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Item 2. Management’s Discussion and Analysis

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 
 The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this "Form 10-Q" or this "Report"). References in this Form 10-Q to the terms "we", "us", "our", "the Company" or other similar terms mean the consolidated operations of Maiden Holdings, Ltd. and its subsidiaries, unless the context requires otherwise. References in this Form 10-Q to the term "Maiden Holdings" means Maiden Holdings, Ltd. only. Certain reclassifications have been made for 2019 to conform to the 2020 presentation and have no impact on consolidated net income and total equity previously reported. 
 Note on Forward-Looking Statements 
 This Quarterly Report on Form 10-Q includes projections concerning financial information and statements concerning future economic performance and events, plans and objectives relating to management, operations, products and services, and assumptions underlying these projections and statements. These projections and statements are forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 and are not historical facts but instead represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control. These projections and statements may address, among other things, our strategy for growth, product development, financial results and reserves. Our actual results and financial condition may differ, possibly materially, from these projections and statements and therefore you should not place undue reliance on them. Factors that could cause our actual results and financial condition to differ, possibly materially, from those in the specific projections and statements are discussed throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations and in "Risk Factors" in Item 1A of Part I of our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission ("SEC") on March 18, 2020 , however, these factors should not be construed as exhaustive. Forward-looking statements speak only as of the date they are made and we undertake no obligation to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by law. 
 
 30 

 Overview 
 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. ("Maiden Global"). These products also produce reinsurance programs which are underwritten by Maiden Reinsurance Ltd. ("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 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. "Financial Information". 
 As discussed in "Note 1. Basis of Presentation" of the Notes to Condensed Consolidated Financial Statements included in Part I Item 1. "Financial Information" and in Item 1. "Business" of our Annual Report on Form 10-K 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: Diversified Reinsurance and AmTrust Reinsurance. As a result of the strategic decision to divest all of our U.S. 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 Reinsurance, primarily the AmTrust Quota Share and the European Hospital Liability Quota Share. 
 Recent Developments 
 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. 
 
 31 

 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, 
 
 2020 
 
 2019 
 
 Change 
 
 Summary Consolidated Statement of Income Data (unaudited): 
 
 ($ in thousands except per share data) 
 
 Net income (loss) from continuing operations 
 
 $ 
 20,861 
 
 $ 
 (33,902 
 ) 
 
 $ 
 54,763 
 
 Loss from discontinued operations, net of income tax 
 
 — 
 
 (2,734 
 ) 
 
 2,734 
 
 Net income (loss) 
 
 20,861 
 
 (36,636 
 ) 
 
 57,497 
 
 Basic and diluted earnings (loss) per common share (9) : 
 
 Net income (loss) attributable to common shareholders (2)(9) 
 
 0.25 
 
 (0.44 
 ) 
 
 0.69 
 
 Gross premiums written 
 
 11,734 
 
 (561,139 
 ) 
 
 572,873 
 
 Net premiums earned 
 
 31,215 
 
 183,102 
 
 (151,887 
 ) 
 
 Underwriting loss (3) 
 
 (3,693 
 ) 
 
 (42,689 
 ) 
 
 38,996 
 
 Net investment income 
 
 17,964 
 
 32,022 
 
 (14,058 
 ) 
 
 Combined ratio (4) 
 
 131.6 
 % 
 
 129.9 
 % 
 
 1.7 
 
 Non-GAAP measures: 
 
 Non-GAAP operating earnings (loss) (1) 
 
 $ 
 3,132 
 
 $ 
 (27,552 
 ) 
 
 $ 
 30,684 
 
 Non-GAAP operating earnings (loss) per share - attributable to common shareholders (1)(9) 
 
 0.04 
 
 (0.33 
 ) 
 
 0.37 
 
 Annualized non-GAAP operating return on average common shareholders' equity (1) 
 
 40.2 
 % 
 
 (107.2 
 )% 
 
 147.4 
 
 32 

 March 31, 2020 
 
 December 31, 2019 
 
 Change 
 
 Consolidated Financial Condition 
 
 ($ in thousands except per share data) 
 
 Total investments and cash and cash equivalents (5) 
 
 $ 
 1,720,594 
 
 $ 
 1,974,544 
 
 $ 
 (253,950 
 ) 
 
 Total assets 
 
 3,321,757 
 
 3,568,196 
 
 (246,439 
 ) 
 
 Reserve for loss and LAE 
 
 2,249,045 
 
 2,439,907 
 
 (190,862 
 ) 
 
 Senior notes - principal amount 
 
 262,500 
 
 262,500 
 
 — 
 
 Common shareholders' equity 
 
 19,998 
 
 42,718 
 
 (22,720 
 ) 
 
 Shareholders' equity 
 
 484,998 
 
 507,718 
 
 (22,720 
 ) 
 
 Total capital resources (6) 
 
 747,498 
 
 770,218 
 
 (22,720 
 ) 
 
 Ratio of debt to total capital resources (12) 
 
 35.1 
 % 
 
 34.1 
 % 
 
 1.0 
 
 Book Value calculations: 
 
 Book value per common share (7) 
 
 $ 
 0.24 
 
 $ 
 0.51 
 
 $ 
 (0.27 
 ) 
 
 Accumulated dividends per common share 
 
 4.27 
 
 4.27 
 
 — 
 
 Book value per common share plus accumulated dividends 
 
 $ 
 4.51 
 
 $ 
 4.78 
 
 $ 
 (0.27 
 ) 
 
 Change in book value per common share plus accumulated dividends 
 
 (5.6 
 )% 
 
 Diluted book value per common share (8) 
 
 $ 
 0.24 
 
 $ 
 0.50 
 
 $ 
 (0.26 
 ) 
 
 Non-GAAP measures: 
 
 Adjusted book value per common share (10) 
 
 $ 
 1.59 
 
 $ 
 1.87 
 
 $ 
 (0.28 
 ) 
 
 Adjusted Maiden shareholders' equity (11) 
 
 597,948 
 
 620,668 
 
 (22,720 
 ) 
 
 Adjusted total capital resources (11) 
 
 860,448 
 
 883,168 
 
 (22,720 
 ) 
 
 Ratio of debt to adjusted total capital resources (13) 
 
 30.5 
 % 
 
 29.7 
 % 
 
 0.8 
 
 (1) 
 Non-GAAP operating earnings (loss), non-GAAP operating earnings (loss) per common share, and annualized non-GAAP operating return on average common equity and underwriting loss are non-GAAP financial measures. See " Key Financial Measures " for additional information. 
 
