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Item 2. Management’s Discussion and Analysis

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 
 The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this "Form 10-Q" or this "Report"). References in this Form 10-Q to the terms "we", "us", "our", "the Company" or other similar terms mean the consolidated operations of Maiden Holdings, Ltd. and its subsidiaries, unless the context requires otherwise. References in this Form 10-Q to the term "Maiden Holdings" means Maiden Holdings, Ltd. only. Certain reclassifications have been made for 2018 to conform to the 2019 presentation and have no impact on consolidated net income and total equity previously reported. 
 Note on Forward-Looking Statements 
 This Quarterly Report on Form 10-Q includes projections concerning financial information and statements concerning future economic performance and events, plans and objectives relating to management, operations, products and services, and assumptions underlying these projections and statements. These projections and statements are forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 and are not historical facts but instead represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control. These projections and statements may address, among other things, our strategy for growth, product development, financial results and reserves. Our actual results and financial condition may differ, possibly materially, from these projections and statements and therefore you should not place undue reliance on them. Factors that could cause our actual results and financial condition to differ, possibly materially, from those in the specific projections and statements are discussed throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations and in "Risk Factors" in Item 1A of Part I of our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission ("SEC") on March 14, 2019 , however, these factors should not be construed as exhaustive. Forward-looking statements speak only as of the date they are made and we undertake no obligation to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by law. 
 
 39 

 Overview 
 We are a Bermuda-based holding company, previously focused on serving the needs of regional and specialty insurers in the United States ("U.S."), Europe and select other global markets. 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"). 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") 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 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". 
 As discussed in "Note 1. Basis of Presentation" of the Notes to Condensed Consolidated Financial Statements included in Part I Item 1. "Financial Information" and in Item 1. "Business" of our Annual Report on Form 10-K filed with the SEC on March 14, 2019 , the sale of Maiden Reinsurance North America, Inc. ("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. 
 Our business consists of two reportable segments: Diversified Reinsurance and AmTrust Reinsurance. As a result of the strategic decision to divest all of our U.S. treaty reinsurance operations as discussed in more detail below, we revised the composition of our reportable segments in the fourth quarter of 2018. Our Diversified Reinsurance segment now only consists of a portfolio of predominantly property and casualty reinsurance business focusing on regional and specialty property and casualty insurance companies located primarily in Europe. Our AmTrust Reinsurance segment includes the run-off of all business ceded by AmTrust to Maiden Bermuda, primarily the AmTrust Quota Share and the European Hospital Liability Quota Share, as defined below. 
 Recent Developments 
 In early 2018, our Board of Directors initiated a review of strategic alternatives ("Strategic Review") to evaluate ways to increase shareholder value as a result of continuing higher than targeted combined ratios and lower returns on equity than planned. This Strategic Review has resulted in a series of transactions that have transformed our operations and materially reduced the risk on our balance sheet. These transactions include: 
 On August 29, 2018, we entered into a Renewal Rights Agreement (“Renewal Rights”) with Transatlantic Reinsurance Company ("TransRe"), pursuant to which we sold, and TransRe purchased, Maiden US's rights to: (i) renew its treaty reinsurance agreements upon their expiration or cancellation, (ii) solicit renewals of and replacement coverages for the treaty reinsurance agreements and (iii) replicate and use the products and contract forms used in Maiden US’s business. The sale was consummated on August 29, 2018. We continue to earn premiums and remain liable for losses occurring subsequent to August 29, 2018 for any policies in force prior to and as of August 29, 2018, until those policies expire. The payment received for sale of the Renewal Rights was $7.5 million , subject to potential additional amounts payable in the future in accordance with the agreement, however, no additional amounts to the fee have been recognized to date. 
 On December 27, 2018, we completed the sale agreement ("U.S. Sale Agreement") with Enstar Holdings U.S. 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 . Also, pursuant to the terms of the U.S. Sale Agreement, Maiden Bermuda entered into a novation agreement and a retrocession agreement pursuant to which certain assets and liabilities associated with the U.S. treaty reinsurance business held by Maiden Bermuda were either novated or retroceded to Cavello Bay Reinsurance Limited (“Cavello”), Enstar Holding’s Bermuda reinsurance affiliate in exchange for a ceding commission of $14.0 million . 
 As a result of the above decision to divest all of our U.S. treaty reinsurance operations, these operations are now classified as discontinued operations, and except as explicitly described as held for sale or as discontinued operations, and unless otherwise noted, all discussions and amounts presented herein relate to our continuing operations, except for net (loss) income, net (loss) income attributable to Maiden and net (loss) income attributable to Maiden common shareholders. 
 Effective January 1, 2019, Maiden Bermuda and AmTrust through AmTrust’s subsidiary, AmTrust International Insurance, Ltd. ("AII"), amended the quota share agreement between Maiden Bermuda and AII ("AmTrust Quota Share"), originally entered into on July 1, 2007 that was in-force and set to expire on June 30, 2019 ("Partial Termination Amendment"). The Partial Termination Amendment provided for the cut-off of the ongoing and unearned premium of AmTrust’s Small Commercial Business and U.S. Specialty Risk and Extended Warranty business ("Terminated Business") as of December 31, 2018 , with the remainder of the AmTrust Quota Share remaining in place. 
 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. During January 2019, as part of this amendment, the Company transferred cash and investments of $480.0 million to AII based on provisional estimates. 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 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. 
 
 40 

 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 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. 
 
 41 

 Three and Nine Months Ended September 30, 2019 and 2018 Financial Highlights 
 
 For the Three Months Ended September 30, 
 
 2019 
 
 2018 
 
 Change 
 
 Summary Consolidated Statement of Income Data: 
 
 ($ in thousands except per share data) 
 
 Net loss from continuing operations 
 
 $ 
 (58,050 
 ) 
 
 $ 
 (240,413 
 ) 
 
 $ 
 182,363 
 
 Loss from discontinued operations, net of income tax 
 
 (277 
 ) 
 
 (59,819 
 ) 
 
 59,542 
 
 Net loss 
 
 (58,327 
 ) 
 
 (300,232 
 ) 
 
 241,905 
 
 Net loss attributable to Maiden common shareholders 
 
 (58,327 
 ) 
 
 (308,839 
 ) 
 
 250,512 
 
 Basic and diluted (loss) earnings per common share (9) : 
 
 Net loss attributable to Maiden common shareholders (2)(9) 
 
 (0.70 
 ) 
 
 (3.72 
 ) 
 
 3.02 
 
 Dividends per common share 
 
 — 
 
 0.05 
 
 (0.05 
 ) 
 
 Gross premiums written 
 
 35,844 
 
 484,493 
 
 (448,649 
 ) 
 
 Net premiums earned 
 
 94,898 
 
 520,077 
 
 (425,179 
 ) 
 
 Underwriting loss (1)(3) 
 
 (80,255 
 ) 
 
 (251,175 
 ) 
 
 170,920 
 
 Net investment income 
 
 13,223 
 
 34,419 
 
 (21,196 
 ) 
 
 Combined ratio (4) 
 
 190.8 
 % 
 
 150.8 
 % 
 
 40.0 
 
 Non-GAAP measures: 
 
 Non-GAAP operating earnings (loss) (1) 
 
 $ 
 39,834 
 
 $ 
 (240,895 
 ) 
 
 $ 
 280,729 
 
 Basic and diluted (loss) earnings per common share (9) : 
 
 Non-GAAP operating earnings (loss) attributable to Maiden common shareholders (1)(9) 
 
 0.48 
 
 (2.90 
 ) 
 
 3.38 
 
 Non-GAAP Combined Ratio (11) 
 
 81.3 
 % 
 
 150.8 
 % 
 
 (69.5 
 ) 
 
 Annualized non-GAAP operating return on average common shareholders' equity (1) 
 
 163.2 
 % 
 
 (201.6 
 )% 
 
 364.8 
 
 For the Nine Months Ended September 30, 
 
 2019 
 
 2018 
 
 Change 
 
 Summary Consolidated Statement of Income Data: 
 
 ($ in thousands except per share data) 
 
 Net loss from continuing operations 
 
 $ 
 (88,049 
 ) 
 
 $ 
 (233,600 
 ) 
 
 $ 
 145,551 
 
 Loss from discontinued operations, net of income tax 
 
 (22,327 
 ) 
 
 (41,609 
 ) 
 
 19,282 
 
 Net loss 
 
 (110,376 
 ) 
 
 (275,209 
 ) 
 
 164,833 
 
 Net loss attributable to Maiden common shareholders 
 
 (110,376 
 ) 
 
 (301,025 
 ) 
 
 190,649 
 
 Basic and diluted loss per common share (9) : 
 
 Net loss attributable to Maiden common shareholders (2)(9) 
 
 (1.33 
 ) 
 
 (3.62 
 ) 
 
 2.29 
 
 Dividends per common share 
 
 — 
 
 0.35 
 
 (0.35 
 ) 
 
 Gross premiums written 
 
 (523,178 
 ) 
 
