What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-05-15 compared with 2019-11-12 · 372 added, 616 removed, 427 unchanged (70% of the section changed)

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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.

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.

Maiden Holdings is 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.

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

("Maiden Bermuda").

("Maiden Reinsurance").

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.

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

In addition, we are not actively underwriting reinsurance business.

We have also 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.

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"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.

"Business" of our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 18, 2020 , the sale of Maiden Reinsurance North America, Inc.

("Maiden US") and the termination of both of our quota share contracts with AmTrust have materially reduced our gross and net premiums written since 2018 .

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

We expect to continue to re–evaluate our operating strategy during 2020 while leveraging the significant assets and capital we retain.

In addition to restoring operating profitability, our strategic focus will center on creating the greatest risk-adjusted shareholder returns, whether via asset and capital management or active reinsurance underwriting, or a combination of both.

Our present assessment of the reinsurance marketplace along with our current operating profile is that the risk-adjusted returns that may be produced via active reinsurance underwriting are likely to present more limited opportunities compared to other strategic initiatives which may produce greater shareholder value.

Our business consists of two reportable segments:

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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.

treaty reinsurance operations in 2018, 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.

Our AmTrust Reinsurance segment includes the run-off of all business ceded by AmTrust to Maiden Reinsurance, primarily the AmTrust Quota Share and the European Hospital Liability Quota Share.

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.

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.

Effective March 16, 2020, we re-domesticated our principal operating subsidiary, Maiden Reinsurance, to the State of Vermont in the United States.

Maiden Reinsurance is now subject to the statutes and regulations of Vermont in the ordinary course of business.

We have determined that re-domesticating Maiden Reinsurance to Vermont enables us to better align our capital and resources with our liabilities, which originate mostly in the United States, resulting in a more efficient structure.The re-domestication, in combination with the transactions completed pursuant to the Strategic Review, will continue to strengthen the Company’s capital position and solvency ratios.

While the Vermont DFR will be the group supervisor for the Company, the re-domestication did not apply to the parent holding company which remains a Bermuda-based holding company.

Securities issued by Maiden Holdings were not affected by the re-domestication of Maiden Reinsurance to Vermont.

Concurrent with its re-domestication to Vermont on March 16, 2020, Maiden Holdings contributed as capital the remaining 65% of its ownership in Maiden Reinsurance to Maiden NA.

Maiden NA now owns 100% of Maiden Reinsurance.

Maiden NA also maintains a portfolio of cash and short-term investments, along with other strategic investments of $48.5 million at March 31, 2020 .

We believe Maiden NA’s investments, including its ownership of Maiden Reinsurance, will create opportunities to utilize net operating loss carry-forwards ("NOLs") which total $222.7 million as of March 31, 2020 .

These NOLs are not presently recognized as deferred tax assets as a full valuation allowance is currently carried against them.

For further details please see Note 16 — Taxation included under Item 8 "Financial Statements and Supplementary Data" in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 18, 2020 .

Taken together, the Company believes these measures should generate additional income for Maiden NA in a tax-efficient manner while sharing in the improvement in profitability anticipated in Maiden Reinsurance as a result of the measures enacted in the Strategic Review.

In addition to these changes regarding Maiden Reinsurance, since the third quarter of 2018, we have engaged in a series of strategic measures that have dramatically reduced the regulatory capital required to operate our business, materially strengthened our solvency ratios, and ceased active reinsurance underwriting.

During that time, we significantly increased our estimate of ultimate losses and loss reserves while purchasing reinsurance protection against further loss reserve volatility and as a result, have improved the ultimate economic value of the Company.

We believe these measures have given the Company the ability to more flexibly allocate capital to those activities most likely to produce the greatest returns for shareholders.

The measures we have taken were initiated in early 2018, when our Board of Directors initiated a review of strategic alternatives ("Strategic Review") to evaluate ways to increase shareholder value after a period of continuing higher than targeted combined ratios and lower returns on equity than expected.

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

These transactions can be found in Part II of our Annual Report on Form 10-K for the year ended December 31, 2019 .

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, 2019 for further information.

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

For the Three Months Ended September 30,

Summary Consolidated Statement of Income Data:

COVID-19 Pandemic

The evolving COVID-19 global pandemic has caused significant disruption to the economy and financial markets globally, and the full extent of the potential impacts of COVID-19 are not yet known.

Circumstances caused by the COVID-19 pandemic are complex, uncertain and rapidly evolving.

Our results of operations, financial condition, and liquidity and capital resources have been adversely impacted by the COVID-19 pandemic, and the future impact of the pandemic on our financial condition or results of operations is difficult to predict.

As described herein, the Company is not engaged in active reinsurance underwriting and is running off the remaining unearned exposures it has reinsured.

Our IIS unit does write limited primary insurance coverages that could be exposed to COVID-19 claims.

While we assess our exposure to COVID-19 insurance and reinsurance claims on our existing insurance exposures and remaining reinsurance exposures as limited and immaterial, given the uncertainty surrounding the COVID-19 pandemic and its impact on the insurance industry, our preliminary estimates of loss and loss adjustment expenses ("loss and LAE") and estimates of reinsurance recoverable arising from the COVID-19 pandemic may materially change.

We have not received any COVID-19 claims to date.

Unanticipated issues relating to claims and coverage may emerge, which could adversely affect our business by increasing the scope of coverage beyond our intent and/or increasing the frequency and severity of claims.

Please refer to the Liquidity and Capital Resources section for a further discussion of the impact of the COVID-19 pandemic on our liquidity and investment portfolio.

Three Months Ended March 31, 2020 and 2019 Financial Highlights

For the Three Months Ended March 31,

Summary Consolidated Statement of Income Data (unaudited):

($ in thousands except per share data)

Net loss from continuing operations

Net income (loss) from continuing operations

Loss from discontinued operations, net of income tax

Net loss attributable to Maiden common shareholders

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

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

Dividends per common share

Net income (loss)

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

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

Gross premiums written

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Non-GAAP operating earnings (loss) (1)

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

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

Non-GAAP Combined Ratio (11)

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

For the Nine Months Ended September 30,

Summary Consolidated Statement of Income Data:

($ in thousands except per share data)

Net loss from continuing operations

Loss from discontinued operations, net of income tax

Net loss attributable to Maiden common shareholders

Basic and diluted loss per common share (9) :

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

Dividends per common share

Gross premiums written

Net premiums earned

Underwriting loss (3)

Net investment income

Combined ratio (4)

Non-GAAP measures:

Non-GAAP operating loss (1)

Basic and diluted loss per common share (9) :

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

Non-GAAP Combined Ratio (11)

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

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

September 30, 2019

March 31, 2020

December 31, 2019

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Total investments and cash and cash equivalents (5)

Reserve for loss and loss adjustment expenses ("loss and LAE")

Reserve for loss and LAE

Senior notes - principal amount

Maiden common shareholders' equity

Maiden shareholders' equity

Common shareholders' equity

Shareholders' equity

Total capital resources (6)

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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.

