Maiden Holdings has reported a $58.3 million net loss for the third quarter, an improvement from the $308.8 million hit in the prior year quarter.
Maiden says this improvement was driven in part by a reduced underwriting loss from lower adverse prior year loss development incurred, primarily within AmTrust Reinsurance segment, of $63.2 million compared to $212.5 million during the same period in 2018.
Overall, Maiden has posted an underwriting loss of $80.3 million compared to $251.2 million in the same period in 2018.
Maiden’s position has also been bolstered by a lower net loss from discontinued operations of $0.3 million, compared $59.8 million for the same period in 2018 as the prior year period.
This included the impairment of goodwill and intangible assets of $74.2 million that was recognised due to the sale of Maiden US, partly offset by the $7.5 million in proceeds from the sale of the renewal rights of certain treaty reinsurance business of Maiden US pursuant to the Renewal Rights Agreement entered into with Transatlantic Reinsurance Company.
Combined ratio was 190.8% in the third quarter 2019 compared to 150.8% in the same period in 2018. Non-GAAP combined ratio for the quarter was 81.3%
Non-GAAP operating earnings were $39.8 million compared to a non-GAAP operating loss of $240.9 million in Q3 2018.
Gross premiums written in Q3 were $35.8 million, compared to $484.5 million in the prior year quarter, primarily due to the termination of both quota share contracts in the AmTrust Reinsurance segment and the return of unearned premiums on certain lines covered by the partial termination amendment with AmTrust.
Historically, the firm’s AmTrust reinsurance business performed at a favourable combined ratio, but the impact of adverse development of prior years’ loss reserves during 2017 had hit the company.
The amendment enabled Maiden to exit specific lines of business in the quota share agreement, including Small Commercial Business and U.S Extended Warranty and Specialty Risk, as of 31 December 2018.
Net premiums earned for the quarter were $94.9 million compared to $520.1 million in the Q3 2018 due to the combined impact of the terminated quota share contracts within the AmTrust Reinsurance segment, non-renewals in Maiden Bermuda’s European Capital Solutions business and a reduction in the German Auto programs produced by the Company’s IIS unit within its Diversified Reinsurance segment.
“While our reported results continue to show the impact of additional reserve development, we are pleased that non-GAAP operating results have now turned positive during the third quarter, and the benefits of the numerous steps we have taken to set Maiden on a course to recovery are emerging,” said Lawrence F. Metz, Maiden’s President and Chief Executive Officer.
“While more work remains, we believe these are all positive steps for Maiden.”
Patrick J. Haveron, Maiden’s Chief Financial Officer and Chief Operating Officer added, “Our recently completed LPT/ ADC Agreement with Enstar is having the tempering effect it was designed to have as we continue to de-risk our balance sheet and transition away from the reserve volatility of the last two years.
“Our third quarter reported results reflect the continuing challenges in certain lines of business such as General Liability and Commercial Auto Liability, the latter which has plagued the industry for an extended period. While this adverse development is being offset in part by continuing favorable development in Workers’ Compensation, we continue to closely monitor and respond to continued observed volatility and unfavorable emergence in those liability lines.
“Despite this, the cumulative impact of our strategic efforts is highlighted in our adjusted book value per share, and tracks with the continuing strengthening of our solvency ratios, which now exceed target levels at both the group and operating company level. We look for further improvements in these ratios as we close 2019.”