 1,629,347 
 
 (2,152,525 
 ) 
 
 Net premiums earned 
 
 411,986 
 
 1,541,278 
 
 (1,129,292 
 ) 
 
 Underwriting loss (3) 
 
 (162,137 
 ) 
 
 (287,906 
 ) 
 
 125,769 
 
 Net investment income 
 
 76,367 
 
 101,548 
 
 (25,181 
 ) 
 
 Combined ratio (4) 
 
 146.0 
 % 
 
 120.7 
 % 
 
 25.3 
 
 Non-GAAP measures: 
 
 Non-GAAP operating loss (1) 
 
 $ 
 (9,132 
 ) 
 
 $ 
 (253,648 
 ) 
 
 $ 
 244,516 
 
 Basic and diluted loss per common share (9) : 
 
 Non-GAAP operating loss attributable to Maiden common shareholders (1) 
 
 (0.11 
 ) 
 
 (3.05 
 ) 
 
 2.94 
 
 Non-GAAP Combined Ratio (11) 
 
 120.8 
 % 
 
 120.7 
 % 
 
 0.1 
 
 Annualized non-GAAP operating return on average common shareholders' equity (1) 
 
 (15.5 
 )% 
 
 (63.1 
 )% 
 
 47.6 
 
 42 

 September 30, 2019 
 
 December 31, 2018 
 
 Change 
 
 Consolidated Financial Condition 
 
 ($ in thousands except per share data) 
 
 Total investments and cash and cash equivalents (5) 
 
 $ 
 2,162,898 
 
 $ 
 4,421,954 
 
 $ 
 (2,259,056 
 ) 
 
 Total assets 
 
 3,791,955 
 
 5,287,460 
 
 (1,495,505 
 ) 
 
 Reserve for loss and loss adjustment expenses ("loss and LAE") 
 
 2,625,858 
 
 3,126,134 
 
 (500,276 
 ) 
 
 Senior notes - principal amount 
 
 262,500 
 
 262,500 
 
 — 
 
 Maiden common shareholders' equity 
 
 68,155 
 
 89,275 
 
 (21,120 
 ) 
 
 Maiden shareholders' equity 
 
 533,155 
 
 554,275 
 
 (21,120 
 ) 
 
 Total capital resources (6) 
 
 795,655 
 
 816,775 
 
 (21,120 
 ) 
 
 Ratio of debt to total capital resources (13) 
 
 33.0 
 % 
 
 32.1 
 % 
 
 0.9 
 
 Book Value calculations: 
 
 Book value per common share (7) 
 
 $ 
 0.82 
 
 $ 
 1.08 
 
 $ 
 (0.26 
 ) 
 
 Accumulated dividends per common share 
 
 4.27 
 
 4.27 
 
 — 
 
 Book value per common share plus accumulated dividends 
 
 $ 
 5.09 
 
 $ 
 5.35 
 
 $ 
 (0.26 
 ) 
 
 Change in book value per common share plus accumulated dividends 
 
 (4.9 
 )% 
 
 Diluted book value per common share (8) 
 
 $ 
 0.81 
 
 $ 
 1.08 
 
 $ 
 (0.27 
 ) 
 
 Non-GAAP measures: 
 
 Adjusted book value per common share (10) 
 
 $ 
 2.08 
 
 $ 
 1.08 
 
 $ 
 1.00 
 
 Adjusted Maiden shareholders' equity (12) 
 
 $ 
 637,697 
 
 $ 
 554,275 
 
 $ 
 83,422 
 
 Adjusted total capital resources (12) 
 
 $ 
 900,197 
 
 $ 
 816,775 
 
 $ 
 83,422 
 
 Ratio of debt to adjusted total capital resources (14) 
 
 29.2 
 % 
 
 32.1 
 % 
 
 (2.9 
 ) 
 
 (1) 
 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. 
 
 (2) 
 Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 12. Earnings per Common Share " for the calculation of basic and diluted loss per common share. 
 
 (3) 
 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. See " Key Financial Measures " for additional information. 
 
 (4) 
 Combined ratio is calculated by adding together the net loss and LAE ratio and the expense ratio. 
 
 (5) 
 Total investments and cash and cash equivalents includes both restricted and unrestricted. 
 
 (6) 
 Total capital resources is the sum of the Company's principal amount of debt and Maiden shareholders' equity. See " Key Financial Measures " for additional information. 
 
 (7) 
 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.See " Key Financial Measures " for additional information. 
 
 (8) 
 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. 
 
 (9) 
 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. 
 
 (10) 
 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. 
 
 (11) 
 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. 
 
 (12) 
 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. Under U.S. GAAP, the deferred gain shall be amortized over the estimated remaining settlement period. See " Key Financial Measures " for additional information. 
 
 (13) 
 Ratio of debt to total capital resources is calculated using the total principal amount of debt divided by the sum of total capital resources. 
 
 (14) 
 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. 
 
 43 

 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 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. GAAP. 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 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 earnings (loss) should not be viewed as a substitute for U.S. GAAP net (loss) income. 
 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; (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. A reconciliation of the Company's underwriting results can be found in the Company's Condensed Consolidated Financial Statements. Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 3. Segment Information " for further details. 
 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 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. 
 Ratio of Debt to Total 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 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. 
 
 44 

 Certain Operating Measures and Relevant Factors 
 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 a general discussion on " Certain Operating Measures" utilized by the Company and the " Relevant Factors" associated with these Certain Operating Measures. 
 Critical Accounting Policies and Estimates 
 The Company's critical accounting policies and estimates 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 . The critical accounting policies and estimates should be read in conjunction with " Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) Note 2. Significant Accounting Policies " included in this Form 10-Q and " Notes to Consolidated Financial Statements Note 2. Significant Accounting Policies " included within the audited Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2018 , filed with the SEC on March 14, 2019 . There have been no material changes in the application of our critical accounting estimates subsequent to that report. 
 
 45 

 Results of Operations 
 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 September 30, 
 
 For the Nine Months Ended September 30, 
 
 ($ in thousands) 
 
 2019 
 
 2018 
 
 2019 
 
 2018 
 
 Gross premiums written 
 
 $ 
 35,844 
 
 $ 
 484,493 
 
 $ 
 (523,178 
 ) 
 
 $ 
 1,629,347 
 
 Net premiums written 
 
 $ 
 35,944 
 
 $ 
 482,806 
 
 $ 
 (525,995 
 ) 
 
 $ 
 1,626,485 
 
 Net premiums earned 
 
 $ 
 94,898 
 
 $ 
 520,077 
 
 $ 
 411,986 
 
 $ 
 1,541,278 
 
 Other insurance revenue 
 
 554 
 
 1,870 
 
 2,058 
 
 7,629 
 
 Net loss and LAE 
 
 (140,860 
 ) 
 
 (600,296 
 ) 
 
 (415,110 
 ) 
 
 (1,323,503 
 ) 
 
 Commission and other acquisition expenses 
 
 (32,763 
 ) 
 
 (167,618 
 ) 
 
 (152,036 
 ) 
 
 (497,026 
 ) 
 
 General and administrative expenses (1) 
 
 (2,084 
 ) 
 
 (5,208 
 ) 
 
 (9,035 
 ) 
 
 (16,284 
 ) 
 
 Underwriting loss (2) 
 
 (80,255 
 ) 
 
 (251,175 
 ) 
 
 (162,137 
 ) 
 
 (287,906 
 ) 
 
 Other general and administrative expenses (1) 
 
 (6,462 
 ) 
 
 (13,999 
 ) 
 
 (28,299 
 ) 
 
 (33,454 
 ) 
 
 Net investment income 
 
 13,223 
 
 34,419 
 
 76,367 
 
 101,548 
 
 Net realized gains (losses) on investment 
 
 12,700 
 
 (225 
 ) 
 
 25,685 
 
 (282 
 ) 
 
 Total other-than-temporary impairment losses 
 
 (165 
 ) 
 
 (479 
 ) 
 
 (165 
 ) 
 
 (479 
 ) 
 
 Foreign exchange and other gains (losses) 
 
 7,827 
 
 (552 
 ) 
 
 14,013 
 
 1,862 
 
 Interest and amortization expenses 
 
 (4,831 
 ) 
 
 (4,829 
 ) 
 
 (14,490 
 ) 
 
 (14,487 
 ) 
 
 Income tax (expense) benefit 
 
 (87 
 ) 
 
 (3,573 
 ) 
 
 977 
 
 (402 
 ) 
 
 Net loss from continuing operations 
 
 (58,050 
 ) 
 
 (240,413 
 ) 
 
 (88,049 
 ) 
 
 (233,600 
 ) 
 
 Loss from discontinued operations, net of income tax 
 
 (277 
 ) 
 
 (59,819 
 ) 
 
 (22,327 
 ) 
 
 (41,609 
 ) 
 
 Income attributable to noncontrolling interests 
 
 — 
 
 (62 
 ) 
 
 — 
 
 (180 
 ) 
 
 Dividends on preference shares 
 
 — 
 
 (8,545 
 ) 
 