 (2) 
 Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 12. Earnings per Common Share " for the calculation of basic and diluted income or loss per common share. 
 
 (3) 
 Underwriting loss is a non-GAAP measure and is calculated as net premiums earned plus other insurance revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities. See " Key Financial Measures " for additional information. 
 
 (4) 
 Combined ratio is calculated by adding together the net loss and LAE ratio and the expense ratio. 
 
 (5) 
 Total investments and cash and cash equivalents includes both restricted and unrestricted. 
 
 (6) 
 Total capital resources is the sum of the Company's principal amount of debt and shareholders' equity. See " Key Financial Measures " for additional information. 
 
 (7) 
 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. 
 
 (8) 
 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. 
 
 (9) 
 During a period of loss, the basic weighted average common shares outstanding is used in the denominator of the diluted loss per common share computation as the effect of including potential dilutive shares would be anti-dilutive. 
 
 (10) 
 Adjusted book value per common share is a non-GAAP measure that is calculated using common shareholders' equity, adjusted for unamortized deferred gain on retroactive reinsurance, divided by the number of common shares outstanding. See " Key Financial Measures " for additional information. 
 
 (11) 
 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. Under U.S. GAAP, the deferred gain shall be amortized over the estimated remaining settlement period. See " Key Financial Measures " for additional information. 
 
 (12) 
 Ratio of debt to total capital resources is calculated using the total principal amount of debt divided by the sum of total capital resources. 
 
 (13) 
 Ratio of debt to adjusted total capital resources is calculated using the total principal amount of debt divided by the sum of adjusted total capital resources. 
 
 33 

 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 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. The non-GAAP measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. The calculation of some of these key financial measures including the reconciliation of non-GAAP measures to the nearest GAAP measure and relevant discussions are found within Item 2 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 49. These key financial measures are: 
 Non-GAAP operating earnings (loss) and non-GAAP diluted operating earnings (loss) per common share : Management believes that the use of non-GAAP operating earnings (loss) and non-GAAP diluted operating earnings (loss) per 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 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 ("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 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. 
 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. 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 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 " 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"): Management uses non-GAAP operating return on average common shareholders' equity as a measure of profitability that focuses on the return to common shareholders. It is calculated using non-GAAP operating earnings (loss) available to common shareholders (as defined above) divided by average common shareholders' equity. 
 
 34 

 Book Value per Common Share and Diluted Book Value per Common Share: Book value per common share and diluted book value per common share are non-GAAP measures. Management uses growth in both of these metrics as a prime measure of the value we are generating for our common shareholders, 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: Management uses this non-GAAP measure to monitor the financial leverage of the Company. This measure is calculated using the total principal amount of debt divided by the sum of total capital resources. 
 Non-GAAP underwriting income (loss), Non-GAAP loss and LAE ratio, and Non-GAAP combined ratio: Management has further adjusted 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 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 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 
 The Company's critical accounting policies and estimates are discussed in " Management's Discussion and Analysis of Financial Condition and Results of Operations " section included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2019 , filed with the SEC on March 18, 2020 . The critical accounting policies and estimates should be read in conjunction with " Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) Note 2. Significant Accounting Policies " included in this Form 10-Q and " Notes to Consolidated Financial Statements Note 2. Significant Accounting Policies " included within the audited Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2019 , filed with the SEC on March 18, 2020 . There have been no material changes in the application of our critical accounting estimates subsequent to that report. 
 
 35 

 Results of Operations 
 The following table sets forth our selected unaudited Condensed Consolidated Statement of Income data for each of the periods indicated: 
 
 For the Three Months Ended March 31, 
 
 ($ in thousands) 
 
 2020 
 
 2019 
 
 Gross premiums written 
 
 $ 
 11,734 
 
 $ 
 (561,139 
 ) 
 
 Net premiums written 
 
 $ 
 10,372 
 
 $ 
 (561,530 
 ) 
 
 Net premiums earned 
 
 $ 
 31,215 
 
 $ 
 183,102 
 
 Other insurance revenue 
 
 408 
 
 812 
 
 Net loss and LAE 
 
 (21,086 
 ) 
 
 (152,689 
 ) 
 
 Commission and other acquisition expenses 
 
 (11,973 
 ) 
 
 (69,617 
 ) 
 
 General and administrative expenses (1) 
 
 (2,257 
 ) 
 
 (4,297 
 ) 
 
 Underwriting loss (2) 
 
 (3,693 
 ) 
 
 (42,689 
 ) 
 
 Other general and administrative expenses (1) 
 
 (6,293 
 ) 
 
 (12,322 
 ) 
 
 Net investment income 
 
 17,964 
 
 32,022 
 
 Net realized gains (losses) on investment 
 
 11,038 
 
 (11,101 
 ) 
 
 Total other-than-temporary impairment losses 
 
 (1,506 
 ) 
 
 — 
 
 Foreign exchange and other gains 
 
 8,197 
 
 4,979 
 
 Interest and amortization expenses 
 
 (4,831 
 ) 
 
 (4,829 
 ) 
 
 Income tax (expense) benefit 
 
 (15 
 ) 
 
 38 
 
 Net income (loss) from continuing operations 
 
 20,861 
 
 (33,902 
 ) 
 
 Loss from discontinued operations, net of income tax 
 
 — 
 
 (2,734 
 ) 
 
 Net income (loss) 
 
 $ 
 20,861 
 
 $ 
 (36,636 
 ) 
 
 Ratios 
 
 Net loss and LAE ratio (3) 
 
 66.7 
 % 
 
 83.0 
 % 
 
 Commission and other acquisition expense ratio (4) 
 
 37.9 
 % 
 
 37.9 
 % 
 
 General and administrative expense ratio (5) 
 
 27.0 
 % 
 
 9.0 
 % 
 
 Expense ratio (6) 
 
 64.9 
 % 
 
 46.9 
 % 
 
 Combined ratio (7) 
 
 131.6 
 % 
 
 129.9 
 % 
 
 (1) 
 Underwriting related general and administrative expenses is a non-GAAP measure. Please refer to "General and Administrative Expenses" below for additional information related to these corporate expenses and the reconciliation to those presented in our unaudited Condensed Consolidated Statements of Income. 
 
