Losses shrink at Maiden ahead of re-domestication to Vermont

Losses reduced at Bermuda-based re/insurer Maiden Holdings in the financial year 2019, although the fourth quarter results were impacted by the run-off of its previously  terminated AmTrust reinsurance contracts and a tempering of the adverse prior year loss development.

Maiden CEO Lawrence Metz announced that the company has completed its re-domestication to the State of Vermont on March 16. Maiden Reinsurance will now be subject to the statutes and regulations of Vermont in the ordinary course of business. The re-domestication does not apply to the parent holding company, which remains a Bermuda-based holding company. Metz hopes that the re-domestication will strengthen the company’s capital position and solvency ratios.

Maiden’s chief financial officer and chief operating officer Patrick Haveron said that the company's strategic focus in 2020 will be on "improving risk-adjusted shareholder returns, whether via asset and capital management or active reinsurance underwriting, or a combination of both".

The re/insurer posted a net loss of $131.9 million for the full year 2019, an improvement on the  net loss of $570.3 million reported in 2018. For the fourth quarter of 2019, net loss attributable to Maiden common shareholders were $21.5 million.

Gross premiums written were $528.6 million for the year, down from $2.02 billion in 2018 as Maiden terminated quota share contracts in the AmTrust Reinsurance segment, and returned unearned premiums on certain lines covered by a partial termination amendment with AmTrust Financial Services, effective January 1, 2019.

The company discontinued the presentation of certain non-GAAP measures such as combined ratio as it believes that as the run-off of its reinsurance portfolios progresses, "such ratios are not meaningful and of less value".

Commenting on the results, Metz said: “The completion of Maiden Reinsurance’s re-domestication to Vermont represents a major strategic step for us as it will continue to appreciably strengthen our solvency ratios and enable us to continue to evaluate our operating strategy during 2020 while leveraging the significant assets and capital we retain.

"We believe that we are positioned to make further progress for our shareholders during 2020. Further, our operating results continue to improve, although the fourth quarter results were impacted by slightly higher non-recurring expenses and it remains a principal focus to lower the run rate of all expenses.”

Haveron commented: “The fourth quarter results continue to reflect the run-off of our previously terminated AmTrust reinsurance contracts and a tempering of the adverse prior year loss development which we experienced in recent years. We believe the LPT/ADC Agreement with Enstar is having the desired effect and will continue to provide adequate limit if further adverse reserve development emerges. While our adjusted book value per share was modestly reduced by fourth quarter results, this non-GAAP measure reflects the ultimate economic value that has been created with the measures we have implemented over the last 18 months."

He added: "Our present assessment of the reinsurance marketplace along with our current operating profile is that the risk-adjusted returns produced by other strategic initiatives may create greater shareholder value versus active reinsurance underwriting.”