 — 
 
 (25,636 
 ) 
 
 Net loss attributable to Maiden common shareholders 
 
 $ 
 (58,327 
 ) 
 
 $ 
 (308,839 
 ) 
 
 $ 
 (110,376 
 ) 
 
 $ 
 (301,025 
 ) 
 
 Ratios 
 
 Net loss and LAE ratio (3) 
 
 147.6 
 % 
 
 115.0 
 % 
 
 100.3 
 % 
 
 85.4 
 % 
 
 Commission and other acquisition expense ratio (4) 
 
 34.3 
 % 
 
 32.1 
 % 
 
 36.7 
 % 
 
 32.1 
 % 
 
 General and administrative expense ratio (5) 
 
 8.9 
 % 
 
 3.7 
 % 
 
 9.0 
 % 
 
 3.2 
 % 
 
 Expense ratio (6) 
 
 43.2 
 % 
 
 35.8 
 % 
 
 45.7 
 % 
 
 35.3 
 % 
 
 Combined ratio (7) 
 
 190.8 
 % 
 
 150.8 
 % 
 
 146.0 
 % 
 
 120.7 
 % 
 
 (1) 
 Underwriting related general and administrative expenses is a non-GAAP measure. Please refer to "General and Administrative Expenses" below for additional information related to these corporate expenses and the reconciliation to those presented in our Condensed Consolidated Statements of Income. 
 
 (2) 
 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. 
 
 (3) 
 Calculated by dividing net loss and LAE by the sum of net premiums earned and other insurance revenue. 
 
 (4) 
 Calculated by dividing commission and other acquisition expenses by the sum of net premiums earned and other insurance revenue. 
 
 (5) 
 Calculated by dividing general and administrative expenses by the sum of net premiums earned and other insurance revenue. 
 
 (6) 
 Calculated by adding together commission and other acquisition expense ratio and general and administrative expense ratio. 
 
 (7) 
 Calculated by adding together net loss and LAE ratio and the expense ratio. 
 
 46 

 Net Loss 
 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); and 
 
 ▪ 
 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. 
 
 • 
 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 ; and 
 
 • 
 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); and 
 
 ▪ 
 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. 
 
 • 
 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; and 
 
 • 
 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 
 
 47 

 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 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, 
 
 2019 
 
 2018 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 Total 
 
 $ 
 
 % 
 
 Diversified Reinsurance 
 
 $ 
 14,539 
 
 $ 
 31,291 
 
 $ 
 (16,752 
 ) 
 
 (53.5 
 )% 
 
 AmTrust Reinsurance 
 
 21,405 
 
 451,515 
 
 (430,110 
 ) 
 
 (95.3 
 )% 
 
 Total 
 
 $ 
 35,944 
 
 $ 
 482,806 
 
 $ 
 (446,862 
 ) 
 
 (92.6 
 )% 
 
 For the Nine Months Ended September 30, 
 
 2019 
 
 2018 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 Total 
 
 $ 
 
 % 
 
 Diversified Reinsurance 
 
 $ 
 38,204 
 
 $ 
 109,279 
 
 $ 
 (71,075 
 ) 
 
 (65.0 
 )% 
 
 AmTrust Reinsurance 
 
 (564,199 
 ) 
 
 1,517,206 
 
 (2,081,405 
 ) 
 
 (137.2 
 )% 
 
 Total 
 
 $ 
 (525,995 
 ) 
 
 $ 
 1,626,485 
 
 $ 
 (2,152,480 
 ) 
 
 (132.3 
 )% 
 
 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; and 
 
 • 
 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 $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, 
 
 2019 
 
 2018 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 % of Total 
 
 Total 
 
 % of Total 
 
 $ 
 
 % 
 
 Diversified Reinsurance 
 
 $ 
 20,492 
 
 21.6 
 % 
 
 $ 
 28,784 
 
 5.5 
 % 
 
 $ 
 (8,292 
 ) 
 
 (28.8 
 )% 
 
 AmTrust Quota Share Reinsurance 
 
 74,406 
 
 78.4 
 % 
 
 491,293 
 
 94.5 
 % 
 
 (416,887 
 ) 
 
 (84.9 
 )% 
 
 Total 
 
 $ 
 94,898 
 
 100.0 
 % 
 
 $ 
 520,077 
 
 100.0 
 % 
 
 $ 
 (425,179 
 ) 
 
 (81.8 
 )% 
 
 For the Nine Months Ended September 30, 
 
 2019 
 
 2018 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 % of Total 
 
 Total 
 
 % of Total 
 
 $ 
 
 % 
 
 Diversified Reinsurance 
 
 $ 
 68,256 
 
 16.6 
 % 
 
 $ 
 82,838 
 
 5.4 
 % 
 
 $ 
 (14,582 
 ) 
 
 (17.6 
 )% 
 
 AmTrust Quota Share Reinsurance 
 
 343,730 
 
 83.4 
 % 
 
 1,458,440 
 
 94.6 
 % 
 
 (1,114,710 
 ) 
 
 (76.4 
 )% 
 
 Total 
 
 $ 
 411,986 
 
 100.0 
 % 
 
 $ 
 1,541,278 
 
 100.0 
 % 
 
 $ 
 (1,129,292 
 ) 
 
 (73.3 
 )% 
 
 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 
 
 48 

 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 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. 
 Other Insurance Revenue 
 All of our Other Insurance Revenue is produced by our Diversified Reinsurance segment. Please refer to page 52 for further discussion. 
 Net Investment Income and Net Realized Gains on Investment 
 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) 
 
 2019 
 
 2018 
 
 2019 
 
 2018 
 
 Average investable assets (1) 
 
 $ 
 3,661,544 
 
 $ 
 4,226,404 
 
 $ 
 3,892,366 
 
 $ 
 4,172,955 
 
 Average book yield (2) 
 
 1.4 
 % 
 
 3.3 
 % 
 
 2.6 
 % 
 
 3.2 
 % 
 
 Adjusted average book yield (3) 
 
 2.9 
 % 
 
 3.3 
 % 
 
 3.1 
 % 
 
 3.2 
 % 
 
 (1) 
 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. 
 
 (2) 
 Ratio of net investment income over average investable assets at fair value, as adjusted. 
 
 (3) 
 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 $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. 
 
 49 

 Commission and Other Acquisition Expenses 
 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 
 General and administrative expenses include expenses which are segregated for analytical purposes as a component of underwriting income. General and administrative expenses comprise: 
 
 For the Three Months Ended September 30, 
 
 For the Nine Months Ended September 30, 
 
 ($ in thousands) 
 
 2019 
 
 2018 
 
 2019 
 
 2018 
 
 General and administrative expenses – segments 
 
 $ 
 2,084 
 
 $ 
 5,208 
 
 $ 
 9,035 
 
 $ 
 16,284 
 
 General and administrative expenses – corporate 
 
 6,462 
 
 13,999 
 
 28,299 
 
 33,454 
 
 Total general and administrative expenses 
 
 $ 
 8,546 
 
 $ 
 19,207 
 
 $ 
 37,334 
 
 $ 
 49,738 
 
 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 $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. Long Term Debt " for further details on the Senior Notes. 
 Foreign Exchange and Other Gains 
 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 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. 
 
 50 

 Dividends on Preference Shares 
 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. Shareholders' Equity " included under Item 8 "Financial Statements and Supplementary Data" of our Annual Report on Form 10-K for the year ended December 31, 2018 for details on the Company’s preference shares. 
 Underwriting Results by Reportable Segment 
 Diversified Reinsurance Segment 
 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) 
 
 2019 
 
 2018 
 
 2019 
 
 2018 
 
 Gross premiums written 
 
 $ 
 14,439 
 
 $ 
 31,698 
 
 $ 
 41,021 
 
 $ 
 111,139 
 
 Net premiums written 
 
 $ 
 14,539 
 
 $ 
 31,291 
 
 $ 
 38,204 
 
 $ 
 109,279 
 
 Net premiums earned 
 
 $ 
 20,492 
 
 $ 
 28,784 
 
 $ 
 68,256 
 
 $ 
 82,838 
 
 Other insurance revenue 
 
 554 
 
 1,870 
 
 2,058 
 
 7,629 
 
 Net loss and LAE 
 
 (13,807 
 ) 
 
 (19,764 
 ) 
 
 (40,695 
 ) 
 
 (51,828 
 ) 
 
 Commission and other acquisition expenses 
 
 (7,005 
 ) 
 
 (8,961 
 ) 
 
 (24,413 
 ) 
 
 (28,261 
 ) 
 
 General and administrative expenses 
 
 (1,849 
 ) 
 
 (4,256 
 ) 
 
 (6,972 
 ) 
 
 (13,330 
 ) 
 
 Underwriting loss 
 
 $ 
 (1,615 
 ) 
 
 $ 
 (2,327 
 ) 
 
 $ 
 (1,766 
 ) 
 
 $ 
 (2,952 
 ) 
 
 Ratios 
 
 Net loss and LAE ratio 
 
 65.6 
 % 
 
 64.5 
 % 
 
 57.9 
 % 
 
 57.3 
 % 
 
 Commission and other acquisition expense ratio 
 
 33.3 
 % 
 
 29.2 
 % 
 
 34.7 
 % 
 
 31.3 
 % 
 
 General and administrative expense ratio 
 
 8.8 
 % 
 
 13.9 
 % 
 
 9.9 
 % 
 
 14.7 
 % 
 
 Expense ratio 
 
 42.1 
 % 
 
 43.1 
 % 
 
 44.6 
 % 
 
 46.0 
 % 
 
 Combined ratio 
 
 107.7 
 % 
 
 107.6 
 % 
 
 102.5 
 % 
 
 103.3 
 % 
 
 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 . 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 nine months ended September 30, 2019 . 
 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. 
 