 (2) 
 Underwriting loss is a non-GAAP measure and is calculated as net premiums earned plus other insurance revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities. 
 
 (3) 
 Calculated by dividing net loss and LAE by the sum of net premiums earned and other insurance revenue. 
 
 (4) 
 Calculated by dividing commission and other acquisition expenses by the sum of net premiums earned and other insurance revenue. 
 
 (5) 
 Calculated by dividing general and administrative expenses by the sum of net premiums earned and other insurance revenue. 
 
 (6) 
 Calculated by adding together commission and other acquisition expense ratio and general and administrative expense ratio. 
 
 (7) 
 Calculated by adding together net loss and LAE ratio and the expense ratio. 
 
 36 

 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 ; and 
 
 ◦ 
 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 ; and 
 
 • 
 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 
 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, 
 
 2020 
 
 2019 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 Total 
 
 $ 
 
 % 
 
 Diversified Reinsurance 
 
 $ 
 10,372 
 
 $ 
 14,947 
 
 $ 
 (4,575 
 ) 
 
 (30.6 
 )% 
 
 AmTrust Reinsurance 
 
 — 
 
 (576,477 
 ) 
 
 576,477 
 
 NM 
 
 Total 
 
 $ 
 10,372 
 
 $ 
 (561,530 
 ) 
 
 $ 
 571,902 
 
 (101.8 
 )% 
 
 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 $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, 
 
 2020 
 
 2019 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 % of Total 
 
 Total 
 
 % of Total 
 
 $ 
 
 % 
 
 Diversified Reinsurance 
 
 $ 
 12,531 
 
 40.1 
 % 
 
 $ 
 25,292 
 
 13.8 
 % 
 
 $ 
 (12,761 
 ) 
 
 (50.5 
 )% 
 
 AmTrust Quota Share Reinsurance 
 
 18,684 
 
 59.9 
 % 
 
 157,810 
 
 86.2 
 % 
 
 (139,126 
 ) 
 
 (88.2 
 )% 
 
 Total 
 
 $ 
 31,215 
 
 100.0 
 % 
 
 $ 
 183,102 
 
 100.0 
 % 
 
 $ 
 (151,887 
 ) 
 
 (83.0 
 )% 
 
 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. 
 
 37 

 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. 
 Other Insurance Revenue 
 All of our Other Insurance Revenue is produced by our Diversified Reinsurance segment. 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) 
 
 2020 
 
 2019 
 
 Average investable assets (1) 
 
 $ 
 2,705,803 
 
 $ 
 4,123,188 
 
 Average book yield (2) 
 
 2.7 
 % 
 
 3.1 
 % 
 
 (1) 
 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. 
 
 (2) 
 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 $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 $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 
 General and administrative expenses include expenses which are segregated for analytical purposes as a component of underwriting income. General and administrative expenses comprise: 
 
 For the Three Months Ended March 31, 
 
 ($ in thousands) 
 
 2020 
 
 2019 
 
 General and administrative expenses – segments 
 
 $ 
 2,257 
 
 $ 
 4,297 
 
 General and administrative expenses – corporate 
 
 6,293 
 
 12,322 
 
 Total general and administrative expenses 
 
 $ 
 8,550 
 
 $ 
 16,619 
 
 38 

 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 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 $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 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 months ended March 31, 2020 and 2019 were as follows: 
 
 For the Three Months Ended March 31, 
 
 ($ in thousands) 
 
 2020 
 
 2019 
 
 Gross premiums written 
 
 $ 
 11,734 
 
 $ 
 15,338 
 
 Net premiums written 
 
 $ 
 10,372 
 
 $ 
 14,947 
 
 Net premiums earned 
 
 $ 
 12,531 
 
 $ 
 25,292 
 
 Other insurance revenue 
 
 408 
 
 812 
 
 Net loss and LAE 
 
 (7,041 
 ) 
 
 (14,391 
 ) 
 
 Commission and other acquisition expenses 
 
 (4,979 
 ) 
 
 (9,261 
 ) 
 
 General and administrative expenses 
 
 (1,613 
 ) 
 
 (3,031 
 ) 
 
 Underwriting loss 
 
 $ 
 (694 
 ) 
 
 $ 
 (579 
 ) 
 
 Ratios 
 
 Net loss and LAE ratio 
 
 54.4 
 % 
 
 55.1 
 % 
 
 Commission and other acquisition expense ratio 
 
 38.5 
 % 
 
 35.5 
 % 
 
 General and administrative expense ratio 
 
 12.5 
 % 
 
 11.6 
 % 
 
 Expense ratio 
 
 51.0 
 % 
 
 47.1 
 % 
 
 Combined ratio 
 
 105.4 
 % 
 
 102.2 
 % 
 
 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 $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. 
 
