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Item 2. Management’s Discussion and Analysis

2019-11-12 compared with 2019-08-09 · 550 added, 371 removed, 493 unchanged (65% of the section changed)

15 unchanged sentences

We operate internationally providing branded auto and credit life insurance products through insurer partners to retail clients in the EU and other global markets through Maiden Global Holdings, Ltd.

("Maiden Global") and its subsidiaries.

("Maiden Global").

These products also produce reinsurance programs which are underwritten by Maiden Reinsurance Ltd.

("Maiden Bermuda").

Certain international credit life business is written on a primary basis by Maiden Life Försäkrings AB ("Maiden LF").

We are also presently running off the liabilities associated with AmTrust Financial Services, Inc.

Certain international credit life business is written on a primary basis by Maiden Life Försäkrings AB ("Maiden LF") and general insurance business is written on a primary basis by Maiden General Försäkrings AB ("Maiden GF").

We are also running off the liabilities associated with AmTrust Financial Services, Inc.

("AmTrust") contracts we terminated in early 2019 as discussed below.

We have recently entered into a retroactive reinsurance agreement and a commutation agreement that reduces our exposure to and limits the potential volatility related to these AmTrust liabilities, which are discussed in "Note 13.

Subsequent Events" of the Notes to Condensed Consolidated Financial Statements included in Part I Item 1.

We have recently entered into a retroactive reinsurance agreement and a commutation agreement that further reduces our exposure to and limits the potential volatility related to these AmTrust liabilities, which are discussed in "Note 1.

Basis of Presentation" of the Notes to Condensed Consolidated Financial Statements included in Part I Item 1.

"Financial Information".

4 unchanged sentences

("Maiden US"), the Partial Termination Amendment (as defined below) and the termination of both of our quota share contracts with AmTrust have materially reduced our gross and net premiums written in 2019.

We have significantly reduced our operating expenses and continue to review the steps necessary to reduce these costs further commensurate with the reduction in revenues.

We have significantly reduced our operating expenses and continue to review the steps necessary to reduce these costs further.

Our business consists of two reportable segments:

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Sale Agreement") with Enstar Holdings U.S.

LLC ("Enstar Holdings"), pursuant to which Maiden Holdings North America, Ltd.

LLC ("Enstar Holdings"), pursuant to which our wholly owned subsidiary Maiden Holdings North America, Ltd.

("Maiden NA") sold, and Enstar Holdings purchased, all of the outstanding shares of common stock of Maiden US for gross consideration of $286.4 million .

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The excess of estimated unearned premium, net of applicable ceding commission and brokerage over the actual amount of approximately $43.2 million was returned by AII to Maiden Bermuda during the second quarter of 2019.

On January 30, 2019, Maiden Bermuda and AmTrust agreed to terminate on a run-off basis (i) the AmTrust Quota Share;

On January 30, 2019, Maiden Bermuda and AmTrust agreed to terminate on a run-off basis (i) the remaining business subject to the AmTrust Quota Share;

and (ii) the European hospital liability quota share reinsurance contract (“European Hospital Liability Quota Share”) with AmTrust’s wholly owned subsidiaries AmTrust Europe Limited ("AEL") and AmTrust International Underwriters DAC ("AIU DAC") effective January 1, 2019.

Effective on July 31, 2019, Maiden Bermuda entered into the loss portfolio and adverse development cover agreement ("LPT/ADC Agreement") with Enstar pursuant to which Cavello, Enstar's Bermuda reinsurance affiliate will assume liabilities for loss reserves as of December 31, 2018 associated with the AmTrust Quota Share in excess of a $2.2 billion retention up to $600.0 million in exchange for a retrocession premium of $445.0 million .

Effective as of July 31, 2019, Maiden Bermuda and AII entered into a Commutation and Release Agreement which provided for AII to assume all reserves ceded by AII to Maiden Bermuda with respect to its proportional 40% share of the ultimate net loss under the AmTrust Quota Share related to:

(a) all losses incurred in Accident Year 2017 and Accident Year 2018 under California workers' compensation policies issued by AII and as defined in the AmTrust Quota Share ("Commuted California Business");

and (b) all losses incurred in Accident Year 2018 under New York workers' compensation policies issued by AII ("Commuted New York Business" and together with the Commuted California Business ("Commuted Business")) in exchange for the release and full discharge of Maiden Bermuda of all of its obligations to AII with respect to the Commuted Business.

The Commuted Business does not include any business classified by AII as Specialty Program or Specialty Risk business.

AII and Maiden Bermuda agreed that the Commuted Business shall be discharged by Maiden Bermuda's transfer of cash and invested assets in the amount of $312.8 million ("Commutation Payment") which is the sum of the net ceded reserves in the amount of $330.7 million with respect to the Commuted Business as of December 31, 2018 less payments in the amount of $17.9 million made by Maiden Bermuda with respect to the Commuted Business from January 1, 2019 through July 31, 2019.

Settlement of the Commutation Payment occurred on August 12, 2019 and Maiden Bermuda paid AII approximately $6.3 million in interest related to the Commutation Payment premium, calculated at the rate of 3.30% per annum from January 1, 2019 through August 12, 2019 .

Maiden Bermuda received a no objection letter from the Bermuda Monetary Authority ("BMA") regarding the Commutation and Release Agreement.

AII and Maiden Bermuda also agreed that, as of July 31, 2019, the AmTrust Quota Share shall be deemed amended as applicable so that the Commuted Business is no longer included as part of the Covered Business under the AmTrust Quota Share.

Effective on July 31, 2019, Maiden Bermuda entered into the loss portfolio and adverse development cover agreement ("LPT/ADC Agreement") with Enstar Group Limited ("Enstar") pursuant to which Cavello assumed liabilities for loss reserves as of December 31, 2018 associated with the AmTrust Quota Share in excess of a $2.2 billion retention, up to $600.0 million in exchange for a retrocession premium of $445.0 million .

The $2.2 billion retention will be subject to adjustment for paid losses subsequent to December 31, 2018 .

The LPT/ADC Agreement will provide Maiden Bermuda with $155.0 million in adverse development cover over its carried AmTrust Quota Share loss reserves at December 31, 2018 .

The LPT/ADC Agreement meets the criteria for risk transfer and therefore will be accounted for as retroactive reinsurance.

Cumulative ceded losses exceeding $445.0 million would result in a deferred gain which would be recognized over the settlement period in proportion to cumulative losses collected over the estimated ultimate reinsurance recoverable.

The LPT/ADC Agreement provides Maiden Bermuda with $155.0 million in adverse development cover over its carried AmTrust Quota Share loss reserves at December 31, 2018 .

The LPT/ADC Agreement meets the criteria for risk transfer and therefore has been accounted for as retroactive reinsurance.

Cumulative ceded losses exceeding $445.0 million would result in a deferred gain which will be recognized over the settlement period in proportion to cumulative losses collected over the estimated ultimate reinsurance recoverable.

Consequently, cumulative adverse development subsequent to December 31, 2018 may result in significant losses from operations until periods when the deferred gain is recognized as a benefit to earnings.

At September 30, 2019 , the deferred gain liability recognized for retroactive reinsurance under the LPT/ADC Agreement was approximately $104.5 million .

During the fourth quarter of 2019, our principal operating subsidiary, Maiden Bermuda, submitted the necessary filings to discontinue from Bermuda and to apply to be licensed and re-domesticate to the State of Vermont in the United States.

Filings were made with the Department of Financial Regulation in Vermont as well as with the BMA to provide notice of the Company's intent to re-domicile from Bermuda.

While the Company is presently targeting a completion of the re-domestication process on or about January 1, 2020, both the licensing in Vermont and the discontinuation process in Bermuda are subject to approval by those respective regulators.

We have determined that re-domesticating the Company to Vermont will enable us to better align our operations, capital and resources with our liabilities, which originate mostly in the United States, resulting in a more efficient structure.The proposed re-domestication, in combination with the Strategic Review previously taken and done in close consultation with the BMA to de-risk the Company’s balance sheet, is expected to continue to strengthen the Company’s capital position and solvency ratios.

The planned re-domestication does not apply to the parent holding company which will remain a Bermuda-based holding company.

Securities issued by Maiden Holdings will not be affected by the planned re-domestication of Maiden Bermuda.

Please refer to " Management's Discussion and Analysis of Financial Condition and Results of Operations" section included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2018 for further information.

Three and Six Months Ended June 30, 2019 and 2018 Financial Highlights

For the Three Months Ended June 30,

Three and Nine Months Ended September 30, 2019 and 2018 Financial Highlights

For the Three Months Ended September 30,

Summary Consolidated Statement of Income Data:

($ in thousands except per share data)

Net income (loss) from continuing operations

(Loss) income from discontinued operations, net of income tax

Net (loss) income

Net loss from continuing operations

Loss from discontinued operations, net of income tax

Net loss attributable to Maiden common shareholders

Non-GAAP operating loss (1)

Basic and diluted loss per common share (9) :

Basic and diluted (loss) earnings per common share (9) :

Net loss attributable to Maiden common shareholders (2)(9)

Non-GAAP operating loss attributable to Maiden common shareholders (1)(9)

Dividends per common share

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Combined ratio (4)

Non-GAAP measures:

Non-GAAP operating earnings (loss) (1)

Basic and diluted (loss) earnings per common share (9) :

Non-GAAP operating earnings (loss) attributable to Maiden common shareholders (1)(9)

Non-GAAP Combined Ratio (11)

Annualized non-GAAP operating return on average common shareholders' equity (1)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Summary Consolidated Statement of Income Data:

($ in thousands except per share data)

Net (loss) income from continuing operations

(Loss) income from discontinued operations, net of income tax

Net (loss) income

Net (loss) income attributable to Maiden common shareholders

Non-GAAP operating loss (1)

Basic and diluted (loss) earnings per common share (9) :

Net (loss) income attributable to Maiden common shareholders (2)(9)

Non-GAAP operating loss attributable to Maiden common shareholders (1)

Net loss from continuing operations

Loss from discontinued operations, net of income tax

Net loss attributable to Maiden common shareholders

Basic and diluted loss per common share (9) :

Net loss attributable to Maiden common shareholders (2)(9)

Dividends per common share

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Combined ratio (4)

Non-GAAP measures:

Non-GAAP operating loss (1)

Basic and diluted loss per common share (9) :

Non-GAAP operating loss attributable to Maiden common shareholders (1)

Non-GAAP Combined Ratio (11)

Annualized non-GAAP operating return on average common shareholders' equity (1)

June 30, 2019

September 30, 2019

December 31, 2018

8 unchanged sentences

Ratio of debt to total capital resources (13)

Book Value calculations:

Book value per common share (7)

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Diluted book value per common share (8)

Non-GAAP operating loss, non-GAAP operating loss per common share, non-GAAP operating return on average common equity and underwriting loss are non-GAAP financial measures.

See " Key Financial Measures " for additional information and a reconciliation to the nearest U.S.

GAAP financial measure net (loss) income.

Non-GAAP measures:

Adjusted book value per common share (10)

Adjusted Maiden shareholders' equity (12)

Adjusted total capital resources (12)

Ratio of debt to adjusted total capital resources (14)

Non-GAAP operating earnings (loss), non-GAAP operating earnings (loss) per common share, and annualized non-GAAP operating return on average common equity and underwriting loss are non-GAAP financial measures.

See " Key Financial Measures " for additional information.

Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 12.

Earnings per Common Share " for the calculation of basic and diluted (loss) earnings per common share.

Earnings per Common Share " for the calculation of basic and diluted loss per common share.

Underwriting loss is a non-GAAP measure and is calculated as net premiums earned plus other insurance revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities.

Calculated by adding together the net loss and LAE ratio and the expense ratio.

See " Key Financial Measures " for additional information.

Combined ratio is calculated by adding together the net loss and LAE ratio and the expense ratio.

Total investments and cash and cash equivalents includes both restricted and unrestricted.

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See " Key Financial Measures " for additional information.

Book value per common share is calculated using Maiden common shareholders’ equity (shareholders' equity excluding the aggregate liquidation value of our preference shares) divided by the number of common shares outstanding.

Diluted book value per common share is calculated by dividing Maiden common shareholders' equity, adjusted for assumed proceeds from the exercise of dilutive options, by the number of outstanding common shares plus dilutive options and restricted share units (assuming exercise of all dilutive share based awards).

See " Key Financial Measures " for additional information.

During a period of loss, the basic weighted average common shares outstanding is used in the denominator of the diluted loss per common share computation as the effect of including potential dilutive shares would be anti-dilutive.

Adjusted book value per common share is a non-GAAP measure that is calculated using Maiden common shareholders' equity, adjusted for unamortized deferred gain on retroactive reinsurance, divided by the number of common shares outstanding.

See " Key Financial Measures " for additional information.

Non-GAAP combined ratio is calculated by excluding the impact of the unamortized deferred gain liability on retroactive reinsurance from the net loss and LAE ratio, and then adding together the expense ratio and the net adjusted loss and LAE ratio.

See " Key Financial Measures " for additional information.

Adjusted Maiden shareholders' equity and adjusted total capital resources are calculated by adding the unamortized deferred gain on retroactive reinsurance to the GAAP Maiden shareholders' equity and GAAP total capital resources, respectively.

The deferred gain arise from the LPT/ADC Agreement with Cavello relating to losses from the AmTrust Quota Share agreement.

GAAP, the deferred gain shall be amortized over the estimated remaining settlement period.

See " Key Financial Measures " for additional information.

Ratio of debt to total capital resources is calculated using the total principal amount of debt divided by the sum of total capital resources.

Ratio of debt to adjusted total capital resources is calculated using the total principal amount of debt divided by the sum of adjusted total capital resources.

Key Financial Measures

In addition to the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Income and Comprehensive Income, management uses certain key financial measures, some of which are non-GAAP measures, to evaluate its financial performance and the overall growth in value generated for the Company’s common shareholders.

Management believes that these measures, which may be defined differently by other companies, explain the Company’s results in a manner that allows for a more complete understanding of the underlying trends in the Company’s business.

Management believes that these measures, which may be defined differently by other companies, explain the Company’s results to investors in a manner that allows for a more complete understanding of the underlying trends in the Company’s business.

The non-GAAP measures should not be viewed as a substitute for those determined in accordance with U.S.

The calculation of some of these key financial measures including the reconciliation of non-GAAP measures to the nearest GAAP measure and relevant discussions are found within Item 2 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 64.

These key financial measures are:

Non-GAAP operating loss and non-GAAP diluted operating loss per common share :

Management believes that the use of non-GAAP operating loss and non-GAAP diluted operating loss per share enables investors and other users of the Company’s financial information to analyze its performance in a manner similar to how management analyzes performance.

Non-GAAP operating earnings (loss) and non-GAAP diluted operating earnings (loss) per common share :

Management believes that the use of non-GAAP operating earnings (loss) and non-GAAP diluted operating earnings (loss) per share enables investors and other users of the Company’s financial information to analyze its performance in a manner similar to how management analyzes performance.

Management also believes that these measures generally follow industry practice and, therefore, allow the users of financial information to compare the Company’s performance with its industry peer group, and that the equity analysts and certain rating agencies which follow the Company, and the insurance industry as a whole, generally exclude these items from their analyses for the same reasons.

Non-GAAP operating loss should not be viewed as a substitute for U.S.

Non-GAAP operating earnings (loss) should not be viewed as a substitute for U.S.

GAAP net (loss) income.