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

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

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

Total capital resources is the sum of the Company's principal amount of debt and Maiden shareholders' equity.

Total capital resources is the sum of the Company's principal amount of debt and shareholders' equity.

See " Key Financial Measures " for additional information.

Book value per common share is calculated using Maiden common shareholders’ equity (shareholders' equity excluding the aggregate liquidation value of our preference shares) divided by the number of common shares outstanding.See " Key Financial Measures " for additional information.

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).

Book value per common share is calculated using 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.

Diluted book value per common share is calculated by dividing 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 shares (assuming exercise of all dilutive share based awards).

See " Key Financial Measures " for additional information.

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

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

See " Key Financial Measures " for additional information.

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

Adjusted book value per common share is a non-GAAP measure that is calculated using 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.

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.

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

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

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

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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.

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 the Company's 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.

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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.

Management believes that the use of non-GAAP operating earnings (loss) and non-GAAP diluted operating earnings (loss) per common 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 therefore allowing 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.

GAAP net income (loss).

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.

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

and (3) foreign exchange and other gains or losses;

and (4) 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 losses.

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.

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

(2) loss and related activity from our NGHC Quota Share run-off operations which was commuted in November 2019.

We exclude net realized gains or losses on investment, OTTI losses and foreign exchange and other 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 commuted in November 2019, results from our discontinued operations, and ceded risks under retroactive reinsurance agreements are representative of our ongoing and future business.

We believe all of these amounts are substantially independent of our business and any potential future underwriting process therefore including them would distort the analysis of underlying trends in our operations.

For purposes of these non-GAAP operating measures, the fee-generating business which is included in our Diversified Reinsurance segment, is considered part of the underwriting operations of the Company.

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.

A reconciliation of the Company's underwriting results can be found in the Condensed Consolidated Financial Statements in the " Notes to Condensed Consolidated Financial Statements (unaudited) Note 3.

Segment Information " included under Item 1.

"Financial Statements" of this Quarterly Report on Form 10-Q.

Combined ratio is commonly used in the insurance and reinsurance industry in conjunction with underwriting income (loss) as a measure of underwriting profitability.

Management measures underwriting results on an overall basis and for each segment on the basis of the combined ratio.

The combined ratio is the sum of the net loss and LAE ratio and the expense ratio and the computations of each component are described below.

A combined ratio under 100% indicates underwriting profitability, as the net loss and LAE, commission and other acquisition expenses and general and administrative expenses are less than the net premiums earned and other insurance revenue on that business.

Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 3.

Segment Information " for further details.

Segment Information " included under Item 1.

"Financial Statements" of this Quarterly Report on Form 10-Q for further details.

While an important metric of success, underwriting loss and combined ratio do not reflect all components of profitability, as they do not recognize the impact of investment income earned on premiums between the time premiums are received and the time loss payments are ultimately paid to clients.

Because we do not manage our cash and investments by segment, investment income and interest expense are not allocated to the reportable segments.

Certain general and administrative expenses are generally allocated to segments based on actual costs incurred.

The " net loss and LAE ratio " is derived by dividing net loss and LAE by the sum of net premiums earned and other insurance revenue.

The " commission and other acquisition expense ratio " is derived by dividing commission and other acquisition expenses by the sum of net premiums earned and other insurance revenue.

The " general and administrative expense ratio " is derived by dividing general and administrative expenses by the sum of net premiums earned and other insurance revenue.

The " expense ratio " is the sum of the commission and other acquisition expense ratio and the general and administrative expense ratio.

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

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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.

Management uses growth in both of these metrics as a prime measure of the value we are generating for our common shareholders, because 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, as well as share repurchases.

Ratio of Debt to Total Capital Resources:

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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.

Management has further adjusted underwriting 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.

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.

Adjusted Total 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 shareholders' equity by adding the unamortized deferred gain on retroactive reinsurance arising from the LPT/ADC Agreement to shareholders' equity.

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

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

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

Certain Operating Measures and Relevant Factors

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.

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

Certain Operating Measures

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, 2019 for a general discussion on " Certain Operating Measures" utilized by the Company.

Critical Accounting Policies and Estimates

6 unchanged sentences

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,

For the Three Months Ended March 31,

($ in thousands)

11 unchanged sentences

Total other-than-temporary impairment losses

Foreign exchange and other gains (losses)

Foreign exchange and other gains

Interest and amortization expenses

Income tax (expense) benefit

Net loss from continuing operations

Net income (loss) from continuing operations

Loss from discontinued operations, net of income tax

Income attributable to noncontrolling interests

Dividends on preference shares

Net loss attributable to Maiden common shareholders

Net income (loss)

Net loss and LAE ratio (3)

4 unchanged sentences

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.

Please refer to "General and Administrative Expenses" below for additional information related to these corporate expenses and the reconciliation to those presented in our unaudited Condensed Consolidated Statements of Income.

4 unchanged sentences

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

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

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

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

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

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

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

partially offset by:

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

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

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

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

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

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

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

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

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

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

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

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

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

partly offset by;

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

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

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

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

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

dollar versus the euro and British pound;

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

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

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

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

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

Net Income (Loss)

Net income for the three months ended March 31, 2020 was $20.9 million compared to a net loss of $36.6 million for the same period in 2019 .

The net improvement in results for the three months ended March 31, 2020 compared to the same period in 2019 was primarily due to the following:

net income from continuing operations of $20.9 million compared to net loss from continuing operations of $33.9 million for the same period in 2019 largely due to the following factors:

underwriting loss of $3.7 million compared to $42.7 million in the same period in 2019 .

The reduction in the underwriting loss was due to:

the impact of lower loss ratios for current year premiums earned during the three months ended March 31, 2020 compared to the same period in 2019 ;

favorable prior year loss development of $0.5 million or 1.7 percentage points in the first quarter of 2020 compared to adverse prior year loss development of $7.3 million or 3.9 percentage points during the same period in 2019 which had been incurred primarily within AmTrust Reinsurance Segment.

realized gains on investment of $11.0 million for the three months ended March 31, 2020 compared to realized losses of $11.1 million for the same period in 2019 ;

foreign exchange and other gains of $8.2 million for the three months ended March 31, 2020 compared to foreign exchange and other gains of $5.0 million for the same period in 2019 .

net income from discontinued operations of $0.0 million compared to a net loss from discontinued operations of $2.7 million for the same period in 2019 .