 39 

 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, 
 
 2020 
 
 2019 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 Total 
 
 $ 
 
 % 
 
 Net Premiums Written 
 
 International 
 
 $ 
 10,372 
 
 $ 
 14,947 
 
 $ 
 (4,575 
 ) 
 
 (30.6 
 )% 
 
 Total Diversified Reinsurance 
 
 $ 
 10,372 
 
 $ 
 14,947 
 
 $ 
 (4,575 
 ) 
 
 (30.6 
 )% 
 
 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, 
 
 2020 
 
 2019 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 Total 
 
 $ 
 
 % 
 
 Net Premiums Earned 
 
 International 
 
 $ 
 12,531 
 
 $ 
 25,292 
 
 $ 
 (12,761 
 ) 
 
 (50.5 
 )% 
 
 Total Diversified Reinsurance 
 
 $ 
 12,531 
 
 $ 
 25,292 
 
 $ 
 (12,761 
 ) 
 
 (50.5 
 )% 
 
 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, 
 
 2020 
 
 2019 
 
 Change 
 
 ($ in thousands) 
 
 % 
 
 International 
 
 $ 
 353 
 
 $ 
 736 
 
 $ 
 (383 
 ) 
 
 (52.0 
 )% 
 
 Other income 
 
 55 
 
 76 
 
 (21 
 ) 
 
 (27.6 
 )% 
 
 Total Diversified Reinsurance 
 
 $ 
 408 
 
 $ 
 812 
 
 $ 
 (404 
 ) 
 
 (49.8 
 )% 
 
 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 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 $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. 
 
 40 

 AmTrust Reinsurance Segment 
 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) 
 
 2020 
 
 2019 
 
 Gross premiums written 
 
 $ 
 — 
 
 $ 
 (576,477 
 ) 
 
 Net premiums written 
 
 $ 
 — 
 
 $ 
 (576,477 
 ) 
 
 Net premiums earned 
 
 $ 
 18,684 
 
 $ 
 157,810 
 
 Net loss and LAE 
 
 (14,045 
 ) 
 
 (138,070 
 ) 
 
 Commission and other acquisition expenses 
 
 (6,994 
 ) 
 
 (60,356 
 ) 
 
 General and administrative expenses 
 
 (644 
 ) 
 
 (1,266 
 ) 
 
 Underwriting loss 
 
 $ 
 (2,999 
 ) 
 
 $ 
 (41,882 
 ) 
 
 Ratios 
 
 Net loss and LAE ratio 
 
 75.2 
 % 
 
 87.5 
 % 
 
 Commission and other acquisition expense ratio 
 
 37.4 
 % 
 
 38.2 
 % 
 
 General and administrative expense ratio 
 
 3.5 
 % 
 
 0.8 
 % 
 
 Expense ratio 
 
 40.9 
 % 
 
 39.0 
 % 
 
 Combined ratio 
 
 116.1 
 % 
 
 126.5 
 % 
 
 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, 
 
 2020 
 
 2019 
 
 ($ in thousands) 
 
 Total 
 
 Total 
 
 Net Premiums Written 
 
 Small Commercial Business 
 
 $ 
 — 
 
 $ 
 (342,681 
 ) 
 
 Specialty Program 
 
 — 
 
 (12,608 
 ) 
 
 Specialty Risk and Extended Warranty 
 
 — 
 
 (221,188 
 ) 
 
 Total AmTrust Reinsurance 
 
 $ 
 — 
 
 $ 
 (576,477 
 ) 
 
 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. 
 
 41 

 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, 
 
 2020 
 
 2019 
 
 Change in 
 
 ($ in thousands) 
 
 Total 
 
 % of Total 
 
 Total 
 
 % of Total 
 
 $ 
 
 % 
 
 Net Premiums Earned 
 
 Small Commercial Business 
 
 $ 
 939 
 
 5.0 
 % 
 
 $ 
 39,455 
 
 25.0 
 % 
 
 $ 
 (38,516 
 ) 
 
 (97.6 
 )% 
 
 Specialty Program 
 
 75 
 
 0.4 
 % 
 
 76,221 
 
 48.3 
 % 
 
 (76,146 
 ) 
 
 (99.9 
 )% 
 
 Specialty Risk and Extended Warranty 
 
 17,670 
 
 94.6 
 % 
 
 42,134 
 
 26.7 
 % 
 
 (24,464 
 ) 
 
 (58.1 
 )% 
 
 Total AmTrust Reinsurance 
 
 $ 
 18,684 
 
 100.0 
 % 
 
 $ 
 157,810 
 
 100.0 
 % 
 
 $ 
 (139,126 
 ) 
 
 (88.2 
 )% 
 
 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 current year loss ratio which decreased relative to the same period in 2019 for the remaining in-force business; and 
 
 • 
 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 
 Liquidity 
 Maiden Holdings is a holding company and transacts no business of its own. We therefore rely on cash flows in the form of dividends, advances, loans and other permitted distributions from our subsidiary companies to pay expenses and make dividend payments on our common and preference shares. The jurisdictions in which our operating subsidiaries are licensed to write business impose regulations requiring companies to maintain or meet statutory solvency and liquidity requirements 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 . 
 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 
 
 42 

 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, 
 
 2020 
 
 2019 
 
 ($ in thousands) 
 
 Operating activities 
 
 $ 
 (218,481 
 ) 
 
 $ 
 (331,930 
 ) 
 
 Investing activities 
 
 288,530 
 
 129,781 
 
 Effect of exchange rate changes on foreign currency cash 
 
 635 
 
 (334 
 ) 
 
 Total increase (decrease) in cash, restricted cash and cash equivalents 
 
 70,684 
 
 (202,483 
 ) 
 
 Less: change in cash, restricted cash and cash equivalents of discontinued operations 
 
 — 
 
 (3,349 
 ) 
 
 Total change in cash, restricted cash and cash equivalents of continuing operations 
 
 $ 
 70,684 
 
 $ 
 (199,134 
 ) 
 
 Cash Flows used in Operating Activities 
 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. 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 . 
 
 43 

 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 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. 
 Investments 
 The investment of our funds is designed to ensure safety of principal while generating current income. Accordingly, our funds are invested in liquid, investment-grade fixed income securities which are all designated as available-for-sale 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 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 portfolio. The U.S. 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. The U.S. 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. 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 March 31, 2020 and December 31, 2019 , these respective durations in years were as follows: 
 
 March 31, 2020 
 
 December 31, 2019 
 
 Fixed maturities and cash and cash equivalents 
 
 2.7 
 
 3.0 
 
 Reserve for loss and LAE (1) 
 
 4.2 
 
 4.2 
 
 (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. 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. 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. 
 