Non-GAAP operating loss earnings is an internal performance measure used by management as these measures focus on the underlying fundamentals of the Company's operations by excluding, on a recurring basis:

Non-GAAP operating earnings (loss) is an internal performance measure used by management as these measures focus on the underlying fundamentals of the Company's operations by excluding, on a recurring basis:

(1) net realized gains or losses on investment;

(2) total other-than-temporary impairment losses;

(3) foreign exchange gains or losses;

and (3) loss and related activity from our NGHC Quota Share run-off operations.

It also excludes on a non-recurring basis the loss from discontinued operations, net of income tax.

We exclude net realized gains or losses on investment and foreign exchange gains or losses as we believe these are influenced by market opportunities and other factors.

We do not believe loss and related activity from our NGHC Quota Share run-off operations and loss from discontinued operations are representative of our ongoing and future business.

(4) loss and related activity from our NGHC Quota Share run-off operations;

and (5) the portion of favorable or unfavorable prior year reserve development for which we have ceded the risk under retroactive reinsurance agreements and related changes in amortization of the deferred gain.

It also excludes on a non-recurring basis:

(1) loss from discontinued operations, net of income tax;

(2) interest expense paid resulting from the LPT/ADC Agreement and Commutation and Release Agreement;

and (3) separation costs incurred due to retirement of former executives.

We exclude net realized gains or losses on investment, other-than-temporary impairment losses and foreign exchange gains or losses as we believe these are influenced by market opportunities and other factors.

We do not believe results from our NGHC Quota Share run-off operations (which was commuted subsequent to September 30, 2019, please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 14.

Subsequent Events " for further details), results from our discontinued operations, interest expense paid on the LPT/ADC Agreement and Commutation and Release Agreement, separation costs paid to our former executives and ceded risks under retroactive reinsurance agreements are representative of our ongoing and future business.

We believe all of these amounts are largely independent of our business and future underwriting process and including them distorts the analysis of trends in our operations.

Underwriting income (loss) is a non-GAAP measure and is calculated as net premiums earned plus other insurance revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities.

Management believes that this measure is important in evaluating the underwriting performance of the Company and its segments.

This measure is also a useful tool to measure the profitability of the Company separately from the investment results

and is also a widely used performance indicator in the insurance industry.

This measure is also a useful tool to measure the profitability of the Company separately from the investment results and is also a widely used performance indicator in the insurance industry.

A reconciliation of the Company's underwriting results can be found in the Company's Condensed Consolidated Financial Statements.

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Segment Information " for further details.

Non-GAAP operating loss and non-GAAP diluted operating loss per common share can be reconciled to the nearest U.S.

GAAP financial measure as follows:

For the Three Months Ended June 30,

($ in thousands except per share data)

Net loss attributable to Maiden common shareholders

Add (subtract):

Net realized (gains) losses on investment

Foreign exchange and other gains

Loss (income) from discontinued operations, net of income tax

Income from NGHC Quota Share run-off

Non-GAAP operating loss attributable to Maiden common shareholders

Diluted loss per share attributable to Maiden common shareholders

Add (subtract):

Net realized (gains) losses on investment

Foreign exchange and other gains

Loss (income) from discontinued operations, net of income tax

Non-GAAP diluted operating loss per common share

For the Six Months Ended June 30,

($ in thousands except per share data)

Net (loss) income attributable to Maiden common shareholders

Add (subtract):

Net realized (gains) losses on investment

Foreign exchange and other gains

Loss (income) from discontinued operations, net of income tax

Loss from NGHC Quota Share run-off

Non-GAAP operating loss attributable to Maiden common shareholders

Diluted (loss) earnings per share attributable to Maiden common shareholders

Add (subtract):

Net realized (gains) losses on investment

Foreign exchange and other gains

Loss (income) from discontinued operations, net of income tax

Non-GAAP diluted operating loss per common share

Non-GAAP operating loss attributable to Maiden common shareholders increased by $3.5 million for the three months ended June 30, 2019 compared to the same period in 2018 .

This was largely due to the deterioration in our underwriting results of $7.1 million during the three months ended June 30, 2019 compared to the same period in 2018 primarily in our AmTrust Reinsurance segment.

The deterioration was largely due to the Partial Termination Amendment with AmTrust which caused changes in the mix of business being earned in 2019 compared to 2018 that resulted in a higher current year loss ratio.

In addition, underwriting results were impacted by higher ceding commission payable for the remaining in-force business immediately prior to January 1, 2019 which increased by five percentage points (excluding Terminated Business) and related unearned premium as of January 1, 2019 under the Partial Termination Amendment with AmTrust.

Non-GAAP operating loss attributable to Maiden common shareholders increased by $36.2 million for the six months ended June 30, 2019 compared to the same period in 2018 .

This was largely due to the deterioration in our underwriting results of $45.2 million during the six months ended June 30, 2019 compared to the same period in 2018 as a result of higher current year loss ratios due to the Partial Termination Amendment with AmTrust which caused changes in the mix of business being earned in 2019 compared to 2018 .

In addition, underwriting results were impacted by higher ceding commission payable for the remaining

in-force business immediately prior to January 1, 2019 which increased by five percentage points (excluding Terminated Business) and related unearned premium under the Partial Termination Amendment with AmTrust.

Non-GAAP Operating Return on Average Common Equity ("Non-GAAP Operating ROACE"):

Management uses non-GAAP operating return on average common shareholders' equity as a measure of profitability that focuses on the return to common shareholders.

It is calculated using non-GAAP operating loss available to common shareholders (as defined above) divided by average common shareholders' equity.

Non-GAAP Operating ROACE for the three and six months ended June 30, 2019 and 2018 was computed as follows:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

($ in thousands)

Non-GAAP operating loss attributable to Maiden common shareholders

Opening Maiden common shareholders’ equity

Ending Maiden common shareholders’ equity

Average Maiden common shareholders’ equity

Non-GAAP Operating ROACE

It is calculated using non-GAAP operating earnings (loss) available to common shareholders (as defined above) divided by average common shareholders' equity.

Book Value per Common Share and Diluted Book Value per Common Share:

Book value per common share and diluted book value per common share are non-GAAP measures.

Management uses growth in both of these metrics as a prime measure of the value we are generating for our common shareholders, as management believes that growth in each metric ultimately results in growth in the Company’s common share price.

These metrics are impacted by the Company’s net income and external factors, such as interest rates, which can drive changes in unrealized gains or losses on our investment portfolio.

At June 30, 2019 , book value per common share increased by 39.8% and diluted book value per common share increased by 37.0% , compared to December 31, 2018 , primarily due to net unrealized gains on our investment portfolio reported in other comprehensive income during the three and six months ended June 30, 2019 .

These unrealized gains were partially offset by the net loss attributable to Maiden common shareholders during the six months ended June 30, 2019 .

Please see " Liquidity and Capital Resources - Investments" on page 55 for further information on the change in fair value of our fixed maturity investment portfolio.

Book value and diluted book value per common share at June 30, 2019 and December 31, 2018 were computed as follows:

June 30, 2019

December 31, 2018

($ in thousands except share and per share data)

Ending Maiden common shareholders’ equity

Proceeds from assumed conversion of dilutive options

Numerator for diluted book value per common share calculation

Common shares outstanding

Shares issued from assumed conversion of dilutive options and restricted share units

Denominator for diluted book value per common share calculation

Book value per common share

Diluted book value per common share

Ratio of Debt to Total Capital Resources:

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This measure is calculated using the total principal amount of debt divided by the sum of total capital resources.

The ratio of Debt to Total Capital Resources at June 30, 2019 and December 31, 2018 was computed as follows:

June 30, 2019

December 31, 2018

($ in thousands)

Senior notes - principal amount

Maiden shareholders’ equity

Total capital resources

Ratio of debt to total capital resources

Non-GAAP underwriting income (loss), Non-GAAP loss and LAE ratio, and Non-GAAP combined ratio:

Management has further adjusted the underwriting income (loss), as defined above, as well as the reported loss and LAE ratios and reported combined ratios by recognizing into income the unamortized deferred gain arising from the LPT/ADC Agreement relating to losses subject to that agreement.

The deferred gain represents amounts fully recoverable from Cavello and management believes adjusting for this shows the ultimate economic benefit of the LPT/ADC Agreement on Maiden's underwriting income (loss).

We believe reflecting the economic benefit of this retroactive reinsurance agreement is helpful for understanding future trends in our operations.

Adjusted Total Maiden Shareholders' Equity, Adjusted Total Capital Resources, Ratio of debt to Adjusted Total Capital Resources and Adjusted Book Value per Common Share:

Management has adjusted GAAP Maiden shareholders' equity by adding the unamortized deferred gain on retroactive reinsurance arising from the LPT/ADC Agreement relating to losses incurred subject to that agreement to Maiden shareholders' equity.

As a result, by virtue of this adjustment, management has also adjusted Total Capital Resources and computed the Ratio of debt to Adjusted Capital Resources and Adjusted Book Value per Common Share.

The deferred gain represents amounts fully recoverable from Cavello and management believes adjusting for this shows the ultimate economic benefit of the LPT/ADC Agreement.

We believe reflecting the economic benefit of this retroactive reinsurance agreement is helpful for understanding future trends in our operations, which will improve Maiden shareholders' equity over the settlement period.

Certain Operating Measures and Relevant Factors

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The following table sets forth our selected unaudited Condensed Consolidated Statement of Income data for each of the periods indicated:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

($ in thousands)

10 unchanged sentences

Net realized gains (losses) on investment

Foreign exchange and other gains

Total other-than-temporary impairment losses

Foreign exchange and other gains (losses)

Interest and amortization expenses

Income tax benefit

Net income (loss) from continuing operations

(Loss) income from discontinued operations, net of income tax

Income tax (expense) benefit

Net loss from continuing operations

Loss from discontinued operations, net of income tax

Income attributable to noncontrolling interests

Dividends on preference shares

Net (loss) income attributable to Maiden common shareholders

Net loss attributable to Maiden common shareholders

Net loss and LAE ratio (3)

11 unchanged sentences

Calculated by adding together net loss and LAE ratio and the expense ratio.

Net loss attributable to Maiden common shareholders for the three months ended June 30, 2019 was $15.4 million compared to net loss of $5.9 million for the same period in 2018 .

The higher net loss for the three months ended June 30, 2019 compared to the same period in 2018 was primarily due to the following:

net loss from discontinued operations of $18.7 million compared to net income from discontinued operations of $8.2 million for the same period in 2018 largely as a result of the Settlement and Commutation Agreement entered into by Maiden and Enstar on July 31, 2019 which caused a net additional loss of $16.7 million to be recognized;

net income from continuing operations of $3.3 million compared to net loss from continuing operations of $5.5 million for the same period in 2018 largely due to the following factors:

realized gains on investment of $24.1 million for the three months ended June 30, 2019 compared to realized losses of $0.4 million for the same period in 2018 ;

no dividends paid to preference shareholders for the three months ended June 30, 2019 compared to $8.5 million for the same period in 2018 due to our Board not declaring dividends on any of our preference shares during 2019 ;

underwriting loss of $39.1 million compared to $32.0 million in the same period in 2018 .

The deterioration in the underwriting result was principally due to the impact of:

higher initial loss ratios on premiums earned during the period within the AmTrust Reinsurance segment (which excludes the Terminated Business under the Partial Termination Amendment);

Net loss attributable to Maiden common shareholders for the three months ended September 30, 2019 was $58.3 million compared to a net loss attributable to Maiden common shareholders of $308.8 million for the same period in 2018 .

The net improvement in results for the three months ended September 30, 2019 compared to the same period in 2018 was primarily due to the following:

net loss from continuing operations of $58.1 million compared to net loss from continuing operations of $240.4 million for the same period in 2018 largely due to the following factors:

underwriting loss of $80.3 million compared to $251.2 million in the same period in 2018 , which resulted in a combined ratio of 190.8% compared to 150.8% in the prior period.

The reduction in the underwriting loss and the corresponding increase in the combined ratio was due to the impact of:

lower adverse prior year loss development of $63.2 million or 66.2 percentage points in the third quarter of 2019 compared to adverse prior year loss development of $212.5 million or 40.7 percentage points during the same period in 2018 incurred primarily within AmTrust Reinsurance Segment;

partially offset by:

higher initial loss ratios on current year premiums earned during the period within the AmTrust Reinsurance segment (which excludes the Terminated Business under the Partial Termination Amendment);

higher ceding commission payable of $3.5 million for the remaining in-force business immediately prior to January 1, 2019, which increased by five percentage points (excluding Terminated Business) and related unearned premium as of January 1, 2019 under the Partial Termination Amendment with AmTrust.

adverse prior year loss development of $26.0 million or 19.3 percentage points in the second quarter of 2019 compared to adverse prior year loss development of $28.2 million or 5.6 percentage points during the same period in 2018 .

lower foreign exchange and other gains of $1.2 million for the three months ended June 30, 2019 compared to foreign exchange gains of $4.8 million for the same period in 2018 .

Gains in 2019 were due to the impact of the strengthening of the U.S.

dollar on the re-measurement of net loss reserves and unearned premiums denominated in British pound whereas in 2018 gains were due to strengthening of the U.S.

dollar relative to the euro and British pound.

Net loss attributable to Maiden common shareholders for the six months ended June 30, 2019 was $52.0 million compared to net income of $7.8 million for the same period in 2018 .

The net decrease in results for the six months ended June 30, 2019 compared to the same period in 2018 was primarily due to the following:

net loss from discontinued operations of $22.1 million compared to net income from discontinued operations of $18.2 million for the same period in 2018 largely as a result of the Settlement and Commutation Agreement entered into by Maiden and Enstar on July 31, 2019 which caused a net additional loss of $16.7 million to be recognized;

net loss from continuing operations of $30.0 million compared to net income from continuing operations of $6.8 million for the same period in 2018 largely due to the following factors:

underwriting loss of $81.9 million compared to $36.7 million in the same period in 2018 .

The deterioration in the underwriting result was principally due to the impact of:

realized gains on investment of $12.7 million for the three months ended September 30, 2019 compared to realized losses of $0.2 million for the same period in 2018 ;

foreign exchange and other gains of $7.8 million for the three months ended September 30, 2019 compared to foreign exchange losses of $0.6 million for the same period in 2018 ;

no dividends paid to preference shareholders for the three months ended September 30, 2019 compared to $8.5 million for the same period in 2018 .

Our Board of Directors have not declared dividends on any of our preference shares since the fourth quarter of 2018 .

net loss from discontinued operations of $0.3 million compared to net loss from discontinued operations of $59.8 million for the same period in 2018 as the prior year period included the impairment of goodwill and intangible assets of $74.2 million that was recognized due to the sale of Maiden US partly offset by the proceeds of the sale of the Renewal Rights of $7.5 million .

Net loss attributable to Maiden common shareholders for the nine months ended September 30, 2019 was $110.4 million compared to net loss of $301.0 million for the same period in 2018 .

The net improvement in results for the nine months ended September 30, 2019 compared to the same period in 2018 was primarily due to the following:

net loss from continuing operations of $88.0 million compared to net loss from continuing operations of $233.6 million for the same period in 2018 largely due to the following factors:

underwriting loss of $162.1 million compared to $287.9 million for the same period in 2018 which resulted in a combined ratio of 146.0% compared to 120.7% in the prior period.