 51 

 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, 
 
 2019 
 
 2018 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 Total 
 
 $ 
 
 % 
 
 Net Premiums Written 
 
 International 
 
 $ 
 14,563 
 
 $ 
 31,291 
 
 $ 
 (16,728 
 ) 
 
 (53.5 
 )% 
 
 Other 
 
 (24 
 ) 
 
 — 
 
 (24 
 ) 
 
 NM 
 
 Total Diversified Reinsurance 
 
 $ 
 14,539 
 
 $ 
 31,291 
 
 $ 
 (16,752 
 ) 
 
 (53.5 
 )% 
 
 For the Nine Months Ended September 30, 
 
 2019 
 
 2018 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 Total 
 
 $ 
 
 % 
 
 Net Premiums Written 
 
 International 
 
 $ 
 38,246 
 
 $ 
 109,238 
 
 $ 
 (70,992 
 ) 
 
 (65.0 
 )% 
 
 Other 
 
 (42 
 ) 
 
 41 
 
 (83 
 ) 
 
 (202.4 
 )% 
 
 Total Diversified Reinsurance 
 
 $ 
 38,204 
 
 $ 
 109,279 
 
 $ 
 (71,075 
 ) 
 
 (65.0 
 )% 
 
 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, 
 
 2019 
 
 2018 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 Total 
 
 $ 
 
 % 
 
 Net Premiums Earned 
 
 International 
 
 $ 
 20,516 
 
 $ 
 28,784 
 
 $ 
 (8,268 
 ) 
 
 (28.7 
 )% 
 
 Other 
 
 (24 
 ) 
 
 — 
 
 (24 
 ) 
 
 NM 
 
 Total Diversified Reinsurance 
 
 $ 
 20,492 
 
 $ 
 28,784 
 
 $ 
 (8,292 
 ) 
 
 (28.8 
 )% 
 
 For the Nine Months Ended September 30, 
 
 2019 
 
 2018 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 Total 
 
 $ 
 
 % 
 
 Net Premiums Earned 
 
 International 
 
 $ 
 68,298 
 
 $ 
 82,797 
 
 $ 
 (14,499 
 ) 
 
 (17.5 
 )% 
 
 Other 
 
 (42 
 ) 
 
 41 
 
 (83 
 ) 
 
 (202.4 
 )% 
 
 Total Diversified Reinsurance 
 
 $ 
 68,256 
 
 $ 
 82,838 
 
 $ 
 (14,582 
 ) 
 
 (17.6 
 )% 
 
 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 $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 
 
 52 

 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 $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) 
 
 2019 
 
 2018 
 
 2019 
 
 2018 
 
 Gross premiums written 
 
 $ 
 21,405 
 
 $ 
 452,795 
 
 $ 
 (564,199 
 ) 
 
 $ 
 1,518,208 
 
 Net premiums written 
 
 $ 
 21,405 
 
 $ 
 451,515 
 
 $ 
 (564,199 
 ) 
 
 $ 
 1,517,206 
 
 Net premiums earned 
 
 $ 
 74,406 
 
 $ 
 491,293 
 
 $ 
 343,730 
 
 $ 
 1,458,440 
 
 Net loss and LAE 
 
 (126,945 
 ) 
 
 (579,163 
 ) 
 
 (374,103 
 ) 
 
 (1,270,306 
 ) 
 
 Commission and other acquisition expenses 
 
 (25,758 
 ) 
 
 (158,657 
 ) 
 
 (127,623 
 ) 
 
 (468,765 
 ) 
 
 General and administrative expenses 
 
 (235 
 ) 
 
 (952 
 ) 
 
 (2,063 
 ) 
 
 (2,954 
 ) 
 
 Underwriting loss 
 
 $ 
 (78,532 
 ) 
 
 $ 
 (247,479 
 ) 
 
 $ 
 (160,059 
 ) 
 
 $ 
 (283,585 
 ) 
 
 Ratios 
 
 Net loss and LAE ratio 
 
 170.6 
 % 
 
 117.9 
 % 
 
 108.8 
 % 
 
 87.1 
 % 
 
 Commission and other acquisition expense ratio 
 
 34.6 
 % 
 
 32.3 
 % 
 
 37.1 
 % 
 
 32.1 
 % 
 
 General and administrative expense ratio 
 
 0.3 
 % 
 
 0.2 
 % 
 
 0.6 
 % 
 
 0.2 
 % 
 
 Expense ratio 
 
 34.9 
 % 
 
 32.5 
 % 
 
 37.7 
 % 
 
 32.3 
 % 
 
 Combined ratio 
 
 205.5 
 % 
 
 150.4 
 % 
 
 146.5 
 % 
 
 119.4 
 % 
 
 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; 
 
 53 

 • 
 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); and 
 
 • 
 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 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 $17.6 million); and 
 
 • 
 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 . 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, which caused negative gross premiums written for the nine months ended September 30, 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, 
 
 2019 
 
 2018 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 Total 
 
 $ 
 
 % 
 
 Net Premiums Written 
 
 Small Commercial Business 
 
 $ 
 8,050 
 
 $ 
 232,163 
 
 $ 
 (224,113 
 ) 
 
 (96.5 
 )% 
 
 Specialty Program 
 
 4,139 
 
 94,077 
 
 (89,938 
 ) 
 
 (95.6 
 )% 
 
 Specialty Risk and Extended Warranty 
 
 9,216 
 
 125,275 
 
 (116,059 
 ) 
 
 (92.6 
 )% 
 
 Total AmTrust Reinsurance 
 
 $ 
 21,405 
 
 $ 
 451,515 
 
 $ 
 (430,110 
 ) 
 
 (95.3 
 )% 
 
 For the Nine Months Ended September 30, 
 
 2019 
 
 2018 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 Total 
 
 $ 
 
 % 
 
 Net Premiums Written 
 
 Small Commercial Business 
 
 $ 
 (329,116 
 ) 
 
 $ 
 879,403 
 
 $ 
 (1,208,519 
 ) 
 
 (137.4 
 )% 
 
 Specialty Program 
 
 (24,500 
 ) 
 
 286,404 
 
 (310,904 
 ) 
 
 (108.6 
 )% 
 
 Specialty Risk and Extended Warranty 
 
 (210,583 
 ) 
 
 351,399 
 
 (561,982 
 ) 
 
 (159.9 
 )% 
 
 Total AmTrust Reinsurance 
 
 $ 
 (564,199 
 ) 
 
 $ 
 1,517,206 
 
 $ 
 (2,081,405 
 ) 
 
 (137.2 
 )% 
 
 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. 
 
 54 

 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, 
 
 2019 
 
 2018 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 % of Total 
 
 Total 
 
 % of Total 
 
 $ 
 
 % 
 
 Net Premiums Earned 
 
 Small Commercial Business 
 
 $ 
 18,686 
 
 25.1 
 % 
 
 $ 
 273,456 
 
 55.7 
 % 
 
 $ 
 (254,770 
 ) 
 
 (93.2 
 )% 
 
 Specialty Program 
 
 22,204 
 
 29.8 
 % 
 
 98,359 
 
 20.0 
 % 
 
 (76,155 
 ) 
 
 (77.4 
 )% 
 
 Specialty Risk and Extended Warranty 
 
 33,516 
 
 45.1 
 % 
 
 119,478 
 
 24.3 
 % 
 
 (85,962 
 ) 
 
 (71.9 
 )% 
 
 Total AmTrust Reinsurance 
 
 $ 
 74,406 
 
 100.0 
 % 
 
 $ 
 491,293 
 
 100.0 
 % 
 
 $ 
 (416,887 
 ) 
 
 (84.9 
 )% 
 
 For the Nine Months Ended September 30, 
 
 2019 
 
 2018 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 % of Total 
 
 Total 
 
 % of Total 
 
 $ 
 
 % 
 
 Net Premiums Earned 
 
 Small Commercial Business 
 
 $ 
 81,424 
 
 23.7 
 % 
 
 $ 
 882,679 
 
 60.5 
 % 
 
 $ 
 (801,255 
 ) 
 
 (90.8 
 )% 
 
 Specialty Program 
 
 128,751 
 
 37.5 
 % 
 
 283,592 
 
 19.5 
 % 
 
 (154,841 
 ) 
 
 (54.6 
 )% 
 
 Specialty Risk and Extended Warranty 
 
 133,555 
 
 38.8 
 % 
 
 292,169 
 
 20.0 
 % 
 
 (158,614 
 ) 
 
 (54.3 
 )% 
 
 Total AmTrust Reinsurance 
 
 $ 
 343,730 
 
 100.0 
 % 
 
 $ 
 1,458,440 
 
 100.0 
 % 
 
 $ 
 (1,114,710 
 ) 
 
 (76.4 
 )% 
 
 55 

 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; and 
 
 • 
 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; and 
 
 • 
 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. 
 
