Maiden Holdings posts $20.8m net loss in Q4

Maiden Holdings Ltd., has posted it’s results for the fourth quarter of 2023, which includes a net loss of $20.8 million, compared to a net income of $36.2 million from the prior year period.

The firm posted lower underwriting loss of $21.1 million in the fourth quarter, compared to an underwriting loss of $35.5 million in the same period in 2022.

Maiden Holdings stated that this quarter’s underwriting loss includes adverse prior year loss development of $22.2 million in Q423, compared to adverse prior year loss development of $38.1 million during the same period in 2022.

Moreover, net premiums written (NPW) for Q4 sat at $6.9 million, compared to $7.0 million for the prior year quarter.

At the same time, net premiums earned decreased by $2.5 million in the quarter, compared to the same period in 2022.

The firm noted that this decrease was due to lower earned premiums for Specialty Risk business in the AmTrust Reinsurance segment.

Net investment income also decreased by $0.9 million or 10.1% for Q4, compared to the same period in 202, primarily due to higher investments expenses in the fourth quarter of 2023.

Moving on to the full-year 2023, Maiden Holdings posted a net loss of $38.6 million, compared to a $55.4 million net income from 2022.

The company also posted lower underwriting loss of $49.5 million for FY23, compared to underwriting loss of $54.9 million for the same period in 2022.

Additionally, NPW for 2023 sat at $23.2 million, compared to $5.1 million from 2022. Maiden Holdings stated that this was due to significant negative written premiums for the AmTrust Cession Adjustments in 2022.

Net premiums earned climbed $6.2 million for the year ended December 31, 2023 compared to 2022 largely due to negative earned premiums of $15.8 million from AmTrust Cession Adjustments for the year ended December 31, 2022.

Further, net investment income increased by $7.3 million or 24.3% for FY23, compared to 2022.

Patrick J. Haveron, Maiden’s Chief Executive Officer commented: “Maiden’s adjusted book value increased to $3.19 in the fourth quarter as the combined effects of continued increases in our investment results and the stabilizing effects of our LPT/ADC Agreement again supported our adjusted book value. We believe our adjusted book value ultimately represents Maiden’s true economic value.

“The continued improvement in our investment performance was principally the result of higher net investment gains on our alternative asset portfolio. During 2023, our alternative asset portfolio produced a return of 8.0%, now above our benchmark cost of debt capital. Our alternative asset portfolio continues to make contributions as we recognized gains from the sale of a venture capital investment as well as continuing income on several of our equity method investments during the fourth quarter as well. As these results increasingly demonstrate, we believe our alternative investment portfolio remains well positioned to achieve its targeted longer-term returns.”

He continued: “While our GAAP income statement continues to be impacted by adverse loss development, it’s important to note that much of this volatility is expected to be temporary as significant shares of the loss development reported are covered by our LPT/ADC Agreement with Cavello. During the fourth quarter and year ended December 31, 2023, nearly 65% and 67% of the total prior year loss development reported in those periods are expected to be covered by the LPT/ADC Agreement and as a result, nearly 70% of our fourth quarter and 2023 reported net loss is expected to ultimately return over time to Maiden as future GAAP income, subject to certain thresholds in the LPT/ADC Agreement and the applicable GAAP accounting rules. We currently expect to meet the thresholds to begin recoveries under the LPT/ADC Agreement late in 2024.

“As the benefits of the LPT/ADC Agreement begin to be amortized though our GAAP income statement, it reinforces why adjusted book value, which includes the $70.9 million deferred gain presently on the balance sheet, is a key metric in evaluating Maiden’s value. It’s also worth noting that under the provisions of the LPT/ADC Agreement, we still have an additional $84.1 million in available limit to absorb subject loss development should it occur in the future.”

Adding: “We continue to actively evaluate our strategies as we look to build a more consistent base of revenue and profits while leveraging our experience in insurance and reinsurance markets, including through fee-based and distribution channels. Pursuit of these paths should enable us to ultimately recognize and realize the significant deferred tax asset we have. As we evaluate these options, we’ve adopted a more measured pace of deployment of new alternative investment opportunities, and we are adjusting our investment focus accordingly, by seeking income producing, lower risk assets at more attractive yields.

“As noted, our consolidated balance sheet at December 31, 2023 does not reflect $1.19 in net U.S. deferred tax assets which still maintains a full valuation allowance. It’s important to note that of $337.4 million in net operating loss carryforwards that we hold, approximately $151.2 million or 44.8% of these loss carryforwards have no expiry date. Despite the recent adverse reserve development which has delayed the timing related to ultimately recognizing this asset, we believe the factors that will enable us to ultimately recognize these tax assets in the future continues to accumulate, particularly with our asset portfolio producing more current income.”

Haveron concluded: “Finally, during the fourth quarter, we continued our long-term capital management strategy and
repurchased 619,470 common shares. We expect to continue a disciplined and prudent approach to share repurchases as part of this program, particularly in periods of share weakness relative to our book value.”

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