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,

($ in thousands)

Diversified Reinsurance

AmTrust Reinsurance

For the Nine Months Ended September 30,

The table below compares net premiums written by our reportable segments, reconciled to the total consolidated net premiums written for the three months ended March 31, 2020 and 2019 :

For the Three Months Ended March 31,

($ in thousands)

1 unchanged sentence

AmTrust Reinsurance

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

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

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

Premiums written in the Diversified Reinsurance segment decreased significantly by $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.

NM - not meaningful

Net premiums written for the three months ended March 31, 2020 were $10,372 compared to net premiums written of $(561,530) in the same respective period in 2019 due to the following:

Premiums written in the Diversified Reinsurance segment decreased by $4.6 million or 30.6% for the three months ended March 31, 2020 compared to the same respective period in 2019 due to lower premiums written in German Auto programs within our IIS business.

There were no new written premiums within the AmTrust Reinsurance segment due to the termination of both the AmTrust Quota Share and the European Hospital Liability Quota Share effective January 1, 2019.

For the three months ended March 31, 2019 , the negative premiums written are primarily the result of the Partial Termination Amendment which resulted in Maiden Reinsurance returning approximately $648.0 million in unearned premium to AII, or $436.8 million net of applicable ceding commission and brokerage.

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,

($ in thousands)

Diversified Reinsurance

AmTrust Quota Share Reinsurance

For the Nine Months Ended September 30,

Net premiums earned decreased by $151.9 million or 83.0% for the three months ended March 31, 2020 compared to the same period in 2019 .

The table below compares net premiums earned by our reportable segments, reconciled to the total consolidated net premiums earned, for the three months ended March 31, 2020 and 2019 :

For the Three Months Ended March 31,

($ in thousands)

1 unchanged sentence

AmTrust Quota Share Reinsurance

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

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

Net premiums earned in the AmTrust Reinsurance segment for the three months ended March 31, 2020 decreased by $139.1 million or 88.2% compared to the same respective period in 2019 due to the terminations 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 40 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 .

Net premiums earned in our Diversified Reinsurance segment for the three months ended March 31, 2020 decreased by $12.8 million or 50.5% compared to the same respective period in 2019 driven by non-renewals in our European Capital Solutions business combined with reductions in quota share cessions for German Auto Programs within our IIS business.

Please refer to the analysis of our Diversified Reinsurance segment on page 38 for further discussion.

1 unchanged sentence

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,

Please refer to the analysis of our Diversified Reinsurance segment on page 39 for further discussion.

Net Investment Income

Net investment income decreased by $14.1 million or 43.9% for the three months ended March 31, 2020 compared to the same respective period in 2019 , primarily due to the decline in average investable assets of 34.4% in those same periods.

The decline in investable assets is largely due to the cessation of active reinsurance underwriting which materially reduced our revenues and is responsible for significant negative operating cash flows as we run-off our existing reinsurance liabilities.

Lower investment income was also driven by the decline in average book yields to 2.7% for the three months ended March 31, 2020 compared to 3.1% for the same period in 2019 .

The following table details the Company's average investable assets and average book yield for the three months ended March 31, 2020 compared to the same period in 2019 :

For the Three Months Ended March 31,

($ in thousands)

1 unchanged sentence

Average book yield (2)

Adjusted average book yield (3)

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

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

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

The average of our total investments, cash, restricted cash and cash equivalents, funds withheld receivable and loan to related party held at each quarter-end during the period.

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

Net Realized Gains (Losses) on Investment

Net realized gains on investment were $11.0 million for the three months ended March 31, 2020 , compared to net realized losses of $11.1 million for the same respective period in 2019 .

The realized gains for the three months ended March 31, 2020 were primarily due to sales of corporate bonds during the first quarter of 2020 for the settlement of claim payments to AmTrust.

The net realized losses of $11.1 million in 2019 was driven 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 a funds withheld receivable.

Net Impairment Losses Recognized in Earnings

The Company recognized $1.5 million of OTTI losses in earnings on two fixed maturity securities for the three months ended March 31, 2020 .

There were no OTTI losses recognized during the same period in 2019 .

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.

Net loss and LAE decreased by $131.6 million during the three months ended March 31, 2020 compared to the same respective period in 2019 largely due to the termination of the AmTrust Reinsurance quota share agreements effective January 1, 2019.

The loss ratio for the first quarter of 2020 was impacted by net favorable prior year reserve development of $0.5 million or 1.7 percentage points compared to net adverse prior year reserve development of $7.3 million or 3.9 percentage points during the same period in 2019 .

The prior year development is discussed in greater detail in the individual segment discussion and analysis.

The net loss and LAE ratios decreased to 66.7% for the three months ended March 31, 2020 compared to 83.0% for the same respective period in 2019 primarily due to significant reduction in adverse prior year loss development resulting mainly from the termination of the AmTrust Reinsurance quota share contracts effective January 1, 2019.

Commission and Other Acquisition Expenses

Commission and other acquisition expenses decreased by $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.

Commission and other acquisition expenses decreased by $57.6 million or 82.8% for the three months ended March 31, 2020 , compared to the same respective period in 2019 due to significantly lower earned premiums in both of our reportable segments.

The commission and other acquisition expense ratio was 37.9% for the three months ended March 31, 2020 and 2019 .

General and Administrative Expenses

1 unchanged sentence

General and administrative expenses comprise:

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

($ in thousands)

2 unchanged sentences

Total general and administrative expenses

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 .

Total general and administrative expenses decreased by $8.1 million , or 48.6% for the three months ended March 31, 2020 , compared to the same period in 2019 .

The general and administrative expense ratio increased to 27.0% for the three months ended March 31, 2020 from 9.0% for the three months ended March 31, 2019 as a result of significantly lower earned premiums compared to the prior period 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 months ended March 31, 2020 compared to the same respective period in 2019 were largely due to lower salary, benefits and other corporate expenses associated with the Strategic Review and related headcount reductions since 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.

The interest and amortization expenses related to the outstanding senior notes issued by Maiden Holdings in 2016 and Maiden NA in 2013 ("Senior Notes") were $4.8 million for the three months ended March 31, 2020 and 2019 , respectively.

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

Long Term Debt " for further details on the Senior Notes.