 56 

 Liquidity and Capital Resources 
 Liquidity 
 Maiden Holdings is a holding company and transacts no business of its own. We therefore rely on cash flows in the form of dividends, advances, loans and other permitted distributions from our subsidiary companies to pay expenses and make dividend payments on our common and preference shares. The jurisdictions in which our operating subsidiaries are licensed to write business impose regulations requiring companies to maintain or meet statutory solvency and liquidity requirements. Some jurisdictions also place restrictions on the declaration and payment of dividends and other distributions. 
 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. Cash is used primarily to pay loss and LAE, ceded reinsurance premium, general and administrative expenses, interest expense and dividends, with the remainder in excess of our operating requirements, made available to our investment managers for investment in accordance with our investment policy. 
 Our business has undergone significant changes in the last year. 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, 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 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. A significant portion of those liabilities are collateralized and claim payments will be funded by using this collateral which should provide sufficient funding to fulfill those obligations.We generally expect negative operating cash flows to be met or exceeded by positive investing cash flows. 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. 
 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 . 
 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, both the Company and Maiden Bermuda 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. As previously indicated, Maiden Bermuda has made filings with the Bermuda Monetary Authority ("BMA") to discontinue from 
 
 57 

 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. 
 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. 
 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, 
 
 2019 
 
 2018 
 
 ($ in thousands) 
 
 Operating activities 
 
 $ 
 (949,283 
 ) 
 
 $ 
 162,623 
 
 Investing activities 
 
 686,394 
 
 27,151 
 
 Financing activities 
 
 (18 
 ) 
 
 (63,893 
 ) 
 
 Effect of exchange rate changes on foreign currency cash 
 
 (1,269 
 ) 
 
 (1,131 
 ) 
 
 Total (decrease) increase in cash, restricted cash and cash equivalents 
 
 (264,176 
 ) 
 
 124,750 
 
 Less: change in cash, restricted cash and cash equivalents of discontinued operations 
 
 (6,113 
 ) 
 
 9,551 
 
 Total change in cash, restricted cash and cash equivalents of continuing operations 
 
 $ 
 (258,063 
 ) 
 
 $ 
 115,199 
 
 Cash Flows used in Operating Activities 
 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 $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 
 Cash flows from investing activities consist primarily of proceeds from the sales and maturities of investments and payments for investments acquired. 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 $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 $0.02 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 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 . 
 
 58 

 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 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. 
 Investments 
 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 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 nine months ended September 30, 2019 , the yield on the 10-year U.S. Treasury bond decreased by 101 basis points to 1.68%. The 10-year U.S. Treasury rate is the key risk-free determinant in the fair value of many of the securities in our AFS portfolio. The continuing downward shift in the U.S. 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 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 
 
 Fixed maturities and cash and cash equivalents 
 
 3.6 
 
 4.2 
 
 Reserve for loss and LAE (1) 
 
 4.1 
 
 4.5 
 
 (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 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 . 
 
 59 

 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: 
 
 September 30, 2019 
 
 Original or Amortized Cost 
 
 Gross Unrealized Gains 
 
 Gross Unrealized Losses 
 
 Fair Value 
 
 Average yield (1) 
 
 Average duration (2) 
 
 AFS fixed maturities 
 
 ($ in thousands) 
 
 U.S. treasury bonds 
 
 $ 
 94,971 
 
 $ 
 780 
 
 $ 
 — 
 
 $ 
 95,751 
 
 2.6 
 % 
 
 0.9 
 
 U.S. agency bonds – mortgage-backed 
 
 748,135 
 
 12,120 
 
 (1,265 
 ) 
 
 758,990 
 
 2.9 
 % 
 
 4.9 
 
 Non-U.S. government and supranational bonds 
 
 11,899 
 
 201 
 
 (340 
 ) 
 
 11,760 
 
 1.2 
 % 
 
 4.8 
 
 Asset-backed securities 
 
 172,919 
 
 828 
 
 (521 
 ) 
 
 173,226 
 
 4.1 
 % 
 
 0.9 
 
 Corporate bonds 
 
 1,008,823 
 
 28,963 
 
 (22,130 
 ) 
 
 1,015,656 
 
 2.9 
 % 
 
 3.7 
 
 Municipal bonds 
 
 4,105 
 
 72 
 
 — 
 
 4,177 
 
 4.6 
 % 
 
 1.6 
 
 Total AFS fixed maturities 
 
 2,040,852 
 
 42,964 
 
 (24,256 
 ) 
 
 2,059,560 
 
 3.0 
 % 
 
 3.8 
 
 Cash and cash equivalents 
 
 72,926 
 
 — 
 
 — 
 
 72,926 
 
 0.3 
 % 
 
 0.0 
 
 Total 
 
 $ 
 2,113,778 
 
 $ 
 42,964 
 
 $ 
 (24,256 
 ) 
 
 $ 
 2,132,486 
 
 2.9 
 % 
 
 3.6 
 
 December 31, 2018 
 
 Original or Amortized Cost 
 
 Gross Unrealized Gains 
 
 Gross Unrealized Losses 
 
 Fair Value 
 
 Average yield (1) 
 
 Average duration (2) 
 
 AFS fixed maturities 
 
 ($ in thousands) 
 
 U.S. treasury bonds 
 
 $ 
 138,625 
 
 $ 
 448 
 
 $ 
 (1 
 ) 
 
 $ 
 139,072 
 
 2.6 
 % 
 
 1.1 
 
 U.S. agency bonds – mortgage-backed 
 
 1,485,716 
 
 3,491 
 
 (36,073 
 ) 
 
 1,453,134 
 
 3.0 
 % 
 
 5.8 
 
 U.S. agency bonds – other 
 
 129,741 
 
 40 
 
 (548 
 ) 
 
 129,233 
 
 2.8 
 % 
 
 1.0 
 
 Non-U.S. government and supranational bonds 
 
 11,212 
 
 66 
 
 (1,206 
 ) 
 
 10,072 
 
 3.4 
 % 
 
 5.1 
 
 Asset-backed securities 
 
 216,072 
 
 425 
 
 (1,415 
 ) 
 
 215,082 
 
 4.2 
 % 
 
 2.4 
 
 Corporate bonds 
 
 1,128,614 
 
 6,525 
 
 (30,164 
 ) 
 
 1,104,975 
 
 3.0 
 % 
 
 4.3 
 
 Total AFS fixed maturities 
 
 3,109,980 
 
 10,995 
 
 (69,407 
 ) 
 
 3,051,568 
 
 3.1 
 % 
 
 4.6 
 
 HTM fixed maturities 
 
 Corporate bonds 
 
 957,845 
 
 3,872 
 
 (20,990 
 ) 
 
 940,727 
 
 3.7 
 % 
 
 4.4 
 
 Municipal bonds 
 
 57,836 
 
 — 
 
 (551 
 ) 
 
 57,285 
 
 3.2 
 % 
 
 4.0 
 
 Total HTM fixed maturities 
 
 1,015,681 
 
 3,872 
 
 (21,541 
 ) 
 
 998,012 
 
 3.7 
 % 
 
 4.4 
 
 Cash and cash equivalents 
 
 330,989 
 
 — 
 
 — 
 
 330,989 
 
 2.1 
 % 
 
 0.0 
 
 Total 
 
 $ 
 4,456,650 
 
 $ 
 14,867 
 
 $ 
 (90,948 
 ) 
 
 $ 
 4,380,569 
 
 3.1 
 % 
 
 4.2 
 
 (1) 
 Average yield is calculated by dividing annualized investment income for each sub-component of AFS and HTM securities and cash and cash equivalents (including amortization of premium or discount) by amortized cost. 
 
 (2) 
 Average duration in years. 
 