The reduction in the underwriting loss and the corresponding increase in the combined ratio was principally due to the impact of:

lower adverse prior year loss development of $96.5 million or 23.3 percentage points for the nine months ended September 30, 2019 compared to $250.5 million or 16.2 percentage points during the same period in 2018 incurred primarily within the AmTrust Reinsurance Segment;

partly offset by;

higher initial loss ratios on current year premiums earned during the period within the AmTrust Reinsurance segment (which excludes the Terminated Business under the Partial Termination Amendment);

higher ceding commission payable of $17.6 million for the remaining in-force business immediately prior to January 1, 2019, which increased by five percentage points (excluding Terminated Business) and related unearned premium as of January 1, 2019 under the Partial Termination Amendment with AmTrust.

adverse prior year loss development of $33.3 million or 10.5 percentage points in the first half of 2019 compared to $38.0 million or 3.7 percentage points during the same period in 2018 .

The unfavorable movements above were offset by the following:

no dividends were paid to preference shareholders for the six months ended June 30, 2019 compared to $17.1 million for the same period in 2018 .

Our Board of Directors have not declared dividends on any of our preference shares during 2019 ;

realized gains on investment of $13.0 million for the six months ended June 30, 2019 compared to realized losses of $0.1 million for the same period in 2018 ;

foreign exchange and other gains of $6.2 million for the six months ended June 30, 2019 compared to foreign exchange gains of $2.4 million for the same period in 2018 largely due to the proceeds from the sale of AVS Automotive VersicherungsService GmbH ("AVS") and its subsidiaries to Allianz Partners on January 10, 2019.

Excluding the gain of $4.3 million from the sale of AVS, net foreign exchange gains of $1.9 million were realized during the six months ended June 30, 2019 primarily due to the impact of the strengthening of the U.S.

realized gains on investment of $25.7 million for the nine months ended September 30, 2019 compared to realized losses of $0.3 million for the same period in 2018 ;

foreign exchange and other gains of $14.0 million for the nine months ended September 30, 2019 compared to foreign exchange gains of $1.9 million for the same period in 2018 largely due to the proceeds from the sale of AVS Automotive VersicherungsService GmbH ("AVS") and its subsidiaries to Allianz Partners on January 10, 2019.

Excluding the gain of $4.3 million from the sale of AVS, net foreign exchange gains of $9.7 million were realized during the nine months ended September 30, 2019 primarily due to the impact of the strengthening of the U.S.

dollar versus the euro and British pound;

no dividends were paid to preference shareholders for the nine months ended September 30, 2019 compared to $25.6 million for the same period in 2018 .

Our Board of Directors have not declared dividends on any of our preference shares since the fourth quarter of 2018 .

net loss from discontinued operations of $22.3 million compared to net loss from discontinued operations of $41.6 million for the same period in 2018 largely as a result of the Settlement and Commutation Agreement entered into by Maiden and

Enstar on July 31, 2019 which caused a net additional loss of $16.7 million to be recognized.

The prior year period included the impairment of goodwill and intangible assets of $74.2 million that was recognized due to the sale of Maiden US partly offset by the proceeds of the sale of the Renewal Rights of $7.5 million .

Net Premiums Written

Net premiums written decreased significantly for the three and six months ended June 30, 2019 compared to the same periods in 2018 .

The tables below compare net premiums written by our reportable segments, reconciled to the total consolidated net premiums written for the three and six months ended June 30, 2019 and 2018 :

For the Three Months Ended June 30,

Net premiums written decreased significantly for the three and nine months ended September 30, 2019 compared to the same periods in 2018 .

The tables below compare net premiums written by our reportable segments, reconciled to the total consolidated net premiums written for the three and nine months ended September 30, 2019 and 2018 :

For the Three Months Ended September 30,

($ in thousands)

1 unchanged sentence

AmTrust Reinsurance

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

($ in thousands)

1 unchanged sentence

AmTrust Reinsurance

Net premiums written for the three and six months ended June 30, 2019 decreased significantly compared to the same respective periods in 2018 as follows:

Net premiums written for the three and nine months ended September 30, 2019 decreased significantly compared to the same respective periods in 2018 as follows:

Premiums written in the AmTrust Reinsurance segment decreased significantly due to the recent termination of both the AmTrust Quota Share and the European Hospital Liability Quota Share effective January 1, 2019, therefore no new business has been written in this segment during 2019 .

Also, the Partial Termination Amendment resulted in Maiden Bermuda returning approximately $648.0 million in unearned premium to AII, or $436.8 million net of applicable ceding commission and brokerage;

Premiums written in the Diversified Reinsurance segment decreased significantly by $21.0 million or 70.7% and $54.3 million or 69.7% for the three and six months ended June 30, 2019 , respectively, compared to the same respective periods in 2018 largely due to non-renewals in our European Capital Solutions business combined with reduced business written within our IIS business.

Premiums written in the Diversified Reinsurance segment decreased significantly by $16.8 million or 53.5% and $71.1 million or 65.0% for the three and nine months ended September 30, 2019 , respectively, compared to the same respective periods in 2018 due to non-renewals in our European Capital Solutions business combined with lower premiums written in German Auto programs within our IIS business.

Please refer to the analysis below of our Diversified Reinsurance and AmTrust Reinsurance segments for further details.

Net Premiums Earned

Net premiums earned decreased by $370.4 million or 73.4% and $704.1 million or 68.9% for the three and six months ended June 30, 2019 compared to the same periods in 2018 .

The tables below compare net premiums earned by our reportable segments, reconciled to the total consolidated net premiums earned, for the three and six months ended June 30, 2019 and 2018 :

For the Three Months Ended June 30,

Net premiums earned decreased by $425.2 million or 81.8% and $1,129.3 million or 73.3% for the three and nine months ended September 30, 2019 , respectively, compared to the same periods in 2018 .

The tables below compare net premiums earned by our reportable segments, reconciled to the total consolidated net premiums earned, for the three and nine months ended September 30, 2019 and 2018 :

For the Three Months Ended September 30,

($ in thousands)

1 unchanged sentence

AmTrust Quota Share Reinsurance

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

($ in thousands)

1 unchanged sentence

AmTrust Quota Share Reinsurance

Net premiums earned in the AmTrust Reinsurance segment for the three and six months ended June 30, 2019 decreased by $364.3 million or 76.6% and $697.8 million or 72.2% , respectively, compared to the same respective periods in 2018 due to the termination of the AmTrust Quota Share and European Hospital Liability Quota Share effective January 1, 2019.

Net premiums earned in the AmTrust Reinsurance segment for the three and nine months ended September 30, 2019 decreased by $416.9 million or 84.9% and $1,114.7 million or 76.4% , respectively, compared to the same respective periods in 2018 due to

the termination of the AmTrust Quota Share and European Hospital Liability Quota Share effective January 1, 2019.

Please refer to the analysis of our AmTrust Reinsurance segment on page 53 for further discussion.

Net premiums earned in our Diversified Reinsurance segment for the three and six months ended June 30, 2019 decreased by $6.1 million or 21.3% and $6.3 million or 11.6% , respectively, compared to the same respective periods in 2018 driven by reductions in the quota share for German Auto Programs within our IIS business caused by a lower quota share cession percentage which declined from 65% in 2018 to 50% in 2019 .

Net premiums earned in our Diversified Reinsurance segment for the three and nine months ended September 30, 2019 decreased by $8.3 million or 28.8% and $14.6 million or 17.6% , respectively, compared to the same respective periods in 2018 driven by reductions in the quota share for German Auto Programs within our IIS business caused by a lower quota share cession percentage which declined from 65% in 2018 to 50% in 2019 .

Please refer to the analysis of our Diversified Reinsurance segment on page 51 for further discussion.

3 unchanged sentences

Net Investment Income and Net Realized Gains on Investment

For the three and six months ended June 30, 2019 , net investment income decreased by $3.1 million or 9.2% and $4.0 million or 5.9% , respectively, compared to the same respective periods in 2018 .

This was driven by the decline in average book yields from 3.3% to 3.1% for the three and six months ended June 30, 2019 compared to the same respective periods in 2018 .

Net realized gains on investment were $24.1 million and $13.0 million , respectively, for the three and six months ended June 30, 2019 , compared to net realized losses of $0.4 million and $0.1 million for the same respective periods in 2018 .

The realized gains for the three months ended June 30, 2019 were primarily due to sales of corporate bonds during the second quarter in anticipation of completing and funding the LPT/ADC Agreement with Enstar.

The realized gains for the six months ended June 30, 2019 were primarily driven by sales of corporate bonds during the second quarter in anticipation of completing and funding the LPT/ADC Agreement with Enstar, partially offset by net investment losses realized on the non-cash transfer of corporate and other debt securities in the first quarter of 2019 related to the Partial Termination Amendment with AmTrust and the conversion of a portion of reinsurance trust assets held as collateral into funds withheld receivable.

The following table details the Company's average investable assets and average book yield for the three and six months ended June 30, 2019 compared to the same period in 2018 :

For the Three Months Ended June 30,

For the Six Months Ended June 30,

During the three months ended September 30, 2019 , the Company paid AmTrust and Enstar an aggregate of $13.6 million for interest due on the settlement of funding for amounts related to the Commutation and Release Agreement and the LPT/ADC Agreement, respectively, which lowered the average yield by 1.5 basis points for the three months ended September 30, 2019 .

Excluding this non-recurring interest expense, for the three and nine months ended September 30, 2019 , net investment income decreased by $7.6 million or 22.1% and $11.6 million or 11.4% , respectively, compared to the same respective periods in 2018 , primarily due to the decline in average investable assets of 13.4% and 6.7% respectively.

This was also driven by the decline in average book yields (excluding the interest payments to AmTrust and Enstar) to 2.9% and 3.1% for the three and nine months ended September 30, 2019 , respectively, compared to 3.3% and 3.2% for the same respective periods in 2018 .

Net realized gains on investment were $12.7 million and $25.7 million , respectively, for the three and nine months ended September 30, 2019 , compared to net realized losses of $0.2 million and $0.3 million for the same respective periods in 2018 .

The realized gains for the three months ended September 30, 2019 were primarily due to sales of corporate bonds during the third quarter for the settlement of the Commutation Payment to AmTrust via transfer of cash and invested assets on August 12, 2019 .

The realized gains for the nine months ended September 30, 2019 were primarily driven by sales of corporate bonds during the second quarter of 2019 in anticipation of completing and funding the LPT/ADC Agreement with Enstar as well as sales of corporate bonds during the third quarter for the settlement of the Commutation Payment to AmTrust.

This was partially offset by net investment losses realized on the non-cash transfer of corporate and other debt securities in the first quarter of 2019 related to the Partial Termination Amendment with AmTrust and the conversion of a portion of reinsurance trust assets held as collateral into funds withheld receivable.

The following table details the Company's average investable assets and average book yield for the three and nine months ended September 30, 2019 compared to the same period in 2018 :

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

($ in thousands)

1 unchanged sentence

Average book yield (2)

Adjusted average book yield (3)

The average of the Company's investments, cash and cash equivalents, restricted cash and cash equivalents, funds withheld and loan to related party at each quarter-end during the period, as adjusted.

Ratio of net investment income over average investable assets at fair value, as adjusted.

Ratio of net investment income, excluding the interest payments to AmTrust and Enstar, over average investable assets at fair value, as adjusted.

Net Loss and Loss Adjustment Expenses

Net loss and LAE decreased by $248.4 million and $449.0 million during the three and six months ended June 30, 2019 , respectively, compared to the same respective periods in 2018 largely due to the significant drop in earned premiums as a result of the termination of the AmTrust quota share agreements effective January 1, 2019.

The loss ratio for the second quarter of 2019 was impacted by net adverse prior year reserve development of $26.0 million or 19.3 percentage points compared to net adverse prior year reserve development of $28.2 million or 5.6 percentage points during the same period in 2018 .

The loss ratio for the six months ended June 30, 2019 was impacted by net adverse prior year reserve development of $33.3 million or 10.5 percentage points compared to $38.0 million or 3.7 percentage points during the same period in 2018 .

The net loss and LAE ratios increased to 90.2% and 86.1% for the three and six months ended June 30, 2019 , respectively, compared to 73.1% and 70.4% for the same respective periods in 2018 primarily due to the adverse development discussed above as well as changes in the mix of business being earned in the AmTrust Reinsurance segment in 2019 compared to 2018 as a result of the business subject to the Partial Termination Amendment with AmTrust.

Net loss and LAE decreased by $459.4 million and $908.4 million during the three and nine months ended September 30, 2019 , respectively, compared to the same respective periods in 2018 largely due to the termination of the AmTrust Reinsurance quota share agreements effective January 1, 2019.

The loss ratio for the third quarter of 2019 was impacted by net adverse prior year reserve development of $63.2 million or 66.2 percentage points compared to net adverse prior year reserve development of $212.5 million or 40.7 percentage points during the same period in 2018 .

The loss ratio for the nine months ended September 30, 2019 was impacted by net adverse prior year reserve development of $96.5 million or 23.3 percentage points compared to $250.5 million or 16.2 percentage points during the same period in 2018 .

The prior year development, which is discussed in greater detail in the individual segment discussion and analysis, was primarily in our AmTrust Reinsurance segment where significant reserve strengthening occurred during the third quarter of 2018 .

The net loss and LAE ratios increased to 147.6% and increased to 100.3% for the three and nine months ended September 30, 2019 , respectively, compared to 115.0% and 85.4% for the same respective periods in 2018 primarily due to significant reduction in net premiums earned resulting mainly from the termination of the AmTrust Reinsurance quota share contracts effective January 1, 2019.

Commission and Other Acquisition Expenses

Commission and other acquisition expenses decreased by $113.1 million or 69.5% and $210.1 million or 63.8% for the three and six months ended June 30, 2019 , respectively, compared to the same respective periods in 2018 due to significantly lower earned premiums.

The commission and other acquisition expense ratio increased to 36.9% and 37.5% for the three and six months ended June 30, 2019 , respectively, compared to 32.1% for the same respective periods in 2018 driven by an increase in ceding commission fees payable within the AmTrust Reinsurance segment as of January 1, 2019.

Under the Partial Termination Amendment with AmTrust, Maiden Bermuda agreed to pay five additional percentage points of ceding commission on the remaining unearned premium over the term of the contract which had an impact of $6.5 million and $14.1 million for the three and six months ended June 30, 2019 , respectively.

Commission and other acquisition expenses decreased by $134.9 million or 80.5% and $345.0 million or 69.4% for the three and nine months ended September 30, 2019 , respectively, compared to the same respective periods in 2018 due to significantly lower earned premiums in both of our reportable segments.

The commission and other acquisition expense ratio increased to 34.3% and 36.7% for the three and nine months ended September 30, 2019 , respectively, compared to 32.1% for the same respective periods in 2018 driven by an increase in ceding commission fees payable within the AmTrust Reinsurance segment as of January 1, 2019.

Under the Partial Termination Amendment with AmTrust, Maiden Bermuda agreed to pay five additional percentage points of ceding commission with respect to in-force remaining business (excluding Terminated Business) and related unearned premium over the term of the contract which impacted commission expenses by $3.5 million and $17.6 million for the three and nine months ended September 30, 2019 , respectively.

General and Administrative Expenses

1 unchanged sentence

General and administrative expenses comprise:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

($ in thousands)

2 unchanged sentences

Total general and administrative expenses

Total general and administrative expenses decreased by $2.0 million , or 13.5% and $1.7 million or 5.7% for the three and six months ended June 30, 2019 , respectively, compared to the same respective periods in 2018 .

The general and administrative expense ratio increased to 9.5% and 9.0% for the three and six months ended June 30, 2019 , respectively, from 2.9% and 3.0% for the three and six months ended June 30, 2018 , respectively, as a result of significantly lower earned premiums compared to the prior periods due to termination of the AmTrust quota share contracts effective January 1, 2019 and non-renewals within our International business.

