What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-14 compared with 2020-05-15 · 406 added, 229 removed, 570 unchanged (53% of the section changed)

44 unchanged sentences

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.

While the Vermont Department of Financial Regulation ("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.

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 Holdings North America, Ltd.

("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 .

Maiden NA also maintains a portfolio of cash and fixed maturity investments, along with other strategic investments of $48.8 million at June 30, 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.

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, and the Company is actively engaged in evaluating opportunities, both individually and in the aggregate that it believes will accomplish that goal.

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.

3 unchanged sentences

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.

The continuing 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.

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

Maiden Global’s business development teams partner with automobile manufacturers, dealer associations and local primary insurers to design and implement point of sale insurance programs which generate revenue for the auto manufacturer and insurance premiums for the primary insurer ("IIS unit").

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.

Maiden Reinsurance has not received any COVID-19 claims to date but our companies within our IIS unit have received a limited number of claims related to those coverages which it deems as immaterial.

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.

The Company's investment portfolio may be adversely impacted by unfavorable market conditions caused by the COVID-19 pandemic and we and our reinsurance subsidiaries may need additional capital to maintain compliance with regulatory capital requirements and/or be required to post additional collateral under existing reinsurance arrangements, which could reduce our liquidity.

In addition, the Company may experience continued volatility in our results of operations which could negatively impact our financial condition and create a reduction in the amount of available distribution or dividend capacity from our regulated reinsurance subsidiaries, which would also reduce liquidity.

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,

Three and Six Months Ended June 30, 2020 and 2019 Financial Highlights

For the Three Months Ended June 30,

Summary Consolidated Statement of Income Data (unaudited):

($ in thousands except per share data)

Net income (loss) from continuing operations

Net income from continuing operations

Loss from discontinued operations, net of income tax

11 unchanged sentences

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

March 31, 2020

For the Six Months Ended June 30,

Summary Consolidated Statement of Income Data (unaudited):

($ in thousands except per share data)

Net income (loss) from continuing operations

Loss from discontinued operations, net of income tax

Net income (loss)

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

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

Gross premiums written

Net premiums earned

Underwriting loss (3)

Net investment income

Combined ratio (4)

Non-GAAP measures:

Non-GAAP operating earnings (loss) (1)

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

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

June 30, 2020

December 31, 2019

33 unchanged sentences

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

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

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

See " Key Financial Measures " for additional information.

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.

Adjusted shareholders' equity and adjusted total capital resources are calculated by adding the estimated 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.

17 unchanged sentences

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

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

(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.

38 unchanged sentences

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).

The deferred gain represents amounts estimated to be 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.

2 unchanged sentences

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.

The deferred gain represents amounts estimated to be 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.

8 unchanged sentences

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,

The following table sets forth our selected unaudited Condensed Consolidated Statement of Income data for three and six months ended June 30, 2020 and 2019 :

For the Three Months Ended June 30,

For the Six Months Ended June 30,

($ in thousands)

9 unchanged sentences

Net investment income

Net realized gains (losses) on investment

Net realized gains on investment

Total other-than-temporary impairment losses

Foreign exchange and other gains

Foreign exchange and other (losses) gains

Interest and amortization expenses

Income tax (expense) benefit

Income tax benefit

Net income (loss) from continuing operations

15 unchanged sentences

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 for the three months ended June 30, 2020 was $9.2 million compared to a net loss of $15.4 million for the same period in 2019 .

The net improvement in results for the three months ended June 30, 2020 compared to the same period in 2019 was primarily due to the following:

net income from continuing operations of $9.2 million compared to net income from continuing operations of $4.0 million for the same period in 2019 largely due to the following factors:

a negligible underwriting loss for the three months ended June 30, 2020 compared to $39.1 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 June 30, 2020 compared to the same period in 2019 ;

favorable prior year loss development of $0.1 million or 0.3 percentage points in the second quarter of 2020 compared to adverse prior year loss development of $26.0 million or 19.3 percentage points during the same period in 2019 which had been incurred primarily within AmTrust Reinsurance Segment.

The improved underwriting results were partially offset by the following:

lower realized gains on investment of $8.9 million for the three months ended June 30, 2020 compared to realized gains of $24.1 million for the same period in 2019 ;

a reduction in net investment income of $16.8 million or 54.0% for the three months ended June 30, 2020 compared to the same period in 2019 primarily due to the decline in average investable assets of 38.0% ;

foreign exchange and other losses of $2.3 million for the three months ended June 30, 2020 compared to foreign exchange and other gains of $1.2 million for the same period in 2019 .

net income from discontinued operations of $0.0 million for the three months ended June 30, 2020 compared to a net loss from discontinued operations of $19.4 million for the same period in 2019 as a result of the Settlement and Commutation Agreement entered into by Maiden and Enstar on July 31, 2019 which caused a net additional loss of $16.7 million to be recognized.

Net income for the six months ended June 30, 2020 was $30.1 million compared to a net loss of $52.0 million for the same period in 2019 .

The net improvement in results for the six months ended June 30, 2020 compared to the same period in 2019 was primarily due to the following:

net income from continuing operations of $30.1 million compared to net loss from continuing operations of $29.9 million for the same period in 2019 largely due to the following factors:

1 unchanged sentence

The reduction in the underwriting loss was due to:

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

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

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

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

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

the impact of lower loss ratios for current year premiums earned during the six months ended June 30, 2020 compared to the same period in 2019 ;

favorable prior year loss development of $0.6 million or 1.1 percentage points in the first half of 2020 compared to adverse prior year loss development of $33.3 million or 10.5 percentage points during the same period in 2019 which had been incurred primarily within AmTrust Reinsurance Segment.

realized gains on investment of $19.9 million for the six months ended June 30, 2020 compared to realized gains of $13.0 million for the same period in 2019 .