The weighted average effective interest rate for the Senior Notes was 7.6% for the three months ended March 31, 2020 and 2019 , respectively.

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.

Net foreign exchange and other gains amounted to $8.2 million during the three months ended March 31, 2020 compared to net foreign exchange and other gains of $5.0 million for the same respective period in 2019 .

Net foreign exchange gains of $8.4 million occurred during the three months ended March 31, 2020 due to 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.

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.

Net foreign exchange and other gains of $5.0 million for the three months ended March 31, 2019 included $4.3 million of 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 , net foreign exchange gains of $0.7 million were realized primarily attributable to the strengthening of the U.S.

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

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,

The underwriting results and associated ratios for our Diversified Reinsurance segment for the three months ended March 31, 2020 and 2019 were as follows:

For the Three Months Ended March 31,

($ in thousands)

12 unchanged sentences

Combined ratio

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 .

The combined ratio for the three months ended March 31, 2020 increased to 105.4% compared to 102.2% for the same comparative period in 2019 .

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.

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

For the Three Months Ended September 30,

($ in thousands)

Net Premiums Written

International

Total Diversified Reinsurance

For the Nine Months Ended September 30,

Premiums — Gross premiums written decreased by $3.6 million or 23.5% for the three months ended March 31, 2020 compared to the same respective period in 2019 .

This was primarily due to lower premiums written in German Auto Programs in our IIS business during the three months ended March 31, 2020 .

Net premiums written decreased by $4.6 million or 30.6% during the three months ended March 31, 2020 compared to the same period in 2019 mainly due to lower net premiums written in our German Auto programs within our IIS business as discussed above.

The table below shows net premiums written by line of business for the three months ended March 31, 2020 and 2019 :

For the Three Months Ended March 31,

($ in thousands)

2 unchanged sentences

Total Diversified Reinsurance

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,

Net premiums earned decreased by $12.8 million or 50.5% during the three months ended March 31, 2020 compared to the same period in 2019 primarily due to lower earned premiums from German Auto programs and non-renewals in our European Capital Solutions business since 2019 .

The table below shows net premiums earned by line of business for the three months ended March 31, 2020 and 2019 :

For the Three Months Ended March 31,

($ in thousands)

2 unchanged sentences

Total Diversified Reinsurance

For the Nine Months Ended September 30,

Other Insurance Revenue — Other insurance revenue, which represents fee income from our IIS business that is not directly associated with premium revenue assumed by the Company as well as other income earned from transitional services relating to the sale of Maiden US, decreased by $0.4 million or 49.8% for the three months ended March 31, 2020 compared to the same period in 2019 .

This was due to the sale of AVS and its subsidiaries on January 10, 2019 as 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.

The table below shows other insurance revenue by source for the three months ended March 31, 2020 and 2019 :

For the Three Months Ended March 31,

($ in thousands)

Net Premiums Earned

International

Total Diversified Reinsurance

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

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.

Net Loss and Loss Adjustment Expenses — Net loss and LAE decreased by $7.4 million , or 51.1% for the three months ended March 31, 2020 compared to the same respective period in 2019 .

Net loss and LAE ratio decreased to 54.4% for the three months ended March 31, 2020 compared with 55.1% during the same period in 2019 .

During the three months ended March 31, 2020 , the net loss and LAE ratio decreased by 0.7 percentage points compared to the same period in 2019 .

The 2020 loss ratio was impacted by favorable prior year loss reserve development which was $0.5 million or 4.1 percentage points during the three months ended March 31, 2020 , compared to the impact of favorable development of $1.1 million or 4.2 percentage points on the loss ratio in 2019 .

The loss development in 2020 was driven by favorable experience in German Auto programs, while the favorable loss development in 2019 was due to favorable experience from facultative reinsurance run-off lines.

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 .

As a result of these factors, as well as the impact on the loss ratio described above, the combined ratio increased by 3.2 percentage points for the three months ended March 31, 2020 compared to the same respective period in 2019 .

Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $4.3 million or 46.2% for the three months ended March 31, 2020 compared to the same respective period in 2019 .

The commission and other acquisition expense ratio for the three months ended March 31, 2020 increased to 38.5% compared to 35.5% for the same period in 2019 , reflecting the change in the mix of pro rata versus excess of loss premiums written compared to the same period in 2019 .

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 .

General and Administrative Expenses — General and administrative expenses decreased by $1.4 million or 46.8% for the three months ended March 31, 2020 compared to the same respective period in 2019 .

The general and administrative expense ratio increased to 12.5% for the three months ended March 31, 2020 compared to 11.6% for the same period in 2019 .

The overall expense ratio (including commission and other acquisition expenses) for the three months ended March 31, 2020 increased to 51.0% compared to 47.1% for the same respective period in 2019 largely as a result of lower revenue compared to the prior year period.

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,

The AmTrust Reinsurance segment reported an underwriting loss of $3.0 million during the three months ended March 31, 2020 compared to $41.9 million in the same period in 2019 .

The lower underwriting loss was primarily driven by a lower combined ratio on significantly lower earned premiums during the three months ended March 31, 2020 compared to the prior period.

The underwriting results and associated ratios for the AmTrust Reinsurance segment for the three months ended March 31, 2020 and 2019 were as follows:

For the Three Months Ended March 31,

($ in thousands)

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Combined ratio

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

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

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

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

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

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

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

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

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

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

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,

($ in thousands)

Net Premiums Written

Small Commercial Business

Specialty Program

Specialty Risk and Extended Warranty

Total AmTrust Reinsurance

For the Nine Months Ended September 30,

The combined ratio decreased 10.4 percentage points to 116.1% for the three months ended March 31, 2020 compared to 126.5% for the same period in 2019 due to the absence of prior year loss development during the first quarter of 2020 compared to the impact of adverse prior year development of $8.1 million or 5.2 percentage points for the same period in 2019 .

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

Premiums — There were no gross premiums written for the three months ended March 31, 2020 reflecting the termination of both the AmTrust Quota Share and the European Hospital Liability Quota Share as of January 1, 2019, therefore no new business has been written under these contracts during 2020 .

In 2019 , the Partial Termination Amendment resulted in Maiden Reinsurance 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 three months ended March 31, 2019 .

The table below shows net premiums written by category for the three months ended March 31, 2020 and 2019 :

For the Three Months Ended March 31,

($ in thousands)

4 unchanged sentences

Total AmTrust Reinsurance

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

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

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

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

For the Three Months Ended September 30,

($ in thousands)

Net Premiums Earned

Small Commercial Business

Specialty Program

Specialty Risk and Extended Warranty

Total AmTrust Reinsurance

For the Nine Months Ended September 30,

There were no net premiums written in our AmTrust Reinsurance segment for the three months ended March 31, 2020 due to the termination of both the AmTrust Quota Share and European Hospital Liability Quota Share as of January 1, 2019 as discussed above.