 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 September 30, 2019 and December 31, 2018 were as follows: 
 
 September 30, 2019 
 
 December 31, 2018 
 
 ($ in thousands) 
 
 Fair Value 
 
 % of Total 
 
 Fair Value 
 
 % of Total 
 
 U.S. agency bonds - mortgage-backed 
 
 Residential mortgage-backed ("RMBS") 
 
 GNMA – fixed rate 
 
 $ 
 102,018 
 
 13.4 
 % 
 
 $ 
 152,626 
 
 9.6 
 % 
 
 GNMA – variable rate 
 
 7,441 
 
 1.0 
 % 
 
 10,773 
 
 0.7 
 % 
 
 FNMA – fixed rate 
 
 299,079 
 
 39.4 
 % 
 
 742,749 
 
 46.9 
 % 
 
 FHLMC – fixed rate 
 
 350,452 
 
 46.2 
 % 
 
 546,986 
 
 34.6 
 % 
 
 Total U.S. agency bonds - mortgage-backed 
 
 758,990 
 
 100.0 
 % 
 
 1,453,134 
 
 91.8 
 % 
 
 U.S. agency bonds - fixed rate 
 
 — 
 
 — 
 % 
 
 129,233 
 
 8.2 
 % 
 
 Total U.S. agency bonds 
 
 $ 
 758,990 
 
 100.0 
 % 
 
 $ 
 1,582,367 
 
 100.0 
 % 
 
 60 

 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 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. Please see " Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) Note 4. 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 September 30, 2019 and December 31, 2018 were as follows: 
 
 Ratings (1) 
 
 September 30, 2019 
 
 AAA 
 
 AA+, AA, AA- 
 
 A+, A, A- 
 
 BBB+, BBB, BBB- 
 
 BB+ or lower 
 
 Fair Value 
 
 % of Corporate bonds portfolio 
 
 Corporate bonds 
 
 ($ in thousands) 
 
 Basic Materials 
 
 — 
 % 
 
 — 
 % 
 
 0.6 
 % 
 
 1.4 
 % 
 
 — 
 % 
 
 $ 
 19,405 
 
 2.0 
 % 
 
 Communications 
 
 — 
 % 
 
 — 
 % 
 
 2.3 
 % 
 
 3.9 
 % 
 
 — 
 % 
 
 63,678 
 
 6.2 
 % 
 
 Consumer 
 
 — 
 % 
 
 0.1 
 % 
 
 10.3 
 % 
 
 19.1 
 % 
 
 — 
 % 
 
 299,891 
 
 29.5 
 % 
 
 Energy 
 
 — 
 % 
 
 0.8 
 % 
 
 6.0 
 % 
 
 3.7 
 % 
 
 — 
 % 
 
 106,404 
 
 10.5 
 % 
 
 Financial Institutions 
 
 — 
 % 
 
 3.5 
 % 
 
 29.4 
 % 
 
 10.4 
 % 
 
 0.5 
 % 
 
 444,763 
 
 43.8 
 % 
 
 Industrials 
 
 — 
 % 
 
 — 
 % 
 
 1.8 
 % 
 
 3.4 
 % 
 
 — 
 % 
 
 52,941 
 
 5.2 
 % 
 
 Technology 
 
 — 
 % 
 
 — 
 % 
 
 1.1 
 % 
 
 1.7 
 % 
 
 — 
 % 
 
 28,574 
 
 2.8 
 % 
 
 Total 
 
 — 
 % 
 
 4.4 
 % 
 
 51.5 
 % 
 
 43.6 
 % 
 
 0.5 
 % 
 
 $ 
 1,015,656 
 
 100.0 
 % 
 
 Ratings (1) 
 
 December 31, 2018 
 
 AAA 
 
 AA+, AA, AA- 
 
 A+, A, A- 
 
 BBB+, BBB, BBB- 
 
 BB+ or lower 
 
 Fair Value 
 
 % of Corporate bonds portfolio 
 
 Corporate bonds 
 
 ($ in thousands) 
 
 Basic Materials 
 
 — 
 % 
 
 — 
 % 
 
 0.8 
 % 
 
 2.1 
 % 
 
 0.7 
 % 
 
 $ 
 73,696 
 
 3.6 
 % 
 
 Communications 
 
 — 
 % 
 
 0.9 
 % 
 
 2.7 
 % 
 
 5.0 
 % 
 
 — 
 % 
 
 175,924 
 
 8.6 
 % 
 
 Consumer 
 
 — 
 % 
 
 0.2 
 % 
 
 13.0 
 % 
 
 16.0 
 % 
 
 0.3 
 % 
 
 602,756 
 
 29.5 
 % 
 
 Energy 
 
 — 
 % 
 
 1.4 
 % 
 
 3.9 
 % 
 
 3.6 
 % 
 
 0.7 
 % 
 
 195,259 
 
 9.6 
 % 
 
 Financial Institutions 
 
 0.1 
 % 
 
 3.1 
 % 
 
 26.8 
 % 
 
 9.8 
 % 
 
 0.3 
 % 
 
 822,245 
 
 40.1 
 % 
 
 Industrials 
 
 — 
 % 
 
 — 
 % 
 
 1.3 
 % 
 
 3.7 
 % 
 
 — 
 % 
 
 103,349 
 
 5.0 
 % 
 
 Technology 
 
 — 
 % 
 
 0.7 
 % 
 
 1.4 
 % 
 
 0.9 
 % 
 
 0.6 
 % 
 
 72,473 
 
 3.6 
 % 
 
 Total 
 
 0.1 
 % 
 
 6.3 
 % 
 
 49.9 
 % 
 
 41.1 
 % 
 
 2.6 
 % 
 
 $ 
 2,045,702 
 
 100.0 
 % 
 
 (1) 
 Ratings as assigned by S&P, or equivalent 
 
 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: 
 
 September 30, 2019 
 
 Fair Value 
 
 % of Holdings 
 
 Rating (1) 
 
 ($ in thousands) 
 
 Gilead Sciences Inc, 3.65% Due 3/1/2026 
 
 $ 
 21,436 
 
 1.0 
 % 
 
 A 
 
 Rabobank Nederland Utrec, 3.875% Due 2/8/2022 
 
 19,906 
 
 1.0 
 % 
 
 A+ 
 
 BNP Paribas, 5.00% Due 1/15/2021 
 
 19,808 
 
 1.0 
 % 
 
 A+ 
 
 Electricite de France, 4.625%, Due 9/11/2024 
 
 17,194 
 
 0.8 
 % 
 
 A- 
 
 UBS Group Funding (Jersey) Ltd, 2.65% Due 2/1/2022 
 
 17,144 
 
 0.8 
 % 
 
 A- 
 
 Bank of New York Mellon Corp, 3.00%, Due 2/24/2025 
 
 16,657 
 
 0.8 
 % 
 
 A 
 
 Pepsico Inc., 3.60%, Due 3/1/2024 
 
 15,963 
 
 0.8 
 % 
 
 A+ 
 
 Allergan Funding SCS, 3.80%, Due 3/15/2025 
 
 15,707 
 
 0.8 
 % 
 
 BBB 
 
 BAT International Finance PLC, 3.95%, Due 6/15/2025 
 
 15,615 
 
 0.7 
 % 
 
 BBB+ 
 
 Daimler Finance North America LLC, 3.30%, Due 5/19/2025 
 
 13,455 
 
 0.7 
 % 
 
 A 
 
 Total 
 
 $ 
 172,885 
 
 8.4 
 % 
 
 (1) 
 Ratings as assigned by S&P, or equivalent 
 
 61 

 At September 30, 2019 and December 31, 2018 , respectively, we hold the following non-U.S. dollar denominated securities: 
 
 September 30, 2019 
 
 December 31, 2018 
 
 ($ in thousands) 
 
 Fair Value 
 
 % of Total 
 
 Fair Value 
 
 % of Total 
 
 Non-U.S. dollar denominated corporate bonds 
 
 $ 
 302,526 
 
 96.3 
 % 
 
 $ 
 338,712 
 
 97.1 
 % 
 
 Non-U.S. government and supranational bonds 
 
 11,760 
 
 3.7 
 % 
 
 10,072 
 
 2.9 
 % 
 
 Total non-U.S. dollar denominated AFS securities 
 
 $ 
 314,286 
 
 100.0 
 % 
 
 $ 
 348,784 
 
 100.0 
 % 
 
 At September 30, 2019 and December 31, 2018 , respectively, these non-U.S. securities are invested in the following currencies: 
 
 September 30, 2019 
 
 December 31, 2018 
 
 ($ in thousands) 
 
 Fair Value 
 
 % of Total 
 
 Fair Value 
 
 % of Total 
 
 Euro 
 
 $ 
 266,623 
 
 84.8 
 % 
 
 $ 
 284,440 
 
 81.6 
 % 
 
 British Pound 
 
 40,219 
 
 12.8 
 % 
 
 37,469 
 
 10.7 
 % 
 
 Canadian Dollar 
 
 5,317 
 
 1.7 
 % 
 
 5,658 
 
 1.6 
 % 
 
 All other currencies 
 
 2,127 
 
 0.7 
 % 
 
 21,217 
 
 6.1 
 % 
 
 Total non-U.S. dollar denominated AFS securities 
 
 $ 
 314,286 
 
 100.0 
 % 
 
 $ 
 348,784 
 
 100.0 
 % 
 
 The net decrease in 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. 
 For our non-U.S. 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: 
 
 Ratings (1) 
 
 September 30, 2019 
 
 December 31, 2018 
 
 ($ in thousands) 
 