 44 

 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 
 
 Gross Unrealized Gains 
 
 Gross Unrealized Losses 
 
 Fair Value 
 
 Average yield (1) 
 
 Average duration (2) 
 
 ($ in thousands) 
 
 U.S. treasury bonds 
 
 $ 
 84,959 
 
 $ 
 1,185 
 
 $ 
 (1 
 ) 
 
 $ 
 86,143 
 
 2.5 
 % 
 
 0.5 
 
 U.S. agency bonds – mortgage-backed 
 
 495,747 
 
 19,510 
 
 (132 
 ) 
 
 515,125 
 
 2.9 
 % 
 
 3.7 
 
 Non-U.S. government and supranational bonds 
 
 7,290 
 
 93 
 
 (200 
 ) 
 
 7,183 
 
 1.4 
 % 
 
 6.8 
 
 Asset-backed securities 
 
 187,255 
 
 495 
 
 (14,715 
 ) 
 
 173,035 
 
 3.5 
 % 
 
 0.8 
 
 Corporate bonds 
 
 755,438 
 
 9,336 
 
 (37,716 
 ) 
 
 727,058 
 
 2.9 
 % 
 
 3.4 
 
 1,530,689 
 
 30,619 
 
 (52,764 
 ) 
 
 1,508,544 
 
 2.9 
 % 
 
 3.1 
 
 Cash and cash equivalents 
 
 177,962 
 
 — 
 
 — 
 
 177,962 
 
 0.6 
 % 
 
 0.0 
 
 Total 
 
 $ 
 1,708,651 
 
 $ 
 30,619 
 
 $ 
 (52,764 
 ) 
 
 $ 
 1,686,506 
 
 2.7 
 % 
 
 2.7 
 
 December 31, 2019 
 
 Original or Amortized Cost 
 
 Gross Unrealized Gains 
 
 Gross Unrealized Losses 
 
 Fair Value 
 
 Average yield (1) 
 
 Average duration (2) 
 
 ($ in thousands) 
 
 U.S. treasury bonds 
 
 $ 
 94,921 
 
 $ 
 704 
 
 $ 
 — 
 
 $ 
 95,625 
 
 2.5 
 % 
 
 0.7 
 
 U.S. agency bonds – mortgage-backed 
 
 533,296 
 
 6,717 
 
 (1,291 
 ) 
 
 538,722 
 
 2.9 
 % 
 
 4.1 
 
 Non-U.S. government and supranational bonds 
 
 11,796 
 
 294 
 
 (91 
 ) 
 
 11,999 
 
 1.2 
 % 
 
 4.6 
 
 Asset-backed securities 
 
 187,881 
 
 821 
 
 (532 
 ) 
 
 188,170 
 
 3.8 
 % 
 
 0.9 
 
 Corporate bonds 
 
 981,441 
 
 31,140 
 
 (15,725 
 ) 
 
 996,856 
 
 2.9 
 % 
 
 3.4 
 
 Municipal bonds 
 
 4,091 
 
 55 
 
 — 
 
 4,146 
 
 4.6 
 % 
 
 1.4 
 
 1,813,426 
 
 39,731 
 
 (17,639 
 ) 
 
 1,835,518 
 
 3.0 
 % 
 
 3.2 
 
 Cash and cash equivalents 
 
 107,278 
 
 — 
 
 — 
 
 107,278 
 
 0.6 
 % 
 
 0.0 
 
 Total 
 
 $ 
 1,920,704 
 
 $ 
 39,731 
 
 $ 
 (17,639 
 ) 
 
 $ 
 1,942,796 
 
 2.8 
 % 
 
 3.0 
 
 (1) 
 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. 
 
 (2) 
 Average duration in years. 
 
 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 March 31, 2020 and December 31, 2019 were as follows: 
 
 March 31, 2020 
 
 December 31, 2019 
 
 ($ in thousands) 
 
 Fair Value 
 
 % of Total 
 
 Fair Value 
 
 % of Total 
 
 U.S. agency bonds - mortgage-backed 
 
 Residential mortgage-backed ("RMBS") 
 
 GNMA – fixed rate 
 
 $ 
 31,010 
 
 6.0 
 % 
 
 $ 
 33,079 
 
 6.1 
 % 
 
 GNMA – variable rate 
 
 7,087 
 
 1.4 
 % 
 
 7,075 
 
 1.3 
 % 
 
 FNMA – fixed rate 
 
 225,375 
 
 43.8 
 % 
 
 241,905 
 
 44.9 
 % 
 
 FHLMC – fixed rate 
 
 251,653 
 
 48.8 
 % 
 
 256,663 
 
 47.7 
 % 
 
 Total U.S. agency bonds 
 
 $ 
 515,125 
 
 100.0 
 % 
 
 $ 
 538,722 
 
 100.0 
 % 
 
 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. Please see " Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) Note 4. Investments " for additional information on the credit rating of our fixed income portfolio. 
 