Net premiums earned decreased by $139.1 million or 88.2% for the three months ended March 31, 2020 compared to the same respective period in 2019 due to the terminations of the AmTrust Quota Share and European Hospital Liability Quota Share as of January 1, 2019.

The table below details net premiums earned by category for the three months ended March 31, 2020 and 2019 :

For the Three Months Ended March 31,

($ in thousands)

4 unchanged sentences

Total AmTrust Reinsurance

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

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

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

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

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

the impact of adverse prior year loss development which was $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:

Net Loss and Loss Adjustment Expenses — Net loss and LAE decreased by $124.0 million or 89.8% for the three months ended March 31, 2020 compared to the same respective period in 2019 due to significantly lower earned premiums as a result of the termination of both quota share agreements with AmTrust.

Net loss and LAE ratios decreased to 75.2% for the three months ended March 31, 2020 compared to 87.5% for the same respective period in 2019 .

During the three months ended March 31, 2020 , the net loss and LAE ratio decreased by 12.3 percentage points compared to the same period in 2019 primarily due to the following factors:

the Partial Termination Amendment caused significant changes in the mix of business being earned in 2020 compared to 2019 .

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

the impact of adverse prior year loss development which was $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.

These changes resulted in a current year loss ratio which decreased relative to the same period in 2019 for the remaining in-force business;

there was no impact of prior year loss development during the three months ended March 31, 2020 on the loss ratio, compared to the impact of adverse prior year loss development which was $8.1 million or 5.2 percentage points for the same period in 2019 .

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

Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $53.4 million or 88.4% for the three months ended March 31, 2020 compared to the same respective period in 2019 due to significantly lower earned premiums as a result of the terminations of both quota share agreements with AmTrust effective as of January 1, 2019.

The commission and other acquisition expense ratio decreased to 37.4% for the three months ended March 31, 2020 compared to 38.2% for the same respective period in 2019 .

General and Administrative Expenses — General and administrative expenses decreased by $0.6 million or 49.1% for the three months ended March 31, 2020 compared to the same respective period in 2019 .

The general and administrative expense ratios increased to 3.5% for the three months ended March 31, 2020 compared to 0.8% for the same respective period in 2019 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 40.9% for the three months ended March 31, 2020 compared to 39.0% for the same respective period in 2019 primarily due to significantly lower earned premiums as discussed above.

Liquidity and Capital Resources

1 unchanged sentence

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 jurisdictions in which our operating subsidiaries are licensed to write business impose regulations requiring companies to maintain or meet statutory solvency and liquidity requirements and also place restrictions on the declaration and payment of dividends and other distributions.

As of March 31, 2020 , the Company had investable assets of $2.6 billion compared to $2.8 billion as of December 31, 2019 .

Investable assets are the combined total of our investments, cash and cash equivalents (including restricted), loan to a related party and funds withheld receivable.

The decrease in investable assets is primarily the result of significant negative operating cash flows during three months ended March 31, 2020 , particularly as a result of certain contract terminations that occurred in 2019 that require the disbursement of cash and investments to settle claim payments in 2020.

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, 2019 , filed with the SEC on March 18, 2020 .

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

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,

As previously indicated, Maiden Reinsurance re-domesticated to Vermont on March 16, 2020.

We expect to be actively engaged with the Vermont DFR regarding the formulation of Maiden Reinsurance's longer term business plan, which may require prior regulatory approval as stipulated by Vermont law or the Vermont DFR for any active underwriting, capital management or other strategic initiatives.

Due to the change in fair value of our investments caused by the COVID-19 pandemic, we and our insurance subsidiaries may need additional capital to maintain compliance with regulatory capital requirements and/or be required to post additional collateral

under existing reinsurance arrangements, which could reduce our liquidity.

In addition, we may experience a reduction in the amount of available distribution or dividend capacity from our regulated reinsurance subsidiaries, which would also reduce liquidity.

Operating, investing and financing cash flows

Our sources of funds historically have consisted of premium receipts net of commissions and brokerage, investment income, net proceeds from capital raising activities, and proceeds from sales, maturities, pay downs and redemption of investments.

Cash is currently used primarily to pay loss and LAE, ceded reinsurance premium, general and administrative expenses, and interest expense, 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 past two years.

As previously noted, the Strategic Review resulted in a series of transactions that have materially reduced our balance sheet risk 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 thus our net premiums written will continue to be materially lower in 2020 and investment income will become a significantly larger portion of our total revenues.

This has caused significant negative operating cash flow, particularly as we run off the AmTrust Reinsurance reserves as shown in the table below.

We expect this trend to continue going forward for the rest of 2020 and beyond.

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 investment sales and redemptions to meet our expected claims payments and operational expenses.

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 partly offset by positive investing cash flows.

Overall, we continue to expect our cash flows to be sufficient to meet our cash requirements and to operate our business.

At March 31, 2020 and December 31, 2019 , unrestricted cash and cash equivalents and unrestricted fixed maturity investments were $389.1 million and $435.0 million , respectively.

The table below summarizes our operating, investing and financing cash flows for the three months ended March 31, 2020 and 2019 :

For the Three Months Ended March 31,

($ in thousands)

1 unchanged sentence

Investing activities

Financing activities

Effect of exchange rate changes on foreign currency cash

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

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

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

1 unchanged sentence

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 used in operating activities for the three months ended March 31, 2020 were $218.5 million compared to cash flows used in operating activities of $331.9 million for the three months ended March 31, 2019 , a decrease of $113.4 million .

Cash flows used in discontinued operations were $0.0 million for the three months ended March 31, 2020 compared to $0.2 million in the three months ended March 31, 2019 .

Cash flows used in continuing operating activities were $218.5 million for the three months ended March 31, 2020 compared to cash flows used in continuing operations of $331.7 million for the three months ended March 31, 2019 .

The operating cash flows used in continuing operations for the three months ended March 31, 2020 and 2019 were primarily the result of the termination of the AmTrust Quota Share including both 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 both respective periods while claim payments have been principally from the run-off of existing reserves for loss and loss adjustment expenses.

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 .

Net cash provided by investing activities was $288.5 million for the three months ended March 31, 2020 compared to $129.8 million for the same period in 2019 primarily due to proceeds from the sale of fixed maturity investments which were made to settle claim payments during the three months ended March 31, 2020 .