The increased corporate expenses for the three and six months ended June 30, 2019 compared to the same respective periods in 2018 were largely due to approximately $3.0 million and $6.0 million, respectively, in non-recurring expenses including salary and related benefits associated with headcount reductions during 2019 as well as certain professional fees incurred.

Total general and administrative expenses decreased by $10.7 million , or 55.5% and $12.4 million or 24.9% for the three and nine months ended September 30, 2019 , respectively, compared to the same periods in 2018 .

The general and administrative expense ratio increased to 8.9% and 9.0% for the three and nine months ended September 30, 2019 , respectively, from 3.7% and 3.2% for the three and nine months ended September 30, 2018 , respectively, as a result of significantly lower earned premiums compared to the prior periods due to termination of the AmTrust Reinsurance quota share contracts effective January 1, 2019 and non-renewals within our International business in the Diversified Reinsurance segment.

The decreased corporate expenses for the three and nine months ended September 30, 2019 compared to the same respective periods in 2018 were largely due to significant non-recurring compensation benefits of $5.5 million paid under certain executive separation agreements in the third quarter of 2018 , as well as lower salary, benefits and other corporate expenses associated with the Strategic Review and related headcount reductions during 2019 and 2018 .

Interest and Amortization Expenses

The interest and amortization expenses related to outstanding senior notes issued by Maiden Holdings in 2016 and Maiden NA in 2013 ("Senior Notes") were unchanged at $4.8 million and $9.7 million for the three and six months ended June 30, 2019 and 2018 , respectively.

The interest and amortization expenses related to outstanding senior notes issued by Maiden Holdings in 2016 and Maiden NA in 2013 ("Senior Notes") were unchanged at $4.8 million and $14.5 million for the three and nine months ended September 30, 2019 and 2018 , respectively.

Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 7.

1 unchanged sentence

Foreign Exchange and Other Gains

Net foreign exchange and other gains amounted to $1.2 million and $6.2 million during the three and six months ended June 30, 2019 , respectively, compared to net foreign exchange gains of $4.8 million and $2.4 million for the same respective periods in 2018 .

Other gains of $4.3 million during the six months ended June 30, 2019 were realized due to proceeds received from the sale of AVS and its related European subsidiaries to Allianz Partners on January 10, 2019.

Excluding the gain of $4.3 million related to the sale of AVS during the six months ended June 30, 2019 , net foreign exchange gains of $1.9 million were realized during the six months ended June 30, 2019 .

Foreign exchange gains for the three and six months ended June 30, 2018 were primarily attributable to the impact of the strengthening of the U.S.

dollar on the re-measurement of net loss reserves and related liabilities mainly denominated in euros and British pounds.

Net foreign exchange and other gains amounted to $7.8 million and $14.0 million during the three and nine months ended September 30, 2019 , respectively, compared to net foreign exchange losses of $0.6 million and net foreign exchange gains of $1.9 million for the same respective periods in 2018 .

Other gains of $4.3 million were realized during the nine months ended September 30, 2019 due to proceeds received from the sale of AVS and its related European subsidiaries to Allianz Partners on January 10, 2019.

Excluding the gain of $4.3 million related to the sale of AVS during the nine months ended September 30, 2019 , net foreign exchange gains of $9.7 million were realized during the nine months ended September 30, 2019 due to the impact of the strengthening of the U.S.

dollar on the re-measurement of net loss reserves and related liabilities denominated in British pound and euro.

Net foreign exchange gains of $1.9 million for the nine months ended September 30, 2018 were primarily attributable to the impact of the strengthening of the U.S.

dollar on the re-measurement of net loss reserves and related liabilities mainly denominated in euro and British pound.

Income Tax Benefit

The Company recorded an income tax benefit of $1.0 million and $1.1 million for the three and six months ended June 30, 2019 , respectively, compared to $1.8 million and $3.2 million for the same respective periods in 2018 .

These amounts relate to income tax on the losses of our US and international subsidiaries.

The effective rate of income tax was (45.4)% and 3.4% for the three and six months ended June 30, 2019 , respectively, compared to 25.0% and (87.1)% for the three and six months ended June 30, 2018 , respectively.

The Company recorded an income tax expense of $0.1 million and income tax benefit of $1.0 million for the three and nine months ended September 30, 2019 , respectively, compared to income tax expense of $3.6 million and $0.4 million for the same respective periods in 2018 .

These amounts relate to income tax incurred on the earnings and income tax benefits generated on the losses of our US and international subsidiaries.

The effective rate of income tax was 0.2% and (1.1)% for the three and nine months ended September 30, 2019 , respectively, compared to 1.5% and 0.2% for the three and nine months ended September 30, 2018 , respectively.

Dividends on Preference Shares

For the three and six months ended June 30, 2019 , no dividends were declared or paid to preference shareholders compared to $8.5 million and $17.1 million of preference share dividends declared and paid during the same respective periods in 2018 .

For the three and nine months ended September 30, 2019 , no dividends were paid to preference shareholders compared to $8.5 million and $25.6 million of preference share dividends declared and paid during the same respective periods in 2018 .

Our Board of Directors have not declared dividends on any of our preference shares since the fourth quarter of 2018 .

Please refer to " Notes to Consolidated Financial Statements Note 14.

2 unchanged sentences

Diversified Reinsurance Segment

The underwriting results and associated ratios for our Diversified Reinsurance segment for the three and six months ended June 30, 2019 and 2018 were as follows:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

The underwriting results and associated ratios for our Diversified Reinsurance segment for the three and nine months ended September 30, 2019 and 2018 were as follows:

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

($ in thousands)

6 unchanged sentences

General and administrative expenses

Underwriting income (loss)

Underwriting loss

Net loss and LAE ratio

3 unchanged sentences

Combined ratio

The combined ratio for the three and six months ended June 30, 2019 decreased to 97.9% and 100.3% , respectively, compared to 100.6% and 101.0% for the same comparative periods in 2018 , primarily due to decreased general and administrative expense ratios offsetting the increased net loss and LAE ratios and commission and other acquisition expense ratios.

Premiums — Gross premiums written decreased by $18.8 million or 62.6% and $52.9 million or 66.5% for the three and six months ended June 30, 2019 compared to the same respective periods in 2018 .

This was primarily due to non-renewals in our European Capital Solutions business resulting from the downgrade and subsequent withdrawal of Maiden Bermuda's credit rating combined with lower premiums due to a lower quota share cession percentage from German Auto in our IIS business during the three and six months ended June 30, 2019 .

Net premiums written decreased by $21.0 million or 70.7% and $54.3 million or 69.7% during the three and six months ended June 30, 2019 , respectively, compared to the same periods in 2018 mainly due to non-renewals in our European Capital Solutions business combined with lower net premiums written in our German Auto programs within our IIS business.

The tables below show net premiums written by line of business for the three and six months ended June 30, 2019 and 2018 :

For the Three Months Ended June 30,

The combined ratio for the three and nine months ended September 30, 2019 increased slightly to 107.7% and decreased to 102.5% , respectively, compared to 107.6% and 103.3% for the same comparative periods in 2018 .

Please see the respective sections on net loss, commissions and administrative expenses for factors that have impacted the combined ratios in the discussion below.

Premiums — Gross premiums written decreased by $17.3 million or 54.4% and $70.1 million or 63.1% for the three and nine months ended September 30, 2019 compared to the same respective periods in 2018 .

Net premiums written decreased by $16.8 million or 53.5% and $71.1 million or 65.0% during the three and nine months ended September 30, 2019 , respectively, compared to the same periods in 2018 mainly due to non-renewals in our European Capital Solutions business combined with lower net premiums written in our German Auto programs within our IIS business as discussed above.

The tables below show net premiums written by line of business for the three and nine months ended September 30, 2019 and 2018 :

For the Three Months Ended September 30,

($ in thousands)

2 unchanged sentences

Total Diversified Reinsurance

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

($ in thousands)

2 unchanged sentences

Total Diversified Reinsurance

Net premiums earned decreased by $6.1 million or 21.3% and $6.3 million or 11.6% during the three and six months ended June 30, 2019 , respectively, compared to the same periods in 2018 primarily due to lower earned premiums from German Auto programs.

The tables below show net premiums earned by line of business for the three and six months ended June 30, 2019 and 2018 :

For the Three Months Ended June 30,

Net premiums earned decreased by $8.3 million or 28.8% and $14.6 million or 17.6% during the three and nine months ended September 30, 2019 , respectively, compared to the same periods in 2018 primarily due to lower earned premiums from German Auto programs.

The tables below show net premiums earned by line of business for the three and nine months ended September 30, 2019 and 2018 :

For the Three Months Ended September 30,

($ in thousands)

2 unchanged sentences

Total Diversified Reinsurance

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

($ in thousands)

2 unchanged sentences

Total Diversified Reinsurance

Other Insurance Revenue — Other insurance revenue decreased by $1.3 million and $4.3 million for the three and six months ended June 30, 2019 , respectively, compared to the same periods in 2018 due to the sale of AVS and its subsidiaries on January 10, 2019.

NM - not meaningful

Other Insurance Revenue — Other insurance revenue decreased by $1.3 million and $5.6 million for the three and nine months ended September 30, 2019 , respectively, compared to the same periods in 2018 due to the sale of AVS and its subsidiaries on January 10, 2019.

Through 2018 , a substantial portion of our fee income was generated by AVS and its subsidiaries in Germany and Austria through its point of sale producers in select OEM's dealerships.

Net Loss and Loss Adjustment Expenses — Net loss and LAE decreased by $3.7 million or 22.7% and $5.2 million or 16.1% for the three and six months ended June 30, 2019 , respectively, compared to the same respective periods in 2018 .

Net loss and LAE ratios increased to 53.8% and 54.6% for the three and six months ended June 30, 2019 , respectively, compared with 52.9% and 53.6% during the same periods in 2018 .

During the three months ended June 30, 2019 , the net loss and LAE ratio increased by 0.9 percentage points compared to the same period in 2018 due to higher initial loss ratios on current year premiums earned during the period factoring in both market conditions and recent loss trends and experience.

This was partially offset by favorable prior year loss reserve development which was $1.1 million or 4.5 percentage points during the three months ended June 30, 2019 , compared to favorable development of $0.2 million or 0.6 percentage points for the same period in 2018 .

The loss development in 2019 was driven by favorable experience in German Auto programs, while the favorable loss development in 2018 was due to lower than expected loss emergence emanating from certain treaty contracts which are in run-off.

During the six months ended June 30, 2019 , the net loss and LAE ratio increased by one percentage point compared to the same period in 2018 due to higher initial loss ratios on current year premiums earned during the period factoring in both market conditions and recent loss trends and experience.

This was partially offset by favorable prior year loss reserve development which was $2.1 million or 4.3 percentage points during the six months ended June 30, 2019 , compared to adverse development of $1.1 million or 1.8 percentage points for the same period in 2018 .

The loss development in 2019 was driven by favorable experience in German Auto programs and facultative reinsurance lines which are in run-off, while the adverse development in 2018 was due to higher than expected loss emergence emanating from certain treaty contracts which are in run-off.

The impact on the net loss and LAE ratios should be considered in conjunction with the commission and other acquisition expense ratio as changes to either ratio can be effected by the changes in the mix of business and the impact of the increase in the commission and other acquisition expense rates on pro-rata contracts with loss sensitive features.

As a result of these factors, as well as the impacts on the loss ratio described above, the combined ratio decreased by 2.7 and 0.7 percentage points for the three and six months ended June 30, 2019 compared to the same respective periods in 2018 .

Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $1.8 million or 18.4% and $1.9 million or 9.8% for the three and six months ended June 30, 2019 , respectively, compared to the same respective periods in 2018 .

The commission and other acquisition expense ratio for the three months ended June 30, 2019 increased to 35.1% compared to 32.7% for the same period in 2018 , reflecting the impact of lower other insurance revenue which decreased by $1.3 million compared to the same period in 2018 .

Similarly, the commission and other acquisition expense ratio for the six months ended June 30, 2019 increased to 35.3% compared to 32.2% for the same period in 2018 , reflecting the impact of lower other insurance revenue which decreased by $4.3 million compared to the same period in 2018 .

The variation in ratios for the three and six months ended June 30, 2019 was primarily due to the change in the mix of pro rata versus excess of loss premiums written during the period.

Please refer to the reasons for the changes in the combined ratio discussed in the preceding paragraph.

General and Administrative Expenses — General and administrative expenses decreased by $2.5 million or 54.5% and $4.0 million or 43.5% for the three and six months ended June 30, 2019 , respectively, compared to the same respective periods in 2018 .

The general and administrative expense ratio decreased to 9.0% and 10.4% for the three and six months ended June 30, 2019 , respectively, compared to 15.0% and 15.2% for the same periods in 2018 .

The decline in the general and administrative expense ratios were primarily as a result of the sale of AVS and its subsidiaries on January 10, 2019 by the Company, which caused lower compensation costs, legal and other professional fees incurred compared to the respective prior periods.

The overall expense ratio (including commission and other acquisition expenses) for the three and six months ended June 30, 2019 was 44.1% and 45.7% , respectively, compared to 47.7% and 47.4% for the same respective periods in 2018 .

Net Loss and Loss Adjustment Expenses — Net loss and LAE decreased by $6.0 million or 30.1% and $11.1 million or 21.5% for the three and nine months ended September 30, 2019 , respectively, compared to the same respective periods in 2018 .

Net loss and LAE ratios increased to 65.6% and 57.9% for the three and nine months ended September 30, 2019 , respectively, compared with 64.5% and 57.3% during the same periods in 2018 .

During the three months ended September 30, 2019 , the net loss and LAE ratio increased by 1.1 percentage points compared to the same period in 2018 primarily due to the impact of adverse loss reserve development which was $0.7 million or 3.3 percentage points during the three months ended September 30, 2019 , compared to adverse development of $0.7 million or 2.2 percentage points for the same period in 2018 .

The loss development in 2019 was driven by adverse experience in German Auto programs, while the adverse loss development in 2018 was due to higher than expected loss emergence emanating from facultative reinsurance contracts which are in run-off partially offset by favorable development in International auto programs.

During the nine months ended September 30, 2019 , the net loss and LAE ratio increased by 0.6 percentage points compared to the same period in 2018 .

The 2019 loss ratio was impacted by favorable prior year loss reserve development which was $1.5 million or 2.0 percentage points during the nine months ended September 30, 2019 , compared to the impact of adverse development of $1.8 million or 1.9 percentage points on the net loss ratio in 2018 .

The loss development in 2019 was driven by favorable

experience in German Auto programs and facultative reinsurance lines which are in run-off, while the adverse development in 2018 was due to higher than expected loss emergence emanating from facultative reinsurance contracts which are in run-off partially offset by favorable development in International auto programs.

The impact on the net loss and LAE ratios should be considered in conjunction with the commission and other acquisition expense ratio as changes to either ratio can be effected by changes in the mix of business and the impact of increases in the commission and other acquisition expense rates on pro-rata contracts with loss sensitive features.

As a result of these factors, as well as the impacts on the loss ratio described above, the combined ratio increased by 0.1 percentage points and decreased by 0.8 percentage points for the three and nine months ended September 30, 2019 compared to the same respective periods in 2018 .

Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $2.0 million or 21.8% and $3.8 million or 13.6% for the three and nine months ended September 30, 2019 , respectively, compared to the same respective periods in 2018 .

The commission and other acquisition expense ratio for the three months ended September 30, 2019 increased to 33.3% compared to 29.2% for the same period in 2018 , reflecting the impact of lower other insurance revenue which decreased by $1.3 million compared to the same period in 2018 .