 45 

 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: 
 
 Ratings (1) 
 
 March 31, 2020 
 
 AAA, AA+, AA, AA- 
 
 A+, A, A- 
 
 BBB+, BBB, BBB- 
 
 BB+ or lower 
 
 Fair Value 
 
 % of Corporate bonds portfolio 
 
 Corporate bonds 
 
 ($ in thousands) 
 
 Basic Materials 
 
 — 
 % 
 
 — 
 % 
 
 2.3 
 % 
 
 — 
 % 
 
 $ 
 16,878 
 
 2.3 
 % 
 
 Communications 
 
 — 
 % 
 
 0.6 
 % 
 
 6.1 
 % 
 
 — 
 % 
 
 48,837 
 
 6.7 
 % 
 
 Consumer 
 
 0.1 
 % 
 
 3.5 
 % 
 
 23.7 
 % 
 
 1.1 
 % 
 
 206,395 
 
 28.4 
 % 
 
 Energy 
 
 0.3 
 % 
 
 7.9 
 % 
 
 2.0 
 % 
 
 0.7 
 % 
 
 79,562 
 
 10.9 
 % 
 
 Financial Institutions 
 
 3.8 
 % 
 
 27.5 
 % 
 
 13.0 
 % 
 
 0.8 
 % 
 
 327,853 
 
 45.1 
 % 
 
 Industrials 
 
 — 
 % 
 
 0.4 
 % 
 
 2.3 
 % 
 
 — 
 % 
 
 19,316 
 
 2.7 
 % 
 
 Technology 
 
 — 
 % 
 
 2.3 
 % 
 
 1.6 
 % 
 
 — 
 % 
 
 28,217 
 
 3.9 
 % 
 
 Total 
 
 4.2 
 % 
 
 42.2 
 % 
 
 51.0 
 % 
 
 2.6 
 % 
 
 $ 
 727,058 
 
 100.0 
 % 
 
 Ratings (1) 
 
 December 31, 2019 
 
 AAA, AA+, AA, AA- 
 
 A+, A, A- 
 
 BBB+, BBB, BBB- 
 
 BB+ or lower 
 
 Fair Value 
 
 % of Corporate bonds portfolio 
 
 Corporate bonds 
 
 ($ in thousands) 
 
 Basic Materials 
 
 — 
 % 
 
 0.6 
 % 
 
 1.4 
 % 
 
 — 
 % 
 
 $ 
 19,517 
 
 2.0 
 % 
 
 Communications 
 
 — 
 % 
 
 2.4 
 % 
 
 4.0 
 % 
 
 — 
 % 
 
 64,159 
 
 6.4 
 % 
 
 Consumer 
 
 0.2 
 % 
 
 8.3 
 % 
 
 19.6 
 % 
 
 — 
 % 
 
 279,940 
 
 28.1 
 % 
 
 Energy 
 
 0.9 
 % 
 
 6.1 
 % 
 
 3.8 
 % 
 
 — 
 % 
 
 107,369 
 
 10.8 
 % 
 
 Financial Institutions 
 
 3.1 
 % 
 
 30.1 
 % 
 
 10.7 
 % 
 
 0.6 
 % 
 
 443,983 
 
 44.5 
 % 
 
 Industrials 
 
 — 
 % 
 
 1.8 
 % 
 
 3.5 
 % 
 
 — 
 % 
 
 53,279 
 
 5.3 
 % 
 
 Technology 
 
 — 
 % 
 
 1.7 
 % 
 
 1.2 
 % 
 
 — 
 % 
 
 28,609 
 
 2.9 
 % 
 
 Total 
 
 4.2 
 % 
 
 51.0 
 % 
 
 44.2 
 % 
 
 0.6 
 % 
 
 $ 
 996,856 
 
 100.0 
 % 
 
 (1) 
 Ratings as assigned by S&P, or equivalent 
 
 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 
 
 Fair Value 
 
 % of Holdings 
 
 Rating (1) 
 
 ($ in thousands) 
 
 Rabobank Nederland Utrec, 3.875% Due 2/8/2022 
 
 $ 
 19,727 
 
 1.3 
 % 
 
 A+ 
 
 UBS Group Funding (Jersey) Ltd, 2.65% Due 2/1/2022 
 
 16,735 
 
 1.1 
 % 
 
 A- 
 
 Electricite de France, 4.625%, Due 9/11/2024 
 
 16,529 
 
 1.1 
 % 
 
 A- 
 
 Allergan Funding SCS, 3.80%, Due 3/15/2025 
 
 15,358 
 
 1.0 
 % 
 
 BBB 
 
 BAT International Finance PLC, 3.95%, Due 6/15/2025 
 
 14,716 
 
 1.0 
 % 
 
 BBB+ 
 
 Goldman Sachs Group Inc., 3.625%, Due 1/22/2023 
 
 12,869 
 
 0.9 
 % 
 
 BBB+ 
 
 Daimler Finance North America LLC, 3.30%, Due 5/19/2025 
 
 12,393 
 
 0.8 
 % 
 
 BBB+ 
 
 Bayer US Finance LLC, 3.375% Due 10/8/2024 
 
 12,314 
 
 0.8 
 % 
 
 BBB 
 
 Brookfield Asset Management Inc., 4.00% Due 1/15/2025 
 
 12,149 
 
 0.8 
 % 
 
 A- 
 
 Anheuser-Busch INBEV NV, 2.875% Due 9/25/2024 
 
 11,770 
 
 0.8 
 % 
 
 A- 
 
 Total 
 
 $ 
 144,560 
 
 9.6 
 % 
 
 (1) 
 Ratings as assigned by S&P, or equivalent 
 
 46 

 At March 31, 2020 and December 31, 2019 , respectively, we hold the following non-U.S. dollar denominated securities: 
 
 March 31, 2020 
 
 December 31, 2019 
 
 ($ in thousands) 
 
 Fair Value 
 
 % of Total 
 
 Fair Value 
 
 % of Total 
 
 Non-U.S. dollar denominated corporate bonds 
 
 $ 
 262,960 
 
 97.3 
 % 
 
 $ 
 310,323 
 
 96.3 
 % 
 
 Non-U.S. government and supranational bonds 
 
 7,183 
 
 2.7 
 % 
 
 11,999 
 
 3.7 
 % 
 
 Total non-U.S. dollar denominated securities 
 
 $ 
 270,143 
 
 100.0 
 % 
 
 $ 
 322,322 
 
 100.0 
 % 
 
 At March 31, 2020 and December 31, 2019 , respectively, these non-U.S. securities are invested in the following currencies: 
 
 March 31, 2020 
 
 December 31, 2019 
 
 ($ in thousands) 
 