The improved underwriting results and realized gains were partially offset by the following:

a reduction in net investment income of $30.9 million or 48.9% for the six months ended June 30, 2020 compared to the same period in 2019 , primarily due to the decline in average investable assets of 35.9% ;

foreign exchange and other gains of $5.9 million for the six months ended June 30, 2020 compared to foreign exchange and other gains of $6.2 million for the same period in 2019 .

net income from discontinued operations of $0.0 million for the six months ended June 30, 2020 compared to a net loss from discontinued operations of $22.1 million for the same period in 2019 as a result of the Settlement and Commutation Agreement entered into by Maiden and Enstar on July 31, 2019 which caused a net additional loss of $16.7 million to be recognized.

Net 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,

The tables below compare net premiums written by our reportable segments, reconciled to the total consolidated net premiums written for the three and six months ended June 30, 2020 and 2019 :

For the Three Months Ended June 30,

($ in thousands)

1 unchanged sentence

AmTrust Reinsurance

For the Six Months Ended June 30,

($ in thousands)

Diversified Reinsurance

AmTrust Reinsurance

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.

Net premiums written for the three and six months ended June 30, 2020 were $4,090 and $14,462 , respectively, compared to net premiums written of $(409) and $(561,939) in the same respective periods in 2019 due to the following:

Premiums written in the Diversified Reinsurance segment decreased by $0.2 million or 1.9% and $4.7 million or 20.0% for the three and six months ended June 30, 2020 , respectively, compared to the same respective periods 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.

For the three and six months ended June 30, 2020 and 2019 , the negative premiums written are primarily the result of return premium and other adjustments after the termination of the AmTrust contracts in 2019.

In 2019, the Partial Termination Amendment 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,

Net premiums earned decreased by $112.7 million or 84.1% and $264.6 million or 83.4% for the three and six months ended June 30, 2020 , respectively, compared to the same respective periods in 2019 .

The tables below compare net premiums earned by our reportable segments, reconciled to the total consolidated net premiums earned, for the three and six months ended June 30, 2020 and 2019 :

For the Three Months Ended June 30,

($ in thousands)

1 unchanged sentence

AmTrust Quota Share Reinsurance

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.

For the Six Months Ended June 30,

($ in thousands)

Diversified Reinsurance

AmTrust Quota Share Reinsurance

Net premiums earned in the AmTrust Reinsurance segment for the three and six months ended June 30, 2020 decreased by $101.7 million or 91.2% and $240.9 million or 89.4% , respectively, compared to the same respective periods 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 49 for further discussion.

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.

Net premiums earned in our Diversified Reinsurance segment for the three and six months ended June 30, 2020 decreased by $10.9 million or 48.7% and $23.7 million or 49.6% , respectively, compared to the same respective periods 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 47 for further discussion.

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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.

Net investment income decreased by $16.8 million or 54.0% and $30.9 million or 48.9% for the three and six months ended June 30, 2020 , respectively, compared to the same respective periods in 2019 , primarily due to the decline in average investable assets of 38.0% and 35.9% in those same respective 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,

Lower investment income was also driven by the decline in average book yields to 2.3% and 2.5% for the three and six months ended June 30, 2020 , respectively, compared to 3.1% for the same respective periods in 2019 .

The following table details the Company's average investable assets and average book yield for the three and six months ended June 30, 2020 compared to the same respective periods in 2019 :

For the Three Months Ended June 30,

For the Six Months Ended June 30,

($ in thousands)

3 unchanged sentences

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 Realized Gains on Investment

Net realized gains on investment were $8.9 million and $19.9 million for the three and six months ended June 30, 2020 , respectively, compared to net realized gains of $24.1 million and $13.0 million for the same respective periods in 2019 .

The realized gains for the three and six months ended June 30, 2020 were primarily due to sales of corporate bonds during 2020 for the settlement of claim payments to AmTrust.

The net realized gains of $24.1 million and $13.0 million for the same respective periods in 2019 were driven by sales of corporate bonds during the second quarter in anticipation of completing and funding the LPT/ADC Agreement with Enstar.

The year-to-date gains were partially offset by net investment losses realized on the non-cash transfer of corporate and other debt securities in the first quarter of 2019 related to the Partial Termination Amendment with AmTrust and the conversion of a portion of reinsurance trust assets held as collateral into 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 Company recognized $1.5 million of OTTI losses in earnings on two fixed maturity securities for the six months ended June 30, 2020 .

There were no OTTI losses recognized during the three months ended June 30, 2020 and the three and six months ended June 30, 2019 .

Net Loss and LAE

Net loss and LAE decreased by $110.6 million and $242.2 million during the three and six months ended June 30, 2020 , respectively, compared to the same respective periods in 2019 largely due to the cessation of active reinsurance underwriting, including the termination of the AmTrust Reinsurance quota share agreements effective January 1, 2019.

The loss ratio for the second quarter of 2020 was modestly impacted by net favorable prior year reserve development of $0.1 million or 0.3 percentage points compared to net adverse prior year reserve development of $26.0 million or 19.3 percentage points during the same period in 2019 .

The loss ratio for the six months ended June 30, 2020 was impacted by net favorable prior year reserve development of $0.6 million or 1.1 percentage points compared to net adverse prior year reserve development of $33.3 million or 10.5 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.

