Maiden loss increases to $10m
Bermuda-based Maiden Holdings' second quarter loss widened to $10 million in the second quarter, compared to a $2.9 million loss in the same period in 2023.
The increased loss was due to adverse prior period development of $6.8 million compared to $4.5 million in the same period in 2023, and an underwriting loss of $3 million, an improvement from a $4.8 million loss in 2023.
The company also saw a decreased investment profit of $9.9 million from $16.5 million in 2023.
Maiden also said its deferred gain on the company's loss portfolio transfer with Cavello Bay Reinsurance Limited increased by $2.3 million to $78.2 million due to adverse prior year loss development ("PPD"), which is expected to be recoverable over time as future GAAP income with $76.8 million remaining in additional limit.
"Despite the contributions of continuing positive investment results which moderated somewhat during the second quarter, and the stabilizing effects of our LPT/ADC Agreement, adjusted book value, which we believe represents Maiden's true economic value, fell slightly during the quarter," said Maiden chief executive officer Patrick Haveron.
Book value per share decreased 4% to $2.38 and adjusted book value per share decreased 0.6% to $2.17.
"Our active pursuit to strategically build a more consistent base of revenue and profits through fee-based income and distribution channels in the insurance and reinsurance industry remains a high priority for Maiden. Leveraging our experience in insurance and reinsurance markets, these paths should further enable us to ultimately recognise and realise the significant deferred tax asset we have. As a result, we have not made any new commitments to alternative investment opportunities."
He added: "While our GAAP income statement continues to be impacted by adverse loss development, it’s important to reinforce the point that much of this volatility is expected to be temporary as a significant portion is expected to be covered by our LPT/ADC Agreement with Cavello. Approximately $5.6 million or 83% and $10.6 million or 80% of the total reported adverse PPD for the three and six months ended June 30, 2024, respectively, is expected to be covered by the LPT/ADC Agreement and is expected to ultimately return over time to Maiden as future GAAP income, subject to certain thresholds in the LPT/ADC Agreement and the applicable GAAP accounting rules. Our expectation that we will meet the thresholds to begin recoveries under the LPT/ADC Agreement in the fourth quarter of 2024 remains unchanged."
He said Maiden had a $78.2 million deferred gain on its balance sheet and a further $76.8 million in available limit subject to further loss development.
"As noted, Maiden's consolidated balance sheet at June 30, 2024 does not reflect $119.2 million or $1.19 per common share in net U.S. deferred tax assets which still maintains a full valuation allowance," he said. "Of the $338.2 million in net operating loss carryforwards that we hold, approximately $152 million or 44.9% of these loss carryforwards have no expiry date.
"Despite the recent adverse reserve development which has delayed the timing related to ultimately recognizing this asset, we believe the factors that will enable us to ultimately recognise these tax assets in the future, including our current strategic initiatives, continues to accumulate, particularly with our asset portfolio producing more current income."
Haveron said the company continued its capital management strategy and repurchased 747,561 common shares at an average price per share of $2.13.
Maiden had net premiums earned of $12 million compared to $11 million a year earlier, and total revenues were $20.5 million. Net losses rose to $13.9 million from $11.5 million, while total expenses were $26.7 million compared to $23.3 million.
The company also paid interest expenses of $4.8 million.
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