Maiden Re(MHLD) - 2024 Q1 - Quarterly Results

Form 8-K Filing Information This section outlines the Form 8-K filing, including Q1 2024 financial results, a strategic renewal rights transaction, and related exhibits Item 2.02 Results of Operations and Financial Condition On May 9, 2024, Maiden Holdings, Ltd. issued a press release announcing its financial results for the three months ended March 31, 2024 - The company issued a press release on May 9, 2024, announcing its results of operations for the first quarter ended March 31, 2024[6] - The press release is furnished as Exhibit 99.1 and is not considered "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934[6][7] Item 8.01 Other Events The company announced its Q1 2024 results via a press release and a renewal rights transaction with an AmTrust unit for its primary business in its Swedish subsidiaries - On May 6, 2024, the company entered into a renewal rights transaction with AmTrust Nordic AB, a Swedish unit of AmTrust Financial Services, Inc[11] - The transaction covers the majority of the primary business written through its Swedish subsidiaries, Maiden General Försäkrings ("Maiden GF") and Maiden Life Försäkrings ("Maiden LF")[11] Item 9.01 Financial Statements and Exhibits This section lists the exhibits furnished with the Form 8-K, including press releases for Q1 2024 financial results, an investor presentation, and a press release regarding the renewal rights transaction | Exhibit No. | Description | | :--- | :--- | | 99.1 | Press Release of Maiden Holdings, Ltd., dated May 9, 2024 | | 99.2 | Press Release of Maiden Holdings, Ltd., dated May 9, 2024 | | 99.3 | Maiden Holdings, Ltd. Investor Update Presentation, May 2024 | | 99.4 | Press Release of Maiden Holdings, Ltd., dated May 6, 2024 | First Quarter 2024 Financial Results (Exhibit 99.1) This section presents Maiden Holdings' Q1 2024 financial performance, highlighting net income, adjusted book value growth, strategic initiatives, and balance sheet stability Q1 2024 Financial Highlights Maiden Holdings reported a net income of $1.5 million, or $0.01 per share, for Q1 2024, with adjusted book value per common share increasing to $3.24, driven by strong investment results and the LPT/ADC Agreement | Metric | Q1 2024 | Note | | :--- | :--- | :--- | | Net Income | $1.5 million | or $0.01 per diluted common share | | Adjusted Non-GAAP Operating Earnings | $4.4 million | or $0.04 per diluted common share | | Book Value per Common Share | $2.48 | Stable | | Adjusted Book Value per Common Share | $3.24 | Increased | | Investment Results | $17.1 million | vs. $10.5 million in Q1 2023 | | Alternative Asset Portfolio Return | 3.4% | For Q1 2024 | - The deferred gain on the LPT/ADC Agreement increased to $75.9 million, with recoveries expected to begin before the end of 2024[20] - A significant deferred tax asset of $1.17 per common share is not yet recognized in book value, with approximately 45% of NOL carryforwards having no expiry date[20][21] Management Commentary and Strategy CEO Patrick J. Haveron emphasized that the increase in adjusted book value to $3.24 per share reflects the company's true economic value, driven by positive investment results and the LPT/ADC Agreement, with a focus on building consistent revenue and profits and realizing its significant deferred tax asset - The alternative asset portfolio produced a 3.4% return in Q1 2024, driven by $7.9 million in unrealized gains in private equity, which is well above the benchmark cost of debt capital[19] - The company is pursuing strategies to build consistent revenue and profits to ultimately recognize its $117.3 million deferred tax asset[19][21] - The renewal rights transaction with AmTrust is expected to reduce annual operating expenses by up to $6 million over the next 12 to 24 months[19][20] - During Q1 and into Q2, the company repurchased 590,995 common shares at an average price of $2.01 per share[21] Consolidated Financial Performance For Q1 2024, Maiden reported a net income of $1.5 million, a significant improvement from a net loss of $11.3 million in Q1 2023, primarily driven by higher investment gains, a lower underwriting loss, decreased G&A expenses, and favorable foreign exchange movements | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income (Loss) | $1.5 million | $(11.3) million | | Total Investment Income | $17.1 million | $10.5 million | | Underwriting Loss | $7.5 million | $8.3 million | | Corporate G&A Expenses | $5.3 million | $7.0 million | | Foreign Exchange & Other | $2.1 million (gain) | $(2.8) million (loss) | - Net premiums written increased to $8.3 million in Q1 2024 from $0.8 million in Q1 2023, mainly due to growth in the Diversified Reinsurance segment[22][23] - Adverse prior year loss development was $6.6 million in Q1 2024, compared to $3.7 million in Q1 2023, with a significant portion ($5.0 million in Q1 2024) expected to be recoverable under the LPT/ADC Agreement[24][31] Balance Sheet and Capital Management As of March 31, 2024, total assets were $1.5 billion and shareholders' equity was stable at $249.4 million, with adjusted shareholders' equity increasing to $325.3 million, and the company continuing its share repurchase program | Balance Sheet Metric | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $1.5 billion | $1.5 billion | | Shareholders' Equity | $249.4 million | $249.2 million | | Adjusted Shareholders' Equity | $325.3 million | $320.1 million | - The company has $70.4 million remaining for common share repurchases under its $100.0 million plan as of May 8, 2024[40] - The company holds net operating loss carryforwards (NOLs) of $334.0 million, resulting in a net U.S. deferred tax asset of $117.3 million, which is currently offset by a full valuation allowance[43] Strategic Transactions (Exhibit 99.4) This section details the strategic renewal rights transaction with AmTrust Nordic AB, part of a broader divestment plan to reduce annual operating expenses Renewal Rights Transaction for International Primary Business Maiden announced a renewal rights transaction with AmTrust Nordic AB for the majority of its primary business in its Swedish subsidiaries, as part of a broader plan to divest its International Insurance Services (IIS) businesses, which is expected to reduce group operating expenses by up to $6 million annually - Maiden entered into a renewal rights transaction with AmTrust Nordic AB for its primary business written through Swedish subsidiaries Maiden GF and Maiden LF[74] - This transaction is part of a larger strategy to divest the International Insurance Services (IIS) business platform, which was deemed not to be at a sufficient scale to achieve acceptable returns[76][77] - Upon complete divestment of the IIS subsidiaries, the company expects annual Group operating expenses to be reduced by up to $6 million[77] Financial Statements and Supplemental Data This section provides Maiden's consolidated financial statements, including balance sheets, income statements, and detailed segment performance for Q1 2024 Consolidated Balance Sheets As of March 31, 2024, Maiden's total assets were $1.47 billion, down from $1.52 billion at year-end 2023, with total liabilities decreasing and total equity remaining stable at approximately $249 million | (In thousands of U.S. dollars) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total investments | $586,426 | $559,640 | | Total assets | $1,468,971 | $1,518,934 | | Total liabilities | $1,219,611 | $1,269,774 | | Total Equity | $249,360 | $249,160 | | Book value per common share | $2.48 | $2.48 | Consolidated Statements of Income For the first quarter of 2024, Maiden reported total revenues of $28.9 million and a net income of $1.5 million, a significant improvement from a net loss in the same period of 2023, driven by higher net premiums earned and significant net realized and unrealized investment gains | (In thousands of U.S. dollars) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net premiums earned | $12,408 | $9,002 | | Net investment income | $7,700 | $9,545 | | Net realized and unrealized investment gains | $8,750 | $1,005 | | Total revenues | $28,904 | $19,493 | | Net loss and loss adjustment expenses | $11,625 | $9,815 | | Total expenses | $25,278 | $24,158 | | Net income (loss) | $1,459 | $(11,328) | | Diluted earnings (loss) per share | $0.01 | $(0.11) | Segment Information In Q1 2024, the Diversified Reinsurance segment reported an underwriting loss of $0.3 million on $9.0 million of net premiums earned, while the AmTrust Reinsurance segment had an underwriting loss of $7.3 million on $3.4 million of net premiums earned, heavily impacted by adverse loss development Q1 2024 Segment Underwriting Results (in thousands) | Segment | Net Premiums Earned | Underwriting Loss | | :--- | :--- | :--- | | Diversified Reinsurance | $8,991 | $(272) | | AmTrust Reinsurance | $3,417 | $(7,252) | | Total | $12,408 | $(7,524) | Q1 2023 Segment Underwriting Results (in thousands) | Segment | Net Premiums Earned | Underwriting Loss | | :--- | :--- | :--- | | Diversified Reinsurance | $7,471 | $(1,989) | | AmTrust Reinsurance | $1,531 | $(6,264) | | Total | $9,002 | $(8,253) | Non-GAAP Financial Measures This section explains Maiden's non-GAAP financial measures, providing reconciliations and definitions for key metrics like adjusted book value and operating earnings Reconciliation and Key Non-GAAP Metrics The company uses non-GAAP measures to provide insight into its performance, with the non-GAAP operating loss improving to $5.0 million in Q1 2024 and adjusted book value per share rising to $3.24, primarily due to the unamortized deferred gain from the LPT/ADC Agreement Reconciliation of Net Income to Non-GAAP Operating Loss (in thousands) | | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income (loss) | $1,459 | $(11,328) | | Adjustments (Investment gains, FX, etc.) | $(6,409) | $(1,573) | | Non-GAAP operating loss | $(4,950) | $(7,893) | Reconciliation to Adjusted Book Value per Share | | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Book value per common share | $2.48 | $2.48 | | Unamortized deferred gain on LPT/ADC Agreement | $0.76 | $0.71 | | Adjusted book value per common share | $3.24 | $3.19 | - The non-GAAP underwriting loss for Q1 2024 was $2.5 million, compared to a loss of $6.7 million in Q1 2023, after adjusting for adverse loss development covered by the LPT/ADC Agreement[37][58] Definitions of Non-GAAP Measures Maiden defines its non-GAAP measures to help investors understand performance, including Adjusted Book Value per Share, Non-GAAP Operating Earnings (Loss), and Underwriting Income (Loss), each tailored to reflect specific aspects of core operational and economic value - Adjusted Book Value per Common Share: Adds the unamortized deferred gain on the LPT/ADC Agreement to GAAP shareholders' equity to show the ultimate economic benefit[62] - Non-GAAP Operating Earnings (Loss): Excludes net realized/unrealized investment gains, foreign exchange movements, and the change in deferred gain on the LPT/ADC Agreement to allow for performance analysis similar to how management analyzes it[65] - Underwriting Income (Loss): Calculated as net premiums earned plus other insurance revenue less net loss & LAE, commissions, and direct G&A expenses to evaluate underwriting performance separately from investment results[64]