Similarly, the commission and other acquisition expense ratio for the nine months ended September 30, 2019 increased to 34.7% compared to 31.3% for the same period in 2018 , reflecting the impact of lower other insurance revenue which decreased by $5.6 million compared to the same period in 2018 .

Please refer to the preceding paragraph for other factors that can impact the combined ratio.

General and Administrative Expenses — General and administrative expenses decreased by $2.4 million or 56.6% and $6.4 million or 47.7% for the three and nine months ended September 30, 2019 , respectively, compared to the same respective periods in 2018 .

The general and administrative expense ratio decreased to 8.8% and 9.9% for the three and nine months ended September 30, 2019 , respectively, compared to 13.9% and 14.7% for the same periods in 2018 , respectively.

The decline in the general and administrative expense ratios were primarily as a result of the Company's sale of AVS and its subsidiaries on January 10, 2019, which caused lower compensation costs, legal and other professional fees incurred compared to the respective prior periods.

The overall expense ratio (including commission and other acquisition expenses) for the three and nine months ended September 30, 2019 decreased to 42.1% and 44.6% , respectively, compared to 43.1% and 46.0% for the same respective periods in 2018 .

AmTrust Reinsurance Segment

The AmTrust Reinsurance segment reported an underwriting loss of $39.6 million and $81.5 million during the three and six months ended June 30, 2019 , respectively, compared to $31.9 million and $36.1 million in the same periods in 2018 .

The larger underwriting loss was primarily due to lower earned premiums combined with the impact of significantly higher initial current year loss ratios, prior year adverse development and higher commissions paid for premiums earned during the three and six months ended June 30, 2019 .

The underwriting results and associated ratios for the AmTrust Reinsurance segment for the three and six months ended June 30, 2019 and 2018 were as follows:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

The AmTrust Reinsurance segment reported an underwriting loss of $78.5 million and $160.1 million during the three and nine months ended September 30, 2019 , respectively, compared to $247.5 million and $283.6 million in the same periods in 2018 , respectively.

The underwriting loss was primarily driven by significantly lower earned premiums combined with the impact of significantly higher initial current year loss ratios, and higher commissions paid for premiums earned during the three and nine months ended September 30, 2019 .

The underwriting results and associated ratios for the AmTrust Reinsurance segment for the three and nine months ended September 30, 2019 and 2018 were as follows:

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

($ in thousands)

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Combined ratio

The combined ratio increased 28.8 percentage points to 135.5% for the three months ended June 30, 2019 compared to 106.7% for the same period in 2018 due to the following factors:

The combined ratio increased 55.1 percentage points to 205.5% for the three months ended September 30, 2019 compared to 150.4% for the same period in 2018 due to the following factors:

higher loss ratios for current year premiums earned during the period primarily due to the Partial Termination Amendment which caused significant changes in the mix of business being earned in 2019 compared to 2018 .

These changes resulted in a higher current year loss ratio for the remaining in-force business;

increase in the ceding commission payable of $6.5 million for the remaining in-force business immediately prior to January 1, 2019 which increased by five percentage points (excluding Terminated Business) and related unearned premium as of January 1, 2019 under the Partial Termination Amendment;

impact of adverse prior year loss development which was $27.1 million or 24.3 percentage points during the second quarter of 2019 compared to $28.4 million or 6.0 percentage points for the same period in 2018 .

Prior year adverse development in 2019 was primarily due to adverse development in Commercial Auto Liability in accident years 2015 to 2018, partly offset by favorable development in Workers Compensation.

The prior year adverse development in 2018 was largely due to Worker's Compensation and General Liability.

The combined ratio increased by 26.6 percentage points to 130.3% for the six months ended June 30, 2019 compared to 103.7% for the same period in 2018 due to the following factors:

increase in the ceding commission payable which increased by five percentage points for the remaining in-force business immediately prior to January 1, 2019 (excluding Terminated Business) and related unearned premium as of January 1, 2019 under the Partial Termination Amendment (impact of $3.5 million);

impact of adverse prior year loss development which was $62.4 million or 83.8 percentage points during the third quarter of 2019 compared to $210.4 million or 42.8 percentage points for the same period in 2018 .

Prior year adverse development in 2019 was primarily due to adverse development in Commercial Auto and General Liability in accident years 2015 to 2018, partly offset by favorable development in Workers Compensation in accident years 2016-2018.

The prior year adverse development in 2018 was due to Worker's Compensation which represented nearly half of the adverse development and primarily driven by accident years 2014 to 2017, and to a lesser extent, development in European Hospital Liability, Commercial Auto and General Liability.

The combined ratio increased by 27.1 percentage points to 146.5% for the nine months ended September 30, 2019 compared to 119.4% for the same period in 2018 due to the following factors:

higher loss ratios for current year premiums earned during the period primarily due to the Partial Termination Amendment which caused changes in the mix of business being earned in 2019 compared to 2018 .

These changes resulted in a higher current year loss ratio for the remaining in-force business;

increase in the ceding commission payable of $14.1 million for the remaining in-force business immediately prior to January 1, 2019 which increased by five percentage points (excluding Terminated Business) and related unearned premium as of January 1, 2019 under the Partial Termination Amendment;

impact of adverse prior year loss development which was $35.2 million or 13.1 percentage points during the six months ended June 30, 2019 compared to $36.9 million or 3.8 percentage points for the same period in 2018 .

Prior year adverse development in 2019 was primarily due to Commercial Auto Liability in accident years 2014 to 2018, partly offset by favorable development in Workers Compensation.

The prior year adverse development in 2018 was largely due to Workers Compensation and General Liability, with a smaller contribution from Commercial Auto Liability, primarily driven by accident years 2015 and 2016.

Premiums — Gross premiums written decreased significantly for the three and six months ended June 30, 2019 compared to the same respective periods in 2018 reflecting the recent termination of both the AmTrust Quota Share and the European Hospital Liability Quota Share effective January 1, 2019, thus no new business has been written under these contracts during 2019 .

Also, the Partial Termination Amendment resulted in Maiden Bermuda returning approximately $648.0 million in unearned premium to AII, or approximately $436.8 million net of applicable ceding commission and brokerage.

The tables below show net premiums written by category for the three and six months ended June 30, 2019 and 2018 :

For the Three Months Ended June 30,

impact of adverse prior year loss development which was $97.6 million or 28.4 percentage points during the nine months ended September 30, 2019 compared to $247.3 million or 17.0 percentage points for the same period in 2018 .

Prior year adverse development in 2019 was primarily due to Commercial Auto and General Liability in accident years 2014 to 2018, partly offset by favorable development in Workers Compensation in accident years 2016-2018.

The prior year adverse development in 2018 was largely due to Workers Compensation and European Hospital Liability, with a smaller contribution from Commercial Auto and General Liability.

Premiums — Gross premiums written decreased significantly for the three and nine months ended September 30, 2019 compared to the same respective periods in 2018 reflecting the termination of both the AmTrust Quota Share and the European Hospital Liability Quota Share as of January 1, 2019, thus no new business has been written under these contracts during 2019 .

The tables below show net premiums written by category for the three and nine months ended September 30, 2019 and 2018 :

For the Three Months Ended September 30,

($ in thousands)

4 unchanged sentences

Total AmTrust Reinsurance

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

($ in thousands)

4 unchanged sentences

Total AmTrust Reinsurance

Net premiums written in our AmTrust Reinsurance segment for the three and six months ended June 30, 2019 decreased significantly compared to the same respective periods in 2018 due to the recent termination of both the AmTrust Quota Share and the European Hospital Liability Quota Share effective January 1, 2019.

As mentioned above, the Partial Termination Amendment resulted in Maiden Bermuda returning approximately $648.0 million in unearned premium to AII, or approximately $436.8 million net of applicable ceding commission and brokerage, which caused the negative written premiums in the six months ended June 30, 2019 .

Net premiums earned decreased by $364.3 million or 76.6% and $697.8 million or 72.2% for the three and six months ended June 30, 2019 , respectively, compared to the same respective periods in 2018 due to the termination of the AmTrust Quota Share and European Hospital Liability Quota Share effective January 1, 2019.

The tables below detail net premiums earned by category for the three and six months ended June 30, 2019 and 2018 :

For the Three Months Ended June 30,

Net premiums written in our AmTrust Reinsurance segment for the three and nine months ended September 30, 2019 decreased significantly compared to the same respective periods in 2018 due to the termination of both the AmTrust Quota Share and European Hospital Liability Quota Share as of January 1, 2019.

As discussed above, the Partial Termination Amendment resulted in Maiden Bermuda returning approximately $648.0 million in unearned premium to AII, or approximately $436.8 million net of applicable ceding commission and brokerage, which caused negative written premiums in the nine months ended September 30, 2019 .

Net premiums earned decreased by $416.9 million or 84.9% and $1.1 billion or 76.4% for the three and nine months ended September 30, 2019 , respectively, compared to the same respective periods in 2018 due to the termination of the AmTrust Quota Share and European Hospital Liability Quota Share as of January 1, 2019.

The tables below detail net premiums earned by category for the three and nine months ended September 30, 2019 and 2018 :

For the Three Months Ended September 30,

($ in thousands)

4 unchanged sentences

Total AmTrust Reinsurance

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

($ in thousands)

4 unchanged sentences

Total AmTrust Reinsurance

Net Loss and Loss Adjustment Expenses — Net loss and LAE decreased by $244.7 million or 69.2% and $444.0 million or 64.2% for the three and six months ended June 30, 2019 , respectively, compared to the same respective periods in 2018 due to significantly lower earned premiums as a result of the recent termination of both quota share agreements with AmTrust.

Net loss and LAE ratios increased to 97.8% and 91.8% for the three and six months ended June 30, 2019 , respectively, compared to 74.4% and 71.4% for the same respective periods in 2018 .

During the three months ended June 30, 2019 , the net loss and LAE ratio increased by 23.4 percentage points compared to the same period in 2018 primarily due to the following factors:

Net Loss and Loss Adjustment Expenses — Net loss and LAE decreased by $452.2 million or 78.1% and $896.2 million or 70.6% for the three and nine months ended September 30, 2019 , respectively, compared to the same respective periods in 2018 due to significantly lower earned premiums as a result of the recent termination of both quota share agreements with AmTrust.

Net loss and LAE ratios increased to 170.6% and 108.8% for the three and nine months ended September 30, 2019 , respectively, compared to 117.9% and 87.1% for the same respective periods in 2018 .

During the three months ended September 30, 2019 , the net loss and LAE ratio increased by 52.7 percentage points compared to the same period in 2018 primarily due to the following factors:

the Partial Termination Amendment caused significant changes in the mix of business being earned in 2019 compared to 2018 .

These changes resulted in a higher current year loss ratio for the remaining in-force business;

the impact of adverse prior year loss development which was $27.1 million or 24.3 percentage points during the three months ended June 30, 2019 , compared to $28.4 million or 6.0 percentage points for the same period in 2018 .

Prior year adverse development in 2019 was due to adverse development in Commercial Auto Liability in accident years 2014 to 2017, Specialty Risk and Hospital Liability, partly offset by favorable development in Workers Compensation.

The 2018 adverse development was largely from Workers Compensation and General Liability.

During the six months ended June 30, 2019 , the net loss and LAE ratio increased by 20.4 percentage points compared to the same period in 2018 primarily due to the following factors:

the impact of adverse prior year loss development which was $62.4 million or 83.8 percentage points during the three months ended September 30, 2019 , compared to $210.4 million or 42.8 percentage points for the same period in 2018 .

Prior year adverse development in 2019 was due to adverse development in Commercial Auto and General Liability in accident years 2015 to 2018, partly offset by favorable development in Workers Compensation.

The 2018 adverse development from Workers Compensation represented nearly half of the total adverse development and was primarily driven by accident years 2014 to 2017;

to a lesser extent adverse development also occurred in European Hospital Liability, Commercial Auto and General Liability.

During the nine months ended September 30, 2019 , the net loss and LAE ratio increased by 21.7 percentage points compared to the same period in 2018 primarily due to the following factors:

the Partial Termination Amendment caused significant changes in the mix of business being earned in 2019 compared to 2018 .

These changes resulted in a higher current year loss ratio for the remaining in-force business;

the impact of adverse prior year loss development which was $35.2 million or 13.1 percentage points during the six months ended June 30, 2019 , compared to $36.9 million or 3.8 percentage points for the same period in 2018 .

Prior year adverse development in 2019 was due to Commercial Auto Liability in accident years 2014 to 2018, partly offset by favorable development in Workers Compensation.

The 2018 adverse development was due to Workers Compensation and General Liability, with a smaller contribution from Commercial Auto Liability, primarily driven by accident years 2015 and 2016.

Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $111.3 million or 72.8% and $208.2 million or 67.2% for the three and six months ended June 30, 2019 , respectively, compared to the same respective periods in 2018 due to significantly lower earned premiums as a result of recent terminations of both quota share agreements with AmTrust effective January 1, 2019.

The commission and other acquisition expense ratio increased to 37.2% and 37.8% for the three and six months ended June 30, 2019 , respectively, compared to 32.1% for the same respective periods in 2018 driven by the increase in ceding commission payable for the remaining in-force business immediately prior to January 1, 2019 which increased by five percentage points (excluding Terminated Business) and related unearned premium as of January 1, 2019 under the Partial Termination Amendment.

The increase in commission expenses due to the higher ceding commission rate payable was $6.5 million and $14.1 million, respectively, for the three and six months ended June 30, 2019 .

General and Administrative Expenses — General and administrative expenses decreased slightly by $0.5 million or 48.1% and $0.2 million or 8.7% for the three and six months ended June 30, 2019 , respectively, compared to the same respective periods in 2018 .

The general and administrative expense ratios increased to 0.5% and 0.7% for the three and six months ended June 30, 2019 , respectively, compared to 0.2% for the same respective periods in 2018 as a result of significantly lower earned premiums due to the recent termination of both quota share agreements with AmTrust effective January 1, 2019.

The overall expense ratio (including commission and other acquisition expenses) increased to 37.7% and 38.5% for the three and six months ended June 30, 2019 , respectively, compared to 32.3% for the same respective periods in 2018 primarily due to the increase in ceding commission payable under the Partial Termination Amendment as discussed above.

the impact of adverse prior year loss development which was $97.6 million or 28.4 percentage points during the nine months ended September 30, 2019 , compared to $247.3 million or 17.0 percentage points for the same period in 2018 .

Prior year adverse development in 2019 was due to Commercial Auto and General Liability in accident years 2014 to 2018, partly offset by favorable development in Workers Compensation in accident years 2016-2018.

The 2018 adverse development was primarily from Workers Compensation and European Hospital Liability, with a smaller contribution from Commercial Auto and General Liability.

Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $132.9 million or 83.8% and $341.1 million or 72.8% for the three and nine months ended September 30, 2019 , respectively, compared to the same respective periods in 2018 due to significantly lower earned premiums as a result of recent terminations of both quota share agreements with AmTrust effective as of January 1, 2019.

The commission and other acquisition expense ratio increased to 34.6% and 37.1% for the three and nine months ended September 30, 2019 , respectively, compared to 32.3% and 32.1% for the same respective periods in 2018 .

This was driven by higher ceding commission payable which increased by five percentage points for the remaining in-force business immediately prior to January 1, 2019 (excluding Terminated Business) and related unearned premium as of January 1, 2019 under the Partial Termination Amendment.

The increase in commission expenses incurred due to the higher ceding commission rate payable was $3.5 million and $17.6 million, respectively, for the three and nine months ended September 30, 2019 .

General and Administrative Expenses — General and administrative expenses decreased slightly by $0.7 million or 75.3% and $0.9 million or 30.2% for the three and nine months ended September 30, 2019 , respectively, compared to the same respective periods in 2018 .

