Maiden says expense cuts to continue as profits bounce back amid signs of recovery

Re/insurer Maiden Holdings has  continued its return to profitability in the third quarter of 2020, driven by investment gains and reduced operating expenses. The company also unveiled a tender offer to purchase up to $100 million of its preference share.

Lawrence Metz, Maiden’s president and co-chief executive officer attributed the return to profitability to increasing stability in its loss experience, further supported by "immaterial" impacts from the COVID-19 pandemic. Metz noted that the company will continue to lower its operating expenses in light of the ongoing improvements.

Maiden reported a net profit of $2.2 million in Q3, compared with a net loss of $58.3 million in the third quarter of 2019. In the first nine months of 2020, it made a net profit of $32.2 million, compared with a loss of $110.4 million for the first nine months of 2019.

Gross written premiums were $3.5 million for Q3 2020, compared with $35.8 million for the same period in 2019. For the first nine months of 2020 Maiden generated gross written premiums of $20.2 million, compared to negative 523.2 million for the first nine months of 2019.

The re/insurer does not report its combined ratio, arguing that “as the run-off of its reinsurance portfolios progresses, such ratios are increasingly not meaningful”.

Metz commented: "On a net basis we reported net favorable loss development for the quarter, and these ongoing improvements have enabled us to continue to extend our strategic vision in both the asset and capital management pillars previously articulated."

Patrick Haveron, Maiden’s co-chief executive officer and chief financial officer, added: "Our book value continued to increase as we extended our profitable 2020 during the third quarter. Our active portfolio management enabled us to capture realized investment gains in conjunction with expected settlement of our run-off insurance liabilities. While there is no guarantee that recent loss development trends will persist, with multiple successive quarters of stabilization, we are encouraged by them, although a prudent assessment dictates that the run-off portfolio still requires additional maturity to fully emerge.

Maiden said it will commence a cash tender offer via its subsidiary Maiden Reinsurance to purchase preference shares - 8.250 percent non-cumulative series A, 7.125 percent non-cumulative series C and 6.700 percent non-cumulative series D - for an aggregate purchase price of up to $100 million at a offer price of $10.50 per share.

Metz said the tender offer “will offer those shareholders a liquidity opportunity while enhancing Maiden's value to common shareholders. Over the long-term, we believe this blended approach will enable Maiden to build value while retaining options to participate in the re/insurance marketplace, though our present assessment remains that active re/insurance underwriting is likely to present more limited opportunities.”