | |||||||
Restricted cash – third party agreements | $ | 80,999 | $ | 56,891 | ||||
Restricted cash – related party agreements | 50,467 | 46,777 | ||||||
Restricted cash – U.S. state regulatory authorities | 132 | 120 | ||||||
Total restricted cash | 131,598 | 103,788 | ||||||
Restricted investments – in trust for third party agreements at fair value (Amortized cost: 2017 – $1,337,185; 2016 – $1,307,926) | 1,354,548 | 1,299,569 | ||||||
Restricted investments AFS– in trust for related party agreements at fair value (Amortized cost: 2017 – $2,193,678; 2016 – $2,242,565) | 2,218,382 | 2,225,066 | ||||||
Restricted investments HTM– in trust for related party agreements at fair value (Amortized cost: 2017 – $1,118,368; 2016 – $752,212) | 1,152,106 | 766,135 | ||||||
Restricted investments – in trust for U.S. state regulatory authorities (Amortized cost: 2017 – $4,071; 2016 – $4,059) | 4,188 | 4,238 | ||||||
Total restricted investments | 4,729,224 | 4,295,008 | ||||||
Total restricted cash and investments | $ | 4,860,822 | $ | 4,398,796 |
• | Level 1 — Valuations based on unadjusted quoted market prices for identical assets or liabilities that we have the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Examples of assets and liabilities utilizing Level 1 inputs include: exchange-traded equity securities and U.S. Treasury bonds; |
• | Level 2 — Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets, or valuations based on models where the significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data. Examples of assets and liabilities utilizing Level 2 inputs include: U.S. government-sponsored agency securities; non-U.S. government and supranational obligations; commercial mortgage-backed securities ("CMBS"); collateralized loan obligations ("CLO"); corporate and municipal bonds; and |
• | Level 3 — Valuations based on models where significant inputs are not observable. The unobservable inputs reflect our own assumptions about assumptions that market participants would use. Examples of assets and liabilities utilizing Level 3 inputs include: an investment in preference shares of a start-up insurance producer. |
September 30, 2017 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value Based on NAV Practical Expedient | Total Fair Value | |||||||||||||||
AFS fixed maturities | ||||||||||||||||||||
U.S. treasury bonds | $ | 5,336 | $ | — | $ | — | $ | — | $ | 5,336 | ||||||||||
U.S. agency bonds – mortgage-backed | — | 2,006,402 | — | — | 2,006,402 | |||||||||||||||
Non-U.S. government and supranational bonds | — | 31,596 | — | — | 31,596 | |||||||||||||||
Asset-backed securities | — | 262,261 | — | — | 262,261 | |||||||||||||||
Corporate bonds | — | 1,576,389 | — | — | 1,576,389 | |||||||||||||||
Municipal bonds | — | 2,603 | — | — | 2,603 | |||||||||||||||
Other investments | — | — | 1,500 | 5,541 | 7,041 | |||||||||||||||
Total | $ | 5,336 | $ | 3,879,251 | $ | 1,500 | $ | 5,541 | $ | 3,891,628 | ||||||||||
As a percentage of total assets | 0.1 | % | 56.7 | % | — | % | 0.1 | % | 56.9 | % |
December 31, 2016 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value Based on NAV Practical Expedient | Total Fair Value | |||||||||||||||
AFS fixed maturities | ||||||||||||||||||||
U.S. treasury bonds | $ | 5,413 | $ | — | $ | — | $ | — | $ | 5,413 | ||||||||||
U.S. agency bonds – mortgage-backed | — | 1,716,038 | — | — | 1,716,038 | |||||||||||||||
U.S. agency bonds – other | — | 18,102 | — | — | 18,102 | |||||||||||||||
Non-U.S. government and supranational bonds | — | 29,934 | — | — | 29,934 | |||||||||||||||
Asset-backed securities | — | 220,876 | — | — | 220,876 | |||||||||||||||
Corporate bonds | — | 1,916,205 | — | — | 1,916,205 | |||||||||||||||
Municipal bonds | — | 65,098 | — | — | 65,098 | |||||||||||||||
Other investments | 6,586 | — | 1,000 | 5,474 | 13,060 | |||||||||||||||
Total | $ | 11,999 | $ | 3,966,253 | $ | 1,000 | $ | 5,474 | $ | 3,984,726 | ||||||||||
As a percentage of total assets | 0.2 | % | 63.4 | % | — | % | 0.1 | % | 63.7 | % |
September 30, 2017 | December 31, 2016 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
Financial Assets | ||||||||||||||||
HTM – corporate bonds | $ | 1,057,943 | $ | 1,091,222 | $ | 752,212 | $ | 766,135 | ||||||||
HTM – municipal bonds | 60,425 | 60,884 | — | — | ||||||||||||
Total financial assets | $ | 1,118,368 | $ | 1,152,106 | $ | 752,212 | $ | 766,135 | ||||||||
Financial Liabilities | ||||||||||||||||
Senior Notes - MHLA – 6.625% | $ | 110,000 | $ | 117,040 | $ | 110,000 | $ | 111,452 | ||||||||
Senior Notes - MHNC – 7.75% | 152,500 | 159,600 | 152,500 | 164,700 | ||||||||||||
Senior Notes - MHNB – 8.00%(1) | — | — | 100,000 | 101,600 | ||||||||||||
Total financial liabilities | $ | 262,500 | $ | 276,640 | $ | 362,500 | $ | 377,752 |
(1) | Please refer to "Note 6. Long-Term Debt", for disclosure regarding the redemption of the 2012 Senior Notes during the second quarter of 2017. |
September 30, 2017 | 2016 Senior Notes | 2013 Senior Notes | 2012 Senior Notes | Total | ||||||||||||
Principal amount | $ | 110,000 | $ | 152,500 | $ | — | $ | 262,500 | ||||||||
Less: unamortized issuance costs | 3,664 | 4,406 | — | 8,070 | ||||||||||||
Carrying value | $ | 106,336 | $ | 148,094 | $ | — | $ | 254,430 | ||||||||
December 31, 2016 | 2016 Senior Notes | 2013 Senior Notes | 2012 Senior Notes | Total | ||||||||||||
Principal amount | $ | 110,000 | $ | 152,500 | $ | 100,000 | $ | 362,500 | ||||||||
Less: unamortized issuance costs | 3,694 | 4,532 | 2,865 | 11,091 | ||||||||||||
Carrying value | $ | 106,306 | $ | 147,968 | $ | 97,135 | $ | 351,409 | ||||||||
Other details: | ||||||||||||||||
Original debt issuance costs | $ | 3,715 | $ | 5,054 | $ | 3,406 | ||||||||||
Maturity date | June 14, 2046 | Dec 1, 2043 | Mar 27, 2042 | |||||||||||||
Earliest redeemable date (for cash) | June 14, 2021 | Dec 1, 2018 | Mar 27, 2017 | |||||||||||||
Coupon rate | 6.625 | % | 7.75 | % | 8.00 | % | ||||||||||
Effective interest rate | 7.07 | % | 8.04 | % | 8.31 | % |
September 30, 2017 | December 31, 2016 | |||||||
Reserve for reported loss and LAE | $ | 1,898,474 | $ | 1,617,956 | ||||
Reserve for losses incurred but not reported ("IBNR") | 1,466,537 | 1,278,540 | ||||||
Reserve for loss and LAE | $ | 3,365,011 | $ | 2,896,496 |
For the Nine Months Ended September 30, | 2017 | 2016 | ||||||
Gross loss and LAE reserves, January 1 | $ | 2,896,496 | $ | 2,510,101 | ||||
Less: reinsurance recoverable on unpaid losses, January 1 | 99,936 | 71,248 | ||||||
Net loss and LAE reserves, January 1 | 2,796,560 | 2,438,853 | ||||||
Net incurred losses related to: | ||||||||
Current year | 1,394,623 | 1,255,493 | ||||||
Prior years | 150,534 | 41,868 | ||||||
1,545,157 | 1,297,361 | |||||||
Net paid losses related to: | ||||||||
Current year | (400,908 | ) | (356,135 | ) | ||||
Prior years | (765,049 | ) | (722,395 | ) | ||||
(1,165,957 | ) | (1,078,530 | ) | |||||
Effect of foreign exchange movements | 48,622 | 4,764 | ||||||
Net loss and LAE reserves, September 30 | 3,224,382 | 2,662,448 | ||||||
Reinsurance recoverable on unpaid losses, September 30 | 140,629 | 97,070 | ||||||
Gross loss and LAE reserves, September 30 | $ | 3,365,011 | $ | 2,759,518 |
a) | Concentrations of Credit Risk |
b) | Concentrations of Revenue |
c) | Dividends Declared |
Dividend per Share | Payable on: | Record date: | ||||
Common shares | $0.15 | October 16, 2017 | October 2, 2017 |
d) | Legal Proceedings |
For the Three Months Ended September 30, | 2017 | 2016 | ||||||
Numerator: | ||||||||
Net (loss) income attributable to Maiden | $ | (55,051 | ) | $ | 40,852 | |||
Dividends on preference shares – Series A, C and D | (8,545 | ) | (6,032 | ) | ||||
Dividends on convertible preference shares – Series B | — | (2,991 | ) | |||||
Amount allocated to participating common shareholders(1) | (6 | ) | (19 | ) | ||||
Numerator for basic EPS - net (loss) income allocated to Maiden common shareholders | (63,602 | ) | 31,810 | |||||
Potentially dilutive securities: | ||||||||
Dividends on convertible preference shares – Series B(2) | — | 2,991 | ||||||
Numerator for diluted EPS - net (loss) income allocated to Maiden common shareholders after assumed conversion | $ | (63,602 | ) | $ | 34,801 | |||
Denominator: | ||||||||
Weighted average number of common shares – basic | 85,859,201 | 75,993,451 | ||||||
Potentially dilutive securities: | ||||||||
Share options and restricted share units | — | 1,100,206 | ||||||
Convertible preference shares(2) | — | 9,057,294 | ||||||
Adjusted weighted average number of common shares and assumed conversions – diluted | 85,859,201 | 86,150,951 | ||||||
Basic (loss) earnings per share attributable to Maiden common shareholders: | $ | (0.74 | ) | $ | 0.42 | |||
Diluted (loss) earnings per share attributable to Maiden common shareholders: | $ | (0.74 | ) | $ | 0.40 | |||
For the Nine Months Ended September 30, | 2017 | 2016 | ||||||
Numerator: | ||||||||
Net (loss) income attributable to Maiden | $ | (44,854 | ) | $ | 117,678 | |||
Dividends on preference shares – Series A, C and D | (20,611 | ) | (18,752 | ) | ||||
Dividends on convertible preference shares – Series B | — | (8,971 | ) | |||||
Amount allocated to participating common shareholders(1) | (17 | ) | (55 | ) | ||||
Numerator for basic EPS - net (loss) income allocated to Maiden common shareholders | (65,482 | ) | 89,900 | |||||
Potentially dilutive securities: | ||||||||
Dividends on convertible preference shares – Series B(2) | — | 8,971 | ||||||
Numerator for diluted EPS - net (loss) income allocated to Maiden common shareholders after assumed conversion | $ | (65,482 | ) | $ | 98,871 | |||
Denominator: | ||||||||
Weighted average number of common shares – basic | 86,256,481 | 74,625,839 | ||||||
Potentially dilutive securities: | ||||||||
Share options and restricted share units | — | 1,085,740 | ||||||
Convertible preference shares(2) | — | 10,306,440 | ||||||
Adjusted weighted average number of common shares and assumed conversions – diluted | 86,256,481 | 86,018,019 | ||||||
Basic (loss) earnings per share attributable to Maiden common shareholders: | $ | (0.76 | ) | $ | 1.20 | |||
Diluted (loss) earnings per share attributable to Maiden common shareholders: | $ | (0.76 | ) | $ | 1.15 |
(1) | This represents earnings allocated to the holders of non-vested restricted shares issued to the Company's employees under the 2007 Share Incentive Plan. |
(2) | Please refer to "Note 13. Shareholders' Equity" and "Note 14. Share Compensation and Pension Plans" of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, for the terms and conditions of each of these anti-dilutive instruments. |
a) | Common Shares |
b) | Preference Shares – Series D |
c) | Treasury Shares |
d) | Accumulated Other Comprehensive Income |
For the Three Months Ended September 30, 2017 | Change in net unrealized gains on investment | Foreign currency translation adjustments | Total | |||||||||
Beginning balance | $ | 27,866 | $ | 7,629 | $ | 35,495 | ||||||
Other comprehensive income (loss) before reclassifications | 24,994 | (10,828 | ) | 14,166 | ||||||||
Amounts reclassified from AOCI to net income, net of tax | (3,650 | ) | — | (3,650 | ) | |||||||
Net current period other comprehensive income (loss) | 21,344 | (10,828 | ) | 10,516 | ||||||||
Ending balance | 49,210 | (3,199 | ) | 46,011 | ||||||||
Less: AOCI attributable to noncontrolling interest | — | (68 | ) | (68 | ) | |||||||
Ending balance, Maiden shareholders | $ | 49,210 | $ | (3,131 | ) | $ | 46,079 | |||||
For the Three Months Ended September 30, 2016 | Change in net unrealized gains on investment | Foreign currency translation adjustments | Total | |||||||||
Beginning balance | $ | 93,793 | $ | 25,034 | $ | 118,827 | ||||||
Other comprehensive income (loss) before reclassifications | 8,899 | (2,730 | ) | 6,169 | ||||||||
Amounts reclassified from AOCI to net income, net of tax | (1,202 | ) | — | (1,202 | ) | |||||||
Net current period other comprehensive income (loss) | 7,697 | (2,730 | ) | 4,967 | ||||||||
Ending balance | 101,490 | 22,304 | 123,794 | |||||||||
Less: AOCI attributable to noncontrolling interest | — | (82 | ) | (82 | ) | |||||||
Ending balance, Maiden shareholders | $ | 101,490 | $ | 22,386 | $ | 123,876 | ||||||
For the Nine Months Ended September 30, 2017 | Change in net unrealized gains on investment | Foreign currency translation adjustments | Total | |||||||||
Beginning balance | $ | (20,716 | ) | $ | 35,604 | $ | 14,888 | |||||
Other comprehensive income (loss) before reclassifications | 68,803 | (38,803 | ) | 30,000 | ||||||||
Amounts reclassified from AOCI to net income, net of tax | 1,123 | — | 1,123 | |||||||||
Net current period other comprehensive income (loss) | 69,926 | (38,803 | ) | 31,123 | ||||||||
Ending balance | 49,210 | (3,199 | ) | 46,011 | ||||||||
Less: AOCI attributable to noncontrolling interest | — | (68 | ) | (68 | ) | |||||||
Ending balance, Maiden shareholders | $ | 49,210 | $ | (3,131 | ) | $ | 46,079 | |||||
For the Nine Months Ended September 30, 2016 | Change in net unrealized gains on investment | Foreign currency translation adjustments | Total | |||||||||
Beginning balance | $ | (54,112 | ) | $ | 30,231 | $ | (23,881 | ) | ||||
Other comprehensive income (loss) before reclassifications | 155,024 | (7,927 | ) | 147,097 | ||||||||
Amounts reclassified from AOCI to net income, net of tax | 578 | — | 578 | |||||||||
Net current period other comprehensive income (loss) | 155,602 | (7,927 | ) | 147,675 | ||||||||
Ending balance | 101,490 | 22,304 | 123,794 | |||||||||
Less: AOCI attributable to noncontrolling interest | — | (82 | ) | (82 | ) | |||||||
Ending balance, Maiden shareholders | $ | 101,490 | $ | 22,386 | $ | 123,876 |
Dividend per Share | Payable on: | Record date: | ||||||
Common shares | $ | 0.15 | January 16, 2018 | January 2, 2018 | ||||
Preference shares - Series A | $ | 0.515625 | December 15, 2017 | December 1, 2017 | ||||
Preference shares - Series C | $ | 0.445313 | December 15, 2017 | December 1, 2017 | ||||
Preference shares - Series D | $ | 0.418750 | December 15, 2017 | December 1, 2017 |
For the Three Months Ended September 30, | 2017 | 2016 | Change | |||||||||
Summary Consolidated Statement of Income Data: | ($ in thousands except per share data) | |||||||||||
Net (loss) income | $ | (55,054 | ) | $ | 40,796 | $ | (95,850 | ) | ||||
Net (loss) income attributable to Maiden common shareholders | (63,596 | ) | 31,829 | (95,425 | ) | |||||||
Non-GAAP operating (loss) earnings(1) | (56,414 | ) | 30,196 | (86,610 | ) | |||||||
Basic (loss) earnings per common share: | ||||||||||||
Net (loss) income attributable to Maiden common shareholders(2) | (0.74 | ) | 0.42 | (1.16 | ) | |||||||
Non-GAAP operating (loss) earnings attributable to Maiden common shareholders(1) | (0.66 | ) | 0.40 | (1.06 | ) | |||||||
Diluted (loss) earnings per common share: | ||||||||||||
Net (loss) income attributable to Maiden common shareholders(2) (9) | (0.74 | ) | 0.40 | (1.14 | ) | |||||||
Non-GAAP operating (loss) earnings attributable to Maiden common shareholders(1) (9) | (0.66 | ) | 0.39 | (1.05 | ) | |||||||
Dividends per common share | 0.15 | 0.14 | 0.01 | |||||||||
Gross premiums written | 630,972 | 706,854 | (75,882 | ) | ||||||||
Net premiums earned | 653,866 | 698,278 | (44,412 | ) | ||||||||
Underwriting (loss) income(3) | (82,442 | ) | 17,369 | (99,811 | ) | |||||||
Net investment income | 40,823 | 35,666 | 5,157 | |||||||||
Combined ratio(4) | 114.1 | % | 98.5 | % | 15.6 | |||||||
Annualized non-GAAP operating return on average common shareholders' equity(1) | (22.5 | )% | 11.0 | % | (33.5 | ) | ||||||
For the Nine Months Ended September 30, | 2017 | 2016 | Change | |||||||||
Summary Consolidated Statement of Income Data: | ($ in thousands except per share data) | |||||||||||
Net (loss) income | $ | (44,888 | ) | $ | 117,512 | $ | (162,400 | ) | ||||
Net (loss) income attributable to Maiden common shareholders | (65,465 | ) | 89,955 | (155,420 | ) | |||||||
Non-GAAP operating (loss) earnings(1) | (46,226 | ) | 86,974 | (133,200 | ) | |||||||
Basic (loss) earnings per common share: | ||||||||||||
Net (loss) income attributable to Maiden common shareholders(2) | (0.76 | ) | 1.20 | (1.96 | ) | |||||||
Non-GAAP operating (loss) earnings attributable to Maiden common shareholders(1) | (0.54 | ) | 1.16 | (1.7 | ) | |||||||
Diluted (loss) earnings per common share: | ||||||||||||