The general and administrative expense ratios increased to 0.3% and 0.6% for the three and nine months ended September 30, 2019 , respectively, compared to 0.2% for the same respective periods in 2018 as a result of significantly lower earned premiums due to the termination of both quota share agreements with AmTrust as of January 1, 2019.

The overall expense ratio (including commission and other acquisition expenses) increased to 34.9% and 37.7% for the three and nine months ended September 30, 2019 , respectively, compared to 32.5% and 32.3% for the same respective periods in 2018 primarily due to the increase in ceding commission payable under the Partial Termination Amendment as discussed above.

Liquidity and Capital Resources

3 unchanged sentences

Some jurisdictions also place restrictions on the declaration and payment of dividends and other distributions.

As discussed previously in the "Overview to Critical Accounting Policies" , the Partial Termination Amendment was effective as of January 1, 2019.

During January 2019, as part of this amendment, the Company transferred cash and investments of $480.0 million to AII based on provisional estimates.

On May 30, 2019, AII reported to Maiden the actual unearned premium applicable to the Terminated Business as of December 31, 2018 .

As the estimated unearned premium exceeded the actual unearned premium, AII returned the excess to Maiden Bermuda which was approximately $43.2 million .

The regulatory and liquidity requirements of the Company's operating segments are discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" section included under Item 7 of our Annual Report on Form 10- K for the year ended December 31, 2018 , filed with the SEC on March 14, 2019 .

Pursuant to Bermuda law, the Company must ensure that the value of the group's assets exceeds the amount of the group's liabilities by the aggregate minimum margin of solvency of each qualifying member of the group ("Group MSM").

Since December 31, 2013, we have been required to maintain available group capital and surplus at a level equal to or in excess of the Group Enhanced Capital Requirement ("Group ECR") which is established by reference to either the Group Bermuda Solvency Capital Requirement ("Group BSCR") model or an approved group internal capital model.

As a result of the remediation measures implemented including, but not limited to, the transactions resulting from the Strategic Review, the LPT/ADC Agreement with Enstar and the Commutation and Release Agreement with AmTrust, which were both entered into on July 31, 2019, the Company and Maiden Bermuda will meet and exceed the respective MSM and ECR ratios required by the Bermuda insurance legislation.

Further, as a result of these measures, we expect the relevant capital and solvency levels and ratios at both the Group and operating company level to continue to improve throughout the remainder of 2019.

Consistent with the continuing recovery of our capital base, we remain actively engaged in ongoing discussions with the Bermuda Monetary Authority ("BMA") regarding the formulation of our longer term business plan, which will require the approval of the BMA for any new reinsurance business.

Finally, the amount of dividends that can be distributed from Maiden Bermuda is, under certain circumstances, limited under Bermuda law and Bermuda regulatory requirements, which requires our Bermuda operating subsidiary to maintain certain measures of solvency and liquidity in accordance with the BSCR.

Presently, we have voluntarily undertaken with the BMA not to make any capital distributions of any kind, including the payment of any common or preference share dividends, without the express consent of the BMA.

Our sources of funds historically have consisted of premium receipts net of commissions and brokerage, investment income, net proceeds from capital raising activities, which may include the issuance of debt and common and preference shares, and proceeds from sales, maturities, paydowns and redemption of investments.

2 unchanged sentences

As previously noted, the Strategic Review resulted in a series of transactions that have materially reduced the risk on our balance sheet and have transformed our operations.

As a result of the transactions entered into from the Strategic Review, the Company's gross and net premiums written are and will continue to be materially lower in 2019 and investment income will become a significantly larger portion of our revenues.

This has resulted in negative operating cash flow as detailed in the table below.

As a result of the transactions entered into from the Strategic Review, we are not engaged in any active underwriting of reinsurance business, and as a result, the Company's gross and net premiums written are and will continue to be materially lower in 2019 and investment income will become a significantly larger portion of our revenues.

This has resulted in significant negative operating cash flow as detailed in the table below.

We expect this trend to continue throughout the remainder of 2019.

We expect to use funds from cash and investment portfolios, collected premiums on reinsurance contracts in force or being run-off, investment income and proceeds from sales and redemptions of investments to meet expected claims payments and operational expenses.

The premium for the LPT/ADC Agreement with Enstar and the Commutation and Release Agreement with AmTrust will be paid from restricted cash and investments.

The premium for the LPT/ADC Agreement with Enstar and the Commutation and Release Agreement with AmTrust was paid from restricted cash and investments.

Claim payments will be principally from the run-off of existing reserves for losses and loss adjustment expenses.

1 unchanged sentence

Overall, we expect our cash flows, together with our existing capital base and unrestricted cash and investments to be sufficient to meet our cash requirements and to operate our business.

The table below summarizes our operating, investing and financing cash flows for the six months ended June 30, 2019 and 2018 :

For the Six Months Ended June 30,

As of September 30, 2019 , the Company had investable assets of $3.0 billion compared to $4.6 billion as of December 31, 2018 .

Investable assets are the total of the Company's investments, cash and cash equivalents, loan to a related party and funds withheld receivable.

The decrease in investable assets is primarily the result of the aforementioned significant negative operating cash flow during 2019 , in particular as a result of certain strategic transactions that have occurred during the period that required the disbursement of cash and investments.

The most significant of these transactions are described below.

As discussed previously in the "Overview" on page 40, the Partial Termination Amendment was effective as of January 1, 2019.

During January 2019, as part of this amendment, the Company transferred cash and investments of $480.0 million to AII based on provisional estimates.

On May 30, 2019, AII reported to Maiden the actual unearned premium applicable to the Terminated Business as of December 31, 2018 .

As the estimated unearned premium exceeded the actual unearned premium, AII returned the excess to Maiden Bermuda which was approximately $43.2 million .

As discussed previously in the "Overview" , the Commutation and Release Agreement was effective as of July 31, 2019.

On August 12, 2019 , as part of this agreement, the Company transferred cash and investments of $312.8 million to AII which is the sum of the net ceded reserves in the amount of $330.7 million with respect to the Commuted Business as of December 31, 2018 less payments in the amount of $17.9 million made by Maiden Bermuda with respect to the Commuted Business from January 1, 2019 through July 31, 2019.

Maiden Bermuda paid AII approximately $6.3 million in interest related to the Commutation Payment premium, calculated at the rate of 3.30% per annum from January 1, 2019 through August 12, 2019 .

As discussed previously in the "Overview" , the LPT/ADC Agreement was dated as of July 31, 2019.

Under this agreement, Cavello has assumed liabilities for the loss reserves as of December 31, 2018 associated with the AmTrust Quota Share in excess of a $2.2 billion retention up to $600.0 million , in exchange for a retrocession premium of $445.0 million which the Company fully paid in cash and transferred to Cavello on August 12, 2019 .

Maiden Bermuda paid Enstar approximately $7.3 million in interest related to the LPT/ADC Agreement premium, calculated at the rate of 2.64% per annum from January 1, 2019 through August 12, 2019 .

As a result of the remediation measures implemented including, but not limited to, the transactions resulting from the Strategic Review, the LPT/ADC Agreement with Enstar and the Commutation and Release Agreement with AmTrust, which were both entered into on July 31, 2019, both the Company and Maiden Bermuda meet and exceed the respective MSM and ECR ratios required by the Bermuda insurance legislation.

As previously indicated, Maiden Bermuda has made filings with the Bermuda Monetary Authority ("BMA") to discontinue from

Bermuda and an application with the Department of Financial Regulation in the State of Vermont in the United States to be licensed and to re-domesticate to that jurisdiction.

We remain actively engaged with both regulators regarding those filings, including but not limited to the formulation of our longer term business plan, which will require regulatory approval for any active underwriting, capital management or other strategic initiatives.

At September 30, 2019 and December 31, 2018 , unrestricted cash and cash equivalents and unrestricted fixed maturity investments were $434.4 million and $356.6 million , respectively.

The table below summarizes our operating, investing and financing cash flows for the nine months ended September 30, 2019 and 2018 :

For the Nine Months Ended September 30,

($ in thousands)

3 unchanged sentences

Effect of exchange rate changes on foreign currency cash

Total increase in cash, restricted cash and cash equivalents

Total (decrease) increase in cash, restricted cash and cash equivalents

change in cash, restricted cash and cash equivalents of discontinued operations

Total increase in cash, restricted cash and cash equivalents of continuing operations

Total change in cash, restricted cash and cash equivalents of continuing operations

Cash Flows used in Operating Activities

Cash flows used in operating activities for the six months ended June 30, 2019 were $503.7 million compared to cash flows provided by operating activities of $56.1 million for the six months ended June 30, 2018 , a decrease of $559.8 million .

Cash flows used in discontinued operations were $1.8 million for the six months ended June 30, 2019 compared to $78.6 million in the six months ended June 30, 2018 .

Cash flows used in continuing operating activities were $501.8 million for the six months ended June 30, 2019 compared to cash flows provided by continuing operations of $134.7 million for the six months ended June 30, 2018 .

The decrease in operating cash flows from continuing operations was primarily the result of the termination of the AmTrust Quota Share and European Hospital Liability Quota Share, including the Partial Termination Amendment, which significantly decreased gross premiums written during the six months ended June 30, 2019 compared to the same period in 2018 .

Cash flows used in operating activities for the nine months ended September 30, 2019 were $949.3 million compared to cash flows provided by operating activities of $162.6 million for the nine months ended September 30, 2018 , a decrease of $1.1 billion .

Cash flows used in discontinued operations were $2.1 million for the nine months ended September 30, 2019 compared to $51.9 million in the nine months ended September 30, 2018 .

Cash flows used in continuing operating activities were $947.2 million for the nine months ended September 30, 2019 compared to cash flows provided by continuing operations of $214.5 million for the nine months ended September 30, 2018 .

The significant decrease in operating cash flows from continuing operations was primarily the result of the termination of the AmTrust Quota Share including the Partial Termination Amendment and the Commutation and Release Agreement, and the termination of the European Hospital Liability Quota Share, which significantly decreased gross premiums written during the nine months ended September 30, 2019 compared to the same period in 2018 .

The decrease in operating cash flows also includes the new funds withheld arrangement with AmTrust in 2019 .

A total of $425.2 million cash and cash equivalents was transferred to AmTrust as a result of these transactions, as well as claims payments net of premium adjustments for the AmTrust Quota Share, during the six months ended June 30, 2019 .

A total of $599.6 million cash and cash equivalents was transferred to AmTrust as a result of the Partial Termination Amendment and the Commutation and Release Agreement, as well as an additional $812.1 million transferred for the funds withheld arrangement and claims payments net of premium adjustments for the AmTrust Quota Share, during the nine months ended September 30, 2019 .

Cash Flows from Investing Activities

1 unchanged sentence

The Company continues to deploy available cash for longer-term investments as investment conditions permit and to maintain, where possible, cash and cash equivalents balances at relatively low levels.

Net cash provided by investing activities was $630.9 million for the six months ended June 30, 2019 compared to $22.2 million for the same period in 2018 .

Cash flows used in discontinued operations was $6.1 million for the six months ended June 30, 2019 compared to cash flows provided by discontinued operations of $97.8 million for the same period in 2018 .

Cash flows provided by continuing operations was $637.0 million during the six months ended June 30, 2019 compared to cash flows used in continuing operations of $75.6 million for the same period in 2018 as the purchases of fixed maturity securities were lower and the proceeds from maturities and sales of fixed maturities were higher during the six months ended June 30, 2019 compared to the same period in 2018 .

During the six months ended June 30, 2019 , the proceeds from the sales, maturities and calls exceeded the purchases of fixed maturity securities by $638.5 million compared to an outflow of $74.6 million for the same period in 2018 .

Net cash provided by investing activities was $686.4 million for the nine months ended September 30, 2019 compared to $27.2 million for the same period in 2018 primarily due to the sale of fixed maturity investments in the third quarter of 2019 which were made to settle the Commutation Payment of $312.8 million and retrocession premium of $445.0 million under the LPT/ADC Agreement.

Cash flows used in discontinued operations was $6.1 million for the nine months ended September 30, 2019 compared to cash flows provided by discontinued operations of $112.5 million for the same period in 2018 .

Cash flows provided by continuing operations was $692.5 million during the nine months ended September 30, 2019 compared to cash flows used in continuing operations of $85.3 million for the same period in 2018 as the purchases of fixed maturity securities were lower and the proceeds from maturities and sales of fixed maturities were higher during the nine months ended September 30, 2019 compared to the same period in 2018 .

During the nine months ended September 30, 2019 , the proceeds from the sales, maturities and calls exceeded the purchases of fixed maturity securities by $695.8 million compared to an outflow of $74.5 million for the same period in 2018 .

Cash Flows from Financing Activities

Cash flows used in financing activities were $0.01 million for the six months ended June 30, 2019 compared to $42.2 million for the same period in 2018 .

No dividends on common or preference shares were paid during the six months ended June 30, 2019 .

Cash flows used in financing activities were $0.02 million for the nine months ended September 30, 2019 compared to $63.9 million for the same period in 2018 .

No dividends on common or preference shares were paid during the nine months ended September 30, 2019 .

Our Board of Directors have not declared any common or preference share dividends since the fourth quarter of 2018 .

The cash outflow during the six months ended June 30, 2018 primarily relates to dividends paid to holders of preference shares of $17.1 million and dividends paid to holders of common shares of $24.9 million .

The cash outflow during the nine months ended September 30, 2018 primarily relates to dividends paid to holders of preference shares of $25.6 million and dividends paid to holders of common shares of $37.4 million .

Restrictions, Collateral and Specific Requirements

The Company's restrictions, collateral and specific requirements are discussed in " Management's Discussion and Analysis of Financial Condition and Results of Operations " section included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2018 , filed with the SEC on March 14, 2019 .

At June 30, 2019 and December 31, 2018 , restricted cash and cash equivalents and fixed maturity investments used as collateral were $2.9 billion and $4.0 billion , respectively.

This collateral represents 83.6% and 91.9% of the fair value of our total fixed maturity investments and cash and cash equivalents (including restricted cash and cash equivalents) at June 30, 2019 and December 31, 2018 , respectively.

At September 30, 2019 and December 31, 2018 , restricted cash and cash equivalents and fixed maturity investments used as collateral were $1.7 billion and $4.0 billion , respectively.

This collateral represents 79.6% and 91.9% of the fair value of our total fixed maturity investments and cash and cash equivalents (including restricted cash and cash equivalents) at September 30, 2019 and December 31, 2018 , respectively.

The investment of our funds is designed to ensure safety of principal while generating current income.

Accordingly, our funds are invested in liquid, investment-grade fixed income securities which are all designated as available-for-sale ("AFS") at June 30, 2019 .

Accordingly, our funds are invested in liquid, investment-grade fixed income securities which are all designated as available-for-sale ("AFS") at September 30, 2019 .

Please see " Notes to Condensed Consolidated Financial Statements (unaudited) Note 4.

Investments " included under Part I Item 1 " Financial Information" of this Form 10-Q.

During the six months ended June 30, 2019 , the yield on the 10-year U.S.

During the nine months ended September 30, 2019 , the yield on the 10-year U.S.

Treasury bond decreased by 101 basis points to 1.68%.

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The continuing downward shift in the U.S.

Treasury yield curve during the six months ended June 30, 2019 reflects a potentially more accommodative Federal Reserve policy for the remainder of 2019 primarily due to global trade tensions and uncertainty and investor appetite for relatively risk-free investments amid concerns regarding future global economic growth.