Cash flows used in discontinued operations was $0.0 million for the three months ended March 31, 2020 compared to cash flows used in discontinued operations of $3.3 million for the same period in 2019 .

Cash flows provided by continuing operations was $288.5 million during the three months ended March 31, 2020 compared to cash flows provided by continuing operations of $133.1 million for the same period in 2019 as the proceeds from the sales, maturities and calls exceeded the purchases of fixed maturity securities by $291.4 million compared to an inflow of $131.4 million for the same period in 2019 .

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, 2019 , filed with the SEC on March 18, 2020 .

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.

At March 31, 2020 and December 31, 2019 , restricted cash and cash equivalents and fixed maturity investments used as collateral were $1.3 billion and $1.5 billion , respectively.

This collateral represents 76.9% and 77.6% of the fair value of our total fixed maturity investments and cash, restricted cash and cash equivalents at March 31, 2020 and December 31, 2019 , respectively.

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

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

Accordingly, our funds are invested in liquid, investment-grade fixed income securities which are all designated as available-for-sale at March 31, 2020 .

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.

During the three months ended March 31, 2020 , the yield on the 10-year U.S.

Treasury bond decreased by 122 basis points to 0.7%.

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

Treasury rate is the key risk-free determinant in the fair value of many of the securities in our portfolio.

Treasury yield curve experienced a material downward shift during the three months ended March 31, 2020 , reflecting significant global financial and economic volatility from the COVID-19 pandemic which spread during the first quarter of 2020 .

The global nature of the pandemic resulted in an abrupt downturn in economic activity both globally and in the U.S., and financial markets experienced unprecedented volatility during this period.

Federal Reserve, along with central bankers globally, implemented multiple rounds of rapid and aggressive monetary measures to provide liquidity to financial markets and to relieve imbalances that rapidly formed in those markets in the face of the pandemic and its economic and financial impacts.

Government policymakers in the U.S.

and globally have additionally implemented an ongoing series of unprecedented fiscal policy measures to provide immediate and near-term economic relief to affected populations.

Due in large part to the uncertainty caused by the COVID-19 pandemic in global financial markets during the three months ended March 31, 2020 , our investment portfolio experienced significant unrealized losses (largely due to widening credit spreads on fixed income investments), increased volatility, heightened credit risk, and declines in yields on our fixed income investments.

Our investment portfolios may continue to be adversely impacted by unfavorable market conditions caused by the COVID-19 pandemic, which could cause continued volatility in our results of operations and negatively impact our financial condition.

The movement in the market values of our fixed maturity portfolio during the three months ended March 31, 2020 generated net unrealized losses of $44.2 million , primarily due to the recent COVID-19 pandemic which has caused widening credit spreads, a surging demand for liquidity and a sudden stop to global economic activity, all of which have decreased bond prices during the three months ended March 31, 2020 .

At March 31, 2020 , we consider the levels of cash and cash equivalents we are holding to be within our targeted ranges.

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 March 31, 2020 and December 31, 2019 , these respective durations in years were as follows:

March 31, 2020

December 31, 2019

1 unchanged sentence

Reserve for loss and LAE (1)

(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 .

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

(1) The duration regarding our reserve for loss and LAE at March 31, 2020 is gross of LPT/ADC Agreement reserves.

During the three months ended March 31, 2020 , the weighted average duration of our fixed maturity investment portfolio decreased by 0.3 years to 2.7 years and the duration for the reserve for loss and LAE remained at 4.2 years.

At March 31, 2020 , the duration of our fixed maturity investment portfolio decreased compared to December 31, 2019 due to sales of fixed maturities primarily as a result of settling claim payments with AmTrust.

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 at March 31, 2020 and December 31, 2019 , respectively:

March 31, 2020

Original or Amortized Cost

3 unchanged sentences

Average duration (2)

AFS fixed maturities

($ in thousands)

4 unchanged sentences

Corporate bonds

Municipal bonds

Total AFS fixed maturities

Cash and cash equivalents

5 unchanged sentences

Average duration (2)

AFS fixed maturities

($ in thousands)

1 unchanged sentence

agency bonds – mortgage-backed

agency bonds – other

government and supranational bonds

1 unchanged sentence

Corporate bonds

Total AFS fixed maturities

HTM fixed maturities

Corporate bonds

Municipal bonds

Total HTM fixed maturities

Cash and cash equivalents

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.

Average yield is calculated by dividing annualized investment income for each sub-component of fixed maturity securities and cash and cash equivalents (including amortization of premium or discount) by amortized cost.

Average duration in years.

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

At March 31, 2020 , 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

Additional details on the Agency MBS at March 31, 2020 and December 31, 2019 were as follows:

March 31, 2020

December 31, 2019

6 unchanged sentences

FHLMC – fixed rate

agency bonds - mortgage-backed

agency bonds - fixed rate

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.

Our Agency MBS portfolio is 34.1% of our fixed maturity investments at March 31, 2020 .

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 reduce the total amount of investment income we earn.

At March 31, 2020 and December 31, 2019 , 98.8% and 99.7% , respectively, of our fixed maturity investments consisted of investment grade securities.

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

1 unchanged sentence

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

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

September 30, 2019

The security holdings by sector and financial strength rating of our corporate bond holdings at March 31, 2020 and December 31, 2019 were as follows:

March 31, 2020

AAA, AA+, AA, AA-

BBB+, BBB, BBB-

6 unchanged sentences

December 31, 2019

AAA, AA+, AA, AA-

BBB+, BBB, BBB-

6 unchanged sentences

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

At March 31, 2020 , the Company’s ten largest corporate holdings, 80.4% of which are U.S.

dollar denominated, 46.0% of which are in the Consumer Sector 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:

March 31, 2020

% of Holdings

($ in thousands)

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

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

BNP Paribas, 5.00% Due 1/15/2021

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

UBS Group Funding (Jersey) Ltd, 2.65% Due 2/1/2022

Bank of New York Mellon Corp, 3.00%, Due 2/24/2025

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

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

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

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

Goldman Sachs Group Inc., 3.625%, Due 1/22/2023

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

Bayer US Finance LLC, 3.375% Due 10/8/2024

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

Anheuser-Busch INBEV NV, 2.875% Due 9/25/2024

Ratings as assigned by S&P, or equivalent

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

At March 31, 2020 and December 31, 2019 , respectively, we hold the following non-U.S.

dollar denominated securities:

September 30, 2019

March 31, 2020

December 31, 2019

3 unchanged sentences

Total non-U.S.

dollar denominated AFS securities

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

dollar denominated securities

At March 31, 2020 and December 31, 2019 , respectively, these non-U.S.

securities are invested in the following currencies:

September 30, 2019

March 31, 2020

December 31, 2019

4 unchanged sentences

Total non-U.S.

dollar denominated AFS securities

dollar denominated securities

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.

denominated fixed maturities is primarily due to the depreciation of Euro denominated corporate bonds during the three months ended March 31, 2020 .