 Fair Value 
 
 % of Total 
 
 Fair Value 
 
 % of Total 
 
 Euro 
 
 $ 
 229,182 
 
 84.8 
 % 
 
 $ 
 272,493 
 
 84.5 
 % 
 
 British Pound 
 
 34,728 
 
 12.9 
 % 
 
 42,342 
 
 13.1 
 % 
 
 Canadian Dollar 
 
 4,973 
 
 1.8 
 % 
 
 5,364 
 
 1.7 
 % 
 
 All other currencies 
 
 1,260 
 
 0.5 
 % 
 
 2,123 
 
 0.7 
 % 
 
 Total non-U.S. dollar denominated securities 
 
 $ 
 270,143 
 
 100.0 
 % 
 
 $ 
 322,322 
 
 100.0 
 % 
 
 The net decrease in 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. 
 For our non-U.S. dollar denominated corporate bonds, the following table summarizes the composition of the fair value of our fixed maturity investments at the dates indicated by ratings: 
 
 Ratings (1) 
 
 March 31, 2020 
 
 December 31, 2019 
 
 ($ in thousands) 
 
 Fair Value 
 
 % of Total 
 
 Fair Value 
 
 % of Total 
 
 AAA 
 
 $ 
 467 
 
 0.2 
 % 
 
 $ 
 481 
 
 0.2 
 % 
 
 AA+, AA, AA- 
 
 14,860 
 
 5.6 
 % 
 
 21,231 
 
 6.8 
 % 
 
 A+, A, A- 
 
 109,080 
 
 41.5 
 % 
 
 137,584 
 
 44.3 
 % 
 
 BBB+, BBB, BBB- 
 
 127,969 
 
 48.7 
 % 
 
 145,546 
 
 46.9 
 % 
 
 BB+ or lower 
 
 10,584 
 
 4.0 
 % 
 
 5,481 
 
 1.8 
 % 
 
 Total non-U.S. dollar denominated corporate bonds 
 
 $ 
 262,960 
 
 100.0 
 % 
 
 $ 
 310,323 
 
 100.0 
 % 
 
 (1) 
 Ratings as assigned by S&P, or equivalent 
 
 The Company does not employ any credit default protection against any of the fixed maturities held in non-U.S. denominated currencies at 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 March 31, 2020 and December 31, 2019 : 
 
 ($ in thousands) 
 
 March 31, 2020 
 
 December 31, 2019 
 
 Change 
 
 Change % 
 
 Deferred commission and other acquisition expenses 
 
 $ 
 69,109 
 
 $ 
 77,356 
 
 $ 
 (8,247 
 ) 
 
 (10.7 
 )% 
 
 Funds withheld receivable 
 
 696,076 
 
 684,441 
 
 11,635 
 
 1.7 
 % 
 
 Reserve for loss and LAE 
 
 2,249,045 
 
 2,439,907 
 
 (190,862 
 ) 
 
 (7.8 
 )% 
 
 Unearned premiums 
 
 197,094 
 
 220,269 
 
 (23,175 
 ) 
 
 (10.5 
 )% 
 
 Accrued expenses and other liabilities 
 
 22,708 
 
 32,444 
 
 (9,736 
 ) 
 
 (30.0 
 )% 
 
 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. 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. 
 
 47 

 Capital Resources 
 Capital resources consist of funds deployed in support of our operations. 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 March 31, 2020 and December 31, 2019 : 
 
 ($ in thousands) 
 
 March 31, 2020 
 
 December 31, 2019 
 
 Change 
 
 Change % 
 
 Preference shares 
 
 $ 
 465,000 
 
 $ 
 465,000 
 
 $ 
 — 
 
 — 
 % 
 
 Common shareholders' equity 
 
 19,998 
 
 42,718 
 
 (22,720 
 ) 
 
 (53.2 
 )% 
 
 Total shareholders' equity 
 
 484,998 
 
 507,718 
 
 (22,720 
 ) 
 
 (4.5 
 )% 
 
 Senior Notes - principal amount 
 
 262,500 
 
 262,500 
 
 — 
 
 — 
 % 
 
 Total capital resources 
 
 $ 
 747,498 
 
 $ 
 770,218 
 
 $ 
 (22,720 
 ) 
 
 (2.9 
 )% 
 
 The major factors contributing to the net decrease in capital resources were as follows: 
 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 ; and 
 
 • 
 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 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. The NASDAQ Capital Market is a continuous trading market that operates in substantially the same manner as the NASDAQ Global Select Market and listed companies must meet certain financial requirements and comply with the NASDAQ Stock Market LLC’s (“NASDAQ”) corporate governance requirements. The Company’s common shares continue to trade under the symbol “MHLD”. 
 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 common shareholders’ equity 
 
 $ 
 19,998 
 
 $ 
 42,718 
 
 Numerator for diluted book value per common share calculation 
 
 $ 
 19,998 
 
 $ 
 42,718 
 
 Common shares outstanding 
 
 83,969,991 
 
 83,148,458 
 
 Shares issued from assumed conversion of dilutive options and restricted shares 
 
 997,264 
 
 1,818,797 
 
 Denominator for diluted book value per common share calculation 
 
 84,967,255 
 
 84,967,255 
 
 Book value per common share 
 
 $ 
 0.24 
 
 $ 
 0.51 
 
 Diluted book value per common share 
 
 0.24 
 
 0.50 
 
 48 

 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. 
 Senior Notes 
 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. 
 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 
 
 ($ in thousands) 
 
 Senior notes - principal amount 
 
 $ 
 262,500 
 
 $ 
 262,500 
 
 Maiden shareholders’ equity 
 
 484,998 
 
 507,718 
 
 Total capital resources 
 
 $ 
 747,498 
 
 $ 
 770,218 
 
 Ratio of debt to total capital resources 
 
 35.1 
 % 
 
 34.1 
 % 
 
 Financial Strength Ratings 
 The Company does not have a financial strength rating from any nationally recognized statistical rating organization. 
 
