Capital management is key for Maiden Holdings
Bermuda-based Maiden Holdings Ltd has reported second quarter net income available to common shareholders of $26.8 million, or 31 cents per diluted common share, compared to net income of $9.2 million, or 11 cents per diluted common share, in the second quarter of 2020.
Non-GAAP operating earnings were $13.9 million or 16 cents per diluted common share for the second quarter compared to non-GAAP operating earnings of $1.2 million or one cent per diluted common share for the same period in 2020.
Maiden's book value per common share was $2.58 at June 30, compared to $1.57 at December 31, 2020.
On a non-GAAP basis, adjusted for the unamortised deferred gain on retroactive reinsurance recognised as of June 30 of $54.3 million, the company's adjusted book value per common share was $3.21 at June 30.
Patrick Haveron and Lawrence Metz, Maiden’s co-chief executive officers, said: "Our sixth consecutive quarter of operating profitability again featured modest favourable loss development, lower operating expenses and additional returns from our expanded investment activities.
“We have added $1.38 in book value per common share since commencing our capital management initiatives in the fourth quarter of 2020 and we now own majorities of each issue of our preference shares.
“Genesis (Legacy Solutions, the company’s legacy specialist formed in December 2020) is completing its first significant transaction consistent with its business plan and we believe this platform will be a productive channel for Maiden to create further shareholder value over the long-term."
They added: "The second quarter saw us continue to make productive use of our capital management strategy and create additional value for our shareholders and our board believes we have ample authorisation to continue to prudently employ this strategy.
“We are continuing to take advantage of attractive investment opportunities with outstanding partners across a range of asset classes, including private equity and credit, real estate and venture capital. We believe the returns produced by these investments will exceed our cost of capital, in particular our cost of debt capital, and we believe this approach will build long-term shareholder value via risk-adjusted investment income and gains to enable Maiden to utilise its potentially significant tax assets.
“While it may be an extended period of time before we can determine if the actual returns will achieve this objective, we are confident that this will be a fruitful path forward for us. The run-off of our insurance liabilities remains consistent with our expectations, and we continue to make progress in managing expenses down to an appropriate level for the scope of our ongoing operations."
Net premiums written for the three months ended June 30 were $3.3 million compared to net premiums written of $4.1 million for the second quarter of 2020.
Net premiums earned decreased by $8 million or 37.5 per cent for the three months ended June 30, compared to the second quarter of 2020 due to the combined impact of the terminated quota share contracts within the AmTrust Reinsurance segment and the Diversified Reinsurance segment due to run-off of the German Auto programmes produced by Maiden’s IIS unit.
Net investment income decreased by $7 million or 49.1 per cent for the three months ended June 30, compared to the second quarter of 2020, primarily due to the decline in average invested assets (which excludes equity method investments) of 22.6 per cent in those same periods.
Maiden said the decline in invested assets is largely due to the cessation of active reinsurance underwriting since 2018 which is responsible for significant negative operating cash flows as the company continues to run-off its existing reinsurance liabilities.
Total general and administrative expenses decreased by $400,000, or 3.8 per cent for the three months ended June 30, compared to the second quarter of 2020 due to lower staff related costs.
The company estimates that it incurred certain operating expenses of $2.2 million during the three months ended June 30, which it believes will not recur in future periods.
Maiden said these costs include fees and write-offs related to the termination of its existing office lease in Bermuda, salary and related costs associated with headcount reductions and certain regulatory costs in its international operations.
Maiden Holdings is a Bermuda-based holding company formed in 2007. Maiden said it creates shareholder value by actively managing and allocating its assets and capital, including through ownership and management of businesses and assets mostly in the insurance and related financial services industries where it can leverage its deep knowledge of those markets. Maiden also provides a full range of legacy services to small insurance companies.