 Fair Value 
 
 % of Total 
 
 Fair Value 
 
 % of Total 
 
 AAA 
 
 $ 
 474 
 
 0.2 
 % 
 
 $ 
 2,258 
 
 0.7 
 % 
 
 AA+, AA, AA- 
 
 20,542 
 
 6.8 
 % 
 
 28,725 
 
 8.5 
 % 
 
 A+, A, A- 
 
 134,608 
 
 44.4 
 % 
 
 148,204 
 
 43.7 
 % 
 
 BBB+, BBB, BBB- 
 
 141,574 
 
 46.8 
 % 
 
 148,672 
 
 43.9 
 % 
 
 BB+ or lower 
 
 5,328 
 
 1.8 
 % 
 
 10,853 
 
 3.2 
 % 
 
 Total non-U.S. dollar denominated corporate bonds 
 
 $ 
 302,526 
 
 100.0 
 % 
 
 $ 
 338,712 
 
 100.0 
 % 
 
 (1) 
 Ratings as assigned by S&P, or equivalent 
 
 The Company does not employ any credit default protection against any of the fixed maturities held in non-U.S. 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 September 30, 2019 and December 31, 2018 : 
 
 ($ in thousands) 
 
 September 30, 2019 
 
 December 31, 2018 
 
 Change 
 
 Change % 
 
 Reinsurance recoverable on unpaid losses 
 
 $ 
 615,481 
 
 $ 
 71,901 
 
 $ 
 543,580 
 
 756.0 
 % 
 
 Deferred commission and other acquisition expenses 
 
 90,367 
 
 388,442 
 
 (298,075 
 ) 
 
 (76.7 
 )% 
 
 Funds withheld receivable 
 
 678,775 
 
 27,039 
 
 651,736 
 
 2,410.4 
 % 
 
 Reserve for loss and LAE 
 
 2,625,858 
 
 3,126,134 
 
 (500,276 
 ) 
 
 (16.0 
 )% 
 
 Unearned premiums 
 
 261,130 
 
 1,200,419 
 
 (939,289 
 ) 
 
 (78.2 
 )% 
 
 Deferred gain on retroactive reinsurance 
 
 104,542 
 
 — 
 
 104,542 
 
 NM 
 
 Accrued expenses and other liabilities 
 
 12,416 
 
 66,183 
 
 (53,767 
 ) 
 
 (81.2 
 )% 
 
 NM - not meaningful 
 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. 
 
 62 

 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 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 September 30, 2019 and December 31, 2018 : 
 
 ($ in thousands) 
 
 September 30, 2019 
 
 December 31, 2018 
 
 Change 
 
 Change % 
 
 Preference shares 
 
 $ 
 465,000 
 
 $ 
 465,000 
 
 $ 
 — 
 
 — 
 % 
 
 Common shareholders' equity 
 
 68,155 
 
 89,275 
 
 (21,120 
 ) 
 
 (23.7 
 )% 
 
 Total Maiden shareholders' equity 
 
 533,155 
 
 554,275 
 
 (21,120 
 ) 
 
 (3.8 
 )% 
 
 Senior Notes - principal amount 
 
 262,500 
 
 262,500 
 
 — 
 
 — 
 % 
 
 Total capital resources 
 
 $ 
 795,655 
 
 $ 
 816,775 
 
 $ 
 (21,120 
 ) 
 
 (2.6 
 )% 
 
 The major factors contributing to the net decrease in capital resources were as follows: 
 Maiden shareholders' equity 
 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 $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 AFS fixed maturities); and 
 
 • 
 net increase in share based transactions of $1.7 million . 
 
 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 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 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”. 
 
 63 

 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 
 
 $ 
 68,155 
 
 $ 
 89,275 
 
 Proceeds from assumed conversion of dilutive options 
 
 — 
 
 362 
 
 Numerator for diluted book value per common share calculation 
 
 $ 
 68,155 
 
 $ 
 89,637 
 
 Common shares outstanding 
 
 83,111,180 
 
 82,948,577 
 
 Shares issued from assumed conversion of dilutive options and restricted share units 
 
 1,055,273 
 
 398,390 
 
 Denominator for diluted book value per common share calculation 
 
 84,166,453 
 
 83,346,967 
 
 Book value per common share 
 
 $ 
 0.82 
 
 $ 
 1.08 
 
 Diluted book value per common share 
 
 0.81 
 
 1.08 
 
 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. 
 Senior Notes 
 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 
 
 $ 
 262,500 
 
 $ 
 262,500 
 
 Maiden shareholders’ equity 
 
 533,155 
 
 554,275 
 
 Total capital resources 
 
 $ 
 795,655 
 
 $ 
 816,775 
 
 Ratio of debt to total capital resources 
 
 33.0 
 % 
 
 32.1 
 % 
 
 Financial Strength Ratings 
 In February 2019, we requested from A.M. Best to withdraw our financial strength rating. On February 28, 2019, A.M. Best approved the withdrawal with a final rating as "B++" (Good) with negative outlook and implications as previously disclosed in the " Financial Strength Ratings " of the Company's Annual Report on Form 10-K for the year ended December 31, 2018 . 
 Aggregate Contractual Obligations 
 In the normal course of business, the Company is a party to a variety of contractual obligations as summarized in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 . 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 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. Commitments and Contingencies " included under Part I Item 1 " Financial Information" of this Form 10-Q for a discussion of the Company’s Operating Lease Obligations. 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: 
 
 64 

 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, 
 
 2019 
 
 2018 
 
 ($ in thousands except per share data) 
 
 Net loss attributable to Maiden common shareholders 
 
 $ 
 (58,327 
 ) 
 
 $ 
 (308,839 
 ) 
 
 Add (subtract): 
 
 Net realized (gains) losses on investment 
 
 (12,700 
 ) 
 
 225 
 
 Total other-than-temporary impairment losses 
 
 165 
 
 479 
 
 Foreign exchange and other (gains) losses 
 
 (7,827 
 ) 
 
 552 
 
 Loss from NGHC Quota Share run-off 
 
 108 
 
 1,369 
 
 Unamortized deferred gain on retroactive reinsurance 
 
 104,542 
 
 — 
 
 Loss from discontinued operations, net of income tax 
 
 277 
 
 59,819 
 
 Interest expense paid under the LPT/ADC Agreement and the Commutation Agreement 
 
 13,596 
 
 — 
 
 Separation costs incurred due to retirement of former executives 
 
 — 
 
 5,500 
 
 Non-GAAP operating earnings (loss) attributable to Maiden common shareholders 
 
 $ 
 39,834 
 
 $ 
 (240,895 
 ) 
 
 Diluted loss per share attributable to Maiden common shareholders 
 
 $ 
 (0.70 
 ) 
 
 $ 
 (3.72 
 ) 
 
 Add (subtract): 
 
 Net realized (gains) losses on investment 
 
 (0.15 
 ) 
 
 #VALUE! 
 
 Total other-than-temporary impairment losses 
 
 — 
 
 0.01 
 
 Foreign exchange and other (gains) losses 
 
 (0.09 
 ) 
 
 0.01 
 
 Loss from NGHC Quota Share run-off 
 
 — 
 
 0.01 
 
 Unamortized deferred gain on retroactive reinsurance 
 
 1.26 
 
 — 
 
 Loss from discontinued operations, net of income tax 
 
 — 
 
 0.72 
 
 Interest expense paid under the LPT/ADC Agreement and the Commutation Agreement 
 
 0.16 
 
 — 
 
 Separation costs incurred due to retirement of former executives 
 
 — 
 
 0.07 
 
 Non-GAAP diluted operating earnings (loss) per common share 
 
 $ 
 0.48 
 
 #VALUE! 
 
 For the Nine Months Ended September 30, 
 
 2019 
 
 2018 
 
 ($ in thousands except per share data) 
 
 Net loss attributable to Maiden common shareholders 
 
 $ 
 (110,376 
 ) 
 
 $ 
 (301,025 
 ) 
 
 Add (subtract): 
 
 Net realized (gains) losses on investment 
 
 (25,685 
 ) 
 
 282 
 
 Total other-than-temporary impairment losses 
 
 165 
 
 479 
 
 Foreign exchange and other gains 
 
 (14,013 
 ) 
 
 (1,862 
 ) 
 
 Loss from NGHC Quota Share run-off 
 
 312 
 
 1,369 
 
 Unamortized deferred gain on retroactive reinsurance 
 
 104,542 
 
 — 
 
 Loss from discontinued operations, net of income tax 
 
 22,327 
 
 41,609 
 
 Interest expense paid under the LPT/ADC Agreement and the Commutation Agreement 
 
 13,596 
 
 — 
 
 Separation costs incurred due to retirement of former executives 
 
 — 
 
 5,500 
 
 Non-GAAP operating loss attributable to Maiden common shareholders 
 
 $ 
 (9,132 
 ) 
 
 $ 
 (253,648 
 ) 
 
 Diluted loss per share attributable to Maiden common shareholders 
 
 $ 
 (1.33 
 ) 
 
 $ 
 (3.62 
 ) 
 
