Enstar enters $2.7bn retro deal with Maiden

Maiden Reinsurance (Maiden Bermuda), a wholly-owned subsidiaries of Bermuda-based Maiden Holdings has entered a retrocession agreement with Enstar Group related to quota share reinsurance contracts with AmTrust Financial Services.

As part of the deal, Enstar will assume loss reserves of approximately $2.68 billion associated with quota share reinsurance contracts that Maiden Bermuda has with AmTrust Financial Services. The retrocession will apply to losses arising and/or claims made on or prior to June 30, 2018, and loss reserves assumed will be subject to adjustment for paid losses since such date.

Maiden Holdings and AmTrust had previously mutually agreed to extend the notice period of non-renewal for the current Master Agreement until Jan. 31, 2019.

Maiden’s CEO Lawrence Metz said: “Since late August, we have witnessed significant progress in the execution of the company’s strategic review and our announcement today with Enstar materially advances our work and significantly strengthens our financial position. During that time, we announced the sale of Maiden Reinsurance North America, to Enstar for net proceeds of $307.5 million subject to closing adjustments, executed a Renewal Rights Agreement with Transatlantic Reinsurance Company for net proceeds of $7.5 million and subject to further increases, and sold our US casualty facultative reinsurance team to Sompo Group. While there is still work to do, we believe that much has been accomplished, and we remain committed to completing our strategic review process and to taking the actions necessary to further enhance value to all our shareholders.”

Maiden has reported a significant increase in net losses for the third quarter of 2018 as adverse prior year loss development worsened in the AmTrust reinsurance segment.

The net loss attributable to Maiden common shareholders was $308.8 million in the third quarter compared with a net loss of $63.6 million in the third quarter of 2017.

Patrick Haveron, Maiden’s chief financial and operating officer said: “During the third quarter, we also took the opportunity to materially strengthen our carried loss reserves and position Maiden for profitable future results. Our announcement today with Enstar brings additional certainty and finality to the steps we have taken. Upon completion of all of the strategic transactions announced since August, Maiden’s capital position will be dramatically stronger. These measures will afford us significant flexibility to manage our capital to further increase shareholder value and combined with the significant and on-going expense reduction implemented in the third quarter, we anticipate an improved outlook for Maiden as 2018 heads to its final quarter and into 2019.”

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