Net (loss) income attributable to Maiden common shareholders(2) (9) | (0.76 | ) | 1.15 | (1.91 | ) | |||||||
Non-GAAP operating (loss) earnings attributable to Maiden common shareholders(1) (9) | (0.54 | ) | 1.11 | (1.65 | ) | |||||||
Dividends per common share | 0.45 | 0.42 | 0.03 | |||||||||
Gross premiums written | 2,259,597 | 2,259,290 | 307 | |||||||||
Net premiums earned | 2,074,475 | 1,951,851 | 122,624 | |||||||||
Underwriting (loss) income(3) | (116,455 | ) | 46,660 | (163,115 | ) | |||||||
Net investment income | 123,492 | 107,291 | 16,201 | |||||||||
Combined ratio(4) | 106.7 | % | 98.7 | % | 8.0 | |||||||
Annualized non-GAAP operating return on average common shareholders' equity(1) | (6.2 | )% | 11.8 | % | (18.0 | ) |
September 30, 2017 | December 31, 2016 | Change | ||||||||||
Consolidated Financial Condition | ($ in thousands except per share data) | |||||||||||
Total investments and cash and cash equivalents(5) | $ | 5,324,271 | $ | 4,886,473 | $ | 437,798 | ||||||
Total assets | 6,839,097 | 6,252,299 | 586,798 | |||||||||
Reserve for loss and loss adjustment expense ("loss and LAE") | 3,365,011 | 2,896,496 | 468,515 | |||||||||
Senior notes - principal amount | 262,500 | 362,500 | (100,000 | ) | ||||||||
Maiden common shareholders' equity | 956,027 | 1,045,797 | (89,770 | ) | ||||||||
Maiden shareholders' equity | 1,421,027 | 1,360,797 | 60,230 | |||||||||
Total capital resources(6) | 1,683,527 | 1,723,297 | (39,770 | ) | ||||||||
Ratio of debt to total capital resources | 15.6 | % | 21.0 | % | (5.4 | ) | ||||||
Book Value | ||||||||||||
Book value per common share(7) | $ | 11.30 | $ | 12.12 | $ | (0.82 | ) | |||||
Accumulated dividends per common share | 3.77 | 3.32 | 0.45 | |||||||||
Book value per common share plus accumulated dividends | $ | 15.07 | $ | 15.44 | $ | (0.37 | ) | |||||
Diluted book value per common share(8) (9) | $ | 11.20 | $ | 12.00 | $ | (0.80 | ) |
(1) | Non-GAAP operating (loss) earnings, non-GAAP operating (loss) earnings per common share and non-GAAP operating return on average common equity are non-GAAP financial measures. See "Key Financial Measures" for additional information and a reconciliation to the nearest U.S. GAAP financial measure (net (loss) income). |
(2) | Please refer to "Notes to Condensed Consolidated Financial Statements (unaudited) Note 10. Earnings per Common Share" for the calculation of basic and diluted (loss) earnings per common share. |
(3) | Underwriting (loss) income is a non-GAAP measure and is calculated as net premiums earned plus other insurance revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities. |
(4) | Calculated by adding together the net loss and LAE ratio and the expense ratio. |
(5) | Total investments and cash and cash equivalents includes both restricted and unrestricted. |
(6) | Total capital resources is the sum of the Company's principal amount of debt and Maiden shareholders' equity. See "Key Financial Measures" for additional information. |
(7) | Book value per common share is calculated using Maiden common shareholders’ equity (shareholders' equity excluding the aggregate liquidation value of our preference shares) divided by the number of common shares outstanding. |
(8) | Diluted book value per common share is calculated by dividing Maiden common shareholders' equity, adjusted for assumed proceeds from the exercise of dilutive options, by the number of outstanding common shares plus dilutive options and restricted share units (assuming exercise of all dilutive share based awards). |
(9) | During a period of loss, the basic weighted average common shares outstanding is used in the denominator of the diluted loss per common share computation as the effect of including potential dilutive shares would be anti-dilutive. |
For the Three Months Ended September 30, | 2017 | 2016 | ||||||
($ in thousands except per share data) | ||||||||
Net (loss) income attributable to Maiden common shareholders | $ | (63,596 | ) | $ | 31,829 | |||
Add (subtract): | ||||||||
Net realized gains on investment | (5,859 | ) | (1,900 | ) | ||||
Foreign exchange losses (gains) | 3,550 | (687 | ) | |||||
Amortization of intangible assets | 533 | 616 | ||||||
Divested E&S business and NGHC run-off | 8,667 | 47 | ||||||
Non-cash deferred tax expense | 291 | 291 | ||||||
Non-GAAP operating (loss) earnings attributable to Maiden common shareholders | $ | (56,414 | ) | $ | 30,196 | |||
Diluted (loss) earnings per share attributable to Maiden common shareholders | $ | (0.74 | ) | $ | 0.40 | |||
Add (subtract): | ||||||||
Net realized gains on investment | (0.07 | ) | (0.02 | ) | ||||
Foreign exchange losses (gains) | 0.04 | (0.01 | ) | |||||
Amortization of intangible assets | 0.01 | 0.02 | ||||||
Divested E&S business and NGHC run-off | 0.10 | — | ||||||
Non-GAAP diluted operating (loss) earnings per common share | $ | (0.66 | ) | $ | 0.39 | |||
For the Nine Months Ended September 30, | 2017 | 2016 | ||||||
($ in thousands except per share data) | ||||||||
Net (loss) income attributable to Maiden common shareholders | $ | (65,465 | ) | $ | 89,955 | |||
Add (subtract): | ||||||||
Net realized gains on investment | (8,316 | ) | (4,511 | ) | ||||
Foreign exchange losses (gains) | 12,193 | (6,474 | ) | |||||
Amortization of intangible assets | 1,599 | 1,846 | ||||||
Divested E&S business and NGHC run-off | 10,083 | 2,942 | ||||||
Accelerated amortization of senior note issuance cost | 2,809 | 2,345 | ||||||
Non-cash deferred tax expense | 871 | 871 | ||||||
Non-GAAP operating (loss) earnings attributable to Maiden common shareholders | $ | (46,226 | ) | $ | 86,974 | |||
Diluted (loss) earnings per share attributable to Maiden common shareholders | $ | (0.76 | ) | $ | 1.15 | |||
Add (subtract): | ||||||||
Net realized gains on investment | (0.10 | ) | (0.05 | ) | ||||
Foreign exchange losses (gains) | 0.14 | (0.08 | ) | |||||
Amortization of intangible assets | 0.02 | 0.02 | ||||||
Divested E&S business and NGHC run-off | 0.12 | 0.03 | ||||||
Accelerated amortization of senior note issuance cost | 0.03 | 0.03 | ||||||
Non-cash deferred tax expense | 0.01 | 0.01 | ||||||
Non-GAAP diluted operating (loss) earnings per common share | $ | (0.54 | ) | $ | 1.11 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
($ in thousands) | ||||||||||||||||
Non-GAAP operating (loss) earnings attributable to Maiden common shareholders | $ | (56,414 | ) | $ | 30,196 | $ | (46,226 | ) | $ | 86,974 | ||||||
Opening Maiden common shareholders’ equity | $ | 1,035,399 | $ | 1,049,714 | $ | 1,045,797 | $ | 867,821 | ||||||||
Ending Maiden common shareholders’ equity | $ | 956,027 | $ | 1,240,300 | $ | 956,027 | $ | 1,240,300 | ||||||||
Average Maiden common shareholders’ equity | $ | 995,713 | $ | 1,091,203 | $ | 1,000,912 | $ | 981,196 | ||||||||
Operating ROACE | (22.5 | )% | 11.0 | % | (6.2 | )% | 11.8 | % |
September 30, 2017 | December 31, 2016 | |||||||
($ in thousands except share and per share data) | ||||||||
Ending Maiden common shareholders’ equity | $ | 956,027 | $ | 1,045,797 | ||||
Proceeds from assumed conversion of dilutive options | 9,697 | 13,383 | ||||||
Numerator for diluted book value per common share calculation | $ | 965,724 | $ | 1,059,180 | ||||
Common shares outstanding | 84,624,829 | 86,271,109 | ||||||
Shares issued from assumed conversion of dilutive options and restricted share units | 1,611,917 | 1,961,457 | ||||||
Denominator for diluted book value per common share calculation | 86,236,746 | 88,232,566 | ||||||
Book value per common share | $ | 11.30 | $ | 12.12 | ||||
Diluted book value per common share | $ | 11.20 | $ | 12.00 |
September 30, 2017 | December 31, 2016 | |||||||
($ in thousands) | ||||||||
Senior notes - principal amount | $ | 262,500 | $ | 362,500 | ||||
Maiden shareholders’ equity | 1,421,027 | 1,360,797 | ||||||
Total capital resources | $ | 1,683,527 | $ | 1,723,297 | ||||
Ratio of debt to total capital resources | 15.6 | % | 21.0 | % |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
($ in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Gross premiums written | $ | 630,972 | $ | 706,854 | $ | 2,259,597 | $ | 2,259,290 | ||||||||
Net premiums written | $ | 617,330 | $ | 690,653 | $ | 2,201,950 | $ | 2,133,911 | ||||||||
Net premiums earned | $ | 653,866 | $ | 698,278 | $ | 2,074,475 | $ | 1,951,851 | ||||||||
Other insurance revenue | 2,488 | 2,345 | 7,816 | 8,696 | ||||||||||||
Net loss and LAE | (535,968 | ) | (466,751 | ) | (1,545,157 | ) | (1,297,361 | ) | ||||||||
Commission and other acquisition expenses | (193,462 | ) | (206,706 | ) | (625,530 | ) | (587,501 | ) | ||||||||
General and administrative expenses(1) | (9,366 | ) | (9,797 | ) | (28,059 | ) | (29,025 | ) | ||||||||
Underwriting (loss) income(2) | (82,442 | ) | 17,369 | (116,455 | ) | 46,660 | ||||||||||
Other general and administrative expenses(1) | (10,126 | ) | (7,155 | ) | (24,193 | ) | (20,713 | ) | ||||||||
Net investment income | 40,823 | 35,666 | 123,492 | 107,291 | ||||||||||||
Net realized gains on investment | 5,859 | 1,900 | 8,316 | 4,511 | ||||||||||||
Accelerated amortization of senior note issuance cost | — | — | (2,809 | ) | (2,345 | ) | ||||||||||
Amortization of intangible assets | (533 | ) | (616 | ) | (1,599 | ) | (1,846 | ) | ||||||||
Foreign exchange (losses) gains | (3,550 | ) | 687 | (12,193 | ) | 6,474 | ||||||||||
Interest and amortization expenses | (4,829 | ) | (6,856 | ) | (18,430 | ) | (21,314 | ) | ||||||||
Income tax expense | (256 | ) | (199 | ) | (1,017 | ) | (1,206 | ) | ||||||||
Net (loss) income | (55,054 | ) | 40,796 | (44,888 | ) | 117,512 | ||||||||||
Loss attributable to noncontrolling interests | 3 | 56 | 34 | 166 | ||||||||||||
Dividends on preference shares | (8,545 | ) | (9,023 | ) | (20,611 | ) | (27,723 | ) | ||||||||
Net (loss) income attributable to Maiden common shareholders | $ | (63,596 | ) | $ | 31,829 | $ | (65,465 | ) | $ | 89,955 | ||||||
Ratios | ||||||||||||||||
Net loss and LAE ratio(3) | 81.6 | % | 66.6 | % | 74.2 | % | 66.2 | % | ||||||||
Commission and other acquisition expense ratio(4) | 29.5 | % | 29.5 | % | 30.0 | % | 30.0 | % | ||||||||
General and administrative expense ratio(5) | 3.0 | % | 2.4 | % | 2.5 | % | 2.5 | % | ||||||||
Expense ratio(6) | 32.5 | % | 31.9 | % | 32.5 | % | 32.5 | % | ||||||||
Combined ratio(7) | 114.1 | % | 98.5 | % | 106.7 | % | 98.7 | % |
(1) | Underwriting related general and administrative expenses is a non-GAAP measure. Please refer to "General and Administrative Expenses" below for additional information related to these corporate expenses and the reconciliation to those presented in our Condensed Consolidated Statements of Income. |
(2) | Underwriting (loss) income is a non-GAAP measure and is calculated as net premiums earned plus other insurance revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities. |
(3) | Calculated by dividing net loss and LAE by the sum of net premiums earned and other insurance revenue. |
(4) | Calculated by dividing commission and other acquisition expenses by the sum of net premiums earned and other insurance revenue. |
(5) | Calculated by dividing general and administrative expenses by the sum of net premiums earned and other insurance revenue. |
(6) | Calculated by adding together commission and other acquisition expense ratio and general and administrative expense ratio. |
(7) | Calculated by adding together net loss and LAE ratio and the expense ratio. |
• | current period underwriting loss of $82.4 million in the third quarter compared to underwriting income of $17.4 million during the third quarter of 2016. The deterioration in the underwriting result was primarily due to: |
◦ | Adverse development of prior year losses of $77.7 million for the three months ended September 30, 2017 compared to $12.4 million for the same period in 2016. This development, which is discussed in greater detail in the individual segment discussion and analysis, was primarily in our AmTrust Reinsurance segment, but adverse development was also experienced in our Diversified Reinsurance Segment and Other category; |
◦ | Our Other category also incurred adverse development of $8.7 million during the quarter compared to a negligible amount in the comparative quarter due to increased loss reserves in our remaining run–off litigated U.S. E&S property claims as well as increased loss reserves in the run–off of the National General Holdings Corporation Quota Share ("NGHC Quota Share"); |
◦ | In the third quarter of 2017, we incurred $20.0 million of estimated losses from Hurricanes Harvey and Irma, with an estimated $15.0 million in related losses in our Diversified Reinsurance segment and $5.0 million in losses from our AmTrust Reinsurance segment; and |
◦ | Current year underwriting results have also been impacted as we have increased our initial loss picks in both our Diversified Reinsurance and AmTrust Reinsurance segments factoring in both market conditions and recent loss trends and experience. |
• | foreign exchange losses of $3.6 million for the three months ended September 30, 2017 compared to foreign exchange gains of $0.7 million for the same period in 2016 due to the strengthening of euro and British pound against the U.S. dollar. |
• | increase in net investment income of $5.2 million or 14.5%, for the three months ended September 30, 2017 compared to the same period in 2016. This increase reflects the growth in average invested assets of 6.6% from the same period in 2016 and increase in average yields to 3.1% during the three months ended September 30, 2017 compared to 2.9% during the same period in 2016. Additionally, part of the increase is attributable to the call of certain securities which generated additional amortization income of $0.8 million during the quarter. There were no calls in the comparative period. |
• | an underwriting loss of $116.5 million compared to underwriting income of $46.7 million during the nine months ended September 30, 2016. The deterioration in the underwriting result was principally due to: |
◦ | Adverse development of prior year losses of $150.5 million in 2017 compared to $41.9 million for the same period in 2016. This development, which is discussed in greater detail in the individual segment discussion and analysis, was primarily in our AmTrust Reinsurance segment, but adverse development was also experienced in our Diversified Reinsurance Segment and Other category; |
◦ | Our Other category, also incurred adverse development of $10.2 million during the period compared to $2.9 million in the comparative period in 2016 due to increased loss reserves in our remaining run–off litigated U.S. E&S property claims as well as increased loss reserves in the run–off of the NGHC Quota Share; |
◦ | In the third quarter of 2017, we incurred $20.0 million of estimated losses from Hurricanes Harvey and Irma, with an estimated $15.0 million in related losses in our Diversified Reinsurance segment and $5.0 million in losses from our AmTrust Reinsurance segment; and |
◦ | Current year underwriting results have also been impacted as we have increased our initial loss picks in both our Diversified Reinsurance and AmTrust Reinsurance segments factoring in both market conditions and recent loss trends and experience. |
• | foreign exchange losses of $12.2 million for the nine months ended September 30, 2017 compared to foreign exchange gains of $6.5 million for the same period in 2016 due to the strengthening of euro and British pound against the U.S. dollar. |
• | increase in net investment income of $16.2 million or 15.1% for the nine months ended September 30, 2017 compared to the same period in 2016. This increase reflects the growth in average invested assets of 8.6% from the same period in 2016 and increase in average yields to 3.1% during the nine months ended September 30, 2017 compared to 3.0% during the same period in 2016. Additionally, part of the increase is attributable to the call of certain securities which generated additional amortization income of $4.8 million during the period. There were no calls in the comparative period. |
For the Three Months Ended September 30, | 2017 | 2016 | Change in | ||||||||||||||||||
($ in thousands) | Total | % of Total | Total | % of Total | $ | % | |||||||||||||||
Diversified Reinsurance | $ | 207,137 | 33.6 | % | $ | 179,092 | 25.9 | % | $ | 28,045 | 15.7 | % | |||||||||
AmTrust Reinsurance | 410,193 | 66.4 | % | 511,561 | 74.1 | % | (101,368 | ) | (19.8 | )% | |||||||||||
