Maiden Re(US:MHLD)2024-11-12 14:05Investment Performance - Maiden Holdings has invested approximately $253.4 million into alternative investments, including equity securities and other asset classes, with an expectation to exceed the benchmark cost of capital [115]. - The company has achieved an internal rate of return of 24.4% and a capital multiple of 1.77x on $9.5 million invested in insurance distribution platforms [112]. - The alternative investments portfolio decreased by 24.8% during the three months ended September 30, 2024, due to sales and redemptions of private equity and private credit funds [112]. - The alternative investment portfolio decreased by 18.0% primarily due to sales and redemptions, but produced a positive net return of 4.1% during the nine months ended September 30, 2024 [119]. - The company reported net unrealized losses of $9.190 million on other investments, including equities, for the three months ended September 30, 2024 [193]. - Total net realized gains for the three months ended September 30, 2024, were $5.386 million, compared to a loss of $301,000 in the same period of 2023 [193]. - The internal rate of return for active alternative investments as of September 30, 2024, was 4.0%, with a multiple on invested capital of 1.10 [200]. - Private equity investments produced a total investment return of $10.4 million, with an internal rate of return (IRR) of 10.5% and a multiple on invested capital (MOIC) of 1.33 [201]. - Private credit investments generated a total investment return of $1.4 million, with an IRR of 5.2% and a MOIC of 1.10 [201]. - Alternative investments yielded a total investment return of $1.4 million, with an IRR of 4.8% and a MOIC of 1.12; however, fund investments showed an IRR of (7.9)% and a MOIC of 0.92 [201]. - Venture capital investments produced a total return of $0.5 million, with an IRR of 7.6% and a MOIC of 1.19; direct investments had an IRR of 13.1% and a MOIC of 1.46 [202]. - Total investment return for alternative investments for the nine months ended September 30, 2024, was $13,611,000, compared to $14,159,000 in 2023, reflecting a decrease of 3.9% [198]. Financial Performance - The company reported a net loss of $42.98 million for the nine months ended September 30, 2024, compared to a net loss of $17.79 million for the same period in 2023 [122]. - The company's book value decreased by 15.7% to $2.09 per common share, while non-GAAP book value decreased by 6.6% to $2.98 per common share at the same date [118]. - The run-off of historic reinsurance programs resulted in an underwriting loss of $36.0 million for the nine months ended September 30, 2024, driven by adverse prior year reserve development of $25.1 million [118]. - Net loss for the three months ended September 30, 2024, was $34.468 million, compared to a net loss of $3.527 million for the same period in 2023, indicating a significant decline in financial performance [132]. - Non-GAAP operating loss for the three months ended September 30, 2024, was $15.68 million, compared to $11.75 million for the same period in 2023, indicating a worsening of approximately 33% [215]. - Non-GAAP diluted operating loss per share attributable to common shareholders was $(0.16) for the three months ended September 30, 2024, compared to $(0.12) for the same period in 2023 [215]. - The company reported net loss and loss adjustment expenses (LAE) increased by $4.7 million for the third quarter of 2024 compared to the same period in 2023, with net adverse prior period development (PPD) of $11.7 million [144]. - The company reported a net decrease in non-USD denominated fixed maturities primarily due to sales and maturities of euro denominated corporate bonds during the nine months ended September 30, 2024 [186]. Premiums and Underwriting - Gross premiums written increased by $9.26 million to $25.63 million for the nine months ended September 30, 2024, compared to $16.37 million in 2023 [122]. - Gross premiums written for the three months ended September 30, 2024, were $8.861 million, compared to $8.660 million for the same period in 2023, representing an increase of 2.3% [131]. - Net premiums earned increased by $0.9 million (7.4%) and $5.4 million (16.5%) for the three and nine months ended September 30, 2024, respectively, driven by growth in Credit Life programs [135]. - The AmTrust Reinsurance segment reported an underwriting loss of $17.8 million for the three months ended September 30, 2024, compared to an underwriting loss of $8.4 million for the same period in 2023 [156]. - Underwriting loss for the nine months ended September 30, 2024, was $36.0 million, compared to an underwriting loss of $28.4 million for the same period in 2023, primarily due to adverse PPD of $25.1 million in 2024 [133]. Capital Management - The weighted average effective interest rate on the company's debt capital is 7.6%, influencing its strategic decisions [112]. - The ratio of debt to total capital resources increased to 55.8% as of September 30, 2024, compared to 51.3% at the end of 2023 [124]. - The company repurchased 1,488,400 common shares during the nine months ended September 30, 2024, as part of its capital management strategy [118]. - The company has a remaining authorization of $68.7 million for common share repurchases as of September 30, 2024 [208]. - Total capital resources decreased by $41.0 million to $470.5 million, primarily due to a net loss of $43.0 million for the nine months ended September 30, 2024 [206]. Liquidity and Cash Flow - Cash flows used in operating activities for the nine months ended September 30, 2024 was $19.2 million, a decrease from $66.0 million in the same period in 2023 [167]. - Cash flows provided by investing activities were $107.1 million for the nine months ended September 30, 2024, compared to $51.1 million for the same period in 2023 [168]. - At September 30, 2024, unrestricted cash, cash equivalents, and fixed maturity investments were $139.8 million, an increase of $66.4 million from December 31, 2023 [165]. - The total increase in cash, restricted cash, and cash equivalents for the nine months ended September 30, 2024 was $85.1 million [166]. - Investable assets decreased by $124.6 million during the nine months ended September 30, 2024, totaling $789.7 million [163]. Foreign Exchange and Inflation - The company’s non-USD denominated liabilities at September 30, 2024, included a reserve for net loss and LAE of $258.4 million, while foreign currency asset exposures included $149.5 million of fixed maturity securities [226]. - The decrease in foreign currency translation adjustments of $0.2 million for the nine months ended September 30, 2024, was primarily driven by exposures to euro and British pound [226]. - Inflation is explicitly considered in the pricing of insured exposures, impacting reserves for loss and LAE, with potential changes in earnings based on actual claim costs [227]. - The company has not observed significant impacts from elevated inflation levels on its long-tailed lines of business, which include workers' compensation and general liability [227]. - The anticipated effects of inflation may lead to increased wage pressures, impacting net operating results, as salaries and incentive compensation costs comprise less than half of total general and administrative expenses [227]. Strategic Initiatives - Maiden Holdings is actively exploring fee-based and distribution opportunities that are non-risk bearing and capital efficient [112]. - The company has begun to reduce investments in alternative assets as part of a strategic initiative to strengthen liquidity and reposition the balance sheet [172]. - The company is pursuing finality solutions for AmTrust liabilities not covered by the Loss Portfolio Transfer/Adverse Development Cover Agreement, which may involve significant charges [112]. - Maiden Holdings has fulfilled its capital commitment to Genesis Legacy Solutions and does not anticipate further contracts in the legacy management segment [110].