The net loss and LAE ratios decreased to 51.0% and 60.4% for the three and six months ended June 30, 2020 , respectively, compared to 90.2% and 86.1% for the same respective periods in 2019 primarily due to significant reduction in adverse prior year loss development resulting 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 .

Commission and other acquisition expenses decreased by $41.5 million or 83.6% and $99.1 million or 83.1% for the three and six months ended June 30, 2020 , respectively, compared to the same respective periods in 2019 due to significantly lower earned premiums in both of our reportable segments.

The commission and other acquisition expense ratio was 37.8% for both the three and six months ended June 30, 2020 , respectively, compared to 36.9% and 37.4% for the same respective periods in 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,

General and administrative expenses for the three and six months ended June 30, 2020 and 2019 comprise:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

($ in thousands)

2 unchanged sentences

Total general and administrative expenses

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 .

Total general and administrative expenses decreased by $2.9 million , or 23.8% and $11.0 million or 38.1% for the three and six months ended June 30, 2020 , respectively, compared to the same respective periods in 2019 .

The general and administrative expense ratio increased to 43.0% and 33.5% for the three and six months ended June 30, 2020 , respectively, from 9.0% for both the three and six months ended June 30, 2019 as a result of significantly lower earned premiums compared to the prior periods.

Lower earned premiums was largely due to termination of the AmTrust Reinsurance quota share contracts effective January 1, 2019 and non-renewals within our International business in the Diversified Reinsurance segment.

The decreased corporate expenses for the three and six months ended June 30, 2020 compared to the same respective periods 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.

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 and $9.7 million for the three and six months ended June 30, 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.

The weighted average effective interest rate for the Senior Notes was 7.6% for the three and six months ended June 30, 2020 and 2019 , respectively.

Foreign Exchange and Other (Losses) Gains

Net foreign exchange and other amounted to $2.3 million losses and $5.9 million gains during the three and six months ended June 30, 2020 , respectively, compared to net foreign exchange and other gains of $1.2 million and $6.2 million for the same respective periods in 2019 .

Net foreign exchange gains of $6.3 million occurred during the six months ended June 30, 2020 due to the strengthening of the U.S.

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

Net foreign exchange and other gains of $6.2 million for the six months ended June 30, 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 $1.9 million were realized primarily attributable to the strengthening of the U.S.

2 unchanged sentences

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,

The underwriting results and associated ratios for our Diversified Reinsurance segment for the three and six months ended June 30, 2020 and 2019 were as follows:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

($ in thousands)

6 unchanged sentences

General and administrative expenses

Underwriting loss

Underwriting (loss) income

Net loss and LAE ratio

3 unchanged sentences

Combined ratio

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 .

The combined ratio for the three and six months ended June 30, 2020 increased to 103.2% and 104.3% , respectively, compared to 97.9% and 100.2% for the same respective periods in 2019 , largely due to declines in premium volume which increased the expense ratio.

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.

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,

Premiums — Gross premiums written decreased by $1.6 million or 13.8% and $5.2 million or 19.4% for the three and six months ended June 30, 2020 , respectively, compared to the same respective periods in 2019 .

This was primarily due to lower premiums written in German Auto Programs in our IIS business during the three and six months ended June 30, 2020 .

Net premiums written decreased by $0.2 million or 1.9% and $4.7 million or 20.0% during the three and six months ended June 30, 2020 compared to the same respective periods in 2019 mainly due to lower net premiums written in our German Auto programs within our IIS business as discussed above.

The tables below show net premiums written by line of business for the three and six months ended June 30, 2020 and 2019 :

For the Three Months Ended June 30,

($ in thousands)

2 unchanged sentences

Total Diversified Reinsurance

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,

For the Six Months Ended June 30,

($ in thousands)

Net Premiums Written

International

Total Diversified Reinsurance

NM - not meaningful

Net premiums earned decreased by $10.9 million or 48.7% and $23.7 million or 49.6% during the three and six months ended June 30, 2020 , respectively, compared to the same respective periods in 2019 primarily due to lower earned premiums from German Auto programs and non-renewals in our European Capital Solutions business since 2019 .

The tables below show net premiums earned by line of business for the three and six months ended June 30, 2020 and 2019 :

For the Three Months Ended June 30,

($ in thousands)

Net Premiums Earned

1 unchanged sentence

Total Diversified Reinsurance

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 .

For the Six Months Ended June 30,

($ in thousands)

Net Premiums Earned

International

Total Diversified Reinsurance

NM - not meaningful

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 $0.5 million or 66.8% and $0.9 million or 58.0% for the three and six months ended June 30, 2020 , respectively, compared to the same respective periods 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,

The tables below show other insurance revenue by source for the three and six months ended June 30, 2020 and 2019 :

For the Three Months Ended June 30,

($ in thousands)

1 unchanged sentence

Total Diversified Reinsurance

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.

For the Six Months Ended June 30,

($ in thousands)

International

Total Diversified Reinsurance

Net Loss and LAE — Net loss and LAE decreased by $6.5 million or 51.7% and $13.8 million or 51.4% for the three and six months ended June 30, 2020 , respectively, compared to the same respective periods in 2019 .

Net loss and LAE ratio decreased to 51.3% and 52.9% for the three and six months ended June 30, 2020 , respectively, compared with 53.8% and 54.5% during the same respective periods in 2019 .

During the three months ended June 30, 2020 , the net loss and LAE ratio decreased by 2.5 percentage points compared to the same period in 2019 .