Total | $ | 617,330 | 100.0 | % | $ | 690,653 | 100.0 | % | $ | (73,323 | ) | (10.6 | )% | ||||||||
For the Nine Months Ended September 30, | 2017 | 2016 | Change in | ||||||||||||||||||
($ in thousands) | Total | % of Total | Total | % of Total | $ | % | |||||||||||||||
Diversified Reinsurance | $ | 671,880 | 30.5 | % | $ | 626,522 | 29.3 | % | $ | 45,358 | 7.2 | % | |||||||||
AmTrust Reinsurance | 1,529,980 | 69.5 | % | 1,507,389 | 70.7 | % | 22,591 | 1.5 | % | ||||||||||||
Total - reportable segments | 2,201,860 | 100.0 | % | 2,133,911 | 100.0 | % | 67,949 | 3.2 | % | ||||||||||||
Other | 90 | — | % | — | — | % | 90 | NM | |||||||||||||
Total | $ | 2,201,950 | 100.0 | % | $ | 2,133,911 | 100.0 | % | $ | 68,039 | 3.2 | % |
• | A decline in net premiums written in our AmTrust Reinsurance segment of $101.4 million or 19.8% which was mainly a result of changes, in 2017, to the mix of programs in the Specialty Risk and Extended Warranty business and, in 2016, the impact of cumulative cession of premium for the first time from a series of acquisitions made by AmTrust in its Small Commercial and Specialty Program businesses as well as slower organic growth overall; and |
• | The decrease was offset by an increase in net premiums written in our Diversified Reinsurance segment of $28.0 million or 15.7% as well as the lower utilization of retrocessional capacity in 2017. |
For the Three Months Ended September 30, | 2017 | 2016 | Change in | ||||||||||||||||||
($ in thousands) | Total | % of Total | Total | % of Total | $ | % | |||||||||||||||
Diversified Reinsurance | $ | 217,513 | 33.3 | % | $ | 175,141 | 25.1 | % | $ | 42,372 | 24.2 | % | |||||||||
AmTrust Quota Share Reinsurance | 436,353 | 66.7 | % | 523,137 | 74.9 | % | (86,784 | ) | (16.6 | )% | |||||||||||
Total | $ | 653,866 | 100.0 | % | $ | 698,278 | 100.0 | % | $ | (44,412 | ) | (6.4 | )% | ||||||||
For the Nine Months Ended September 30, | 2017 | 2016 | Change in | ||||||||||||||||||
($ in thousands) | Total | % of Total | Total | % of Total | $ | % | |||||||||||||||
Diversified Reinsurance | $ | 623,574 | 30.1 | % | $ | 538,152 | 27.6 | % | $ | 85,422 | 15.9 | % | |||||||||
AmTrust Quota Share Reinsurance | 1,450,811 | 69.9 | % | 1,413,699 | 72.4 | % | 37,112 | 2.6 | % | ||||||||||||
Total - reportable segments | 2,074,385 | 100.0 | % | 1,951,851 | 100.0 | % | 122,534 | 6.3 | % | ||||||||||||
Other | 90 | — | % | — | — | % | 90 | NM | |||||||||||||
Total | $ | 2,074,475 | 100.0 | % | $ | 1,951,851 | 100.0 | % | $ | 122,624 | 6.3 | % |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
($ in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Average invested assets(1) | $ | 5,294,274 | $ | 4,968,685 | $ | 5,232,717 | $ | 4,819,365 | ||||||||
Average book yield(2) | 3.1 | % | 2.9 | % | 3.1 | % | 3.0 | % |
(1) | The average of the Company's investments, cash and cash equivalents, restricted cash and cash equivalents and loan to related party at each quarter-end during the year. |
(2) | Ratio of net investment income over average invested assets at fair value. |
• | Adverse prior year loss development of $77.7 million during the third quarter of 2017, compared to $12.4 million recorded in the comparative period in 2016. This development, which is discussed in greater detail in the individual segment discussion and analysis, was primarily in our AmTrust Reinsurance segment, but adverse development was also experienced in our Diversified Reinsurance Segment and Other category; |
• | $20.0 million of losses incurred for Hurricanes Harvey and Irma during the third quarter of 2017. These preliminary estimates are based on a review of contracts potentially exposed, preliminary discussions with clients and catastrophe modeling techniques and any changes in these estimates will be recorded in the period in which it occurs. Maiden expects no impact from the Mexico earthquakes or Hurricane Maria; and |
• | Excluding the impact of adverse development and the losses from the current year catastrophe events, our net loss and LAE ratio would have been 66.8% for the three months ended September 30, 2017 compared to 64.8% for the same period in 2016. The deterioration for the current year reflects increases we have made in our initial loss picks in both our Diversified Reinsurance and AmTrust Reinsurance segments factoring in both market conditions and recent loss trends and experience. |
• | Adverse prior year loss development of $150.5 million during the current period 2017 compared to $41.9 million recorded in the comparative period in 2016. This development, which is discussed in greater detail in the individual segment discussion and analysis, was primarily in our AmTrust Reinsurance segment, but adverse development was also experienced in our Diversified Reinsurance Segment and Other category; |
• | $20.0 million of losses incurred for Hurricanes Harvey and Irma during the third quarter of 2017. These preliminary estimates are based on a review of contracts potentially exposed, preliminary discussions with clients and catastrophe modeling techniques and any changes in these estimates will be recorded in the period in which it occurs. Maiden expects no impact from the Mexico earthquakes or Hurricane Maria; and. |
• | Excluding the impact of adverse development and the losses from the current year catastrophe events, our net loss and LAE ratio would have been 66.0% for the nine months ended September 30, 2017 compared to 64.0% for the same period in 2016. The deterioration in for the current year reflects increases we have made in our initial loss picks in both our Diversified Reinsurance and AmTrust Reinsurance segments factoring in both market conditions and recent loss trends and experience. |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
($ in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
General and administrative expenses – segments | $ | 9,366 | $ | 9,797 | $ | 28,059 | $ | 29,025 | ||||||||
General and administrative expenses – corporate | 10,126 | 7,155 | 24,193 | 20,713 | ||||||||||||
Total general and administrative expenses | $ | 19,492 | $ | 16,952 | $ | 52,252 | $ | 49,738 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
($ in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Gross premiums written | $ | 210,953 | $ | 186,750 | $ | 683,839 | $ | 667,388 | ||||||||
Net premiums written | 207,137 | 179,092 | 671,880 | 626,522 | ||||||||||||
Net premiums earned | 217,513 | 175,141 | 623,574 | 538,152 | ||||||||||||
Other insurance revenue | 2,488 | 2,345 | 7,816 | 8,696 | ||||||||||||
Net loss and LAE | (172,273 | ) | (132,396 | ) | (487,759 | ) | (395,718 | ) | ||||||||
Commission and other acquisition expenses | (54,810 | ) | (39,868 | ) | (159,744 | ) | (139,895 | ) | ||||||||
General and administrative expenses | (8,595 | ) | (9,038 | ) | (25,819 | ) | (26,717 | ) | ||||||||
Underwriting loss | $ | (15,677 | ) | $ | (3,816 | ) | $ | (41,932 | ) | $ | (15,482 | ) | ||||
Ratios | ||||||||||||||||
Net loss and LAE ratio | 78.3 | % | 74.6 | % | 77.2 | % | 72.4 | % | ||||||||
Commission and other acquisition expense ratio | 24.9 | % | 22.5 | % | 25.3 | % | 25.6 | % | ||||||||
General and administrative expense ratio | 3.9 | % | 5.1 | % | 4.1 | % | 4.8 | % | ||||||||
Expense ratio | 28.8 | % | 27.6 | % | 29.4 | % | 30.4 | % | ||||||||
Combined ratio | 107.1 | % | 102.2 | % | 106.6 | % | 102.8 | % |
• | $15.0 million of losses incurred for Hurricanes Harvey and Irma during the third quarter of 2017; |
• | Adverse prior year loss development of $7.9 million during the third quarter of 2017, compared to $10.4 million recorded in the same period in 2016. The third quarter 2017 activity was largely from commercial auto excess from the 2014 underwriting year as well as other liability excess of loss. The adverse development during the third quarter 2016 was primarily from the commercial auto line of business; and |
• | Excluding the impact of catastrophe events and prior year loss development, the combined ratio for the third quarter 2017 would have been 96.7% compared to 96.3% for 2016, reflecting higher initial expected loss ratios for premiums earned during the period. |
• | Adverse prior year loss development of $39.5 million during 2017, compared to $37.4 million recorded in the same period in 2016. The 2017 development was largely due to a higher than expected loss emergence emanating largely from facultative commercial auto as well as certain specific contracts across several lines of business, with over half of the development coming from three accounts. The 2016 adverse development was primarily from the commercial auto line of business; |
• | $15.0 million of losses incurred for Hurricanes Harvey and Irma; and |
• | Excluding the catastrophe events and prior year loss development, the combined ratio for the current period 2017 would have been 98.0% compared to 96.0% for 2016, reflecting higher initial expected loss ratios for premiums earned during the period. |
For the Three Months Ended September 30, | 2017 | 2016 | Change in | ||||||||||||||||||
Total | % of Total | Total | % of Total | $ | % | ||||||||||||||||
Net Premiums Written | ($ in thousands) | ($ in thousands) | ($ in thousands) | ||||||||||||||||||
Property | $ | 37,962 | 18.3 | % | $ | 30,606 | 17.1 | % | $ | 7,356 | 24.0 | % | |||||||||
Casualty | 129,726 | 62.6 | % | 115,360 | 64.4 | % | 14,366 | 12.5 | % | ||||||||||||
Accident and Health | 16,946 | 8.2 | % | 14,845 | 8.3 | % | 2,101 | 14.2 | % | ||||||||||||
International | 22,503 | 10.9 | % | 18,281 | 10.2 | % | 4,222 | 23.1 | % | ||||||||||||
Total Diversified Reinsurance | $ | 207,137 | 100.0 | % | $ | 179,092 | 100.0 | % | $ | 28,045 | 15.7 | % | |||||||||
For the Nine Months Ended September 30, | 2017 | 2016 | Change in | ||||||||||||||||||
Total | % of Total | Total | % of Total | $ | % | ||||||||||||||||
Net Premiums Written | ($ in thousands) | ($ in thousands) | ($ in thousands) | ||||||||||||||||||
Property | $ | 132,398 | 19.7 | % | $ | 123,991 | 19.8 | % | $ | 8,407 | 6.8 | % | |||||||||
Casualty | 391,503 | 58.3 | % | 365,332 | 58.3 | % | 26,171 | 7.2 | % | ||||||||||||
Accident and Health | 74,504 | 11.1 | % | 68,140 | 10.9 | % | 6,364 | 9.3 | % | ||||||||||||
International | 73,475 | 10.9 | % | 69,059 | 11.0 | % | 4,416 | 6.4 | % | ||||||||||||
Total Diversified Reinsurance | $ | 671,880 | 100.0 | % | $ | 626,522 | 100.0 | % | $ | 45,358 | 7.2 | % |
For the Three Months Ended September 30, | 2017 | 2016 | Change in | ||||||||||||||||||
Total | % of Total | Total | % of Total | $ | % | ||||||||||||||||
Net Premiums Earned | ($ in thousands) | ($ in thousands) | ($ in thousands) | ||||||||||||||||||
Property | $ | 43,362 | 19.9 | % | $ | 29,921 | 17.1 | % | $ | 13,441 | 44.9 | % | |||||||||
Casualty | 130,428 | 60.0 | % | 105,893 | 60.5 | % | 24,535 | 23.2 | % | ||||||||||||
Accident and Health | 22,780 | 10.5 | % | 18,436 | 10.5 | % | 4,344 | 23.6 | % | ||||||||||||
International | 20,943 | 9.6 | % | 20,891 | 11.9 | % | 52 | 0.2 | % | ||||||||||||
Total Diversified Reinsurance | $ | 217,513 | 100.0 | % | $ | 175,141 | 100.0 | % | $ | 42,372 | 24.2 | % | |||||||||
For the Nine Months Ended September 30, | 2017 | 2016 | Change in | ||||||||||||||||||
Total | % of Total | Total | % of Total | $ | % | ||||||||||||||||
Net Premiums Earned | ($ in thousands) | ($ in thousands) | ($ in thousands) | ||||||||||||||||||
Property | $ | 122,888 | 19.7 | % | $ | 103,023 | 19.1 | % | $ | 19,865 | 19.3 | % | |||||||||
Casualty | 375,141 | 60.2 | % | 313,736 | 58.3 | % | 61,405 | 19.6 | % | ||||||||||||
Accident and Health | 63,878 | 10.2 | % | 55,788 | 10.4 | % | 8,090 | 14.5 | % | ||||||||||||
International | 61,667 | 9.9 | % | 65,605 | 12.2 | % | (3,938 | ) | (6.0 | )% | |||||||||||
Total Diversified Reinsurance | $ | 623,574 | 100.0 | % | $ | 538,152 | 100.0 | % | $ | 85,422 | 15.9 | % |
• | $15.0 million of losses incurred for Hurricanes Harvey and Irma during the third quarter of 2017; |
• | Adverse prior year loss development of $7.9 million during the third quarter of 2017, compared to $10.4 million recorded in the same period in 2016. The third quarter 2017 activity was largely from commercial auto excess from the 2014 underwriting year as well as other liability excess of loss. The adverse development during the third quarter 2016 was primarily from the commercial auto line of business; and |
• | Excluding the impact of catastrophe events and prior year loss development, the net loss and LAE ratio for the third quarter 2017 would have been 67.9% compared to 68.7% for 2016, reflecting higher initial expected loss ratios for premiums earned during the period. |
• | Adverse prior year loss development of $39.5 million during 2017, compared to $37.4 million recorded in the same period in 2016. The 2017 development was largely due to a higher than expected loss emergence emanating largely from facultative commercial auto as well as certain specific contracts across several lines of business, with over half of the development coming from three accounts. The 2016 adverse development was primarily from the commercial auto line of business. The ratio also reflects higher initial expected loss ratios for premiums earning in the nine months ended September 30, 2017; |
• | $15.0 million of losses incurred for Hurricanes Harvey and Irma; and |
• | Excluding the catastrophe events and prior year loss development, the net loss and LAE ratio for 2017 would have been 68.6% compared to 65.5% for 2016, reflecting higher initial expected loss ratios for premiums earned during the period. |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
($ in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Gross premiums written | $ | 420,019 | $ | 520,104 | $ | 1,575,677 | $ | 1,591,902 | ||||||||
Net premiums written | 410,193 | 511,561 | 1,529,980 | 1,507,389 | ||||||||||||
Net premiums earned | 436,353 | 523,137 | 1,450,811 | 1,413,699 | ||||||||||||
Net loss and LAE | (355,030 | ) | (334,310 | ) | (1,047,222 | ) | (898,703 | ) | ||||||||
Commission and other acquisition expenses | (138,650 | ) | (166,836 | ) | (465,789 | ) | (447,604 | ) | ||||||||
General and administrative expenses | (771 | ) | (759 | ) | (2,240 | ) | (2,308 | ) | ||||||||
Underwriting (loss) income | $ | (58,098 | ) | $ | 21,232 | $ | (64,440 | ) | $ | 65,084 | ||||||
Ratios | ||||||||||||||||
Net loss and LAE ratio | 81.4 | % | 63.9 | % | 72.2 | % | 63.5 | % | ||||||||
Commission and other acquisition expense ratio | 31.7 | % | 31.9 | % | 32.1 | % | 31.7 | % | ||||||||
General and administrative expense ratio | 0.2 | % | 0.1 | % | 0.1 | % | 0.2 | % | ||||||||
Expense ratio | 31.9 | % | 32.0 | % | 32.2 | % | 31.9 | % | ||||||||
Combined ratio | 113.3 | % | 95.9 | % | 104.4 | % | 95.4 | % |
• | Adverse prior year loss development of $61.1 million during the third quarter 2017, compared to $2.0 million recorded in the same period in 2016. The third quarter 2017 activity was largely from the general liability line of business as well as auto liability and workers compensation lines of business for both Specialty Programs and Small Commercial where elevated loss activity has been observed. $16.2 million of the third quarter of 2017 adverse loss development came from one program which was terminated by AmTrust on September 1, 2017. |
• | During the third quarter of 2017, the AmTrust Reinsurance segment recognized total estimated losses from Hurricanes Harvey and Irma of $5.0 million. |
• | Excluding the catastrophe events and prior year loss development, the combined ratio for the current period in 2017 would have been 98.2% compared to 95.6% for 2016, reflecting higher initial expected loss ratios for premiums earned during the period. |
• | Adverse prior year loss development of $100.9 million compared to $1.5 million recorded in 2016. Similar to the third quarter activity, the year to date 2017 activity was largely from the general liability line of business as well as auto liability and workers compensation lines of business for both Specialty Programs and Small Commercial where elevated loss activity has been observed. |
• | During the current period, the AmTrust Reinsurance segment recognized total estimated losses from Hurricanes Harvey and Irma of $5.0 million. |
• | Excluding the catastrophe events and prior year loss development, the combined ratio for the current period in 2017 was 97.1% compared to 95.3% for 2016, reflecting higher initial expected loss ratios for premiums earned during the period. |