At March 31, 2020 and December 31, 2019 , all of the Company's non-U.S.

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

1 unchanged sentence

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

September 30, 2019

March 31, 2020

December 31, 2019

5 unchanged sentences

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

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

denominated currencies at March 31, 2020 and December 31, 2019 , 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 :

The following table summarizes the Company's other material balance sheet changes at March 31, 2020 and December 31, 2019 :

($ in thousands)

September 30, 2019

March 31, 2020

December 31, 2019

Reinsurance recoverable on unpaid losses

Deferred commission and other acquisition expenses

2 unchanged sentences

Unearned premiums

Deferred gain on retroactive reinsurance

Accrued expenses and other liabilities

NM - not meaningful

The Company's deferred commission and other acquisition expenses decreased by 10.7% and unearned premiums decreased by 10.5% primarily due to the Partial Termination Amendment with AmTrust on a cut-off basis and the termination of the remaining business under both quota share contracts with AmTrust which are now in run-off with no new business written beginning January 1, 2019.

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

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

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

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

Funds withheld receivable increased by 1.7% primarily due to insurance balances receivable that were converted into funds withheld to be utilized as collateral for the European Hospital Liability Quota Share.

Accrued expenses and other liabilities decreased by 30.0% as at March 31, 2020 compared to December 31, 2019 due to reductions in the reinsurance balances payable as a result of the aforementioned termination of both AmTrust reinsurance contracts effective January 1, 2019.

The Company's reserve for loss and LAE decreased by 7.8% primarily due to the recent commutation of workers' compensation reserves during 2019 in the AmTrust Reinsurance segment.

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.

In the three months ended March 31, 2020 , our total capital resources decrease d by $22.7 million , or 2.9% compared to December 31, 2019 due to unrealized losses on our investment portfolio partly offset by net income attributable to common shareholders.

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 :

The following table shows the movement in total capital resources at March 31, 2020 and December 31, 2019 :

($ in thousands)

September 30, 2019

March 31, 2020

December 31, 2019

1 unchanged sentence

Common shareholders' equity

Total Maiden shareholders' equity

Total shareholders' equity

Senior Notes - principal amount

1 unchanged sentence

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);

Shareholders' equity

Total shareholders' equity at March 31, 2020 decreased by $22.7 million , or 4.5% compared to December 31, 2019 due to the following factors:

net decrease in AOCI of $44.1 million which arose due to net unrealized losses on investment resulting from the net decrease in the fair value of our investment portfolio relating to market price movements due to widening credit spreads and unfavorable economic conditions during the three months ended March 31, 2020 ;

partly offset by:

net income attributable to Maiden of $20.9 million for the three months ended March 31, 2020 ;

net increase in share based transactions of $0.5 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 .

During the three months ended March 31, 2020 , the Company did not repurchase any common shares under its share repurchase authorization.

At March 31, 2020 , the Company has a remaining authorization of $74.2 million for share repurchases.

Please refer to " Notes to Consolidated Financial Statements Note 13.

Shareholders' Equity " included under Part II Item 8.

" Financial Statements and Supplementary Data" of our Annual Report on Form 10-K for a discussion of the equity instruments issued by the Company as at December 31, 2019 .

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

1 unchanged sentence

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

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

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

September 30, 2019

On April 17, 2020, the Company received a letter from NASDAQ stating that the Company had not regained compliance during the Compliance Period and that the Company’s securities would be delisted from the Capital Market by the opening of business on April 28, 2020 unless the Company requests an appeal of NASDAQ’s determination to a Hearings Panel.

On April 24, 2020, the Company filed a Hearing Request Form to appeal NADSAQ’s determination with the Hearings Panel which stays the de-listing until a decision is rendered subsequent to the appeal hearing.

The NASDAQ Hearings Department has scheduled an appeal hearing to take place on July 23, 2020.

Book value and diluted book value per common share at March 31, 2020 and December 31, 2019 were computed as follows:

March 31, 2020

December 31, 2019

($ in thousands except share and per share data)

Ending Maiden common shareholders’ equity

Proceeds from assumed conversion of dilutive options

Ending common shareholders’ equity

Numerator for diluted book value per common share calculation

Common shares outstanding

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

Shares issued from assumed conversion of dilutive options and restricted shares

Denominator for diluted book value per common share calculation

1 unchanged sentence

Diluted book value per common share

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

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

At March 31, 2020 , book value per common share decreased by 52.9% and diluted book value per common share decreased by 52.0% , compared to December 31, 2019 .

This was primarily due to net unrealized losses on our investment portfolio of $44.1 million reported in other comprehensive loss for the three months ended March 31, 2020 , partly offset by our net income attributable to common shareholders of $20.9 million during the three months ended March 31, 2020 .

Please see " Liquidity and Capital Resources - Investments" on page 43 for further information on the change in fair value of our fixed maturity investment portfolio.

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

There were no changes in the Company’s Senior Notes at March 31, 2020 compared to December 31, 2019 and the Company did not enter into any short-term borrowing arrangements during the three months ended March 31, 2020 .

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

The ratio of Debt to Total Capital Resources at March 31, 2020 and December 31, 2019 was computed as follows:

March 31, 2020

December 31, 2019

5 unchanged sentences

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 .

The Company does not have a financial strength rating from any nationally recognized statistical rating organization.

Non-GAAP Measures

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

Non-GAAP Operating earnings (loss)

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

As defined and described in Key Financial Measures on page 33, management uses certain key financial measures, some of which are non-GAAP measures, to evaluate the Company's financial performance and the overall growth in value generated for the Company’s common shareholders.

For the three months ended March 31, 2020 and 2019 , respectively, certain defined non-GAAP measures and the calculation of these non-GAAP measures, specifically non-GAAP underwriting income (loss) , non-GAAP loss and LAE ratio , and non-GAAP combined ratio are not presented herein as those figures and ratios are the same in the periods presented on a GAAP basis.

However, these non-GAAP measures could differ in future periods.

