Bermuda-based Maiden Holdings has reported net income of $26.8 million for the second quarter of 2021, up from $9.2 million for the same period last year.
This was partly due to a return to underwriting profitability, as the company moved from an underwriting loss of $17.0 million in Q2 2020 to a profit of $8.5 million this year.
Underwriting was helped by favourable prior year loss development of $12.8 million, compared to $0.1 million previously, primarily related to the quota share reinsurance agreements with AmTrust Financial Services, Inc., or the AmTrust Reinsurance segment.
Maiden also benefitted from a repurchase of preference shares of $18.7 million for the three-month period.
Net premiums written for Q2 were $3.3 million, down from $4.1 million previously, although net premiums written in the Diversified Reinsurance segment decreased by $3.5 million or 41.3% due to return of unearned premiums written in a German Auto quota share reinsurance contract which went into run-off on January 1, 2021.
Net investment income decreased by $7.0 million or 49.1%, primarily due to the decline in average invested assets of 22.6% caused by the cessation of active reinsurance underwriting since 2018.
“Our sixth consecutive quarter of operating profitability again featured modest favorable loss development, lower operating expenses and additional returns from our expanded investment activities,” said Patrick J. Haveron and Lawrence F. Metz, Maiden’s Co-Chief Executive Officers.
“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 authorization to continue to prudently employ this strategy,” they continued.
“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 utilize 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.