The 2020 loss ratio was impacted by adverse prior year loss reserve development which was $0.4 million or 3.1 percentage points during the three months ended June 30, 2020 , compared to the impact of favorable development of $1.1 million or 4.5 percentage points on the loss ratio in 2019 .

The loss development in 2020 was driven by adverse experience in specific German Auto programs while the loss development in 2019 was driven by favorable experience in German Auto programs.

During the six months ended June 30, 2020 , the net loss and LAE ratio decreased by 1.6 percentage points compared to the same period in 2019 .

The 2020 loss ratio was impacted by favorable prior year loss reserve development which was $0.2 million or 0.7 percentage points during the six months ended June 30, 2020 , compared to the impact of favorable development of $2.1 million or 4.4 percentage points on the loss ratio in 2019 .

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 .

As a result of these factors, as well as the impact on the loss ratio described above, the combined ratio increased by 5.3 and 4.1 percentage points for the three and six months ended June 30, 2020 compared to the same respective periods in 2019 .

Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $3.8 million or 46.3% and $8.1 million or 46.3% for the three and six months ended June 30, 2020 , respectively, compared to the same respective periods in 2019 , largely as a result of the corresponding decrease in net premiums earned in this segment.

The commission and other acquisition expense ratio for the three and six months ended June 30, 2020 increased to 37.1% and 37.8% , respectively, compared to 35.1% and 35.3% for the same respective periods in 2019 , reflecting the change in the mix of pro rata versus excess of loss premiums written compared to the same respective periods 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.

General and Administrative Expenses — General and administrative expenses decreased by $0.3 million or 16.5% and $1.8 million or 34.4% for the three and six months ended June 30, 2020 , respectively, compared to the same respective periods in 2019 .

The general and administrative expense ratio increased to 14.8% and 13.6% for the three and six months ended June 30, 2020 , respectively, compared to 9.0% and 10.4% for the same respective periods in 2019 due to lower net premiums earned compared to prior periods.

The overall expense ratio (including commission and other acquisition expenses) for the three and six months ended June 30, 2020 increased to 51.9% and 51.4% compared to 44.1% and 45.7% for the same respective periods in 2019 largely as a result of lower premium revenue compared to the respective prior year periods.

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,

The AmTrust Reinsurance segment reported underwriting results of $0.4 million income and $2.6 million loss during the three and six months ended June 30, 2020 , respectively, compared to an underwriting loss of $39.6 million and $81.5 million in the same respective periods in 2019 .

The improved underwriting results in the current year periods were primarily driven by a lower combined ratio on significantly lower earned premiums during the three and six months ended June 30, 2020 compared to the respective prior periods in 2019 .

The underwriting results and associated ratios for the AmTrust Reinsurance segment for the three and six months ended June 30, 2020 and 2019 were as follows:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

($ in thousands)

5 unchanged sentences

General and administrative expenses

Underwriting loss

Underwriting income (loss)

Net loss and LAE ratio

3 unchanged sentences

Combined ratio

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,

The combined ratio decreased 39.2 percentage points to 96.3% for the three months ended June 30, 2020 compared to 135.5% for the same period in 2019 partly due to the impact of favorable prior year loss development of $0.4 million or 4.3 percentage points during the second quarter of 2020 compared to the impact of adverse prior year development of $27.1 million or 24.3 percentage points for the same period in 2019 .

Prior year favorable development in 2020 was primarily due to Workers Compensation partly offset by adverse development within Commercial Auto Liability.

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

The combined ratio decreased 21.0 percentage points to 109.3% for the six months ended June 30, 2020 compared to 130.3% for the same period in 2019 partly due to the impact of favorable prior year loss development of $0.4 million or 1.5 percentage points during the first half of 2020 compared to the impact of adverse prior year development of $35.2 million or 13.1 percentage points for the same period in 2019 .

Prior year favorable development in 2020 was primarily due to Workers Compensation partly

offset by adverse development within Commercial Auto Liability.

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

Premiums — There were negative gross and net premiums written for the three and six months ended June 30, 2020 reflecting premium adjustments under the AmTrust Quota Share as of April 1, 2020.

Furthermore, the termination of both the AmTrust Quota Share and the European Hospital Liability Quota Share as of January 1, 2019, led to no new business 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 and net premiums written for the three and six months ended June 30, 2019 .

The tables below show net premiums written by category for the three and six months ended June 30, 2020 and 2019 :

For the Three Months Ended June 30,

($ in thousands)

4 unchanged sentences

Total AmTrust Reinsurance

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

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

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

For the Three Months Ended March 31,

For the Six Months Ended June 30,

($ in thousands)

Net Premiums Written

Small Commercial Business

Specialty Program

Specialty Risk and Extended Warranty

Total AmTrust Reinsurance

Net premiums earned decreased by $101.7 million or 91.2% and $240.9 million or 89.4% for the three and six months ended June 30, 2020 , respectively, compared to the same respective periods in 2019 due to the terminations of the AmTrust Quota Share and European Hospital Liability Quota Share as of January 1, 2019.

There were negative net premiums earned on Small Commercial Business for the three and six months ended June 30, 2020 due to premium adjustments and earned premium returns under the recent commutation of certain home warranty business under the AmTrust Quota Share as of April 1, 2020.

The tables below detail net premiums earned by category for the three and six months ended June 30, 2020 and 2019 :

For the Three Months Ended June 30,

($ in thousands)

Net Premiums Earned

3 unchanged sentences

Total AmTrust Reinsurance

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:

For the Six Months Ended June 30,

($ in thousands)

Net Premiums Earned

Small Commercial Business

Specialty Program

Specialty Risk and Extended Warranty

Total AmTrust Reinsurance

Net Loss and LAE — Net loss and LAE decreased by $104.1 million or 95.4% and $228.1 million or 92.3% for the three and six months ended June 30, 2020 , respectively, compared to the same respective periods 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 50.8% and 66.8% for the three and six months ended June 30, 2020 , respectively, compared to 97.8% and 91.8% for the same respective periods in 2019 .

During the three months ended June 30, 2020 , the net loss and LAE ratio decreased by 47.0 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;

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.

the impact of prior year loss development was favorable development of $0.4 million or 4.3 percentage points during the three months ended June 30, 2020 on the loss ratio, compared to the impact of adverse prior year loss development which was $27.1 million or 24.3 percentage points for the same period in 2019 .

Prior year favorable development in 2020 was primarily due to Workers Compensation partly offset by adverse development within Commercial General Liability.

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

During the six months ended June 30, 2020 , the net loss and LAE ratio decreased by 25.0 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;

the impact of prior year loss development was favorable development of $0.4 million or 1.5 percentage points during the six months ended June 30, 2020 on the loss ratio, compared to the impact of adverse prior year loss development which was $35.2 million or 13.1 percentage points for the same period in 2019 .

Prior year favorable development in 2020 was primarily due to Workers Compensation partly offset by adverse development within Commercial General Liability.

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

Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $37.7 million or 90.9% and $91.1 million or 89.4% for the three and six months ended June 30, 2020 , respectively, compared to the same respective periods 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 increased to 38.6% and remained flat at 37.8% for the three and six months ended June 30, 2020 , respectively, compared to 37.2% and 37.8% for the same respective periods in 2019 .

General and Administrative Expenses — General and administrative expenses increased by $0.1 million or 18.7% and decreased by $0.5 million or 28.3% for the three and six months ended June 30, 2020 , respectively, compared to the same respective periods in 2019 .

The general and administrative expense ratios increased to 6.9% and 4.7% for the three and six months ended June 30, 2020 , respectively, compared to 0.5% and 0.7% for the same respective periods 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 45.5% and 42.5% for the three and six months ended June 30, 2020 , respectively, compared to 37.7% and 38.5% for the same respective periods in 2019 primarily due to significantly lower earned premiums as discussed above.

Liquidity and Capital Resources

2 unchanged sentences

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 .

As of June 30, 2020 , the Company had investable assets of $2.5 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 decrease in investable assets is primarily the result of significant negative operating cash flows during six months ended June 30, 2020 , particularly as a result of our cessation of active reinsurance underwriting, including 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

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.

We expect to be actively engaged with the Vermont DFR regarding the formulation of Maiden Reinsurance's longer term business plan, including its investment policy, changes to which require prior regulatory approval as stipulated by Vermont law or the Vermont DFR for any active

underwriting, capital management or other strategic initiatives.

Maiden Reinsurance has received all necessary approvals required to date by the Vermont DFR.

The Company's investment portfolio may be adversely impacted by unfavorable market conditions caused by the COVID-19 pandemic and we and our insurance subsidiaries may need additional capital to maintain compliance with regulatory capital requirements and/or be required to post additional collateral under existing reinsurance arrangements, which could reduce our liquidity.

In addition, we may experience continued volatility in our results of operations which could negatively impact our financial condition and create 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

7 unchanged sentences

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.

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

1 unchanged sentence

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,

At June 30, 2020 and December 31, 2019 , unrestricted cash and cash equivalents and unrestricted fixed maturity investments were $401.8 million and $435.0 million , respectively.

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

The table below summarizes our operating, investing and financing cash flows for the six months ended June 30, 2020 and 2019 :

For the Six Months Ended June 30,

($ in thousands)

1 unchanged sentence

Investing activities

Financing activities

Effect of exchange rate changes on foreign currency cash

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

Total increase in cash, restricted cash and cash equivalents

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

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

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

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 used in operating activities for the six months ended June 30, 2020 were $419.2 million compared to cash flows used in operating activities of $503.7 million for the six months ended June 30, 2019 , a decrease of $84.5 million .

Cash flows used in discontinued operations were $0.0 million for the six months ended June 30, 2020 compared to $1.9 million in the six months ended June 30, 2019 .

Cash flows used in continuing operating activities were $419.2 million for the six months ended June 30, 2020 compared to cash flows used in continuing operations of $501.8 million for the six months ended June 30, 2019 .

The operating cash flows used in continuing operations for the six months ended June 30, 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 LAE.

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 .

Net cash provided by investing activities was $448.0 million for the six months ended June 30, 2020 compared to $630.9 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 six months ended June 30, 2020 .

Cash flows used in discontinued operations was $0.0 million for the six months ended June 30, 2020 compared to cash flows used in discontinued operations of $6.1 million for the same period in 2019 .

Cash flows provided by continuing operations was $448.0 million during the six months ended June 30, 2020 compared to cash flows provided by continuing operations of $637.0 million for the same period in 2019 as the proceeds from the sales, maturities and calls exceeded the purchases of fixed maturity securities by $453.0 million compared to an inflow of $638.5 million for the same period in 2019 .

Cash Flows from Financing Activities

Cash flows used in financing activities were $1.0 thousand for the six months ended June 30, 2020 compared to $13.0 thousand for the same period in 2019 which represent repurchases of common shares to settle employee withholdings in respect of tax obligations on the vesting of restricted shares and performance based shares.

No dividends on common or preference shares were paid during the six months ended June 30, 2020 and 2019 .

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

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.

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 .