The calculation, reconciliation to nearest GAAP measure and discussion of relevant non-GAAP measures used by management are as follows:

Non-GAAP operating earnings (loss) and Non-GAAP diluted operating earnings (loss) per share attributable to common shareholders

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

GAAP financial measure as follows:

For the Three Months Ended September 30,

For the Three Months Ended March 31,

($ in thousands except per share data)

Net loss attributable to Maiden common shareholders

Net income (loss)

Add (subtract):

1 unchanged sentence

Total other-than-temporary impairment losses

Foreign exchange and other (gains) losses

Loss from NGHC Quota Share run-off

Unamortized deferred gain on retroactive reinsurance

Foreign exchange and other gains

Loss from discontinued operations, net of income tax

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

Separation costs incurred due to retirement of former executives

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

Diluted loss per share attributable to Maiden common shareholders

Add (subtract):

Net realized (gains) losses on investment

Total other-than-temporary impairment losses

Foreign exchange and other (gains) losses

Loss from NGHC Quota Share run-off

Unamortized deferred gain on retroactive reinsurance

Loss from discontinued operations, net of income tax

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

Separation costs incurred due to retirement of former executives

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

For the Nine Months Ended September 30,

($ in thousands except per share data)

Net loss attributable to Maiden common shareholders

Non-GAAP operating earnings (loss)

Diluted earnings (loss) per share attributable to common shareholders

Add (subtract):

2 unchanged sentences

Foreign exchange and other gains

Loss from NGHC Quota Share run-off

Unamortized deferred gain on retroactive reinsurance

Loss from discontinued operations, net of income tax

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

Separation costs incurred due to retirement of former executives

Non-GAAP operating loss attributable to Maiden common shareholders

Diluted loss per share attributable to Maiden common shareholders

Add (subtract):

Net realized (gains) losses on investment

Total other-than-temporary impairment losses

Foreign exchange and other gains

Loss from NGHC Quota Share run-off

Unamortized deferred gain on retroactive reinsurance

Loss from discontinued operations, net of income tax

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

Separation costs incurred due to retirement of former executives

Non-GAAP diluted operating loss per common share

Non-GAAP operating earnings (loss)

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

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

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

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

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

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

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

Non-GAAP operating earnings was $3.1 million for the three months ended March 31, 2020 , compared to a non-GAAP operating loss of $27.6 million for the same period in 2019 .

The Company's non-GAAP operating results included an underwriting loss of $3.7 million for the three months ended March 31, 2020 , compared to an underwriting loss of $42.7 million for the same period in 2019 , which was primarily the result of underwriting results not covered by the LPT/ADC Agreement, specifically the run-off of the AmTrust Quota Share with losses occurring after December 31, 2018 (including the additional ceding commission paid under the Partial Termination Amendment) as well as claims related to the European Hospital Liability Quota Share.

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,

The improvement in Non-GAAP Operating ROACE for the three months ended March 31, 2020 relative to the same period in 2019 reflects the reflective improvement in non-GAAP operating earnings and was computed as follows:

For the Three Months Ended March 31,

($ in thousands)

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

Opening Maiden common shareholders’ equity

Ending Maiden common shareholders’ equity

Average Maiden common shareholders’ equity

Non-GAAP operating earnings (loss)

Opening common shareholders’ equity

Ending common shareholders’ equity

Average common shareholders’ equity

Non-GAAP Operating ROACE

Non-GAAP Underwriting Results

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

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

($ in thousands)

Gross premiums written

Net premiums written

Net premiums earned

Other insurance revenue

Non-GAAP net loss and LAE (1)

Commission and other acquisition expenses

General and administrative expenses

Non-GAAP underwriting income (loss)

Non-GAAP net loss and LAE ratio (1)

Commission and other acquisition expense ratio

General and administrative expense ratio

Expense ratio

Non-GAAP combined ratio (1)

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

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

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

Non-GAAP Underwriting Income (Loss)

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

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

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

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

Non-GAAP Combined Ratio

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

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Combined ratio

Unamortized deferred gain on retroactive reinsurance

Non-GAAP combined ratio (1)

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

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

Non-GAAP Net Loss and LAE

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

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

($ in thousands)

Net loss and loss adjustment expenses

Unamortized deferred gain on retroactive reinsurance

Non-GAAP net loss and loss adjustment expenses

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

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

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

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

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

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

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

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

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

The Adjusted Shareholders' Equity, Adjusted Total Capital Resources and Adjusted Book Value per Common Share at March 31, 2020 reflect the addition of the unamortized deferred gain on retroactive reinsurance to the GAAP shareholders' equity as depicted in the computations below.

The deferred gain of $113.0 million 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's shareholders' equity over the settlement period under the terms of the agreement.

Reconciliation of shareholders' equity to Adjusted shareholders' equity and Adjusted Total Capital Resources

The following table computes adjusted shareholders' equity and adjusted total capital resources by recognizing the unamortized deferred gain on retroactive reinsurance at March 31, 2020 and December 31, 2019 :

($ in thousands)

September 30, 2019

March 31, 2020

December 31, 2019

1 unchanged sentence

Common shareholders' equity

Total Maiden shareholders' equity

Total shareholders' equity

Unamortized deferred gain on retroactive reinsurance

Adjusted Maiden shareholders' equity

Adjusted shareholders' equity

Senior Notes - principal amount

Adjusted total capital resources

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

September 30, 2019

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 March 31, 2020 and December 31, 2019 was computed as follows:

March 31, 2020

December 31, 2019

3 unchanged sentences

Adjusted book value per common share

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

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

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

September 30, 2019

Ratio of Debt to Adjusted 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 adjusted total capital resources as computed in the table above.

The ratio of Debt to Adjusted Total Capital Resources at March 31, 2020 and December 31, 2019 was computed as follows:

March 31, 2020

December 31, 2019

1 unchanged sentence

Senior notes - principal amount

Adjusted Maiden shareholders’ equity

Adjusted shareholders’ equity

Adjusted total capital resources

1 unchanged sentence

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.

We conduct business in a variety of foreign (non-U.S.) currencies, the principal exposures being the euro and the British pound.

Assets and liabilities denominated in foreign currencies are exposed to changes in currency exchange rates.

6 unchanged sentences

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

At 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.

At March 31, 2020 , no such hedges or hedging strategies were in force or had been entered into.

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.

Net foreign exchange gains amounted to $8.4 million during the three months ended March 31, 2020 , compared to foreign exchange gains of $0.7 million for the three months ended March 31, 2019 .

Effects of Inflation

4 unchanged sentences

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.

At March 31, 2020 , we did not have any off-balance sheet arrangements as defined by Item 303(a) (4) of Regulation S-K.

Recent Accounting Pronouncements

2 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis