Jonathan Kent, Business Editor

Maiden Holdings Ltd shares plunged by nearly 10 per cent yesterday after the reinsurer said it was taking a $120 million charge to boost reserves in its commercial auto division.

The Bermudian company, which has offices at 131 Front Street, is due to report fourth-quarter and full-year earnings on February 27. Despite the charge Maiden said in a statement that it expected to report “a modest level of operating and net income for the full year”.

The company’s shares fell by $1.85, or 9.8 per cent, to close on $17 in New York.

Art Raschbaum, Maiden’s chief executive officer, said: “For some time, Maiden has experienced adverse development across its historical commercial auto portfolio, primarily emanating from the 2011-2014 underwriting years.

“Throughout the industry, commercial auto loss cost severity trends have been rising and we believe it is prudent to address this adverse trend by strengthening the company’s loss reserve position.

“We believe we have taken appropriate steps to respond to adverse development and believe this reserve strengthening will help to stabilise forward performance and profitability.”

Maiden added that it would have generated profitable underwriting results for the year, absent the reserve strengthening measures.

The company said it expected no change to be made to its quarterly dividend policy.

According to company data, the commercial auto business generated 11 per cent of Maiden’s gross premiums in 2015.