At June 30, 2020 and December 31, 2019 , restricted cash and cash equivalents and fixed maturity investments used as collateral were $1.2 billion and $1.5 billion , respectively.

This collateral represents 74.5% and 77.6% of the fair value of our total fixed maturity investments and cash, restricted cash and cash equivalents at June 30, 2020 and December 31, 2019 , respectively.

The investment of our funds has generally been designed to ensure safety of principal while generating current income.

Accordingly, our funds have been invested in liquid, investment-grade fixed income securities which are all designated as available-for-sale at June 30, 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.

As our insurance liabilities continue to run-off and the required capital to operate our business for regulatory purposes decreases, we may have the ability to consider additional asset classes to enhance the income and returns our investment portfolio produces.

We may allocate a portion of our investment portfolio to other investments, including private equity and credit funds, fixed income funds, hedge funds, equity funds and other non-fixed income investments.

We may utilize and pay fees to various companies to provide investment advisory and/or management services related to these investments.

These fees, which would be predominantly based upon the amount of assets under management, would be included in net investment income.

We believe these other investments and equity method investments would provide diversification against our fixed income investments and an opportunity for improved risk-adjusted returns;

however, the returns of these investments may be more volatile and we may experience significant unrealized gains or losses in a particular quarter or year.

The substantial majority of our current and future investments are or will be held by Maiden Reinsurance, whose investment policy is required to be approved by the Vermont DFR.

Maiden Reinsurance has received all necessary approvals for its investment policy.

During the six months ended June 30, 2020 , the yield on the 10-year U.S.

Treasury bond decreased by 126 basis points to 0.66%.

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

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

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

Treasury yield curve experienced a material downward shift during the six months ended June 30, 2020 , reflecting significant global financial and economic volatility from the COVID-19 pandemic which spread during the first half of 2020 .

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

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

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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.

The movement in the market values of our fixed maturity portfolio during the six months ended June 30, 2020 generated net unrealized losses of $4.8 million , primarily due to the ongoing COVID-19 pandemic which has caused widening credit spreads, a surging demand for liquidity and a slowdown to global economic activity, all of which have decreased bond prices during the six months ended June 30, 2020 .

Due in large part to the ongoing uncertainty caused by the COVID-19 pandemic in global financial markets during the six months ended June 30, 2020 , our investment portfolio experienced significant fluctuation in unrealized gains and losses (largely due to rapidly fluctuating credit spreads on fixed income investments), increased volatility, heightened credit risk, and declines in yields on our fixed income investments.

Our investment portfolios may 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.

At June 30, 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

At June 30, 2020 and December 31, 2019 , these respective durations in years were as follows:

June 30, 2020

December 31, 2019

1 unchanged sentence

Reserve for loss and LAE (1)

(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.

(1) The duration regarding our reserve for loss and LAE at June 30, 2020 is gross of LPT/ADC Agreement reserves.

During the six months ended June 30, 2020 , the weighted average duration of our fixed maturity investment portfolio decreased by 1.0 years to 2.0 years and the duration for the reserve for loss and LAE increased by 0.3 years to 4.5 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.

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

At June 30, 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.

At June 30, 2020 , the duration of our loss reserves net of the LPT/ADC Agreement was in line with the duration of our fixed maturity investment portfolio.

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 June 30, 2020 and December 31, 2019 , respectively:

June 30, 2020

Original or Amortized Cost

26 unchanged sentences

Average duration in years.

At March 31, 2020 , 100.0% of the Company’s U.S.

At June 30, 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

Additional details on the Agency MBS at June 30, 2020 and December 31, 2019 were as follows:

June 30, 2020

December 31, 2019

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FHLMC – fixed rate

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

Our Agency MBS portfolio is 30.2% of our fixed maturity investments at June 30, 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.

At June 30, 2020 and December 31, 2019 , 97.6% and 99.7% , respectively, of our fixed maturity investments consisted of investment grade securities.

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

1 unchanged sentence

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

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

March 31, 2020

The security holdings by sector and financial strength rating of our corporate bond holdings at June 30, 2020 and December 31, 2019 were as follows:

June 30, 2020

AAA, AA+, AA, AA-

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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.

At June 30, 2020 , the Company’s ten largest corporate holdings, 52.8% of which are U.S.

dollar denominated, 48.4% of which are in the Consumer Sector and 39.4% 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

June 30, 2020

% of Holdings

($ in thousands)

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

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

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

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

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

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

Abbvie Inc., 3.80%, Due 3/15/2025

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

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

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

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

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

Deutsche Bank AG, 1.25%, Due 9/8/2021

Nordea Bank ABP, 0.875% Due 6/26/2023

Carlsberg Breweries A/S, 2.5%, Due 5/28/2024

Ratings as assigned by S&P, or equivalent

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

At June 30, 2020 and December 31, 2019 , respectively, we hold the following non-U.S.

dollar denominated securities:

March 31, 2020

June 30, 2020

December 31, 2019

4 unchanged sentences

dollar denominated securities

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

At June 30, 2020 and December 31, 2019 , respectively, these non-U.S.

securities are invested in the following currencies:

March 31, 2020

June 30, 2020

December 31, 2019

6 unchanged sentences

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.

denominated fixed maturities is primarily due to the depreciation of Euro denominated corporate bonds during the six months ended June 30, 2020 .

At June 30, 2020 and December 31, 2019 , all of the Company's non-U.S.