 Add (subtract): 
 
 Net realized (gains) losses on investment 
 
 (0.31 
 ) 
 
 — 
 
 Total other-than-temporary impairment losses 
 
 — 
 
 0.01 
 
 Foreign exchange and other gains 
 
 (0.17 
 ) 
 
 (0.03 
 ) 
 
 Loss from NGHC Quota Share run-off 
 
 0.01 
 
 0.02 
 
 Unamortized deferred gain on retroactive reinsurance 
 
 1.26 
 
 — 
 
 Loss from discontinued operations, net of income tax 
 
 0.27 
 
 0.50 
 
 Interest expense paid under the LPT/ADC Agreement and the Commutation Agreement 
 
 0.16 
 
 — 
 
 Separation costs incurred due to retirement of former executives 
 
 — 
 
 0.07 
 
 Non-GAAP diluted operating loss per common share 
 
 $ 
 (0.11 
 ) 
 
 $ 
 (3.05 
 ) 
 
 65 

 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) 
 
 2019 
 
 2018 
 
 2019 
 
 2018 
 
 Non-GAAP operating earnings (loss) attributable to Maiden common shareholders 
 
 $ 
 39,834 
 
 $ 
 (240,895 
 ) 
 
 $ 
 (9,132 
 ) 
 
 $ 
 (253,648 
 ) 
 
 Opening Maiden common shareholders’ equity 
 
 125,572 
 
 640,742 
 
 89,275 
 
 767,174 
 
 Ending Maiden common shareholders’ equity 
 
 68,155 
 
 307,554 
 
 68,155 
 
 307,554 
 
 Average Maiden common shareholders’ equity 
 
 96,864 
 
 474,148 
 
 78,715 
 
 537,364 
 
 Non-GAAP Operating ROACE 
 
 163.2 
 % 
 
 (201.6 
 )% 
 
 (15.5 
 )% 
 
 (63.1 
 )% 
 
 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) 
 
 2019 
 
 2018 
 
 2019 
 
 2018 
 
 Gross premiums written 
 
 $ 
 35,844 
 
 $ 
 484,493 
 
 $ 
 (523,178 
 ) 
 
 $ 
 1,629,347 
 
 Net premiums written 
 
 $ 
 35,944 
 
 $ 
 482,806 
 
 $ 
 (525,995 
 ) 
 
 $ 
 1,626,485 
 
 Net premiums earned 
 
 $ 
 94,898 
 
 $ 
 520,077 
 
 $ 
 411,986 
 
 $ 
 1,541,278 
 
 Other insurance revenue 
 
 554 
 
 1,870 
 
 2,058 
 
 7,629 
 
 Non-GAAP net loss and LAE (1) 
 
 (36,318 
 ) 
 
 (600,296 
 ) 
 
 (310,568 
 ) 
 
 (1,323,503 
 ) 
 
 Commission and other acquisition expenses 
 
 (32,763 
 ) 
 
 (167,618 
 ) 
 
 (152,036 
 ) 
 
 (497,026 
 ) 
 
 General and administrative expenses 
 
 (2,084 
 ) 
 
 (5,208 
 ) 
 
 (9,035 
 ) 
 
 (16,284 
 ) 
 
 Non-GAAP underwriting income (loss) 
 
 $ 
 24,287 
 
 $ 
 (251,175 
 ) 
 
 $ 
 (57,595 
 ) 
 
 $ 
 (287,906 
 ) 
 
 Ratios: 
 
 Non-GAAP net loss and LAE ratio (1) 
 
 38.1 
 % 
 
 115.0 
 % 
 
 75.1 
 % 
 
 85.4 
 % 
 
 Commission and other acquisition expense ratio 
 
 34.3 
 % 
 
 32.1 
 % 
 
 36.7 
 % 
 
 32.1 
 % 
 
 General and administrative expense ratio 
 
 8.9 
 % 
 
 3.7 
 % 
 
 9.0 
 % 
 
 3.2 
 % 
 
 Expense ratio 
 
 43.2 
 % 
 
 35.8 
 % 
 
 45.7 
 % 
 
 35.3 
 % 
 
 Non-GAAP combined ratio (1) 
 
 81.3 
 % 
 
 150.8 
 % 
 
 120.8 
 % 
 
 120.7 
 % 
 
 66 

 (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, 
 
 2019 
 
 2018 
 
 2019 
 
 2018 
 
 Combined ratio 
 
 190.8 
 % 
 
 150.8 
 % 
 
 146.0 
 % 
 
 120.7 
 % 
 
 Less: Unamortized deferred gain on retroactive reinsurance 
 
 109.5 
 % 
 
 — 
 % 
 
 25.2 
 % 
 
 — 
 % 
 
 Non-GAAP combined ratio (1) 
 
 81.3 
 % 
 
 150.8 
 % 
 
 120.8 
 % 
 
 120.7 
 % 
 
 (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) 
 
 2019 
 
 2018 
 
 2019 
 
 2018 
 
 Net loss and loss adjustment expenses 
 
 $ 
 140,860 
 
 $ 
 600,296 
 
 $ 
 415,110 
 
 $ 
 1,323,503 
 
 Less: Unamortized deferred gain on retroactive reinsurance 
 
 104,542 
 
 — 
 
 104,542 
 
 — 
 
 Non-GAAP net loss and loss adjustment expenses 
 
 $ 
 36,318 
 
 $ 
 600,296 
 
 $ 
 310,568 
 
 $ 
 1,323,503 
 
 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. 
 
 67 

 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 
 
 Change 
 
 Change % 
 
 Preference shares 
 
 $ 
 465,000 
 
 $ 
 465,000 
 
 $ 
 — 
 
 — 
 % 
 
 Common shareholders' equity 
 
 68,155 
 
 89,275 
 
 (21,120 
 ) 
 
 (23.7 
 )% 
 
 Total Maiden shareholders' equity 
 
 533,155 
 
 554,275 
 
 (21,120 
 ) 
 
 (3.8 
 )% 
 
 Unamortized deferred gain on retroactive reinsurance 
 
 104,542 
 
 — 
 
 104,542 
 
 100.0 
 % 
 
 Adjusted Maiden shareholders' equity 
 
 637,697 
 
 554,275 
 
 83,422 
 
 15.1 
 % 
 
 Senior Notes - principal amount 
 
 262,500 
 
 262,500 
 
 — 
 
 — 
 % 
 
 Adjusted total capital resources 
 
 $ 
 900,197 
 
 $ 
 816,775 
 
 $ 
 83,422 
 
 10.2 
 % 
 
 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 
 
 $ 
 0.82 
 
 $ 
 1.08 
 
 Unamortized deferred gain on retroactive reinsurance 
 
 1.26 
 
 — 
 
 Adjusted book value per common share 
 
 $ 
 2.08 
 
 $ 
 1.08 
 
 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 
 
 $ 
 262,500 
 
 $ 
 262,500 
 
 Adjusted Maiden shareholders’ equity 
 
 637,697 
 
 554,275 
 
 Adjusted total capital resources 
 
 $ 
 900,197 
 
 $ 
 816,775 
 
 Ratio of debt to adjusted total capital resources 
 
 29.2 
 % 
 
 32.1 
 % 
 
 68 

 Currency and Foreign Exchange 
 We conduct business in a variety of foreign (non-U.S.) currencies, the principal exposures being the euro, the British pound, the Australian dollar and the Canadian dollar. Assets and liabilities denominated in foreign currencies are exposed to changes in currency exchange rates. Our reporting currency is the U.S. dollar, and exchange rate fluctuations relative to the U.S. dollar may materially impact our results and financial position. Our principal exposure to foreign currency risk is our obligation to settle claims in foreign currencies. In addition, in order to minimize this risk, we maintain and expect to continue to maintain a portion of our investment portfolio in investments denominated in currencies other than the U.S. dollar. We may employ various strategies (including hedging) to manage our exposure to foreign currency exchange risk. 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 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. Revenues and expenses in foreign currencies are converted at average exchange rates during the period. The effect of the translation adjustments for foreign operations is included in AOCI. 
 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 
 The anticipated effects of inflation are considered explicitly in the pricing of the insured exposures, which are used as the initial estimates of reserves for loss and LAE. In addition, inflation is also implicitly accounted for in subsequent estimates of loss and LAE reserves, as the expected rate of emergence is in part predicated upon the historical levels of inflation that impact ultimate claim costs. To the extent inflation causes these costs, particularly medical treatments and litigation costs, to vary from the assumptions made in the pricing or reserving estimates, the Company will be required to change the reserve for loss and LAE with a corresponding change in its earnings in the period in which the variance is identified. The actual effects of inflation on the results of operations of the Company cannot be accurately known until claims are ultimately settled. 
 Off-Balance Sheet Arrangements 
 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 
 See " Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) Note 2. Significant Accounting Policies " for a discussion on recently issued accounting pronouncements not yet adopted. 
 
 69
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
Maiden Holdings, Ltd. 10-Q

Item 2. Management’s Discussion and Analysis
