Organization

12 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Maiden Holdings, Ltd. (sometimes referred to as "Maiden Holdings" or "Parent Company") is a Bermuda-based holding company formed in June 2007, primarily focused on serving the needs of regional and specialty insurers in the United States and Europe. Together with its subsidiaries (collectively referred to as the "Company", "We" or "Maiden"), we provide reinsurance through our wholly owned subsidiary, Maiden Reinsurance Ltd. ("Maiden Bermuda") and have operations in Bermuda. Maiden Bermuda does not underwrite any direct insurance business. Internationally, we provide reinsurance-related services through Maiden Global Holdings, Ltd. ("Maiden Global") and its subsidiaries. Maiden Global primarily focuses on providing branded auto and life insurance products through its insurer partners to retail clients in the European Union and other global markets, which also produce reinsurance programs which are underwritten by Maiden Bermuda. Certain international life and general business is also written on a primary basis by Maiden Life Försäkrings AB ("Maiden LF") and Maiden General Försäkrings AB ("Maiden GF"), both wholly owned subsidiaries of Maiden Holdings, as part of Maiden Global’s service offerings.

Strategic Review

The Company's business has undergone significant changes in the last year. Maiden Holding's Board of Directors initiated a review of strategic alternatives (the "Strategic Review") in the first quarter of 2018 to evaluate ways to increase shareholder value as a result of continuing significant operating losses and lower returns on equity than planned. As part of the Strategic Review, a series of transactions were entered into which are described herein and in “Note 18. Subsequent Events", which includes additional information related to these events.

In addition, as of September 30, 2018 and December 31, 2018, the Company and Maiden Bermuda failed to meet their requirements to hold sufficient capital to cover their respective economic capital requirement (“ECR”). The Company had communicated such conditions to the Bermuda Monetary Authority ("BMA") and via its Quarterly Report on Form 10-Q filed with the SEC on November 9, 2018 and is following the guidelines of a reportable “event” as stipulated by Bermuda insurance law. The Company has taken the following actions to remediate the breach including: (1) completed the sale of Maiden Reinsurance North America, Inc. ("Maiden US"), on December 27, 2018; (2) Maiden Bermuda's shareholders, Maiden Holdings and Maiden Holdings North America, Ltd. ("Maiden NA"), made capital injections of $125,000 on December 31, 2018 and $70,000 in January 2019 to Maiden Bermuda from the sale proceeds of Maiden US; (3) entered into a partial termination amendment ("Partial Termination Amendment") with AmTrust Financial Services Inc. ("AmTrust") effective January 1, 2019; and (4) entered into amendments which terminated the AmTrust Quota Share Reinsurance Agreement ("AmTrust Quota Share") and the AmTrust European Hospital Liability Quota Share Agreement ("European Hospital Liability Quota Share") effective January 1, 2019.

As a result of these actions and pending finalization and regulatory approval of the loss portfolio transfer and adverse development cover entered into by Maiden Bermuda and Enstar Group Limited ("New LPT/ADC MTA") on March 1, 2019, we estimate that the Company and Maiden Bermuda will have sufficient capital in excess of the respective ECR requirements and that this position should improve throughout 2019.

Discontinued Operations

As part of the strategic review initiated by the Company's Board of Directors earlier in 2018, during the third quarter of 2018, the Company made the strategic decision to divest its U.S. treaty reinsurance operations. Except as explicitly described as held for sale or as discontinued operations, and unless otherwise noted, all discussions and amounts presented herein relate to the Company's continuing operations except for net loss, net loss attributable to Maiden and net loss attributable to Maiden common shareholders.

Sale of U.S. treaty reinsurance operations

The sale of the U.S. treaty reinsurance business occurred in two parts as described below:

(a) On August 29, 2018, the Company announced that it had entered into a Renewal Rights Agreement ("Renewal Rights"), dated as of August 29, 2018, with Transatlantic Reinsurance Company ("TransRe"), pursuant to which the Company agreed to sell, and TransRe agreed to purchase, Maiden US's rights to: (i) renew Maiden US’s treaty reinsurance agreements upon their expiration or cancellation, (ii) solicit renewals of and replacement coverages for the treaty reinsurance agreements and (iii) replicate and use the products and contract forms used in Maiden US’s business. The sale was consummated on August 29, 2018. The payment received for the sale of the Renewal Rights was $7,500 subject to potential additional amounts payable in the future in accordance with the agreement.

(b) On December 27, 2018, the Company announced that its subsidiary, Maiden Holdings North America, Ltd. ("Maiden NA"), completed its sale agreement (U.S. Master Transaction Agreement, "US MTA") dated as of August 31, 2018, with Enstar Holdings (US) LLC ("Enstar Holdings"), pursuant to which Maiden NA sold, and Enstar Holdings purchased Maiden NA’s subsidiary Maiden US.

Pursuant to and subject to the terms of the US MTA:

(i) Maiden NA sold, and Enstar Holdings purchased, all of the outstanding shares of common stock of Maiden US (the “Maiden US Sale”) for gross consideration of $286,375, which included estimated closing adjustments but is subject to post-closing adjustments;

(ii) Cavello Bay Reinsurance Limited ("Cavello"), Enstar Group Limited’s ("Enstar") Bermuda reinsurance affiliate, and Maiden Bermuda entered into an agreement pursuant to which certain quota share reinsurance contracts between Maiden US and Maiden Bermuda were novated to Cavello for a ceding commission payable by Maiden Bermuda of $12,250;

1. Organization (continued)

(iii) Cavello and Maiden Bermuda also entered into a retrocession agreement pursuant to which certain assets and liabilities associated with the Company’s U.S. treaty reinsurance business held by Maiden Bermuda were retroceded to Cavello in exchange for a $1,750 ceding commission; and

(iv) Maiden Bermuda provided Enstar with a reinsurance cover for loss reserve development, up to a maximum of $25,000, when losses are more than $100,000 in excess of the net loss and loss adjustment expenses recorded as of June 30, 2018, for no additional consideration.

The Company has determined that the sale of the U.S. treaty reinsurance operations represents a strategic shift that will have a major effect on its ongoing operations and financial results and that all of the held for sale criteria have been met. Accordingly, all transactions related to the U.S. treaty reinsurance operations are reported and presented as part of discontinued operations.

Please refer to "Note 2. Significant Accounting Policies" and "Note 6. Discontinued Operations" for additional information regarding the effect of the reclassifications on the Company's Consolidated Financial Statements.

Segments

As a result of the strategic decision to divest all of the Company's U.S. treaty reinsurance operations noted above, the Company has revised the composition of its reportable segments. As described in more detail below under “Note 3. Segment Information”, the reportable segments include: (i) Diversified Reinsurance which consists of a portfolio of property and casualty reinsurance business focusing on regional and specialty property and casualty insurance companies located primarily in Europe; and (ii) AmTrust Reinsurance which includes all business ceded to Maiden Bermuda from subsidiaries of AmTrust. In addition to these reportable segments, the results of operations of the former National General Holdings Corporation Quota Share ("NGHC Quota Share") segment is included in the "Other" category. All prior periods presented have been reclassified to conform to this new presentation. For the year ended December 31, 2018, the Company's AmTrust Reinsurance segment accounted for 93.5% (2017 - 95.9% and 2016 - 96.1%), of the Company's total consolidated gross premiums written.