For the Three Months Ended September 30, | 2017 | 2016 | Change in | ||||||||||||||||||
Total | % of Total | Total | % of Total | $ | % | ||||||||||||||||
Net Premiums Written | ($ in thousands) | ($ in thousands) | ($ in thousands) | ||||||||||||||||||
Small Commercial Business | $ | 295,499 | 72.0 | % | $ | 314,677 | 61.5 | % | $ | (19,178 | ) | (6.1 | )% | ||||||||
Specialty Program | 63,816 | 15.6 | % | 98,895 | 19.3 | % | (35,079 | ) | (35.5 | )% | |||||||||||
Specialty Risk and Extended Warranty | 50,878 | 12.4 | % | 97,989 | 19.2 | % | (47,111 | ) | (48.1 | )% | |||||||||||
Total AmTrust Reinsurance | $ | 410,193 | 100.0 | % | $ | 511,561 | 100.0 | % | $ | (101,368 | ) | (19.8 | )% | ||||||||
For the Nine Months Ended September 30, | 2017 | 2016 | Change in | ||||||||||||||||||
Total | % of Total | Total | % of Total | $ | % | ||||||||||||||||
Net Premiums Written | ($ in thousands) | ($ in thousands) | ($ in thousands) | ||||||||||||||||||
Small Commercial Business | $ | 1,028,905 | 67.3 | % | $ | 983,601 | 65.3 | % | $ | 45,304 | 4.6 | % | |||||||||
Specialty Program | 255,767 | 16.7 | % | 268,193 | 17.8 | % | (12,426 | ) | (4.6 | )% | |||||||||||
Specialty Risk and Extended Warranty | 245,308 | 16.0 | % | 255,595 | 16.9 | % | (10,287 | ) | (4.0 | )% | |||||||||||
Total AmTrust Reinsurance | $ | 1,529,980 | 100.0 | % | $ | 1,507,389 | 100.0 | % | $ | 22,591 | 1.5 | % |
For the Three Months Ended September 30, | 2017 | 2016 | Change in | ||||||||||||||||||
Total | % of Total | Total | % of Total | $ | % | ||||||||||||||||
Net Premiums Earned | ($ in thousands) | ($ in thousands) | ($ in thousands) | ||||||||||||||||||
Small Commercial Business | $ | 314,773 | 72.1 | % | $ | 320,596 | 61.3 | % | $ | (5,823 | ) | (1.8 | )% | ||||||||
Specialty Program | 59,143 | 13.6 | % | 89,856 | 17.2 | % | (30,713 | ) | (34.2 | )% | |||||||||||
Specialty Risk and Extended Warranty | 62,437 | 14.3 | % | 112,685 | 21.5 | % | (50,248 | ) | (44.6 | )% | |||||||||||
Total AmTrust Reinsurance | $ | 436,353 | 100.0 | % | $ | 523,137 | 100.0 | % | $ | (86,784 | ) | (16.6 | )% | ||||||||
For the Nine Months Ended September 30, | 2017 | 2016 | Change in | ||||||||||||||||||
Total | % of Total | Total | % of Total | $ | % | ||||||||||||||||
Net Premiums Earned | ($ in thousands) | ($ in thousands) | ($ in thousands) | ||||||||||||||||||
Small Commercial Business | $ | 946,782 | 65.3 | % | $ | 864,699 | 61.2 | % | $ | 82,083 | 9.5 | % | |||||||||
Specialty Program | 251,153 | 17.3 | % | 251,543 | 17.8 | % | (390 | ) | (0.2 | )% | |||||||||||
Specialty Risk and Extended Warranty | 252,876 | 17.4 | % | 297,457 | 21.0 | % | (44,581 | ) | (15.0 | )% | |||||||||||
Total AmTrust Reinsurance | $ | 1,450,811 | 100.0 | % | $ | 1,413,699 | 100.0 | % | $ | 37,112 | 2.6 | % |
• | Adverse prior year loss development of $61.1 million during the third quarter 2017, compared to $2.0 million recorded in the same period in 2016. The third quarter 2017 activity was largely from the general liability line of business as well as auto liability and workers compensation lines of business for both Specialty Programs and Small Commercial where elevated loss activity has been observed. $16.2 million of the third quarter 2017 adverse development came from one program which was terminated by AmTrust on September 1, 2017; |
• | During the third quarter of 2017, the AmTrust Reinsurance segment recognized total estimated losses from Hurricanes Harvey and Irma of $5.0 million; and |
• | Excluding the catastrophe events and prior year loss development, the net loss and LAE ratio for the current period in 2017 would have been 66.2% compared to 63.5% for 2016, reflecting higher initial expected loss ratios for premiums earned during the period. |
• | Adverse prior year loss development of $100.9 million during 2017, compared to $1.5 million recorded in 2016. Similar to the third quarter , the year to date 2017 adverse development was largely from the general liability line of business as well as auto liability and workers compensation lines of business for both Specialty Programs and Small Commercial where elevated loss activity has been observed; |
• | During the third quarter of 2017, the AmTrust Reinsurance segment recognized total estimated losses from Hurricanes Harvey and Irma of $5.0 million; and |
• | Excluding the catastrophe events and prior year loss development, the net loss and LAE ratio for the current period in 2017 was 64.9% compared to 63.5% for 2016, reflecting higher initial expected loss ratios for premiums earned during the period. |
For the Nine Months Ended September 30, | 2017 | 2016 | ||||||
($ in thousands) | ||||||||
Operating activities | $ | 374,779 | $ | 326,157 | ||||
Investing activities | (212,053 | ) | (291,389 | ) | ||||
Financing activities | (28,440 | ) | (59,665 | ) | ||||
Effect of exchange rate changes on foreign currency cash | 2,644 | 2,715 | ||||||
Total increase (decrease) in cash and cash equivalents | $ | 136,930 | $ | (22,182 | ) |
September 30, 2017 | December 31, 2016 | |||
Fixed maturities and cash and cash equivalents | 4.4 | 4.9 | ||
Reserve for loss and LAE | 3.6 | 3.8 |
September 30, 2017 | Original or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Average yield(1) | Average duration(2) | ||||||||||||||||
AFS fixed maturities | ($ in thousands) | |||||||||||||||||||||
U.S. treasury bonds | $ | 5,194 | $ | 150 | $ | (8 | ) | $ | 5,336 | 3.0 | % | 1.7 | ||||||||||
U.S. agency bonds – mortgage-backed | 2,004,645 | 14,208 | (12,451 | ) | 2,006,402 | 2.8 | % | 4.6 | ||||||||||||||
Non-U.S. government and supranational bonds | 33,392 | 216 | (2,012 | ) | 31,596 | 2.7 | % | 3.3 | ||||||||||||||
Asset-backed securities | 257,969 | 4,456 | (164 | ) | 262,261 | 4.4 | % | 2.3 | ||||||||||||||
Corporate bonds | 1,541,296 | 52,717 | (17,624 | ) | 1,576,389 | 3.2 | % | 5.0 | ||||||||||||||
Municipal bonds | 2,500 | 103 | — | 2,603 | 4.2 | % | 8.1 | |||||||||||||||
Total AFS fixed maturities | 3,844,996 | 71,850 | (32,259 | ) | 3,884,587 | 3.1 | % | 4.6 | ||||||||||||||
HTM fixed maturities | ||||||||||||||||||||||
Corporate bonds | 1,057,943 | 34,027 | (748 | ) | 1,091,222 | 3.5 | % | 5.2 | ||||||||||||||
Municipal Bonds | 60,425 | 459 | — | 60,884 | 3.2 | % | 5.0 | |||||||||||||||
Total HTM fixed maturities | 1,118,368 | 34,486 | (748 | ) | 1,152,106 | 3.5 | % | 5.1 | ||||||||||||||
Cash and cash equivalents | 314,275 | — | — | 314,275 | 0.2 | % | 0.0 | |||||||||||||||
Total | $ | 5,277,639 | $ | 106,336 | $ | (33,007 | ) | $ | 5,350,968 | 3.0 | % | 4.4 |
December 31, 2016 | Original or Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Average yield(1) | Average duration(2) | ||||||||||||||||
AFS fixed maturities | ($ in thousands) | |||||||||||||||||||||
U.S. treasury bonds | $ | 5,186 | $ | 238 | $ | (11 | ) | $ | 5,413 | 3.0 | % | 2.4 | ||||||||||
U.S. agency bonds – mortgage-backed | 1,720,436 | 12,867 | (17,265 | ) | 1,716,038 | 2.8 | % | 4.9 | ||||||||||||||
U.S. agency bonds – other | 18,082 | 20 | — | 18,102 | 3.2 | % | 8.9 | |||||||||||||||
Non-U.S. government and supranational bonds | 35,158 | 73 | (5,297 | ) | 29,934 | 2.4 | % | 3.4 | ||||||||||||||
Asset-backed securities | 217,232 | 3,713 | (69 | ) | 220,876 | 4.6 | % | 2.5 | ||||||||||||||
Corporate bonds | 1,947,347 | 30,951 | (62,093 | ) | 1,916,205 | 3.5 | % | 5.4 | ||||||||||||||
Municipal bonds | 62,201 | 2,897 | — | 65,098 | 4.2 | % | 6.5 | |||||||||||||||
Total AFS fixed maturities | 4,005,642 | 50,759 | (84,735 | ) | 3,971,666 | 3.2 | % | 5.1 | ||||||||||||||
HTM fixed maturities | ||||||||||||||||||||||
Corporate bonds | 752,212 | 16,370 | (2,447 | ) | 766,135 | 3.6 | % | 5.2 | ||||||||||||||
Total HTM fixed maturities | 752,212 | 16,370 | (2,447 | ) | 766,135 | |||||||||||||||||
Cash and cash equivalents | 149,535 | — | — | 149,535 | 0.1 | % | 0.0 | |||||||||||||||
Total | $ | 4,907,389 | $ | 67,129 | $ | (87,182 | ) | $ | 4,887,336 | 3.2 | % | 4.9 |
(1) | Average yield is calculated by dividing annualized investment income for each sub-component of AFS and HTM securities and cash and cash equivalents (including amortization of premium or discount) by amortized cost. |
(2) | Average duration in years. |
September 30, 2017 | December 31, 2016 | |||||||||||||||
($ in thousands) | AFS fixed maturities | HTM fixed maturities | AFS fixed maturities | HTM fixed maturities | ||||||||||||
Fair Value | Amortized cost | Fair Value | Amortized Cost | |||||||||||||
Due in one year or less | $ | 38,784 | $ | 49,293 | $ | 61,219 | $ | — | ||||||||
Due after one year through five years | 583,569 | 335,922 | 560,141 | 260,557 | ||||||||||||
Due after five years through ten years | 990,968 | 723,297 | 1,371,356 | 486,568 | ||||||||||||
Due after ten years | 2,603 | 9,856 | 42,036 | 5,087 | ||||||||||||
1,615,924 | 1,118,368 | 2,034,752 | 752,212 | |||||||||||||
U.S. agency bonds – mortgage-backed | 2,006,402 | — | 1,716,038 | — | ||||||||||||
Asset-backed securities | 262,261 | — | 220,876 | — | ||||||||||||
Total fixed maturities | $ | 3,884,587 | $ | 1,118,368 | $ | 3,971,666 | $ | 752,212 |
September 30, 2017 | December 31, 2016 | |||||||||||||
Fair Value | % of Total | Fair Value | % of Total | |||||||||||
U.S. agency bonds - mortgage-backed | ($ in thousands) | ($ in thousands) | ||||||||||||
Residential mortgage-backed (RMBS) | ||||||||||||||
GNMA – fixed rate | $ | 357,165 | 17.8 | % | $ | 368,142 | 21.2 | % | ||||||
FNMA – fixed rate | 893,334 | 44.5 | % | 800,947 | 46.2 | % | ||||||||
FNMA – variable rate | 14,441 | 0.7 | % | 17,761 | 1.0 | % | ||||||||
FHLMC – fixed rate | 736,956 | 36.8 | % | 523,983 | 30.2 | % | ||||||||
FHLMC – variable rate | 4,506 | 0.2 | % | 5,205 | 0.3 | % | ||||||||
Total U.S. agency bonds - mortgage-backed | 2,006,402 | 100.0 | % | 1,716,038 | 98.9 | % | ||||||||
Non-MBS fixed rate agency bonds | — | — | % | 18,102 | 1.1 | % | ||||||||
Total U.S. agency bonds | $ | 2,006,402 | 100.0 | % | $ | 1,734,140 | 100.0 | % |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Agency MBS: | ($ in thousands) | ($ in thousands) | ||||||||||||||
Beginning balance | $ | 1,795,612 | $ | 1,451,795 | $ | 1,716,038 | $ | 1,476,991 | ||||||||
Purchases | 271,651 | 267,040 | 490,237 | 366,399 | ||||||||||||
Sales, calls and paydowns | (63,438 | ) | (104,146 | ) | (202,556 | ) | (261,238 | ) | ||||||||
Net realized gains on sales – included in net income | 22 | — | (74 | ) | 230 | |||||||||||
Change in net unrealized losses – included in other comprehensive income | 3,751 | (7,149 | ) | 6,155 | 28,156 | |||||||||||
Amortization of bond premium and discount | (1,196 | ) | (1,762 | ) | (3,398 | ) | (4,760 | ) | ||||||||
Ending balance | $ | 2,006,402 | $ | 1,605,778 | $ | 2,006,402 | $ | 1,605,778 |
Ratings(1) | ||||||||||||||||||||||
September 30, 2017 | AAA | AA+, AA, AA- | A+, A, A- | BBB+, BBB, BBB- | BB+ or lower | Fair Value | % of Corporate bonds portfolio | |||||||||||||||
($ in thousands) | ||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||
Basic Materials | — | % | — | % | 1.8 | % | 4.4 | % | 0.9 | % | $ | 186,804 | 7.1 | % | ||||||||
Communications | — | % | 0.5 | % | 1.3 | % | 6.0 | % | — | % | 209,098 | 7.8 | % | |||||||||
Consumer | — | % | 0.5 | % | 13.9 | % | 11.6 | % | — | % | 695,590 | 26.0 | % | |||||||||
Energy | — | % | 1.0 | % | 3.8 | % | 3.0 | % | 0.8 | % | 229,598 | 8.6 | % | |||||||||
Financial Institutions | 1.4 | % | 3.3 | % | 22.8 | % | 12.3 | % | — | % | 1,059,788 | 39.8 | % | |||||||||
Industrials | — | % | 0.8 | % | 2.0 | % | 2.8 | % | 0.1 | % | 151,750 | 5.7 | % | |||||||||
Technology | — | % | 1.1 | % | 2.6 | % | 0.8 | % | 0.5 | % | 134,983 | 5.0 | % | |||||||||
Total Corporate bonds | 1.4 | % | 7.2 | % | 48.2 | % | 40.9 | % | 2.3 | % | $ | 2,667,611 | 100.0 | % |
Ratings(1) | ||||||||||||||||||||||
December 31, 2016 | AAA | AA+, AA, AA- | A+, A, A- | BBB+, BBB, BBB- | BB+ or lower | Fair Value | % of Corporate bonds portfolio | |||||||||||||||
($ in thousands) | ||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||
Basic Materials | — | % | — | % | 1.5 | % | 4.1 | % | 2.4 | % | $ | 213,904 | 8.0 | % | ||||||||
Communications | — | % | 0.5 | % | 1.3 | % | 6.6 | % | — | % | 223,984 | 8.4 | % | |||||||||
Consumer | — | % | 0.4 | % | 14.9 | % | 8.9 | % | 0.3 | % | 657,717 | 24.5 | % | |||||||||
Energy | — | % | 1.0 | % | 3.8 | % | 2.7 | % | 2.1 | % | 256,449 | 9.6 | % | |||||||||
Financial Institutions | 1.4 | % | 2.3 | % | 22.1 | % | 12.6 | % | 0.2 | % | 1,035,759 | 38.6 | % | |||||||||
Industrials | — | % | 0.8 | % | 2.0 | % | 2.9 | % | 0.6 | % | 170,030 | 6.3 | % | |||||||||
Technology | — | % | 2.2 | % | 1.1 | % | 0.6 | % | 0.7 | % | 124,497 | 4.6 | % | |||||||||
Total Corporate bonds | 1.4 | % | 7.2 | % | 46.7 | % | 38.4 | % | 6.3 | % | $ | 2,682,340 | 100.0 | % |
(1) | Ratings as assigned by S&P, or equivalent |
September 30, 2017 | Fair Value | % of Holdings Based on Fair Value of All Fixed Income Securities | Rating(1) | ||||||
($ in thousands) | |||||||||
Australia and New Zealand Banking Group, 3.70% Due 11/16/2025 | $ | 26,505 | 0.5 | % | AA- | ||||
Morgan Stanley, 4.00% Due 7/23/2025 | 26,383 | 0.5 | % | BBB+ | |||||
Schlumberger Holdings Corporation, 4.00% Due 12/21/2025 | 26,269 | 0.5 | % | AA- | |||||
JP Morgan Chase & Co, 3.90% Due 7/15/2025 | 21,078 | 0.5 | % | A- | |||||
Vale Overseas Ltd, 4.375% Due 1/11/2022 | 20,890 | 0.4 | % | BBB- | |||||
Gilead Sciences Inc, 3.65% Due 3/1/2026 | 20,889 | 0.4 | % | A | |||||
BNP Paribas, 5.00% Due 1/15/2021 | 20,732 | 0.4 | % | A | |||||
Brookfield Asset Management Inc, 4.00%, Due 1/15/2025 | 20,590 | 0.4 | % | A- | |||||
Rabobank Nederland Utrec, 3.875% Due 2/8/2022 | 20,261 | 0.4 | % | A+ | |||||
AT&T Inc, 2.625% Due 12/1/2022 | 19,997 | 0.4 | % | BBB+ | |||||
Total | $ | 223,594 | 4.4 | % |
(1) | Ratings as assigned by S&P, or equivalent |
September 30, 2017 | December 31, 2016 | |||||||||||||
($ in thousands) | Fair Value | % of Total | Fair Value | % of Total | ||||||||||
Non-U.S. dollar denominated corporate bonds | $ | 427,985 | 93.3 | % | $ | 345,646 | 92.3 | % | ||||||
Non-U.S. government and supranational bonds | 30,624 | 6.7 | % | 28,980 | 7.7 | % | ||||||||
Total non-U.S. dollar denominated AFS securities | $ | 458,609 | 100.0 | % | $ | 374,626 | 100.0 | % |
September 30, 2017 | December 31, 2016 | |||||||||||||
($ in thousands) | Fair Value | % of Total | Fair Value | % of Total | ||||||||||
Euro | $ | 391,865 | 85.4 | % | $ | 315,768 | 84.3 | % | ||||||
British Pound | 42,654 | 9.3 | % | 39,154 | 10.5 | % | ||||||||
Australian Dollar | 14,169 | 3.1 | % | 10,089 | 2.7 | % | ||||||||
Canadian Dollar | 5,272 | 1.2 | % | 3,360 | 0.9 | % | ||||||||
All other | 4,649 | 1.0 | % | 6,255 | 1.6 | % | ||||||||
Total non-U.S. dollar denominated AFS securities | $ | 458,609 | 100.0 | % | $ | 374,626 | 100.0 | % |
Ratings(1) | September 30, 2017 | December 31, 2016 | ||||||||||||
($ in thousands) | Fair Value | % of Total | Fair Value | % of Total | ||||||||||
AAA | $ | 37,396 | 8.7 | % | $ | 31,704 | 9.2 | % | ||||||
AA+, AA, AA- | 58,473 | 13.7 | % | 30,535 | 8.8 | % | ||||||||
A+, A, A- | 198,164 | 46.3 | % | 161,845 | 46.8 | % | ||||||||
BBB+, BBB, BBB- | 133,952 | 31.3 | % | 114,456 | 33.1 | % | ||||||||
BB+ or lower | — | — | % | 7,106 | 2.1 | % | ||||||||
Total non-U.S. dollar denominated corporate bonds | $ | 427,985 | 100.0 | % | $ | 345,646 | 100.0 | % |
(1) | Ratings as assigned by S&P, or equivalent |
($ in thousands) | September 30, 2017 | December 31, 2016 | Change | Change % | |||||||||||
Reinsurance balances receivable, net | $ | 479,472 | $ | 410,166 | $ | 69,306 | 16.9 | % | |||||||
Reserve for loss and LAE | 3,365,011 | 2,896,496 | 468,515 | 16.2 | % | ||||||||||
Unearned premiums | 1,601,069 | 1,475,506 | 125,563 | 8.5 | % |
($ in thousands) | September 30, 2017 | December 31, 2016 | Change | Change % | |||||||||||
Preference shares | $ | 465,000 | $ | 315,000 | $ | 150,000 | 47.6 | % | |||||||
Common shareholders' equity | 956,027 | 1,045,797 | (89,770 | ) | (8.6 | )% | |||||||||
Total Maiden shareholders' equity | 1,421,027 | 1,360,797 | 60,230 | 4.4 | % | ||||||||||
Senior Notes - principal amount | 262,500 | 362,500 | (100,000 | ) | (27.6 | )% | |||||||||
Total capital resources | $ | 1,683,527 | $ | 1,723,297 | $ | (39,770 | ) | (2.3 | )% |
• | issuance of new preference shares with net proceeds of $144.9 million after issuance cost of $5.1 million; |