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

1 unchanged sentence

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

March 31, 2020

June 30, 2020

December 31, 2019

5 unchanged sentences

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

denominated currencies at March 31, 2020 and December 31, 2019 , respectively.

denominated currencies at June 30, 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 :

The following table summarizes the Company's other material balance sheet changes at June 30, 2020 and December 31, 2019 :

($ in thousands)

March 31, 2020

June 30, 2020

December 31, 2019

3 unchanged sentences

Unearned premiums

Deferred gain on retroactive reinsurance

Liability for investments purchased

Accrued expenses and other liabilities

NM - not meaningful

The Company's deferred commission and other acquisition expenses decreased by 17.9% and unearned premiums decreased by 17.3% 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 4.6% 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.

Accrued expenses and other liabilities decreased by 45.1% as at June 30, 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 15.1% primarily due to the recent commutation of workers' compensation reserves during 2019 in the AmTrust Reinsurance segment.

The liability for investments purchased increased by $45.0 million at June 30, 2020 compared to December 31, 2019 due to timing on investment trades primarily within the trust accounts used for collateral on the AmTrust Quota Share which were settled using restricted cash subsequent to June 30, 2020 .

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 the six months ended June 30, 2020 , our total capital resources increase d by $23.0 million , or 3.0% compared to December 31, 2019 due to net income attributable to common shareholders partly offset by unrealized losses on our investment portfolio.The following table shows the movement in total capital resources at June 30, 2020 and December 31, 2019 :

($ in thousands)

March 31, 2020

June 30, 2020

December 31, 2019

4 unchanged sentences

Total capital resources

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

The major factors contributing to the net increase 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 ;

Total shareholders' equity at June 30, 2020 increased by $23.0 million , or 4.5% compared to December 31, 2019 due to the following factors:

net income attributable to Maiden of $30.1 million for the six months ended June 30, 2020 ;

net increase in share based transactions of $1.6 million ;

partly offset by

net decrease in AOCI of $8.6 million which arose due to:

(1) an increase in net unrealized losses on investment of $4.8 million 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 six months ended June 30, 2020 ;

and (2) a decrease in cumulative translation adjustments of $3.8 million due to the effect of the recent depreciation of the euro relative to the original currencies on our non-U.S.

dollar net liabilities (excluding non-U.S.

dollar denominated AFS fixed maturities).

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.

During the six months ended June 30, 2020 , the Company did not repurchase

any common shares under its share repurchase authorization.

At June 30, 2020 , the Company has a remaining authorization of $74.2 million for share repurchases.

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

4 unchanged sentences

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

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 NASDAQ 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 stayed the de-listing until a decision is rendered subsequent to the appeal hearing.

On June 2, 2020, the Company issued a press release announcing it has regained compliance with NADSAQ’s mimimum bid price and all applicable listing requirements for continued listing, and the appeal hearing was canceled.

Accordingly, the Company's common shares continue to be listed on the NASDAQ Capital Market.

Book value and diluted book value per common share at June 30, 2020 and December 31, 2019 were computed as follows:

June 30, 2020

December 31, 2019

7 unchanged sentences

Diluted book value per common share

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 .

At June 30, 2020 , book value per common share increased by 52.9% and diluted book value per common share increased by 52.0% , compared to December 31, 2019 .

This was primarily due to our net income attributable to common shareholders of $30.1 million during the six months ended June 30, 2020 , partly offset by the net decrease in AOCI of $8.6 million for the six months ended June 30, 2020 .

Please see " Liquidity and Capital Resources - Investments" on page 53 for further information on the change in fair value of our fixed maturity investment portfolio.

There were no changes in the Company’s Senior Notes at 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 .

There were no changes in the Company’s Senior Notes at June 30, 2020 compared to December 31, 2019 and the Company did not enter into any short-term borrowing arrangements during the six months ended June 30, 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

The ratio of Debt to Total Capital Resources at June 30, 2020 and December 31, 2019 was computed as follows:

June 30, 2020

December 31, 2019

7 unchanged sentences

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.

As defined and described in Key Financial Measures on page 40 , m anagement 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 were $1.2 million for the three months ended June 30, 2020 , compared to a non-GAAP operating loss of $21.3 million for the same period in 2019 .

The Company's non-GAAP operating results included an underwriting loss of $0.0 million for the three months ended June 30, 2020 , compared to an underwriting loss of $39.1 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 earnings were $4.4 million for the six months ended June 30, 2020 , compared to a non-GAAP operating loss of $48.9 million for the same period in 2019 .

The Company's non-GAAP operating results included an underwriting loss of $3.7 million for the six months ended June 30, 2020 , compared to an underwriting loss of $81.8 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 earnings (loss) and Non-GAAP diluted operating earnings (loss) per share attributable to common shareholders

1 unchanged sentence

GAAP financial measure as follows:

For the Three Months Ended March 31,

For the Three Months Ended June 30,

($ in thousands except per share data)

1 unchanged sentence

Add (subtract):

Net realized (gains) losses on investment

Net realized gains on investment

Foreign exchange and other losses (gains)

Change in unamortized deferred gain on retroactive reinsurance

Loss from discontinued operations, net of income tax

Income from NGHC Quota Share run-off

Non-GAAP operating earnings (loss)

Diluted earnings (loss) per share attributable to common shareholders

Add (subtract):

Net realized gains on investment

Foreign exchange and other losses (gains)

Change in unamortized deferred gain on retroactive reinsurance

Loss from discontinued operations, net of income tax

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

For the Six Months Ended June 30,

($ in thousands except per share data)

Net income (loss)

Add (subtract):