 49 

 Non-GAAP Measures 
 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. 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. 
 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 March 31, 
 
 2020 
 
 2019 
 
 ($ in thousands except per share data) 
 
 Net income (loss) 
 
 $ 
 20,861 
 
 $ 
 (36,636 
 ) 
 
 Add (subtract): 
 
 Net realized (gains) losses on investment 
 
 (11,038 
 ) 
 
 11,101 
 
 Total other-than-temporary impairment losses 
 
 1,506 
 
 — 
 
 Foreign exchange and other gains 
 
 (8,197 
 ) 
 
 (4,979 
 ) 
 
 Loss from discontinued operations, net of income tax 
 
 — 
 
 2,734 
 
 Loss from NGHC Quota Share run-off 
 
 — 
 
 228 
 
 Non-GAAP operating earnings (loss) 
 
 $ 
 3,132 
 
 $ 
 (27,552 
 ) 
 
 Diluted earnings (loss) per share attributable to common shareholders 
 
 $ 
 0.25 
 
 $ 
 (0.44 
 ) 
 
 Add (subtract): 
 
 Net realized (gains) losses on investment 
 
 (0.13 
 ) 
 
 0.13 
 
 Total other-than-temporary impairment losses 
 
 0.02 
 
 — 
 
 Foreign exchange and other gains 
 
 (0.10 
 ) 
 
 (0.06 
 ) 
 
 Loss from discontinued operations, net of income tax 
 
 — 
 
 0.03 
 
 Loss from NGHC Quota Share run-off 
 
 — 
 
 0.01 
 
 Non-GAAP diluted operating earnings (loss) per share attributable to common shareholders 
 
 $ 
 0.04 
 
 $ 
 (0.33 
 ) 
 
 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 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) 
 
 2020 
 
 2019 
 
 Non-GAAP operating earnings (loss) 
 
 $ 
 3,132 
 
 $ 
 (27,552 
 ) 
 
 Opening common shareholders’ equity 
 
 42,718 
 
 89,275 
 
 Ending common shareholders’ equity 
 
 19,998 
 
 119,289 
 
 Average common shareholders’ equity 
 
 31,358 
 
 104,282 
 
 Non-GAAP Operating ROACE 
 
 40.2 
 % 
 
 (107.2 
 )% 
 
 50 

 Adjusted Shareholders' Equity, Adjusted Total Capital Resources and Adjusted Book Value per Common Share, Ratio of Debt to Total Adjusted Capital Resources 
 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) 
 
 March 31, 2020 
 
 December 31, 2019 
 
 Change 
 
 Change % 
 
 Preference shares 
 
 $ 
 465,000 
 
 $ 
 465,000 
 
 $ 
 — 
 
 — 
 % 
 
 Common shareholders' equity 
 
 19,998 
 
 42,718 
 
 (22,720 
 ) 
 
 (53.2 
 )% 
 
 Total shareholders' equity 
 
 484,998 
 
 507,718 
 
 (22,720 
 ) 
 
 (4.5 
 )% 
 
 Unamortized deferred gain on retroactive reinsurance 
 
 112,950 
 
 112,950 
 
 — 
 
 — 
 % 
 
 Adjusted shareholders' equity 
 
 597,948 
 
 620,668 
 
 (22,720 
 ) 
 
 (3.7 
 )% 
 
 Senior Notes - principal amount 
 
 262,500 
 
 262,500 
 
 — 
 
 — 
 % 
 
 Adjusted total capital resources 
 
 $ 
 860,448 
 
 $ 
 883,168 
 
 $ 
 (22,720 
 ) 
 
 (2.6 
 )% 
 
 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 
 
 ($ in thousands except per share data) 
 
 Book value per common share 
 
 $ 
 0.24 
 
 $ 
 0.51 
 
 Unamortized deferred gain on retroactive reinsurance 
 
 1.35 
 
 1.36 
 
 Adjusted book value per common share 
 
 $ 
 1.59 
 
 $ 
 1.87 
 
 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 
 
 ($ in thousands) 
 
 Senior notes - principal amount 
 
 $ 
 262,500 
 
 $ 
 262,500 
 
 Adjusted shareholders’ equity 
 
 597,948 
 
 620,668 
 
 Adjusted total capital resources 
 
 $ 
 860,448 
 
 $ 
 883,168 
 
 Ratio of debt to adjusted total capital resources 
 
 30.5 
 % 
 
 29.7 
 % 
 
 Currency and Foreign Exchange 
 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. Our reporting currency is the U.S. dollar, and exchange rate fluctuations relative to the U.S. dollar may materially impact our results and financial position. Our principal exposure to foreign currency risk is our obligation to settle claims in foreign currencies. In addition, in order to minimize this risk, we maintain and expect to continue to maintain a portion of our investment portfolio in investments denominated in currencies other than the U.S. dollar. We may employ various strategies (including hedging) to manage our exposure to foreign currency exchange risk. To the extent that these exposures are not fully hedged or the hedges are ineffective, our results of operations or equity may be adversely affected. At March 31, 2020 , 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 unaudited Condensed Consolidated Statements of Income. Revenues and 
 
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 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 $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 
 The anticipated effects of inflation are considered explicitly in the pricing of the insured exposures, which are used as the initial estimates of reserves for loss and LAE. In addition, inflation is also implicitly accounted for in subsequent estimates of loss and LAE reserves, as the expected rate of emergence is in part predicated upon the historical levels of inflation that impact ultimate claim costs. To the extent inflation causes these costs, particularly medical treatments and litigation costs, to vary from the assumptions made in the pricing or reserving estimates, the Company will be required to change the reserve for loss and LAE with a corresponding change in its earnings in the period in which the variance is identified. The actual effects of inflation on the results of operations of the Company cannot be accurately known until claims are ultimately settled. 
 Off-Balance Sheet Arrangements 
 At 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 
 See " Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) Note 2. Significant Accounting Policies " for a discussion on recently issued accounting pronouncements not yet adopted. 
 
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
Maiden Holdings, Ltd. 10-Q

Item 2. Management’s Discussion and Analysis