• | net increase in AOCI of $31.1 million. This increase arose due to: 1) an increase in AOCI of $69.9 million which arose from the net increase in our U.S. dollar denominated investment portfolio of $17.4 million relating to market price movements and an increase in our non-U.S. dollar denominated investment portfolio of $52.5 million, primarily due to the strengthening of the euro and British pound relative to the U.S. dollar during 2017; and offset by 2) decrease in cumulative translation adjustments of $38.8 million due to the effect of the appreciation of the euro and British pound relative to the original currencies on our non-U.S. dollar net liabilities (excluding non-U.S. dollar denominated AFS fixed maturities); and |
• | net increase resulting from share based transactions of $3.3 million. |
• | net loss attributable to Maiden of $44.9 million. See "Results of Operations - Net Income" on page 45 for a discussion of the Company’s net loss for the nine months ended September 30, 2017; |
• | dividends declared of $59.3 million related to the Company’s common and preferred shares; and |
• | shares repurchased of $14.9 million. |
Hypothetical Change in Interest Rates | Fair Value | Estimated Change in Fair Value | Hypothetical % (Decrease) Increase in Shareholders’ Equity | ||||||||
($ in thousands) | |||||||||||
200 basis point increase | $ | 3,555,940 | $ | (328,647 | ) | (23.1 | )% | ||||
100 basis point increase | 3,714,624 | (169,963 | ) | (12.0 | )% | ||||||
No change | 3,884,587 | — | — | % | |||||||
100 basis point decrease | 4,068,897 | 184,310 | 13.0 | % | |||||||
200 basis point decrease | 4,267,740 | 383,153 | 27.0 | % |
September 30, 2017 | December 31, 2016 | |||||
Ratings(1) | ||||||
AA+ or better | 44.5 | % | 41.3 | % | ||
AA, AA-, A+, A, A- | 32.2 | % | 33.2 | % | ||
BBB+, BBB, BBB- | 22.2 | % | 22.0 | % | ||
BB+ or lower | 1.1 | % | 3.5 | % | ||
100.0 | % | 100.0 | % |
(1) | Ratings as assigned by S&P, or equivalent |
September 30, 2017 | December 31, 2016 | |||||
A or better | 98.7 | % | 97.2 | % | ||
B++ or worse | 1.3 | % | 2.8 | % | ||
100.0 | % | 100.0 | % |
For the Three Months Ended September 30, 2017 | Total number of shares repurchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs (a) | Dollar amount still available under trading plan | ||||||||||
($ in thousands) | ||||||||||||||
July 1, 2017 - July 31, 2017 | — | $ | — | — | $ | 100,000 | ||||||||
August 1, 2017 - August 31, 2017 | 1,380,000 | $ | 7.31 | 1,380,000 | $ | 89,914 | ||||||||
September 1, 2017 - September 30, 2017 | 635,700 | $ | 6.69 | 635,700 | $ | 85,662 | ||||||||
Total | 2,015,700 | $ | 7.11 | 2,015,700 | $ | 85,662 |
Exhibit No. | Description | |
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
101.1 | The following materials from Maiden Holdings, Ltd. Quarterly Report on Form 10-Q, formatted in XBRL (eXtensive Business Reporting Language): (i) the unaudited Condensed Consolidated Balance Sheets, (ii) the unaudited Condensed Consolidated Statements of Income, (iii) the unaudited Condensed Consolidated Statements of Comprehensive Income, (iv) the unaudited Condensed Consolidated Statements of Changes in Shareholders' Equity, (v) the unaudited Condensed Consolidated Statements of Cash Flows, and (vi) Notes to unaudited Condensed Consolidated Financial Statements. |
MAIDEN HOLDINGS, LTD. | ||
By: | ||
November 9, 2017 | /s/ Arturo M. Raschbaum | |
Arturo M. Raschbaum President and Chief Executive Officer | ||
/s/ Karen L. Schmitt | ||
Karen L. Schmitt Chief Financial Officer | ||
/s/ Michael J. Tait | ||
Michael J. Tait Chief Accounting Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Maiden Holdings, Ltd.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including any consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
November 9, 2017 | /s/ ARTURO M. RASCHBAUM | ||
Arturo M. Raschbaum | |||
President and Chief Executive Officer | |||
1. | I have reviewed this quarterly report on Form 10-Q of Maiden Holdings, Ltd.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including any consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
November 9, 2017 | /s/ KAREN L. SCHMITT | ||
Karen L. Schmitt | |||
Chief Financial Officer | |||
November 9, 2017 | By: | /s/ ARTURO M. RASCHBAUM | |
Arturo M. Raschbaum | |||
President and Chief Executive Officer |
November 9, 2017 | By: | /s/ KAREN L. SCHMITT | |
Karen L. Schmitt | |||
Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Nov. 02, 2017 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | MHLD | |
Entity Registrant Name | Maiden Holdings, Ltd. | |
Entity Central Index Key | 0001412100 | |
Current Fiscal Year End Data | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 84,624,829 |
Basis of Presentation |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Maiden Holdings, Ltd. ("Maiden Holdings") and its subsidiaries (the "Company" or "Maiden"). They have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP" or "U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All significant inter-company transactions and accounts have been eliminated. These interim unaudited Condensed Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim period and all such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative, if annualized, of those to be expected for the full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. These unaudited Condensed Consolidated Financial Statements, including these notes, should be read in conjunction with the Company's audited Consolidated Financial Statements, and related notes thereto, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016. Certain reclassifications have been made for 2016 to conform to the 2017 presentation and have no impact on consolidated net income and total equity previously reported. |
Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies There have been no material changes to our significant accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2016 except for the following: Recently Adopted Accounting Standards Updates Improvements to Employee Share-Based Payment Accounting In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-09 guidance that outlines changes for certain aspects of share-based payments to employees, such as accounting for forfeitures, which applies to the Company. Under the new guidance, the entities can elect to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The guidance is effective for public business entities for fiscal year beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted for all entities, in any annual or interim period for which financial statements haven't been issued or made available for issuance, but all of the guidance must be adopted in the same period. Based on the Company's history, forfeitures have never been material. The Company will account for forfeitures as they occur. The adoption of this guidance did not have a material impact on the Company's Condensed Consolidated Financial Statements. There were no forfeitures for the three and nine months ended September 30, 2017. Simplified Accounting for Goodwill Impairment In February 2017, the FASB issued ASU 2017-04 guidance that simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on Step 1 of the two-step impairment test under ASC 350 Intangibles - Goodwill and Other. Under the new guidance, if the carrying value of a reporting unit exceeds its fair value, the Company will record an impairment charge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. The standard eliminates the requirement to calculate goodwill impairment under Step 2, which calculates any impairment charge by comparing the implied fair value of goodwill with its carrying amount. The Update does not change the guidance on completing Step 1 of the goodwill impairment test. The standard has tiered effective dates, starting in 2020 for calendar public business entities that meet the definition of an SEC filer. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. Recently Issued Accounting Standards Not Yet Adopted Premium Amortization on Purchased Callable Debt Securities In March 2017, the FASB issued ASU 2017-08 to amend the amortization period for certain purchased callable debt securities held at a premium. Current GAAP excludes certain callable debt securities from consideration of early repayment of principal even if the holder is certain that the call will be exercised. As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings. 2. Significant Accounting Policies (continued) The amendments in ASU 2017-08 affect all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date. The amendments shorten the amortization period for certain callable debt securities held at a premium and require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public business entities, the amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. The Company holds a number of securities with callable features on the Condensed Consolidated Balance Sheet and this includes certain securities that have been purchased at a premium that is being amortized to the associated security's maturity date. The Company is currently evaluating the impact of this guidance on the Company's results of operations, financial position or liquidity at the date of adoption. Scope of Modification Accounting In May 2017, the FASB issued ASU 2017-09 to amend the guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following are met: 1.The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; 2.The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and 3.The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in this Update. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this Update should be applied prospectively to an award modified on or after the adoption date. The Company currently has a number of share based payment awards as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2016, however, we do not anticipate any modifications to the terms or conditions at this time. The impact of this guidance on the Company's Condensed Consolidated Financial Statements will be evaluated once ASU-2017-09 is adopted and when the Company makes any modification to any of its current shared based payment awards. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company currently has two reportable segments: Diversified Reinsurance and AmTrust Reinsurance. Our Diversified Reinsurance segment consists of a portfolio of predominantly property and casualty reinsurance business focusing on regional and specialty property and casualty insurance companies located, primarily, in the U.S. and Europe. Our AmTrust Reinsurance segment includes all business ceded to our wholly owned subsidiary, Maiden Reinsurance Ltd. ("Maiden Bermuda") from AmTrust Financial Services, Inc. ("AmTrust"), primarily the AmTrust Quota Share and the European Hospital Liability Quota Share. In addition to our reportable segments, the results of operations of the former National General Holdings Corporation Quota Share ("NGHC Quota Share") segment and the remnants of the U.S. excess and surplus ("E&S") business have been included in the "Other" category. Please refer to "Note 8. Related Party Transactions" for additional information. The Company evaluates segment performance based on segment profit separately from the results of our investment portfolio. General and administrative expenses are allocated to the segments on an actual basis except salaries and benefits where management’s judgment is applied. The Company does not allocate general corporate expenses to the segments. In determining total assets by reportable segment, the Company identifies those assets that are attributable to a particular segment such as reinsurance balances receivable, reinsurance recoverable on unpaid losses, deferred commission and other acquisition expenses, loans, goodwill and intangible assets, restricted cash and cash equivalents and investments and unearned reinsurance premiums ceded, funds withheld receivable and reinsurance recoverable on paid losses (presented as part of other assets in the Condensed Consolidated Balance Sheet). All remaining assets are allocated to Corporate. The following tables summarize our reporting segment's underwriting results and the reconciliation of our reportable segments and Other category's underwriting results to our consolidated net income:
3. Segment Information (continued)
3. Segment Information (continued)
3. Segment Information (continued)
The following tables summarize the financial position of our reportable segments including the reconciliation to our consolidated assets at September 30, 2017 and December 31, 2016:
3. Segment Information (continued) The following table sets forth financial information relating to net premiums written by major line of business and reportable segment for the three and nine months ended September 30, 2017 and 2016:
3. Segment Information (continued) The following table sets forth financial information relating to net premiums earned by major line of business and reportable segment for the three and nine months ended September 30, 2017 and 2016:
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Investments |
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Schedule of Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments
During the second quarter of 2017, we designated additional fixed maturities with a fair value of $391,934 as held-to-maturity ("HTM") and during 2016 we designated fixed maturities with a total fair value of $155,538 as HTM reflecting our intent to hold these securities to maturity. The net unrealized holding gain of $4,313 and $15,770, respectively, as at each designation date continues to be reported in the carrying value of the HTM securities and is amortized through other comprehensive income over the remaining life of the securities using the effective yield method in a manner consistent with the amortization of any premium or discount. The original or amortized cost, estimated fair value and gross unrealized gains and losses of fixed maturities and other investments at September 30, 2017 and December 31, 2016, are as follows:
4. Investments (continued) The contractual maturities of our fixed maturities are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
The following tables summarize fixed maturities in an unrealized loss position and the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position:
At September 30, 2017, there were approximately 148 securities in an unrealized loss position with a fair value of $1,559,349 and unrealized losses of $33,007. Of these securities, there were 93 securities that have been in an unrealized loss position for 12 months or greater with a fair value of $672,040 and unrealized losses of $21,804. 4. Investments (continued)
At December 31, 2016, there were approximately 251 securities in an unrealized loss position with a fair value of $2,106,048 and unrealized losses of $87,182. Of these securities, there were 91 securities that have been in an unrealized loss position for 12 months or greater with a fair value of $431,159 and unrealized losses of $57,444. OTTI The Company performs quarterly reviews of its fixed maturities in order to determine whether declines in fair value below the amortized cost basis were considered other-than-temporary in accordance with applicable guidance. At September 30, 2017, we have determined that the unrealized losses on fixed maturities were primarily due to widening of credit and interest rate spreads as well as the impact of foreign exchange rate changes on certain foreign currency denominated AFS fixed maturities since their date of purchase. Because we do not intend to sell these securities and it is not more likely than not that we will be required to do so until a recovery of fair value to amortized cost, we currently believe it is probable that we will collect all amounts due according to their respective contractual terms. Therefore, we do not consider these fixed maturities to be other-than-temporarily impaired ("OTTI") at September 30, 2017. The Company has recognized no OTTI through earnings for the three and nine months ended September 30, 2017 and 2016. The following summarizes the credit ratings of our fixed maturities:
4. Investments (continued)
The table below shows our portfolio of other investments:
The Company has a remaining unfunded commitment on its investment in limited partnerships of approximately $319 at September 30, 2017 (December 31, 2016 - $463).
Net investment income was derived from the following sources:
4. Investments (continued)
Realized gains or losses on the sale of investments are determined on the basis of the first in first out cost method. The following provides an analysis of net realized gains on investment included in the Condensed Consolidated Statements of Income:
Proceeds from sales of fixed maturities classified as AFS were $97,357 and $199,751 for the three and nine months ended September 30, 2017, respectively (2016 - $15,260 and $101,923, respectively). Net unrealized (losses) gains were as follows:
We are required to maintain assets on deposit to support our reinsurance operations and to serve as collateral for our reinsurance liabilities under various reinsurance agreements. The assets on deposit are available to settle reinsurance liabilities. We also utilize trust accounts to collateralize business with our reinsurance counterparties. These trust accounts generally take the place of letter of credit requirements. 4. Investments (continued) The assets in trust as collateral are primarily cash and highly rated fixed maturities. The fair value of our restricted assets was as follows:
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments (a) Fair Values of Financial Instruments Fair Value Measurements — Accounting Standards Codification ("ASC") Topic 820, "Fair Value Measurements and Disclosures" ("ASC 820") defines fair value as the price that would be received upon the sale of an asset or paid to transfer a liability (i.e. the "exit price") in an orderly transaction between open market participants at the measurement date. Additionally, ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy is broken down into three levels based on the reliability of inputs as follows:
The availability of observable inputs can vary from financial instrument to financial instrument and is affected by a wide variety of factors, including, for example, the type of financial instrument, whether the financial instrument is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires significantly more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3. We use prices and inputs that are current at the measurement date. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified between levels. For investments that have quoted market prices in active markets, the Company uses the quoted market prices as fair value and includes these prices in the amounts disclosed in the Level 1 hierarchy. The Company receives the quoted market prices from a third party nationally recognized provider, the Pricing Service. When quoted market prices are unavailable, the Company utilizes the Pricing Service to determine an estimate of fair value. The fair value estimates are included in the Level 2 hierarchy. The Company will challenge any prices for its investments which are considered not to be representation of fair value. If quoted market prices and an estimate from the Pricing Service are unavailable, the Company produces an estimate of fair value based on dealer quotations for recent activity in positions with the same or similar characteristics to that being valued or through consensus pricing of a pricing service. The Company determines whether the fair value estimate is in the Level 2 or Level 3 hierarchy depending on the level of observable inputs available when estimating the fair value. The Company bases its estimates of fair values for assets on the bid price as it represents what a third party market participant would be willing to pay in an orderly transaction. ASC 825, “Disclosure About Fair Value of Financial Instruments", requires all entities to disclose the fair value of their financial instruments, both assets and liabilities recognized and not recognized in the balance sheet, for which it is practicable to estimate fair value. The following describes the valuation techniques used by the Company to determine the fair value of financial instruments held at September 30, 2017. U.S. government and U.S. agency — Bonds issued by the U.S. Treasury, the Federal Home Loan Bank, the Federal Home Loan Mortgage Corporation, Government National Mortgage Association and the Federal National Mortgage Association. The fair values of U.S. treasury bonds are based on quoted market prices in active markets, and are included in the Level 1 fair value hierarchy. We believe the market for U.S. treasury bonds is an actively traded market given the high level of daily trading volume. The fair values of U.S. agency bonds are determined using the spread above the risk-free yield curve. As the yields for the risk-free yield curve and the spreads for these securities are observable market inputs, the fair values of U.S. agency bonds are included in the Level 2 fair value hierarchy. 5. Fair Value of Financial Instruments (continued) Non-U.S. government and supranational bonds — These securities are generally priced by independent pricing services. The Pricing Service may use current market trades for securities with similar quality, maturity and coupon. If no such trades are available, the Pricing Service typically uses analytical models which may incorporate spreads, interest rate data and market/sector news. As the significant inputs used to price non-U.S. government and supranational bonds are observable market inputs, the fair values of non-U.S. government and supranational bonds are included in the Level 2 fair value hierarchy. Asset-backed securities — These securities comprise CMBS and CLO originated by a variety of financial institutions that on acquisition are rated BBB-/Baa3 or higher. These securities are priced by independent pricing services and brokers. The pricing provider applies dealer quotes and other available trade information, prepayment speeds, yield curves and credit spreads to the valuation. As the significant inputs used to price the CMBS and CLO are observable market inputs, the fair value of the CMBS and CLO is included in the Level 2 fair value hierarchy. Corporate bonds — Bonds issued by corporations that on acquisition are rated BBB-/Baa3 or higher. These securities are generally priced by independent pricing services. The spreads are sourced from broker/dealers, trade prices and the new issue market. Where pricing is unavailable from pricing services, we obtain non-binding quotes from broker-dealers. As the significant inputs used to price corporate bonds are observable market inputs, the fair values of corporate bonds are included in the Level 2 fair value hierarchy. Municipal bonds — Bonds issued by U.S. state and municipality entities or agencies. The fair values of municipal bonds are generally priced by independent pricing services. The pricing services typically use spreads obtained from broker-dealers, trade prices and the new issue market. As the significant inputs used to price the municipal bonds are observable market inputs, municipal bonds are classified within Level 2. Other investments — Includes both quoted and unquoted investments. The fair value of our quoted equity investment is obtained from the Pricing Service and is classified within Level 1. The quoted equity investment was sold in the third quarter of 2017. Unquoted other investments comprise investments in limited partnerships and two investments in start-up insurance related companies. The fair values of the limited partnerships are determined by the fund manager based on recent filings, operating results, balance sheet stability, growth and other business and market sector fundamentals. The fair value of these investments are measured using the NAV practical expedient and therefore have not been categorized within the fair value hierarchy. If there is a reporting lag between the current period end and reporting date of the latest available fund valuation, we estimate fair values by starting with the most recently available valuation and adjusting for return estimates as well as any subscriptions and distributions that took place during the current period. The fair value of the investments in the start-up insurance related companies was determined using recent private market transactions and as such, the fair value is included in the Level 3 fair value hierarchy. Cash and cash equivalents (including restricted amounts), accrued investment income, reinsurance balances receivable, and certain other assets and liabilities — The carrying values reported in the Condensed Consolidated Balance Sheets for these financial instruments approximate their fair value due to their short term nature and are classified as Level 2. Loan to related party — The carrying value reported in the Condensed Consolidated Balance Sheets for this financial instrument approximates its fair value and it is included in the Level 2 hierarchy. Senior notes — The amount reported in the Condensed Consolidated Balance Sheets for these financial instruments represents the carrying value of the notes. The fair values are based on indicative market pricing obtained from a third-party service provider and as such, are included in the Level 2 hierarchy. (b) Fair Value Hierarchy The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in ASC 820. The framework is based on the inputs used in valuation and gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the ASC 820 hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. 5. Fair Value of Financial Instruments (continued) At September 30, 2017 and December 31, 2016, we classified our financial instruments measured at fair value on a recurring basis in the following valuation hierarchy:
The Company utilizes a Pricing Service to assist in determining the fair value of our investments; however, management is ultimately responsible for all fair values presented in the Company’s financial statements. This includes responsibility for monitoring the fair value process, ensuring objective and reliable valuation practices and pricing of assets and liabilities and pricing sources. The Company analyzes and reviews the information and prices received from the Pricing Service to ensure that the prices represent a reasonable estimate of the fair value. The Pricing Service was utilized to estimate fair value measurements for approximately 99.9% and 98.8% of its fixed maturities at September 30, 2017 and December 31, 2016, respectively. The Pricing Service utilizes market quotations for fixed maturity securities that have quoted market prices in active markets. Since fixed maturities other than U.S. treasury bonds generally do not trade actively on a daily basis, the Pricing Service prepares estimates of fair value measurements using relevant market data, benchmark curves, sector groupings and matrix pricing and these have been classified as Level 2. At September 30, 2017 and December 31, 2016, 0.1% and 1.2%, respectively, of the fixed maturities are valued using the market approach. At each of those dates, a total of three securities, or approximately $6,463 and $56,674, respectively, of Level 2 fixed maturities, were priced using a quotation from a broker and/or custodian as opposed to the Pricing Service due to lack of information available. At September 30, 2017 and December 31, 2016, we have not adjusted any pricing provided to us based on the review performed by our investment managers. 5. Fair Value of Financial Instruments (continued) The Company utilized a Pricing Service to estimate fair value measurement for the quoted equity investment reflecting the closing price quoted for the final trading day of the period and is included in Level 1. The quoted equity investment was sold in the third quarter of 2017. There have not been any transfers between Level 1 and Level 2 and there has not been any transfers to or from Level 3 during the periods represented by these Condensed Consolidated Financial Statements. (c) Level 3 Financial Instruments The Company also has investments of $1,500 (December 31, 2016 - $1,000) in start-up insurance related companies, the fair value of each was determined using recent private market transactions. Due to the significant unobservable inputs in these valuations, the Company includes the estimate of the fair value of these unquoted investments as Level 3. The Company has determined that its investment in Level 3 securities is not material to its financial position or results of operations. During the three and nine months ended September 30, 2017 and 2016, there have been no transfers into or out of Level 3. (d) Financial Instruments not measured at Fair Value The following table presents the fair value and carrying value of the financial instruments not measured at fair value:
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Long-Term Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | Long-Term Debt Senior Notes Maiden Holdings and its wholly owned subsidiary, Maiden Holdings North America, Ltd. ("Maiden NA"), both have an outstanding public debt offering of senior notes which were issued in 2016 and 2013, respectively, (the "Senior Notes"). The 2013 Senior Notes issuance made by Maiden NA is fully and unconditionally guaranteed by the Company. The Senior Notes are unsecured and unsubordinated obligation of the Company. On June 27, 2017, we fully redeemed all of the 2012 Senior Notes using a portion of the proceeds from the Preference Shares - Series D issuance (see related discussion in "Note 11. Shareholders' Equity"). The 2012 Senior Notes were redeemed at a redemption price equal to 100% of the principal amount of $100,000 plus accrued and unpaid interest on the principal amount being redeemed up to, but not including, the redemption date. As a result, the Company accelerated the amortization of the remaining 2012 Senior Note issuance cost of $2,809. The following table details the Company's Senior Notes issuances as of September 30, 2017 and December 31, 2016:
The interest expense incurred on the Senior Notes for the three and nine months ended September 30, 2017 was $4,776 and $18,218, respectively, (2016 - $6,776 and $21,049, respectively) of which $1,342 and $1,453 was accrued at September 30, 2017 and December 31, 2016, respectively. The issuance costs related to the Senior Notes were capitalized and are being amortized over the life of the Senior Notes. The amount of amortization expense for the three and nine months ended September 30, 2017 was $53 and $212, respectively, (2016 - $80 and $265, respectively). |
Reserve for Loss and Loss Adjustment Expenses |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reserve for Loss and Loss Adjustment Expenses | Reserve for Loss and Loss Adjustment Expenses Our reserve for loss and LAE comprises:
The following table represents a reconciliation of our beginning and ending gross and net loss and LAE reserves:
Management believes that its use of both historical experience and industry-wide loss development factors provide a reasonable basis for estimating future losses. In the future, certain events may be beyond the control of management, such as changes in law, judicial interpretations of law, and inflation may favorably or unfavorably impact the ultimate settlement of the Company’s loss and LAE reserves. The anticipated effect of inflation is implicitly considered when estimating liabilities for loss and LAE. While anticipated changes in claim costs due to inflation are considered in estimating the ultimate claim costs, changes in average severity of claims are caused by a number of factors that vary with the individual type of policy written. Ultimate losses are projected based on historical trends adjusted for implemented changes in underwriting standards, policy provisions, and general economic trends. Those anticipated trends are monitored based on actual development and are modified if necessary. Prior period development arises from changes to loss estimates recognized in the current year that relate to loss reserves in previous calendar years. The development reflects changes in management's best estimate of the ultimate losses under the relevant reinsurance policies after review of changes in actuarial assessments. During the three and nine months ended September 30, 2017, the Company recognized approximately $77,670 and $150,534, respectively (2016 - $12,446 and $41,868, respectively) of adverse development in both the Diversified Reinsurance and AmTrust Reinsurance segments as well as in its run-off business. For the Diversified Reinsurance segment, adverse development was $7,878 and $39,486 for the three and nine months ended September 30, 2017, respectively (2016 - $10,408 and $37,404, respectively) which was largely due to a higher than expected loss emergence emanating largely from facultative commercial auto as well as a handful of specific contracts across several lines of business. For the AmTrust Reinsurance segment, the net adverse development was $61,127 and $100,872 for the three and nine months ended September 30, 2017, respectively, largely from program and non-program general liability, auto liability and workers compensation lines where elevated loss activity has been observed, $16,237 of which, came from one program that was terminated on September 1, 2017 (2016 - $1,993 and $1,524, respectively). Our Other category also incurred adverse development of $8,665 and $10,176 for the three and nine months ended September 30, 2017, respectively, (2016 - $45 and $2,940, respectively) due to increased reserves in the remaining run–off litigated U.S. E&S property claims and increased reserves in the run–off of the NGHC Quota Share Reinsurance Agreement. 7. Reserve for Loss and Loss Adjustment Expenses (continued) For the three and nine months ended September 30, 2017, the Company recorded an estimate of $20,000 in losses from Hurricanes Harvey and Irma, predominantly in the Diversified segment largely from the property and casualty lines. The Company expects no impact from the Mexico earthquakes or Hurricane Maria. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Founding Shareholders of the Company are Michael Karfunkel, George Karfunkel and Barry Zyskind. Michael Karfunkel passed away on April 27, 2016. Based on each individual's most recent public filing, Leah Karfunkel (wife of Michael Karfunkel) owns or controls approximately 8.0% of the outstanding shares of the Company and Barry Zyskind (the Company's non-executive chairman) owns or controls approximately 7.6% of the outstanding shares of the Company as at September 30, 2017. George Karfunkel now owns or controls less than 5.0% of the outstanding shares of the Company as at September 30, 2017 so there is no longer a public filing requirement. Leah Karfunkel and George Karfunkel are directors of AmTrust, and Barry Zyskind is the president, CEO and chairman of AmTrust. Leah Karfunkel, George Karfunkel and Barry Zyskind own or control approximately 42.8% of the outstanding shares of AmTrust. AmTrust owns 1.6% of the issued and outstanding shares of National General Holdings Corporation ("NGHC") common stock, and Leah Karfunkel and the Michael Karfunkel 2005 Family Trust (which is controlled by Leah Karfunkel) owns 41.8% of the outstanding common shares of NGHC. Barry Zyskind is the non-executive chairman of NGHC. AmTrust The following describes transactions between the Company and AmTrust: AmTrust Quota Share Reinsurance Agreement Effective July 1, 2007, the Company and AmTrust entered into a master agreement, as amended (the "Master Agreement"), by which they caused Maiden Bermuda, a wholly owned subsidiary of the Company, and AmTrust's Bermuda reinsurance subsidiary, AmTrust International Insurance, Ltd. ("AII"), to enter into a quota share reinsurance agreement (the "Reinsurance Agreement") by which AII retrocedes to Maiden Bermuda an amount equal to 40% of the premium written by subsidiaries of AmTrust, net of the cost of unaffiliated inuring reinsurance and 40% of losses. The Master Agreement further provided that AII receives a ceding commission of 31% of ceded written premiums. On June 11, 2008, Maiden Bermuda and AII amended the Reinsurance Agreement to add Retail Commercial Package Business to the Covered Business. AII receives a ceding commission of 34.375% on Retail Commercial Package Business. On July 1, 2016 the agreement was renewed through June 30, 2019. The agreement automatically renews for successive three-year periods thereafter unless AII or Maiden Bermuda elects to so terminate the Reinsurance Agreement by giving written notice to the other party not less than nine months prior to the expiration of any successive three-year period. Either party is entitled to terminate on thirty days' notice or less upon the occurrence of certain early termination events, which include a default in payment, insolvency, change in control of AII or Maiden Bermuda, run-off, or a reduction of 50% or more of the shareholders' equity of Maiden Bermuda or the combined shareholders' equity of AII and the AmTrust subsidiaries. Additionally, for the Specialty Program portion of Covered Business only, AII will be responsible for ultimate net loss otherwise recoverable from Maiden Bermuda to the extent that the loss ratio to Maiden Bermuda, which shall be determined on an inception to date basis from July 1, 2007 through the date of calculation, is between 81.5% and 95%. Above and below the defined corridor, Maiden Bermuda will continue to reinsure losses at its proportional 40% share per the Reinsurance Agreement. AmTrust European Hospital Liability Quota Share Agreement ("European Hospital Liability Quota Share") Effective April 1, 2011, Maiden Bermuda, entered into a quota share reinsurance contract with AmTrust Europe Limited ("AEL") and AmTrust International Underwriters Limited ("AIUL"), both wholly owned subsidiaries of AmTrust. Pursuant to the terms of the contract, Maiden Bermuda assumed 40% of the premiums and losses related to policies classified as European Hospital Liability, including associated liability coverages and policies covering physician defense costs, written or renewed on or after April 1, 2011. The contract also covers policies written or renewed on or before March 31, 2011, but only with respect to losses that occur, accrue or arise on or after April 1, 2011. The maximum limit of liability attaching shall be €5,000 (€10,000 effective January 1, 2012) or currency equivalent (on a 100% basis) per original claim for any one original policy. Maiden Bermuda will pay a ceding commission of 5%. The agreement has been renewed through March 31, 2018 and can be terminated at any April 1 by either party on four months notice. Effective July 1, 2016, the contract was amended such that Maiden Bermuda assumes from AEL 32.5% of the premiums and losses of all policies written or renewed on or after July 1, 2016 until June 30, 2017 and 20% of all policies written or renewed on or after July 1, 2017. For the three and nine months ended September 30, 2017, the Company recorded approximately $138,171 and $460,667 (2016 - $163,336 and $447,767, respectively) of commission expense as a result of both of these quota share arrangements with AmTrust. 8. Related Party Transactions (continued) Other Reinsurance Agreements Effective September 1, 2010, the Company, through a subsidiary, entered into a quota share reinsurance agreement with Technology Insurance Company, Inc. ("Technology"), a subsidiary of AmTrust. Under the agreement, we ceded (a) 90% of its gross liability written under the Open Lending Program ("OPL") and (b) 100% of its surplus lines general liability business under the Naxos Avondale Specialty Casualty Program ("NAXS"). Our involvement is limited to certain states where Technology was not fully licensed. The agreement also provides that we receive a ceding commission of 5% of ceded written premiums. The OPL program was terminated on December 31, 2011, on a run-off basis, and the NAXS program was terminated on October 31, 2012. We recorded $1 and $4 of ceded premiums for the three and nine months ended September 30, 2017, respectively (2016 - $nil and $12, respectively). Effective April 1, 2012, the Company, through a subsidiary, entered into a reinsurance agreement with AmTrust's wholly owned subsidiary, AmTrust North America, Inc. ("AmTrust NA"). We indemnify AmTrust NA, on an excess of loss basis, as a result of losses occurring on AmTrust NA's new and renewal policies relating to the lines of business classified as Automobile Liability by AmTrust NA in its annual statement utilizing the specific underwriting guidelines defined in the reinsurance agreement. AmTrust NA shall retain the first $1,000 of loss, per any one policy or per any one loss occurrence. This agreement has a term of one year and automatically renews annually unless terminated pursuant to the terms of the agreement. During the three and nine months ended September 30, 2017, under the terms of this agreement, we have recorded net premiums earned of approximately $351 and $1,182, respectively (2016 - $305 and $745, respectively) and commission expense of $53 and $256, respectively (2016 - $87 and $187, respectively). Collateral provided to AmTrust a) AmTrust Quota Share Reinsurance Agreement In order to provide AmTrust's U.S. insurance subsidiaries with credit for reinsurance on their statutory financial statements, AII, as the direct reinsurer of the AmTrust's insurance subsidiaries, has established trust accounts ("Trust Accounts") for their benefit. Maiden Bermuda has agreed to provide appropriate collateral to secure its proportional share under the Reinsurance Agreement of AII's obligations to the AmTrust subsidiaries to whom AII is required to provide collateral. This collateral may be in the form of (a) assets loaned by Maiden Bermuda to AII for deposit into the Trust Accounts, pursuant to a loan agreement between those parties, (b) assets transferred by Maiden Bermuda for deposit into the Trust Accounts, (c) a letter of credit obtained by Maiden Bermuda and delivered to an AmTrust subsidiary on AII's behalf, or (d) premiums withheld by an AmTrust subsidiary at Maiden Bermuda's request in lieu of remitting such premiums to AII. Maiden Bermuda may provide any or a combination of these forms of collateral, provided that the aggregate value thereof equals Maiden Bermuda's proportionate share of its obligations under the Reinsurance Agreement with AII. Maiden Bermuda satisfied its collateral requirements under the Reinsurance Agreement with AII as follows: •by lending funds in the amount of $167,975 at September 30, 2017 and December 31, 2016 pursuant to a loan agreement entered into between those parties. Advances under the loan, which were made in three separate tranches of $113,542 (December 18, 2007), $20,193 (April 11, 2008) and $34,240 (June 23, 2008), are secured by promissory notes. The maturity date with respect to each advance is ten years from the date the advance was made. This loan was assigned by AII to AmTrust effective December 31, 2014 and is carried at cost. Interest is payable at a rate equivalent to the one-month LIBOR plus 90 basis points per annum; and •effective December 1, 2008, the Company entered into a Reinsurer Trust Assets Collateral agreement to provide to AII sufficient collateral to secure its proportional share of AII's obligations to the U.S. AmTrust subsidiaries. The amount of the collateral, at September 30, 2017 was approximately $3,245,369 (December 31, 2016 - $2,766,032) and the accrued interest was $21,288 (December 31, 2016 - $20,420). Please refer to "Note 4. (e) Investments" for additional information. b) European Hospital Liability Quota Share AEL requested that Maiden Bermuda provide collateral to secure its proportional share under the European Hospital Liability Quota Share agreement. Please refer to "Note 4. (e) Investments" for additional information. Brokerage Agreement Effective July 1, 2007, the Company entered into a reinsurance brokerage agreement with AII Reinsurance Broker Ltd. ("AIIB"), a wholly owned subsidiary of AmTrust. Pursuant to the brokerage agreement, AIIB provides brokerage services relating to the Reinsurance Agreement and the European Hospital Liability Quota Share agreement for a fee equal to 1.25% of the premium assumed. The brokerage fee is payable in consideration of AIIB's brokerage services. AIIB is not the Company's exclusive broker. The agreement may be terminated upon 30 days written notice by either party. Maiden Bermuda recorded approximately $5,642 and $18,662 of reinsurance brokerage expense for the three and nine months ended September 30, 2017, respectively, (2016 - $6,652 and $18,330, respectively) and deferred reinsurance brokerage at September 30, 2017 of $15,476 (December 31, 2016 - $14,395) as a result of this agreement. The Company also paid brokerage fees to AmTrust's subsidiary, AmTrust North America, of $54 and $55 for the three and nine months ended September 30, 2017 (2016 - $41 and $42), respectively, for acting as insurance intermediary in relation to certain insurance placements. 8. Related Party Transactions (continued) Asset Management Agreement Effective July 1, 2007, the Company entered into an asset management agreement with AII Insurance Management Limited ("AIIM"), a wholly owned subsidiary of AmTrust, pursuant to which AIIM has agreed to provide investment management services to the Company. AIIM provides investment management services for a quarterly fee of 0.0375% if the average value of the account for the previous calendar quarter is greater than $1 billion. The agreement may be terminated upon 30 days written notice by either party. The Company recorded approximately $1,927 and $5,586 of investment management fees for the three and nine months ended September 30, 2017, respectively, (2016 - $1,780 and $5,122, respectively) as a result of this agreement. Other The Company entered into time sharing agreements for the lease of aircraft owned by AmTrust Underwriters, Inc. ("AUI"), a wholly owned subsidiary of AmTrust, and by AmTrust on March 1, 2011 and November 5, 2014, respectively. The agreements automatically renew for successive one-year terms unless terminated in accordance with the provisions of the agreements. Pursuant to the agreements, the Company will reimburse AUI and AmTrust for actual expenses incurred as allowed by Federal Aviation Regulations. For the three and nine months ended September 30, 2017, the Company recorded an expense of $nil and $39, respectively (2016 - $22 and $61, respectively) for the use of the aircraft. NGHC The following describes transactions between the Company and NGHC and its subsidiaries: NGHC Quota Share Maiden Bermuda, effective March 1, 2010, had a 50% participation in the NGHC Quota Share, by which it received 25% of net premiums of the personal lines automobile business and assumed 25% of the related net losses. On August 1, 2013, the Company received notice from NGHC of the termination of the NGHC Quota Share effective on that date. The Company and NGHC mutually agreed that the termination is on a run-off basis. Other Effective April 1, 2015, Maiden US renewed the Medical Excess of Loss reinsurance agreement with wholly owned subsidiaries of NGHC, Distributors Insurance Company PCC, AIBD Insurance Company IC and Professional Services Captive Corporation IC. Pursuant to this agreement, Maiden US indemnifies on an excess of loss basis, for the amounts of net loss, paid from April 1, 2015 through March 31, 2016. Maiden US was liable for 100% of the net loss for each covered person per agreement year in excess of the $1,175 retention (each covered person per agreement year). Maiden US' liability did not exceed $8,825 per covered person per agreement year. In addition, Maiden US continued to indemnify extra contractual obligations with a maximum liability of $2,000. This agreement terminated on March 31, 2016 and Maiden US was relieved of all liability hereunder for losses incurred or paid subsequent to such termination date. Under these agreements, Maiden US recorded no premiums earned for the three and nine months ended September 30, 2017 (2016 - $nil and $157, respectively). Effective May 1, 2015, Maiden US entered into an agreement with several NGHC subsidiaries for medical excess of loss programs. This program covers employer aggregate and traditional specific medical stop loss policies underwritten by the Managing General Agent that they support. The NGHC companies covered under the treaty are Integon Indemnity Insurance Company, Integon National Insurance Company and National Health Insurance Company. This agreement expired on April 30, 2017. Upon expiration of this agreement, coverage remains in full force and effect on all assumed liability for policies in force on the date of expiration until expiration, cancellation or next anniversary date of such subject policies. The treaty limit of the aggregate medical stop loss is subject to a limit of $4,000 in excess of $1,000 any one insured person. The treaty limit on the traditional specific medical stop loss Layer 1 is subject to a limit of $1,000 in excess of $1,000 any one insured person; Layer 2 is subject to a limit of $3,000 in excess of $2,000 any one insured person and Layer 3 is subject to a limit of $5,000 in excess of $5,000. In addition to these limits, the Company shall cover extra contractual obligations arising under this agreement with a maximum liability of $2,000. Under these agreements, Maiden US recorded $163 and $403 of premiums earned for the three and nine months ended September 30, 2017, respectively (2016 - $136 and $295, respectively). |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies
At September 30, 2017 and December 31, 2016, the Company’s assets where significant concentrations of credit risk may exist include investments, cash and cash equivalents, loan to related party, reinsurance balances receivable and reinsurance recoverable on unpaid losses. The reinsurers with the three largest balances accounted for 44.7%, 15.7% and 14.6%, respectively, of the Company's reinsurance recoverable on unpaid losses balance at September 30, 2017 (December 31, 2016 – 54.8%, 31.6% and 2.9%, respectively). At September 30, 2017, 98.7% (December 31, 2016 - 97.2%) of the reinsurance recoverable on unpaid losses was due from reinsurers with credit ratings from A.M Best of A or better, and 1.3% (December 31, 2016 - 2.8%) of the reinsurance recoverable on unpaid losses was due from reinsurers with ratings of B++ or lower. At September 30, 2017, 89.1% (December 31, 2016 - 98.6%) of reinsurance recoverable on unpaid losses, due from reinsurers with ratings of B++ or lower, were collateralized. At September 30, 2017 and December 31, 2016, the Company had no valuation allowance against reinsurance recoverable on unpaid losses. The Company manages concentration of credit risk in the investment portfolio through issuer and sector exposure limitations. The Company believes it bears minimal credit risk in its cash on deposit. The Company also monitors the credit risk related to the loan to related party and its reinsurance balances receivable, within which the largest balance is due from AmTrust. To mitigate credit risk, we generally have a contractual right of offset thereby allowing us to settle claims net of any premiums or loan receivable. The Company believes these balances will be fully collectible.
During the three and nine months ended September 30, 2017, our gross premiums written from AmTrust accounted for $420,019 or 66.6% and $1,575,677 or 69.7%, respectively of our total gross premiums written (2016 – $520,104 or 73.6% and $1,591,902 or 70.5%, respectively).
On August 3, 2017, the Company's Board of Directors authorized the following quarterly dividend:
Except as noted below, the Company is not a party to any material legal proceedings. From time to time, the Company is subject to routine legal proceedings, including arbitrations, arising in the ordinary course of business. These legal proceedings generally relate to claims asserted by or against the Company in the ordinary course of insurance or reinsurance operations. Based on the Company's opinion, the eventual outcome of these legal proceedings is not expected to have a material adverse effect on its financial condition or results of operations. In April 2009, the Company learned that Bentzion S. Turin, the former Chief Operating Officer, General Counsel and Secretary of Maiden Holdings and Maiden Bermuda, sent a letter to the U.S. Department of Labor claiming that his employment with the Company was terminated in retaliation for corporate whistle blowing in violation of the whistle blower protection provisions of the Sarbanes-Oxley Act of 2002. Mr. Turin alleged that he was terminated for raising concerns regarding corporate governance with respect to the negotiation of the terms of the Trust Preferred Securities Offering. He seeks reinstatement as Chief Operating Officer, General Counsel and Secretary of Maiden Holdings and Maiden Bermuda, back pay and legal fees incurred. On December 31, 2009, the U.S. Secretary of Labor found no reasonable cause for Mr. Turin’s claim and dismissed the complaint in its entirety. Mr. Turin objected to the Secretary's findings and requested a hearing before an administrative law judge in the U.S. Department of Labor. The Company moved to dismiss Mr. Turin's complaint, and its motion was granted by the Administrative Law Judge on June 30, 2011. On July 13, 2011, Mr. Turin filed a petition for review of the Administrative Law Judge's decision with the Administrative Review Board in the U.S. Department of Labor. On March 29, 2013, the Administrative Review Board reversed the dismissal of the complaint on procedural grounds, and remanded the case to the administrative law judge. The administrative hearing began in September 2014. Twelve hearing days have taken place, and we expect the hearings to conclude in late 2017 or early 2018. The Company believes that it had good and sufficient reasons for terminating Mr. Turin's employment and, that the claim is without merit. The Company will continue to vigorously defend itself against this claim. |
Earnings per Common Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Common Share | Earnings per Common Share The following is a summary of the elements used in calculating basic and diluted earnings per common share:
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Shareholders' Equity |
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders' Equity
At September 30, 2017, the aggregate authorized share capital of the Company is 150,000,000 shares from which the Company has issued 87,728,554 common shares, of which 84,624,829 common shares are outstanding, and 18,600,000 preference shares, all of which are outstanding. The remaining 43,671,446 are undesignated at September 30, 2017. For further discussion on the components of Shareholders' Equity, please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2016.
On June 15, 2017, the Company issued and authorized a total of 6,000,000, 6.700% Preference Shares – Series D (the "Preference Shares - Series D"), par value $0.01 per share, at a price of $25 per preference share. The Company's total net proceeds from the offering was $144,942, after deducting issuance costs of $5,058, which were recognized as a reduction in additional paid-in capital. The Preference Shares – Series D have no stated maturity date and are redeemable in whole or in part at the sole option of the Company any time after June 15, 2022, subject to certain regulatory restrictions at a redemption price of $25 per preference share plus any declared and unpaid dividends, without accumulation of any undeclared dividends. Additionally, at any time prior to June 15, 2022, the Company may redeem all but not less than all of the Series D Preference Shares at a redemption price of $26 per share, plus declared and unpaid dividends, if any, to, but excluding, the date of redemption subject to certain conditions and regulatory approval. Dividends on the Preference Shares – Series D are non-cumulative. Consequently, in the event a dividend is not declared on the Preference Shares – Series D for any dividend period, holders of Preference Shares – Series D will not be entitled to receive a dividend for such period, and such undeclared dividend will not accrue and will not be payable. The holders of Preference Shares – Series D will be entitled to receive dividend payments only when, as and if declared by the Company's board of directors or a duly authorized committee of the board of directors. Any such dividends will be payable from, and including, the date of original issue on a non-cumulative basis, quarterly in arrears. To the extent declared, these dividends will accumulate, with respect to each dividend period, in an amount per share equal to 6.7% of the $25 liquidation preference per annum. During any dividend period, so long as any Preference Shares – Series D remain outstanding, unless the full dividends for the latest completed dividend period on all outstanding Preference Shares – Series D have been declared and paid, no dividend shall be paid or declared on the common shares. The holders of the Preference Shares – Series D have no voting rights other than the right to elect up to two directors if preference share dividends are not declared and paid for six or more dividend periods.
During the three and nine months ended September 30, 2017, the Company repurchased a total of 2,015,700 common shares at an average price of $7.11 per share under its share repurchase authorization. As at September 30, 2017, the Company has a remaining authorization of $85,662 for share repurchases. In addition, during the nine months ended September 30, 2017, the Company repurchased a total of 38,122 shares at an average price per share of $15.06 from employees, which represent withholdings in respect of tax obligations on the vesting of restricted shares and performance based shares. None of these repurchases took place during the three months ended September 30, 2017. 11. Shareholders' Equity (continued)
The following tables set forth financial information regarding the changes in the balances of each component of AOCI:
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Subsequent Events |
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Subsequent Events [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent Events | Subsequent Events On November 7, 2017, the Company's Board of Directors authorized the following quarterly dividends:
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Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Maiden Holdings, Ltd. ("Maiden Holdings") and its subsidiaries (the "Company" or "Maiden"). They have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP" or "U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All significant inter-company transactions and accounts have been eliminated. These interim unaudited Condensed Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim period and all such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative, if annualized, of those to be expected for the full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. These unaudited Condensed Consolidated Financial Statements, including these notes, should be read in conjunction with the Company's audited Consolidated Financial Statements, and related notes thereto, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016. Certain reclassifications have been made for 2016 to conform to the 2017 presentation and have no impact on consolidated net income and total equity previously reported. |
Recently Adopted Accounting Standards Updates and Recently Issued Accounting Standards Not Yet Adopted | Recently Adopted Accounting Standards Updates Improvements to Employee Share-Based Payment Accounting In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-09 guidance that outlines changes for certain aspects of share-based payments to employees, such as accounting for forfeitures, which applies to the Company. Under the new guidance, the entities can elect to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The guidance is effective for public business entities for fiscal year beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted for all entities, in any annual or interim period for which financial statements haven't been issued or made available for issuance, but all of the guidance must be adopted in the same period. Based on the Company's history, forfeitures have never been material. The Company will account for forfeitures as they occur. The adoption of this guidance did not have a material impact on the Company's Condensed Consolidated Financial Statements. There were no forfeitures for the three and nine months ended September 30, 2017. Simplified Accounting for Goodwill Impairment In February 2017, the FASB issued ASU 2017-04 guidance that simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on Step 1 of the two-step impairment test under ASC 350 Intangibles - Goodwill and Other. Under the new guidance, if the carrying value of a reporting unit exceeds its fair value, the Company will record an impairment charge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. The standard eliminates the requirement to calculate goodwill impairment under Step 2, which calculates any impairment charge by comparing the implied fair value of goodwill with its carrying amount. The Update does not change the guidance on completing Step 1 of the goodwill impairment test. The standard has tiered effective dates, starting in 2020 for calendar public business entities that meet the definition of an SEC filer. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. Recently Issued Accounting Standards Not Yet Adopted Premium Amortization on Purchased Callable Debt Securities In March 2017, the FASB issued ASU 2017-08 to amend the amortization period for certain purchased callable debt securities held at a premium. Current GAAP excludes certain callable debt securities from consideration of early repayment of principal even if the holder is certain that the call will be exercised. As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings. 2. Significant Accounting Policies (continued) The amendments in ASU 2017-08 affect all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date. The amendments shorten the amortization period for certain callable debt securities held at a premium and require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public business entities, the amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. The Company holds a number of securities with callable features on the Condensed Consolidated Balance Sheet and this includes certain securities that have been purchased at a premium that is being amortized to the associated security's maturity date. The Company is currently evaluating the impact of this guidance on the Company's results of operations, financial position or liquidity at the date of adoption. Scope of Modification Accounting In May 2017, the FASB issued ASU 2017-09 to amend the guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following are met: 1.The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; 2.The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and 3.The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in this Update. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this Update should be applied prospectively to an award modified on or after the adoption date. The Company currently has a number of share based payment awards as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2016, however, we do not anticipate any modifications to the terms or conditions at this time. The impact of this guidance on the Company's Condensed Consolidated Financial Statements will be evaluated once ASU-2017-09 is adopted and when the Company makes any modification to any of its current shared based payment awards. |
Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Underwriting results of operating segments | The following tables summarize our reporting segment's underwriting results and the reconciliation of our reportable segments and Other category's underwriting results to our consolidated net income:
3. Segment Information (continued)
3. Segment Information (continued)
3. Segment Information (continued)
The following tables summarize the financial position of our reportable segments including the reconciliation to our consolidated assets at September 30, 2017 and December 31, 2016:
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Net premiums by major line of business | The following table sets forth financial information relating to net premiums written by major line of business and reportable segment for the three and nine months ended September 30, 2017 and 2016:
3. Segment Information (continued) The following table sets forth financial information relating to net premiums earned by major line of business and reportable segment for the three and nine months ended September 30, 2017 and 2016:
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Investments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Original or amortized cost, estimated fair value and gross unrealized gains and losses of available-for-sale and other investments | The original or amortized cost, estimated fair value and gross unrealized gains and losses of fixed maturities and other investments at September 30, 2017 and December 31, 2016, are as follows:
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Contractual maturities of fixed maturities, available-for-sale | The contractual maturities of our fixed maturities are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
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Summary of available-for-sale securities and other investments in an unrealized loss position and the aggregate fair value and gross unrealized loss by length of time the securities have continuously been in an unrealized loss position |
The following tables summarize fixed maturities in an unrealized loss position and the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position:
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Summary of the credit ratings of fixed maturities | The following summarizes the credit ratings of our fixed maturities:
4. Investments (continued)
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Portfolio of other investments | The table below shows our portfolio of other investments:
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Net investment income | Net investment income was derived from the following sources:
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Analysis of realized and unrealized gains (losses) on investment | Realized gains or losses on the sale of investments are determined on the basis of the first in first out cost method. The following provides an analysis of net realized gains on investment included in the Condensed Consolidated Statements of Income:
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Net unrealized (losses) gains on available-for-sale securities and other investments | Net unrealized (losses) gains were as follows:
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Fair value of restricted assets | The assets in trust as collateral are primarily cash and highly rated fixed maturities. The fair value of our restricted assets was as follows:
|
Fair Value of Financial Instruments (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value hierarchy of financial assets and financial liabilities measured on a recurring basis | At September 30, 2017 and December 31, 2016, we classified our financial instruments measured at fair value on a recurring basis in the following valuation hierarchy:
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Carrying values and fair values of financial instruments not measured at fair value | The following table presents the fair value and carrying value of the financial instruments not measured at fair value:
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Long-Term Debt (Tables) |
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Outstanding Senior Notes Issuances | The following table details the Company's Senior Notes issuances as of September 30, 2017 and December 31, 2016:
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Reserve for Loss and Loss Adjustment Expenses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of liability for unpaid claims and claims adjustment expense | Our reserve for loss and LAE comprises:
The following table represents a reconciliation of our beginning and ending gross and net loss and LAE reserves:
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Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||
Schedule of dividends declared | On August 3, 2017, the Company's Board of Directors authorized the following quarterly dividend:
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Earnings per Common Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of elements used in calculating basic and diluted earnings per common share | The following is a summary of the elements used in calculating basic and diluted earnings per common share:
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Shareholders' Equity (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accumulated other comprehensive income | The following tables set forth financial information regarding the changes in the balances of each component of AOCI:
|
Subsequent Events (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent Events [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of quarterly dividends | On November 7, 2017, the Company's Board of Directors authorized the following quarterly dividends:
|
Significant Accounting Policies (Details) - shares |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2017 |
|
Accounting Policies [Abstract] | ||
Forfeitures in period (in shares) | 0 | 0 |
Investments - Other Investments (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Schedule of Investments [Line Items] | ||
Other investments | $ 7,041 | $ 13,060 |
% of Total fair value | 100.00% | 100.00% |
Investments in limited partnerships [Member] | ||
Schedule of Investments [Line Items] | ||
Other investments | $ 5,541 | $ 5,474 |
% of Total fair value | 78.70% | 41.90% |
Unfunded commitment on investments in limited partnerships | $ 319 | $ 463 |
Investment in quoted equity [Member] | ||
Schedule of Investments [Line Items] | ||
Other investments | $ 0 | $ 6,586 |
% of Total fair value | 0.00% | 50.40% |
Other [Member] | ||
Schedule of Investments [Line Items] | ||
Other investments | $ 1,500 | $ 1,000 |
% of Total fair value | 21.30% | 7.70% |
Investments - Net Investment Income (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Schedule of Investments [Line Items] | ||||
Investment income | $ 42,750 | $ 37,446 | $ 129,078 | $ 112,413 |
Investment expenses | (1,927) | (1,780) | (5,586) | (5,122) |
Net investment income | 40,823 | 35,666 | 123,492 | 107,291 |
Fixed maturities [Member] | ||||
Schedule of Investments [Line Items] | ||||
Investment income | 40,369 | 35,769 | 123,849 | 108,018 |
Cash and cash equivalents [Member] | ||||
Schedule of Investments [Line Items] | ||||
Investment income | 899 | 506 | 1,328 | 1,147 |
Loans to related party [Member] | ||||
Schedule of Investments [Line Items] | ||||
Investment income | 913 | 599 | 2,441 | 1,729 |
Other [Member] | ||||
Schedule of Investments [Line Items] | ||||
Investment income | $ 569 | $ 572 | $ 1,460 | $ 1,519 |
Fair Value of Financial Instruments - Changes in Level 3 Financial Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Fair Value Disclosures [Abstract] | ||||
Transfers into Level 3 | $ 0 | $ 0 | $ 0 | $ 0 |
Transfers out of Level 3 | $ 0 | $ 0 | $ 0 | $ 0 |
Long-Term Debt - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 27, 2017 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Debt Instrument [Line Items] | ||||||
Accelerated amortization of senior note issuance cost | $ 0 | $ 0 | $ 2,809,000 | $ 2,345,000 | ||
Interest expense | 4,829,000 | 6,856,000 | 18,430,000 | 21,314,000 | ||
Senior Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | 262,500,000 | 262,500,000 | $ 362,500,000 | |||
Interest expense | 4,776,000 | 6,776,000 | 18,218,000 | 21,049,000 | ||
Accrued interest | 1,342,000 | 1,342,000 | 1,453,000 | |||
Amortization expense, debt issuance costs | 53,000 | $ 80,000 | 212,000 | $ 265,000 | ||
2012 Senior Notes [Member] | Senior Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Redemption price percentage | 100.00% | |||||
Principal amount | $ 100,000,000 | $ 0 | $ 0 | $ 100,000,000 | ||
Accelerated amortization of senior note issuance cost | $ 2,809,000 |
Subsequent Events (Details) - $ / shares |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Nov. 07, 2017 |
Aug. 03, 2017 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Subsequent Event [Line Items] | ||||||
Dividends declared per common share (in dollars per share) | $ 0.15 | $ 0.15 | $ 0.14 | $ 0.45 | $ 0.42 | |
Subsequent event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Dividends declared per common share (in dollars per share) | $ 0.15 | |||||
Subsequent event [Member] | Preference shares - Series A [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Dividends declared per Preference share (in dollars per share) | 0.515625 | |||||
Subsequent event [Member] | Preference shares - Series C [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Dividends declared per Preference share (in dollars per share) | 0.445313 | |||||
Subsequent event [Member] | Preference shares - Series D [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Dividends declared per Preference share (in dollars per share) | $ 0.41875 |
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