Net realized gains on investment

Total other-than-temporary impairment losses

Foreign exchange and other gains

Loss from discontinued operations, net of income tax

Loss from NGHC Quota Share run-off

Change in unamortized deferred gain on retroactive reinsurance

Loss from discontinued operations, net of income tax

Non-GAAP operating earnings (loss)

1 unchanged sentence

Add (subtract):

Net realized (gains) losses on investment

Net realized gains on investment

Total other-than-temporary impairment losses

Foreign exchange and other gains

Change in unamortized deferred gain on retroactive reinsurance

Loss from discontinued operations, net of income tax

Loss from NGHC Quota Share run-off

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

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

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

Non-GAAP Operating ROACE

The improvement in Non-GAAP Operating ROACE for the three 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,

The improvement in Non-GAAP Operating ROACE for the three and six months ended June 30, 2020 relative to the same periods in 2019 reflects the reflective improvement in non-GAAP operating earnings and was computed as follows:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

($ in thousands)

4 unchanged sentences

Non-GAAP Operating ROACE

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.

Non-GAAP Underwriting Results and Combined Ratio

The following summarizes our non-GAAP underwriting results for the three and six months ended June 30, 2020 and 2019 :

For the Three Months Ended June 30,

For the Six Months Ended June 30,

($ in thousands)

Gross premiums written

Net premiums written

Net premiums earned

Other insurance revenue

Non-GAAP net loss and LAE (1)

Commission and other acquisition expenses

General and administrative expenses

Non-GAAP underwriting loss (1)

Non-GAAP net loss and LAE ratio (1)

Commission and other acquisition expense ratio

General and administrative expense ratio

Expense ratio

Non-GAAP combined ratio (1)

(1) Non-GAAP underwriting loss, non-GAAP net loss and LAE, non-GAAP net loss and LAE ratio, and non-GAAP combined ratio for the three and six months ended June 30, 2020 include the impact of favorable prior year reserve development subject to the LPT/ADC Agreement.

See "Key Financial Measures" on page 40 for definitions of Non-GAAP underwriting loss, net loss and LAE, non-GAAP net loss and LAE ratio, and non-GAAP combined ratio.

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

As shown in the table below, adjusted for the recognition into income of the decrease in unamortized deferred gain on retroactive reinsurance of $1.4 million during the three and six months ended June 30, 2020 , the non-GAAP underwriting loss was $1.4 million and $5.1 million , respectively, compared to $39.1 million and $81.8 million for the same respective periods in 2019 .

The non-GAAP combined ratio during the three and six months ended June 30, 2020 was 138.4% and 134.3% , respectively, compared to 136.1% and 132.5% during the same respective periods in 2019 .

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Combined ratio

change in unamortized deferred gain on retroactive reinsurance

Non-GAAP combined ratio

Non-GAAP Net Loss and LAE

As noted previously, the recognition of the decrease in the unamortized deferred gain on retroactive reinsurance of $1.4 million increased net loss and LAE for the three and six months ended June 30, 2020 by $1.4 million in the calculation of non-GAAP Loss and LAE as shown in the table below:

For the Three Months Ended June 30,

For the Six Months Ended June 30,

($ in thousands)

Net loss and LAE

change in unamortized deferred gain on retroactive reinsurance

Non-GAAP net loss and LAE

Adjusted for the recognition into income of the decrease in the deferred gain on retroactive reinsurance of $1.4 million during the three and six months ended June 30, 2020 , non-GAAP net loss and LAE was $12.4 million and $33.5 million , respectively, compared to net loss and LAE of $121.6 million and $274.3 million incurred for the same respective periods in 2019 , and the non-GAAP net loss and LAE ratio was 57.6% and 63.0% , respectively, compared to net loss ratios of 90.2% and 86.1% for the same respective periods in 2019 .

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

The Adjusted Shareholders' Equity, Adjusted Total Capital Resources and Adjusted Book Value per Common Share at June 30, 2020 and December 31, 2019 reflect the addition of the unamortized deferred gain on retroactive reinsurance to the GAAP shareholders' equity as depicted in the computations below.

The estimated deferred gain of $111.5 million at June 30, 2020 and $113.0 million at December 31, 2019 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 :

The following table computes adjusted shareholders' equity and adjusted total capital resources by recognizing the unamortized deferred gain on retroactive reinsurance at June 30, 2020 and December 31, 2019 :

($ in thousands)

March 31, 2020

June 30, 2020

December 31, 2019

7 unchanged sentences

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

The adjusted book value per common share as reconciled for the recognition of the unamortized deferred gain on retroactive reinsurance at June 30, 2020 and December 31, 2019 was computed as follows:

June 30, 2020

December 31, 2019

($ in thousands except per share data)

Book value per common share

4 unchanged sentences

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

The ratio of Debt to Adjusted Total Capital Resources at June 30, 2020 and December 31, 2019 was computed as follows:

($ in thousands)

June 30, 2020

December 31, 2019

Senior notes - principal amount

12 unchanged sentences

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

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

At June 30, 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.

expenses in foreign currencies are converted at average exchange rates during the period.

Revenues and expenses in foreign currencies are converted at average exchange rates during the period.

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

Net foreign exchange gains amounted to $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 .

Net foreign exchange losses of $2.1 million and net foreign exchange gains of $6.3 million were generated during the three and six months ended June 30, 2020 , respectively, compared to foreign exchange gains of $1.2 million and $1.9 million for the three and six months ended June 30, 2019 , respectively.

Effects of Inflation

4 unchanged sentences

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.

At June 30, 2020 , we did not have any off-balance sheet arrangements as defined by Item 303(a) (4) of Regulation S-K.

Recent Accounting Pronouncements

2 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis