Maiden expects to take $150m charge in fourth quarter

Maiden Holdings, which has announced it plans to merge with US specialty programme insurer Kestrel, said it will take up to $150 million in charges in the fourth quarter related to its reserves. 

The Bermuda-based re/insurer said in a statement that a previously announced review of its reserves was continuing, but the estimate on charges will include approximately $25 million of charges along with adverse development of loss reserves. 

These reserves are separate from the loss portfolio transfer agreed with Bermuda-based Enstar last year. 

The company, led by chief executive officer Patrick Haveron (pictured), added that its wholly owned subsidiary, Maiden Holdings North America, holds net operating loss carryforwards totalling $345.6 million. Approximately $159.4 million or 46.1% of the Company's NOL carryforwards as of that date have no expiry date under the relevant US tax law. 

“These NOLs, in combination with additional net deferred tax assets primarily related to our insurance liabilities, result in a net US deferred tax asset (before valuation allowance) of $126 million as of September 30, 2024,” the company said. 

“The net deferred tax assets are not presently recognized on the Company’s balance sheet as a full valuation allowance is carried against them. As a result of anticipated charges announced herein, the company believes that its unrecognised net deferred tax asset will increase in the fourth quarter 2024. There is no assurance as to when the tax attributes may be utilised by the combined company or if they will ever be utilised.”

It added that as of September 30, 2024, the Company’s book value per common share was $2.09 and its adjusted book value per common share was $2.98. 

“Adjusted book value per common share includes the unamortized deferred gain on retroactive reinsurance arising from the Enstar LPT/ADC Agreement, which reflects the ultimate economic benefit to the Company of such agreement, which will begin being recognised into shareholders’ equity commencing in the fourth quarter 2024,” the company said. 

Maiden announced plans this week to merge with US specialty programme insurer Kestrel to form a new Bermuda-based publicly listed re/insurer which will be called Kestrel Group. 

The merger is expected to close in the first half of the year.

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