The movement in the market values of our AFS fixed maturity portfolio during the six months ended June 30, 2019 generated net unrealized gains of $87.8 million , primarily due to the recent trend of lower long-term interest rates along with lower inflation expectations as a result of slower global economic growth, both of which have increased bond prices during the six months ended June 30, 2019 .

Treasury yield curve during the nine months ended September 30, 2019 reflects a potentially more accommodative Federal Reserve policy for the remainder of 2019 primarily due to global trade tensions and uncertainty and investor appetite for relatively risk-free investments amid concerns regarding future global economic growth.

The movement in the market values of our AFS fixed maturity portfolio during the nine months ended September 30, 2019 generated net unrealized gains of $77.1 million , primarily due to the recent trend of lower long-term interest rates along with lower inflation expectations as a result of slower global economic growth, both of which have increased bond prices during the nine months ended September 30, 2019 .

Please see " Liquidity and Capital Resources - Capital Resources" on page 63 for further information.

At June 30, 2019 , we consider the levels of cash and cash equivalents we are holding to be within our targeted ranges.

In order to limit our exposure to unexpected interest rate increases which would reduce the value of our fixed income securities and reduce our shareholders' equity, we attempt to maintain the duration of our fixed maturity investment portfolio combined with our cash and cash equivalents, both restricted and unrestricted, within a reasonable range of the duration of our loss reserves.

At June 30, 2019 and December 31, 2018 , these respective durations in years were as follows:

June 30, 2019

At September 30, 2019 , we consider the levels of cash and cash equivalents we are holding to be within our targeted ranges.

During periods when interest rates experience greater volatility, we have periodically maintained more cash and cash equivalents in order to better assess current market conditions and opportunities within our defined risk appetite, and may do so in future periods.To limit our exposure to unexpected interest rate increases which would reduce the value of our fixed income securities and reduce our shareholders' equity, we attempt to maintain the duration of our fixed maturity investment portfolio combined with our cash and cash equivalents, both restricted and unrestricted, within a reasonable range of the duration of our loss reserves.

At September 30, 2019 and December 31, 2018 , these respective durations in years were as follows:

September 30, 2019

December 31, 2018

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Reserve for loss and LAE (1)

During the six months ended June 30, 2019 , the weighted average duration of our fixed maturity investment portfolio decreased by 1.1 years to 3.1 years and the duration for the reserve for loss and LAE decreased by 0.6 years to 3.9 years.

(1) The duration regarding our reserve for loss and LAE at September 30, 2019 is gross of LPT/ADC Agreement reserves.

During the nine months ended September 30, 2019 , the weighted average duration of our fixed maturity investment portfolio decreased by 0.6 years to 3.6 years and the duration for the reserve for loss and LAE decreased by 0.4 years to 4.1 years.

The differential in duration between these assets and liabilities may fluctuate over time and in the case of fixed maturities, historically has been affected by factors such as market conditions, changes in asset mix and prepayment speeds in the case of both our agency mortgage-backed securities ("Agency MBS") and commercial mortgage-backed securities ("CMBS").

At June 30, 2019 , the duration of our fixed maturity investment portfolio had decreased compared to December 31, 2018 as we had sold fixed maturities in anticipation of entering into the LPT/ADC Agreement with Enstar prior to that date as the premium is to be paid in cash.

Furthermore, upon entering into both the LPT/ADC Agreement with Enstar and the Commutation and Release Agreement with AmTrust, we anticipate that the duration of our reserve for loss and LAE will decrease also and the differential between asset and liability duration will narrow.

We expect to make further adjustments to return that differential to its historical range as the effects of the LPT/ADC Agreement with Enstar and the Commutation and Release Agreement with AmTrust on liability duration are confirmed.

At September 30, 2019 , the duration of our fixed maturity investment portfolio had decreased compared to December 31, 2018 due to sales of fixed maturities as a result of entering into both the LPT/ADC Agreement with Enstar and the Commutation and Release Agreement with AmTrust.

Due to the impact of these agreements, the duration of our reserve for loss and LAE has decreased similarly and the differential between asset and liability duration is comparable to December 31, 2018 .

The average yield and average duration of our fixed maturities, by asset class, and our cash and cash equivalents (restricted and unrestricted) are as follows:

June 30, 2019

September 30, 2019

Original or Amortized Cost

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agency bonds – mortgage-backed

agency bonds – other

government and supranational bonds

26 unchanged sentences

Average duration in years.

At June 30, 2019 , 94.9% of the Company’s U.S.

At September 30, 2019 , 100.0% of the Company’s U.S.

agency bond holdings are mortgage-backed.

Additional details on the Agency MBS at June 30, 2019 and December 31, 2018 were as follows:

June 30, 2019

Additional details on the Agency MBS at September 30, 2019 and December 31, 2018 were as follows:

September 30, 2019

December 31, 2018

8 unchanged sentences

agency bonds - fixed rate

Our Agency MBS portfolio is 32.2% of our fixed maturity investments at June 30, 2019 .

Our Agency MBS portfolio is 36.9% of our fixed maturity investments at September 30, 2019 .

Given the relative size of this portfolio to our total investments, if faster prepayment patterns were to occur over an extended period of time, this could potentially limit the growth in our investment income in certain circumstances, or even potentially reduce the total amount of investment income we earn.

At June 30, 2019 and December 31, 2018 , 99.1% and 98.7% , respectively, of our fixed maturity investments consisted of investment grade securities.

At September 30, 2019 and December 31, 2018 , 99.7% and 98.7% , respectively, of our fixed maturity investments consisted of investment grade securities.

We define a security as being below investment grade if it has an S&P credit rating of BB+, or equivalent, or less.

1 unchanged sentence

Investments " for additional information on the credit rating of our fixed income portfolio.

The security holdings by sector and financial strength rating of our corporate bond holdings at June 30, 2019 and December 31, 2018 were as follows:

June 30, 2019

The security holdings by sector and financial strength rating of our corporate bond holdings at September 30, 2019 and December 31, 2018 were as follows:

September 30, 2019

BBB+, BBB, BBB-

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Ratings as assigned by S&P, or equivalent

At June 30, 2019 , the Company’s ten largest corporate holdings, 90.2% of which are U.S.

At September 30, 2019 , the Company’s ten largest corporate holdings, 90.1% of which are U.S.

dollar denominated and 42.5% of which are in the Financial Institutions sector, at fair value and as a percentage of all fixed income securities were as follows:

June 30, 2019

September 30, 2019

% of Holdings

Based on Fair

($ in thousands)

Gilead Sciences Inc, 3.65% Due 3/1/2026

Brookfield Asset Management Inc, 4.00%, Due 1/15/2025

Rabobank Nederland Utrec, 3.875% Due 2/8/2022

BNP Paribas, 5.00% Due 1/15/2021

Nissan Motor Acceptance Corp, 3.875%, Due 9/21/2023

Electricite de France, 4.625%, Due 9/11/2024

2 unchanged sentences

Pepsico Inc., 3.60%, Due 3/1/2024

BAE Systems (Holdings) Ltd., 3.80%, Due 10/7/2024

Allergan Funding SCS, 3.80%, Due 3/15/2025

BAT International Finance PLC, 3.95%, Due 6/15/2025

Daimler Finance North America LLC, 3.30%, Due 5/19/2025

Ratings as assigned by S&P, or equivalent

At June 30, 2019 and December 31, 2018 , respectively, we hold the following non-U.S.

At September 30, 2019 and December 31, 2018 , respectively, we hold the following non-U.S.

dollar denominated securities:

June 30, 2019

September 30, 2019

December 31, 2018

4 unchanged sentences

dollar denominated AFS securities

At June 30, 2019 and December 31, 2018 , respectively, these non-U.S.

At September 30, 2019 and December 31, 2018 , respectively, these non-U.S.

securities are invested in the following currencies:

June 30, 2019

September 30, 2019

December 31, 2018

6 unchanged sentences

The net decrease in non-U.S.

denominated fixed maturities is primarily due to sales of Australian dollar denominated corporate bonds during the six months ended June 30, 2019 .

At June 30, 2019 and December 31, 2018 , all of the Company's non-U.S.

denominated fixed maturities is primarily due to sales of Australian dollar denominated corporate bonds during the nine months ended September 30, 2019 .

At September 30, 2019 and December 31, 2018 , all of the Company's non-U.S.

government and supranational issuers have a rating of A or higher by S&P.

1 unchanged sentence

dollar denominated corporate bonds, the following table summarizes the composition of the fair value of our fixed maturity investments at the dates indicated by ratings:

June 30, 2019

September 30, 2019

December 31, 2018

5 unchanged sentences

The Company does not employ any credit default protection against any of the fixed maturities held in non-U.S.

denominated currencies at June 30, 2019 and December 31, 2018 , respectively.

denominated currencies at September 30, 2019 and December 31, 2018 , respectively.

Other Balance Sheet Changes

The following table summarizes the Company's other material balance sheet changes at June 30, 2019 and December 31, 2018 :

The following table summarizes the Company's other material balance sheet changes at September 30, 2019 and December 31, 2018 :

($ in thousands)

June 30, 2019

September 30, 2019

December 31, 2018

Reinsurance recoverable on unpaid losses

Deferred commission and other acquisition expenses

Funds withheld receivable

Reserve for loss and LAE

Unearned premiums

Liability for investments purchased

Deferred gain on retroactive reinsurance

Accrued expenses and other liabilities

NM - not meaningful

The Company's deferred commission and other acquisition expenses decreased by 70.7% and unearned premiums decreased by 73.2% primarily due to the Partial Termination Amendment with AmTrust which resulted in Maiden Bermuda returning approximately $648.0 million in unearned premium to AII, or approximately $436.8 million , net of applicable deferred commission and other acquisition expenses of $211.2 million .

The amounts further declined due to the termination of the remaining business under both quota share contracts with AmTrust which are now in run-off with no new business written beginning January 1, 2019.

Accrued expenses and other liabilities decreased by 77.4% as at June 30, 2019 compared to December 31, 2018 due to reductions in the reinsurance balances payable as a result of the termination of both AmTrust reinsurance contracts effective January 1, 2019.

Funds withheld receivable increased by $654.2 million due to the conversion of a portion of the existing trust accounts used for collateral on the AmTrust Quota Share into a funds withheld arrangement and the establishment of a funds withheld arrangement on the AIU DAC portion of the European Hospital Liability Quota Share, which is a permitted collateral option under each

respective agreement, during the six months ended June 30, 2019 .

The liability for investments purchased increased by $298.9 million due to timing on investment trades primarily within the trust accounts used for collateral on the AmTrust Quota Share which were settled using restricted cash subsequent to June 30, 2019 .

The Company's deferred commission and other acquisition expenses decreased by 76.7% and unearned premiums decreased by 78.2% primarily due to the Partial Termination Amendment with AmTrust on a cut-off basis and the termination of the remaining business under both quota share contracts with AmTrust which are now in run-off with no new business written beginning January 1, 2019.

Accrued expenses and other liabilities decreased by 81.2% as at September 30, 2019 compared to December 31, 2018 due to reductions in the reinsurance balances payable as a result of the aforementioned termination of both AmTrust reinsurance contracts effective January 1, 2019.

Funds withheld receivable increased by $651.7 million due to the conversion of a portion of the existing trust accounts used for collateral on the AmTrust Quota Share into a funds withheld arrangement and the establishment of a funds withheld arrangement on the AIU DAC portion of the European Hospital Liability Quota Share, both of which are permitted collateral options under each respective agreement, on January 11, 2019.

Reinsurance recoverable on unpaid losses increased by $543.6 million at September 30, 2019 compared to December 31, 2018 as a result of the entry by Maiden Bermuda into the LPT/ADC Agreement pursuant to which Cavello assumed liabilities for the loss reserves as of December 31, 2018 of $445.0 million .

In addition, reinsurance recoverables further increased by $104.5 million due to adverse prior year reserve development on loss reserves subject to the agreement, with a corresponding deferred gain on retroactive reinsurance recognized.

Capital Resources

Capital resources consist of funds deployed in support of our operations.

In the six months ended June 30, 2019 , our total capital resources increase d by $36.3 million , or 4.4% compared to December 31, 2018 due to the favorable movement in unrealized gains on our investment portfolio partly offset by a net loss attributable to common shareholders.

In the nine months ended September 30, 2019 , our total capital resources decrease d by $21.1 million , or 2.6% compared to December 31, 2018 due to the net loss attributable to common shareholders partly offset by unrealized gains on our investment portfolio.

The Company’s management believes its current sources of liquidity are adequate to meet its cash requirements for the next twelve months.

The following table shows the movement in total capital resources at June 30, 2019 and December 31, 2018 :

The following table shows the movement in total capital resources at September 30, 2019 and December 31, 2018 :

($ in thousands)

June 30, 2019

September 30, 2019

December 31, 2018

4 unchanged sentences

Total capital resources

The major factors contributing to the net increase in capital resources were as follows:

The major factors contributing to the net decrease in capital resources were as follows:

Maiden shareholders' equity

Total shareholders' equity at June 30, 2019 increased by $36.3 million , or 6.5% , compared to December 31, 2018 primarily due to the following factors:

Total shareholders' equity at September 30, 2019 decreased by $21.1 million , or 3.8% compared to December 31, 2018 due to the following factors:

net loss attributable to Maiden of $110.4 million for the nine months ended September 30, 2019 partly offset by:

net increase in AOCI of $87.6 million which arose due to:

1) an increase in net unrealized gains on investment of $89.0 million resulting from the net increase in the fair value of our investment portfolio relating to market price movements due to declining interest rates during the six months ended June 30, 2019 ;

offset by 2) a decrease in cumulative translation adjustments of $2.3 million due to the effect of the recent depreciation of the euro and British pound relative to the original currencies on our non-U.S.

1) an increase in net unrealized gains on investment of $78.3 million resulting from the net increase in the fair value of our investment portfolio relating to market price movements due to declining interest rates during the nine months ended September 30, 2019 ;

2) an increase in cumulative translation adjustments of $9.2 million due to the effect of the recent depreciation of the euro and British pound relative to the original currencies on our non-U.S.

dollar net liabilities (excluding non-U.S.

dollar denominated AFS fixed maturities);

dollar AFS fixed maturities);

net increase in share based transactions of $1.7 million .

and partly offset by

net loss attributable to Maiden of $52.0 million .

Please see the discussion of the Company’s net loss for the six months ended June 30, 2019 on page 43 of the " Results of Operations ".

On February 21, 2017, the Company's Board of Directors approved the repurchase of up to $100.0 million of the Company's common shares from time to time at market prices.

During the six months ended June 30, 2019 , the Company did not repurchase any common shares under its share repurchase authorization.

At June 30, 2019 , the Company has a remaining authorization of $74.2 million for share repurchases.

During the nine months ended September 30, 2019 , the Company did not repurchase any common shares under its share repurchase authorization.

At September 30, 2019 , the Company has a remaining authorization of $74.2 million for share repurchases.

Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 13.

Shareholders' Equity " included under Part I Item 1 " Financial Information" of this Form 10-Q for a discussion of the equity instruments issued by the Company at June 30, 2019 and December 31, 2018 .

There were no changes in the Company’s Senior Notes at June 30, 2019 compared to December 31, 2018 and the Company did not enter into any short-term borrowing arrangements during the six months ended June 30, 2019 .

Shareholders' Equity " included under Part I Item 1 " Financial Information" of this Form 10-Q for a discussion of the equity instruments issued by the Company at September 30, 2019 and December 31, 2018 .

On October 25, 2019, the Company transferred the listing of its common shares from the NASDAQ Global Select Market to the NASDAQ Capital Market.

The NASDAQ Capital Market is a continuous trading market that operates in substantially the same manner as the NASDAQ Global Select Market and listed companies must meet certain financial requirements and comply with the NASDAQ Stock Market LLC’s (“NASDAQ”) corporate governance requirements.

The Company’s common shares continue to trade under the symbol “MHLD”.

Book Value per Common Share and Diluted Book Value per Common Share

Book value and diluted book value per common share at September 30, 2019 and December 31, 2018 were computed as follows:

September 30, 2019

December 31, 2018

($ in thousands except share and per share data)

Ending Maiden common shareholders’ equity

Proceeds from assumed conversion of dilutive options

Numerator for diluted book value per common share calculation

Common shares outstanding

Shares issued from assumed conversion of dilutive options and restricted share units

Denominator for diluted book value per common share calculation

Book value per common share

Diluted book value per common share

At September 30, 2019 , book value per common share decreased by 24.1% and diluted book value per common share decreased by 25.0% , compared to December 31, 2018 .

This was primarily due to our net loss attributable to Maiden common shareholders of $110.4 million for the nine months ended September 30, 2019 , partly offset by net unrealized gains on our investment portfolio of $78.3 million and foreign currency gains of $9.2 million reported in other comprehensive income during the nine months ended September 30, 2019 .

Please see " Liquidity and Capital Resources - Investments" on page 59 for further information on the change in fair value of our fixed maturity investment portfolio.

There were no changes in the Company’s Senior Notes at September 30, 2019 compared to December 31, 2018 and the Company did not enter into any short-term borrowing arrangements during the nine months ended September 30, 2019 .

Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 7.

Long Term Debt " included under Part I Item 1 " Financial Information" of this Form 10-Q for a discussion of the Company’s Senior Notes.

Ratio of Debt to Total Capital Resources

The ratio of Debt to Total Capital Resources (see calculation above of Total Capital Resources), which is a non-GAAP financial measure, at September 30, 2019 and December 31, 2018 was computed as follows:

September 30, 2019

December 31, 2018

($ in thousands)

Senior notes - principal amount

Maiden shareholders’ equity

Total capital resources

Ratio of debt to total capital resources

Financial Strength Ratings

6 unchanged sentences

These contractual obligations are considered by the Company when assessing its liquidity requirements and the Company is confident in its ability to meet all of its obligations.

As a result of the adoption of Topic 842 accounting standard for leases on January 1, 2019, the Company’s contractual operating lease obligations have been capitalized at the net present value of future lease payments on the Company's Condensed Consolidated Balance Sheet at June 30, 2019 .

As a result of the adoption of Topic 842 accounting standard for leases on January 1, 2019, the Company’s contractual operating lease obligations were capitalized at the net present value of future lease payments on the Condensed Consolidated Balance Sheet at September 30, 2019 .

Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 11.

1 unchanged sentence

There are no other material changes from what was disclosed in the Company’s table of contractual obligations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 .

Non-GAAP Measures

The calculation, reconciliation to nearest GAAP measure and discussion of relevant non-GAAP measures (as defined in the Key Financial Measures on page 44) used by management are as follows:

Non-GAAP Operating earnings (loss)

Non-GAAP operating earnings (loss) and non-GAAP diluted operating earnings (loss) per common share can be reconciled to the nearest U.S.

GAAP financial measure as follows:

For the Three Months Ended September 30,

($ in thousands except per share data)

Net loss attributable to Maiden common shareholders

Add (subtract):

Net realized (gains) losses on investment

Total other-than-temporary impairment losses

Foreign exchange and other (gains) losses

Loss from NGHC Quota Share run-off

Unamortized deferred gain on retroactive reinsurance

Loss from discontinued operations, net of income tax

Interest expense paid under the LPT/ADC Agreement and the Commutation Agreement

Separation costs incurred due to retirement of former executives

Non-GAAP operating earnings (loss) attributable to Maiden common shareholders

Diluted loss per share attributable to Maiden common shareholders

Add (subtract):

Net realized (gains) losses on investment

Total other-than-temporary impairment losses

Foreign exchange and other (gains) losses

Loss from NGHC Quota Share run-off

Unamortized deferred gain on retroactive reinsurance

Loss from discontinued operations, net of income tax

Interest expense paid under the LPT/ADC Agreement and the Commutation Agreement

Separation costs incurred due to retirement of former executives

Non-GAAP diluted operating earnings (loss) per common share

For the Nine Months Ended September 30,

($ in thousands except per share data)

Net loss attributable to Maiden common shareholders

Add (subtract):

Net realized (gains) losses on investment

Total other-than-temporary impairment losses

Foreign exchange and other gains

Loss from NGHC Quota Share run-off

Unamortized deferred gain on retroactive reinsurance

Loss from discontinued operations, net of income tax

Interest expense paid under the LPT/ADC Agreement and the Commutation Agreement

Separation costs incurred due to retirement of former executives

Non-GAAP operating loss attributable to Maiden common shareholders

Diluted loss per share attributable to Maiden common shareholders

Add (subtract):

Net realized (gains) losses on investment

Total other-than-temporary impairment losses

Foreign exchange and other gains

Loss from NGHC Quota Share run-off

Unamortized deferred gain on retroactive reinsurance

Loss from discontinued operations, net of income tax

Interest expense paid under the LPT/ADC Agreement and the Commutation Agreement

Separation costs incurred due to retirement of former executives

Non-GAAP diluted operating loss per common share

Non-GAAP operating earnings (loss)

Non-GAAP operating earnings attributable to Maiden common shareholders were $39.8 million and non-GAAP operating loss attributable to Maiden common shareholders was $9.1 million for the three and nine months ended September 30, 2019 , respectively, compared to a non-GAAP operating loss of $240.9 million and $253.6 million for the same respective periods in 2018 .

This was largely due to non-GAAP underwriting income of $24.3 million for the three months ended September 30, 2019 , compared to a non-GAAP underwriting loss of $251.2 million for the same period in 2018 , and a non-GAAP underwriting loss of $57.6 million for the nine months ended September 30, 2019 compared to a non-GAAP underwriting loss of $287.9 million for the same period in 2018 .

The non-GAAP underwriting and operating results for the three and nine months ended September 30, 2019 reflect the recognition into income of the deferred gain arising from the LPT/ADC Agreement relating to losses subject to that agreement which are fully recoverable from Cavello, to show the ultimate economic benefit to Maiden..

The amount recognized as a deferred gain for the three and nine months ended September 30, 2019 under this agreement was $104.5 million , which is the portion of unfavorable loss development for which we have ceded the risk under the LPT/ADC Agreement.

In addition, the improvement in non-GAAP underwriting results in both the three and nine months ended September 30, 2019 compared to the same periods in 2018 , respectively, was primarily due to a reduction in the amount of adverse loss development that was incurred compared to the prior year period in our AmTrust Reinsurance segment.

Please see the "Results of Operations" on page 53 for further details regarding the impact of adverse development under the "AmTrust Reinsurance Segment" section.

Non-GAAP Operating ROACE

The improvement in Non-GAAP Operating ROACE for the three and nine months ended September 30, 2019 relative to the same periods in 2018 reflects the improvement in non-GAAP operating earnings for the three and nine months ended September 30, 2019 compared to the same periods in 2018 and was computed as follows:

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

($ in thousands)

Non-GAAP operating earnings (loss) attributable to Maiden common shareholders

Opening Maiden common shareholders’ equity

Ending Maiden common shareholders’ equity

Average Maiden common shareholders’ equity

Non-GAAP Operating ROACE

Non-GAAP Underwriting Results

The following summarizes our non-GAAP underwriting results for the three and nine months ended September 30, 2019 :

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

($ in thousands)

Gross premiums written

Net premiums written

Net premiums earned

Other insurance revenue

Non-GAAP net loss and LAE (1)

Commission and other acquisition expenses

General and administrative expenses

Non-GAAP underwriting income (loss)

Non-GAAP net loss and LAE ratio (1)

Commission and other acquisition expense ratio

General and administrative expense ratio

Expense ratio

Non-GAAP combined ratio (1)

(1) Non-GAAP net loss and LAE, non-GAAP net loss and LAE ratio, and non-GAAP combined ratio for the three and nine months ended September 30, 2019 exclude adverse prior year reserve development subject to the LPT/ADC Agreement.

See "Key Financial Measures" on page 44 for definitions of Non-GAAP underwriting income (loss), net loss and LAE, non-GAAP net loss and LAE ratio, and non-GAAP combined ratio.

The non-GAAP underwriting results as well as the non-GAAP loss and LAE and ratios and non-GAAP combined ratios reflect the recognition into income of the deferred gain arising from the LPT/ADC Agreement relating to losses subject to the AmTrust Quota Share agreement which are fully recoverable from Cavello to show the ultimate economic benefit to Maiden.

Non-GAAP Underwriting Income (Loss)

Adjusted for the recognition into income of the deferred gain on the LPT/ADC Agreement of $104.5 million during the three months ended September 30, 2019 , the non-GAAP underwriting income was $24.3 million compared to an underwriting loss of $251.2 million for the comparative period in 2018 .

The non-GAAP combined ratio for the three months ended September 30, 2019 was 81.3% compared to 150.8% during the same period in 2018 .

Adjusted for the recognition into income of the deferred gain on retroactive reinsurance of $104.5 million during the nine months ended September 30, 2019 , the non-GAAP underwriting loss was $57.6 million compared to $287.9 million in the comparative period in 2018 .

The non-GAAP combined ratio during the nine months ended September 30, 2019 was 120.8% compared to 120.7% during the same period in 2018 .

Non-GAAP Combined Ratio

As noted previously, the recognition of the unamortized deferred gain on retroactive reinsurance of $104.5 million reduced the net loss and loss adjustment expenses for the three and nine months ended September 30, 2019 in the calculation of non-GAAP Combined Ratio as shown in the table below:

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Combined ratio

Unamortized deferred gain on retroactive reinsurance

Non-GAAP combined ratio (1)

(1) Non-GAAP net loss and LAE for the three months ended September 30, 2019 includes adverse prior year reserve development subject to the LPT/ADC Agreement for the first half of 2019 of $30.6 million.

Excluding this amount, the non-GAAP net loss and LAE for the third quarter of 2019 was $66.9 million and the non-GAAP combined ratio was 113.3%.

Non-GAAP Net Loss and LAE

As noted previously, the recognition of the unamortized deferred gain on retroactive reinsurance of $104.5 million reduced the net loss and LAE for the three and nine months ended September 30, 2019 in the calculation of non-GAAP Loss and LAE as shown in the table below:

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

($ in thousands)

Net loss and loss adjustment expenses

Unamortized deferred gain on retroactive reinsurance

Non-GAAP net loss and loss adjustment expenses

Adjusted for the recognition into income of the deferred gain on retroactive reinsurance of $104.5 million during the three and nine months ended September 30, 2019 , non-GAAP net loss and LAE were $36.3 million and $310.6 million , respectively, and the non-GAAP net loss and LAE ratios were 38.1% and 75.1% , respectively, compared to 115.0% and 85.4% for the respective comparative periods in 2018 .

Non-GAAP net loss and LAE and the non-GAAP net loss ratio for the three months ended September 30, 2019 includes adverse prior year reserve development under the AmTrust Quota Share covered under the LPT/ADC Agreement for the first half of 2019 of $30.6 million.

Excluding this amount, the non-GAAP net loss and LAE for the third quarter of 2019 was $66.9 million, the non-GAAP net loss and LAE ratio was 70.1%, and the non-GAAP combined ratio was 113.3%.

These non-GAAP measures include the recognition of $27.6 million (or 28.9 and 6.7 net loss and LAE ratio and combined ratio percentage points for the three and nine months ended September 30, 2019 , respectively) related to the application of the $40.5 million loss corridor cap on AmTrust program business during the three and nine months ended September 30, 2019 , pursuant to the previously announced Post-Termination Endorsement of the reinsurance contracts between the Company and AmTrust.

Adjusted Shareholders' Equity, Adjusted Total Capital Resources and Adjusted Book Value per Common Share, Ratio of Debt to Total Adjusted Capital Resources

The improvement in Adjusted Shareholders' Equity, Adjusted Total Capital Resources and Adjusted Book Value per Common Share at September 30, 2019 reflects the addition of the unamortized deferred gain on retroactive reinsurance to the GAAP Maiden shareholders' equity as depicted in the computations below.

As noted previously, the deferred gain arises from the LPT/ADC Agreement with Cavello relating to losses subject to that agreement which are fully recoverable from Cavello.

The inclusion of the unamortized deferred gain in these metrics better reflects the ultimate economic benefit of the LPT/ADC Agreement, which will improve Maiden shareholders' equity over the settlement period under the terms of the agreement.

Reconciliation of Maiden's shareholders' equity to adjusted total capital resources The following table computes Maiden's adjusted shareholders' equity and adjusted total capital resources by recognizing the unamortized deferred gain on retroactive reinsurance at September 30, 2019 and December 31, 2018 :

($ in thousands)

September 30, 2019

December 31, 2018

Preference shares

Common shareholders' equity

Total Maiden shareholders' equity

Unamortized deferred gain on retroactive reinsurance

Adjusted Maiden shareholders' equity

Senior Notes - principal amount

Adjusted total capital resources

Reconciliation of book value per common share to adjusted book value per common share The adjusted book value per common share as reconciled for the recognition of the unamortized deferred gain on retroactive reinsurance at September 30, 2019 and December 31, 2018 was computed as follows:

September 30, 2019

December 31, 2018

($ in thousands except per share data)

Book value per common share

Unamortized deferred gain on retroactive reinsurance

Adjusted book value per common share

Ratio of Debt to Total Adjusted Capital Resources Management uses this non-GAAP measure to monitor the financial leverage of the Company.

This measure is calculated using the total principal amount of debt divided by the sum of total adjusted capital resources as computed in the table above.

The ratio of Debt to Adjusted Total Capital Resources at September 30, 2019 and December 31, 2018 was computed as follows:

September 30, 2019

December 31, 2018

($ in thousands)

Senior notes - principal amount

Adjusted Maiden shareholders’ equity

Adjusted total capital resources

Ratio of debt to adjusted total capital resources

Currency and Foreign Exchange

8 unchanged sentences

To the extent that these exposures are not fully hedged or the hedges are ineffective, our results of operations or equity may be adversely affected.

At June 30, 2019 , no such hedges or hedging strategies were in force or had been entered into.

At September 30, 2019 , no such hedges or hedging strategies were in force or had been entered into.

We measure monetary assets and liabilities denominated in foreign currencies at period end exchange rates, with the resulting foreign exchange gains and losses recognized in the Condensed Consolidated Statements of Income.

1 unchanged sentence

The effect of the translation adjustments for foreign operations is included in AOCI.

Net foreign exchange gains amounted to $1.2 million and $1.9 million during the three and six months ended June 30, 2019 , respectively, compared to $4.8 million and $2.4 million for the same respective periods in 2018 .

Net foreign exchange gains amounted to $7.8 million and $9.7 million during the three and nine months ended September 30, 2019 , respectively, compared to foreign exchange losses of $0.6 million and foreign exchange gains of $1.9 million for the three and nine months ended September 30, 2018 , respectively.

Effects of Inflation

4 unchanged sentences

Off-Balance Sheet Arrangements

At June 30, 2019 , we did not have any off-balance sheet arrangements as defined by Item 303(a) (4) of Regulation S-K.

At September 30, 2019 , we did not have any off-balance sheet arrangements as defined by Item 303(a) (4) of Regulation S-K.

Recent Accounting Pronouncements

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis