Maiden Holdings, Ltd. 10-Q

Item 1. Financial Statements MAIDEN HOLDINGS, LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands of U.S. dollars, except share and per share data) June 30, 2020 December 31, 2019 ASSETS (Unaudited) (Audited) Investments: Fixed maturities, available-for-sale, at fair value (amortized cost 2020 - $1,422,298; 2019 - $1,813,426) $ 1,439,563 $ 1,835,518 Other investments 36,054 31,748 Total investments 1,475,617 1,867,266 Cash and cash equivalents 56,583 48,197 Restricted cash and cash equivalents 80,870 59,081 Accrued investment income 11,868 18,331 Reinsurance balances receivable, net (includes $923 from related parties in 2020) 13,268 12,181 Reinsurance recoverable on unpaid losses 617,496 623,422 Loan to related party 167,975 167,975 Deferred commission and other acquisition expenses (includes $56,159 and $68,433 from related parties in 2020 and 2019, respectively) 63,533 77,356 Funds withheld receivable (includes $668,188 and $632,305 from related parties in 2020 and 2019, respectively) 715,623 684,441 Other assets 10,603 9,946 Total assets $ 3,213,436 $ 3,568,196 LIABILITIES Reserve for loss and loss adjustment expenses (includes $1,920,745 and $2,272,418 from related parties in 2020 and 2019, respectively) $ 2,071,222 $ 2,439,907 Unearned premiums (includes $156,869 and $189,797 from related parties in 2020 and 2019, respectively) 182,121 220,269 Deferred gain on retroactive reinsurance 111,540 112,950 Liability for securities purchased 44,996 — Accrued expenses and other liabilities (includes $8,137 and $20,049 from related parties in 2020 and 2019, respectively) 17,802 32,444 Senior notes - principal amount 262,500 262,500 Less: unamortized debt issuance costs 7,484 7,592 Senior notes, net 255,016 254,908 Total liabilities 2,682,697 3,060,478 Commitments and Contingencies EQUITY Preference shares 465,000 465,000 Common shares ($0.01 par value; 89,732,851 and 88,161,638 shares issued in 2020 and 2019, respectively; 84,718,837 and 83,148,458 shares outstanding in 2020 and 2019, respectively) 897 882 Additional paid-in capital 752,896 751,327 Accumulated other comprehensive income 9,201 17,836 Accumulated deficit ( 665,721 ) ( 695,794 ) Treasury shares, at cost (5,014,014 and 5,013,180 shares in 2020 and 2019, respectivel y) ( 31,534 ) ( 31,533 ) Total shareholders’ equity 530,739 507,718 Total liabilities and equity $ 3,213,436 $ 3,568,196 See accompanying notes to the unaudited Condensed Consolidated Financial Statements. 3 MAIDEN HOLDINGS, LTD. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands of U.S. dollars, except per share data) For the Three Months Ended June 30, For the Six Months Ended June 30, 2020 2019 2020 2019 Revenues Gross premiums written $ 4,982 $ 2,117 $ 16,716 $ ( 559,022 ) Net premiums written $ 4,090 $ ( 409 ) $ 14,462 $ ( 561,939 ) Change in unearned premiums 17,218 134,395 38,061 879,027 Net premiums earned 21,308 133,986 52,523 317,088 Other insurance revenue 250 754 658 1,566 Net investment income 14,309 31,122 32,273 63,144 Net realized gains on investment 8,875 24,086 19,913 12,985 Total other-than-temporary impairment losses — — ( 1,506 ) — Total revenues 44,742 189,948 103,861 394,783 Expenses Net loss and loss adjustment expenses 11,008 121,561 32,094 274,250 Commission and other acquisition expenses 8,154 49,656 20,127 119,273 General and administrative expenses 9,261 12,158 17,811 28,777 Interest and amortization expenses 4,830 4,830 9,661 9,659 Foreign exchange and other losses (gains) 2,295 ( 1,207 ) ( 5,902 ) ( 6,186 ) Total expenses 35,548 186,998 73,791 425,773 Income (loss) from continuing operations before income taxes 9,194 2,950 30,070 ( 30,990 ) Less: income tax benefit ( 18 ) ( 1,026 ) ( 3 ) ( 1,064 ) Income (loss) from continuing operations 9,212 3,976 30,073 ( 29,926 ) Loss from discontinued operations, net of income tax — ( 19,389 ) — ( 22,123 ) Net income (loss) $ 9,212 $ ( 15,413 ) $ 30,073 $ ( 52,049 ) Basic and diluted earnings (loss) from continuing operations per share attributable to common shareholders $ 0.11 $ 0.04 $ 0.35 $ ( 0.36 ) Basic and diluted loss from discontinued operations per share attributable to common shareholders — ( 0.23 ) — ( 0.27 ) Basic and diluted earnings (loss) per share attributable to common shareholders $ 0.11 $ ( 0.19 ) $ 0.35 $ ( 0.63 ) Weighted average number of common shares - basic 84,537,385 83,058,123 83,896,804 83,008,888 Adjusted weighted average number of common shares and assumed conversions - diluted 84,537,385 83,075,156 83,896,804 83,008,888 See accompanying notes to the unaudited Condensed Consolidated Financial Statements. 4 MAIDEN HOLDINGS, LTD. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (in thousands of U.S. dollars) For the Three Months Ended June 30, For the Six Months Ended June 30, 2020 2019 2020 2019 Net income (loss) $ 9,212 $ ( 15,413 ) $ 30,073 $ ( 52,049 ) Other comprehensive income (loss) Net unrealized holdings gains on fixed maturities arising during period 41,778 43,018 1,575 92,048 Adjustment for reclassification of net realized gains recognized in net income (loss) ( 2,368 ) ( 15,415 ) ( 6,401 ) ( 2,927 ) Foreign currency translation adjustment ( 3,820 ) ( 6,192 ) ( 3,823 ) ( 2,194 ) Other comprehensive income (loss), before tax 35,590 21,411 ( 8,649 ) 86,927 Income tax (expense) benefit related to components of other comprehensive (loss) income ( 101 ) ( 39 ) 14 ( 81 ) Other comprehensive income (loss), after tax 35,489 21,372 ( 8,635 ) 86,846 Comprehensive income 44,701 5,959 21,438 34,797 Comprehensive income attributable to noncontrolling interests — — — ( 78 ) Comprehensive income attributable to Maiden $ 44,701 $ 5,959 $ 21,438 $ 34,719 See accompanying notes to the unaudited Condensed Consolidated Financial Statements. 5 MAIDEN HOLDINGS, LTD. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) (in thousands of U.S. dollars) For the Three Months Ended June 30, For the Six Months Ended June 30, 2020 2019 2020 2019 Preference shares - Series A, C and D Beginning balance $ 465,000 $ 465,000 $ 465,000 $ 465,000 Ending balance 465,000 465,000 465,000 465,000 Common shares Beginning balance 890 881 882 879 Exercise of options and issuance of shares 7 — 15 2 Ending balance 897 881 897 881 Additional paid-in capital Beginning balance 751,862 750,670 751,327 749,418 Exercise of options and issuance of common shares ( 7 ) — ( 15 ) ( 2 ) Share-based compensation expense 1,041 337 1,584 1,591 Ending balance 752,896 751,007 752,896 751,007 Accumulated other comprehensive income Beginning balance ( 26,288 ) ( 220 ) 17,836 ( 65,616 ) Change in net unrealized gains (losses) on investment 39,309 27,564 ( 4,812 ) 89,040 Foreign currency translation adjustment ( 3,820 ) ( 6,192 ) ( 3,823 ) ( 2,272 ) Ending balance 9,201 21,152 9,201 21,152 Accumulated deficit Beginning balance ( 674,933 ) ( 600,527 ) ( 695,794 ) ( 563,891 ) Net income (loss) 9,212 ( 15,413 ) 30,073 ( 52,049 ) Ending balance ( 665,721 ) ( 615,940 ) ( 665,721 ) ( 615,940 ) Treasury shares Beginning balance ( 31,533 ) ( 31,515 ) ( 31,533 ) ( 31,515 ) Shares repurchased ( 1 ) ( 13 ) ( 1 ) ( 13 ) Ending balance ( 31,534 ) ( 31,528 ) ( 31,534 ) ( 31,528 ) Noncontrolling interests in subsidiaries Beginning balance — — — 641 Disposal of subsidiaries — — — ( 719 ) Foreign currency translation adjustment — — — 78 Ending balance — — — — Total shareholders' equity $ 530,739 $ 590,572 $ 530,739 $ 590,572 See accompanying notes to the unaudited Condensed Consolidated Financial Statements. 6 MAIDEN HOLDINGS, LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands of U.S. dollars) For the Six Months Ended June 30, 2020 2019 Cash flows from operating activities Net income (loss) $ 30,073 $ ( 52,049 ) Less: net loss from discontinued operations — 22,123 Adjustments to reconcile net income (loss) to net cash flows from operating activities: Depreciation, amortization and share-based compensation 4,004 4,388 Net realized gains on investment ( 19,913 ) ( 12,985 ) Total other-than-temporary impairment losses 1,506 — Foreign exchange and other gains ( 5,902 ) ( 6,186 ) Changes in assets – (increase) decrease: Reinsurance balances receivable, net ( 10,196 ) ( 1,191 ) Reinsurance recoverable on unpaid losses 4,294 ( 242 ) Accrued investment income 6,413 5,526 Deferred commission and other acquisition expenses 13,662 136,686 Funds withheld receivable ( 13,416 ) ( 81,649 ) Other assets ( 9,316 ) ( 7,910 ) Changes in liabilities – increase (decrease): Reserve for loss and loss adjustment expenses ( 361,082 ) ( 833 ) Unearned premiums ( 37,634 ) ( 459,179 ) Accrued expenses and other liabilities ( 21,645 ) ( 48,251 ) Net cash used in continuing operations ( 419,152 ) ( 501,752 ) Net cash used in discontinued operations — ( 1,905 ) Net cash used in operating activities ( 419,152 ) ( 503,657 ) Cash flows from investing activities: Purchases of fixed maturities ( 245,331 ) ( 395,640 ) Purchases of other investments ( 4,475 ) ( 5,290 ) Proceeds from sales of fixed maturities 405,501 709,615 Proceeds from maturities, paydowns and calls of fixed maturities 292,780 324,480 Proceeds from sale and redemption of other investments 92 580 Other, net ( 598 ) 3,276 Net cash provided by investing activities for continuing operations 447,969 637,021 Net cash used in investing activities for discontinued operations — ( 6,113 ) Net cash provided by investing activities 447,969 630,908 Cash flows from financing activities: Repurchase of common shares ( 1 ) ( 13 ) Net cash used in financing activities ( 1 ) ( 13 ) Effect of exchange rate changes on foreign currency cash, restricted cash and equivalents 1,359 ( 177 ) Net increase in cash, restricted cash and cash equivalents 30,175 127,061 Cash, restricted cash and cash equivalents, beginning of period 107,278 337,102 Cash, restricted cash and cash equivalents, end of period 137,453 464,163 Reconciliation of cash and restricted cash reported within Condensed Consolidated Balance Sheets: Cash and cash equivalents, end of period $ 56,583 $ 82,465 Restricted cash and cash equivalents, end of period 80,870 381,698 Total cash, restricted cash and cash equivalents, end of period $ 137,453 $ 464,163 Non-cash investing activities Investments transferred out related to Partial Termination Amendment $ — $ 280,670 Investments transferred out related to funds withheld arrangement with AmTrust — 571,396 Investments transferred out related to discontinued operations — 65,400 See accompanying notes to the unaudited Condensed Consolidated Financial Statements. 7 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 1. Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Maiden Holdings, Ltd. ("Maiden Holdings") and its subsidiaries (the "Company" or "Maiden"). They have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. All significant intercompany transactions and accounts have been eliminated. These interim unaudited Condensed Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim period and all such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative, if annualized, of those to be expected for the full year. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. These unaudited Condensed Consolidated Financial Statements, including these notes, should be read in conjunction with the Company's audited Consolidated Financial Statements, and related notes thereto, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 . Certain prior year comparatives have been reclassified to conform to the current year presentation. The effect of these reclassifications had no impact on previously reported shareholders' equity or net loss. Strategic Review Since 2018, the Company has engaged in a series of strategic measures that have dramatically reduced the regulatory capital required to operate our business, materially strengthened our solvency ratios, re-domiciled Maiden Reinsurance Ltd. ("Maiden Reinsurance") to Vermont in the U.S. and ceased active reinsurance underwriting. During that time, we significantly increased our estimate of ultimate losses and loss reserves while purchasing reinsurance protection against further loss reserve volatility and as a result, have improved the ultimate economic value of the Company. We believe these measures have given the Company the ability to more flexibly allocate capital to those activities most likely to produce the greatest returns for shareholders. The measures we ultimately 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. As part of the Strategic Review, a series of transactions were entered into including: (1) completed the sale of Maiden Reinsurance North America, Inc. ("Maiden US") on December 27, 2018; (2) Maiden Reinsurance's shareholders, Maiden Holdings and Maiden Holdings North America, Ltd. ("Maiden NA"), made capital injections of $ 125,000 on December 31, 2018 and $ 70,000 on January 18, 2019 to Maiden Reinsurance from the sale proceeds of Maiden US; (3) entered into a partial termination amendment ("Partial Termination Amendment") with AmTrust Financial Services, Inc. ("AmTrust") effective January 1, 2019 which amended the quota share reinsurance agreement (“AmTrust Quota Share”) between Maiden Reinsurance and AmTrust’s wholly owned subsidiary AmTrust International Insurance, Ltd. (“AII”) (as more fully described in "Note 10 - Related Party Transactions" ); (4) entered into amendments which terminated the AmTrust Quota Share and the European hospital liability Quota Share Reinsurance Contract (“European Hospital Liability Quota Share”) with AmTrust’s wholly owned subsidiaries AmTrust Europe Limited ("AEL") and AmTrust International Underwriters DAC ("AIU DAC") effective January 1, 2019 (these transactions are broadly referred to herein as the "Final AmTrust QS Terminations"); (5) entered into the Loss Portfolio Transfer and Adverse Development Cover Agreement ("LPT/ADC Agreement") with Enstar Group Limited ("Enstar") pursuant to the revised Master Transaction Agreement entered into on March 1, 2019; and (6) entered into a Commutation and Release Agreement with AmTrust to commute certain workers' compensation business with AII as of January 1, 2019. Please see the Company's audited Consolidated Financial Statements, and related notes thereto, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 for further details on the above transactions. Discontinued Operations The Company made the strategic decision to divest its U.S. treaty reinsurance operations through the sale of Maiden US which was completed on December 27, 2018. Except as explicitly described as discontinued operations, and unless otherwise noted, all discussions and amounts presented herein relate to the Company's continuing operations except for net income (loss). Re-domestication of Maiden Reinsurance Effective March 16, 2020, we re-domesticated our principal operating subsidiary, Maiden Reinsurance, to the State of Vermont in the United States, having made the necessary filings in both Vermont and Bermuda in the fourth quarter of 2019 and first quarter of 2020. Maiden Reinsurance is now subject to the statutes and regulations of Vermont in the ordinary course of business. We have determined that re-domesticating Maiden Reinsurance to Vermont enables us to better align our capital and resources with our liabilities, which originate mostly in the United States, resulting in a more efficient structure. The re-domestication, in combination with the transactions completed pursuant to the Strategic Review, will continue to strengthen the Company’s capital position and solvency ratios. While the Vermont 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. Maiden NA now owns 100 % of Maiden Reinsurance. 8 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 1. Basis of Presentation (continued) Segments As a result of the strategic decision to divest all of the Company's U.S. treaty reinsurance operations noted above, the Company revised the composition of its reportable segments. As described in more detail under “ Note 3. Segment Information ”, the reportable segments include: (i) Diversified Reinsurance which consists of a portfolio of property and casualty reinsurance business focusing on regional and specialty property and casualty insurance companies located primarily in Europe; and (ii) AmTrust Reinsurance which includes all business ceded to Maiden Reinsurance from subsidiaries of AmTrust. In addition to these reportable segments, the results of operations of the former National General Holdings Corporation Quota Share ("NGHC Quota Share") segment, which was commuted in November 2019, was previously included in the "Other" category. COVID-19 Pandemic 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 may 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 currently engaged in active reinsurance underwriting and is running off the remaining unearned exposures it has reinsured. Maiden Global Holdings, Ltd.’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"). The Company's 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 losses and loss adjustment expenses and estimates of reinsurance recoverable arising from the COVID-19 pandemic may materially change. 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 the Company and its 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 its results of operations which could negatively impact its financial condition and create a reduction in the amount of available distribution or dividend capacity from its regulated reinsurance subsidiaries, which would also reduce liquidity. 9 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 2. Significant Accounting Policies There have been no material changes to the significant accounting policies as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 except for the following: Recently Adopted Accounting Standards Updates Changes to the Disclosure Requirements for Fair Value Measurement In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-13 ("ASU 2018-13") for changes to the disclosure framework related to Topic 820 which amends the disclosure requirements for fair value measurement. The following disclosure requirements were removed from Topic 820: (i) amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (ii) policy for timing of transfers between levels, and (iii) valuation processes for Level 3 fair value measurements. The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. The following disclosure requirements were added to Topic 820: (i) changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and (ii) range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. The amendments in ASU 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of ASU 2018-13. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU 2018-13 and delay adoption of the additional disclosures until their effective date. These amendments only impact disclosures made in " Note 5. Fair Value Measurements " therefore, the adoption of this standard on January 1, 2020 did not impact the Company’s consolidated balance sheets, results of operations or cash flows. Recently Issued Accounting Standards Not Yet Adopted Accounting for Measurement of Credit Losses on Financial Instruments In June 2016, the FASB issued ASU 2016-13 "Financial Instruments: Credit Losses (Topic 326)" replacing the "incurred loss" impairment methodology with an approach based on "expected losses" to estimate credit losses on certain types of financial instruments and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance requires financial assets to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the cost of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. ASU 2016-13 also modified the accounting for available-for-sale ("AFS") debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments: Credit Losses Available-for-Sale Debt Securities . Credit losses relating to AFS debt securities will be recorded through an allowance for credit losses rather than under the current other-than-temporarily impaired ("OTTI") methodology. In April 2019, the FASB issued ASU 2019-04 for targeted improvements related to ASU 2016-13 which clarify that an entity should include all expected recoveries in its estimate of the allowance for credit losses. In addition, for collateral dependent financial assets, the amendments mandate that an allowance for credit losses that is added to the amortized cost basis of the financial asset should not exceed amounts previously written off. It also clarifies FASB’s intent to include all reinsurance recoverables within the scope of Topic 944 to be within the scope of Subtopic 326-20 , regardless of the measurement basis of those recoverables. The Company's reinsurance balances receivable and reinsurance recoverable on unpaid losses are its most significant financial assets within the scope of ASU 2016-13. The guidance is effective for public business entities, excluding entities eligible to be smaller reporting companies ("SRCs") as defined by the SEC, for annual periods beginning after December 15, 2019, and interim periods therein. The guidance is effective for all other entities, including public entities eligible to be SRCs, for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As of December 31, 2019 , the Company qualified for SRC status, as determined on the last business day of its most recent second quarter, and is thus eligible to follow the reporting deadlines and effective dates applicable to SRCs. Therefore Topic 326 will not be effective until the 2023 fiscal year. The Company continues to evaluate the impact of this guidance on its results of operations, financial condition and liquidity. 10 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 3. Segment Information The Company currently has two reportable segments: Diversified Reinsurance and AmTrust Reinsurance. Our Diversified Reinsurance segment consists of a portfolio of predominantly property and casualty reinsurance business focusing on regional and specialty property and casualty insurance companies located primarily in Europe. Our AmTrust Reinsurance segment includes all business ceded to Maiden Reinsurance by AmTrust, primarily the AmTrust Quota Share and the European Hospital Liability Quota Share, which are in run-off effective January 1, 2019. In addition to our reportable segments, the results of operations of the former NGHC Quota Share segment which was commuted in November 2019 and the remnants of our retroceded U.S. treaty business have been included in the "Other" category. Please refer to "Note 10. Related Party Transactions" for additional information. The Company evaluates segment performance based on segment profit separately from the results of our investment portfolio. General and administrative expenses are allocated to the segments on an actual basis except salaries and benefits where management’s judgment is applied; however general corporate expenses are not allocated to the segments. In determining total assets by reportable segment, the Company identifies those assets that are attributable to a particular segment such as reinsurance balances receivable, reinsurance recoverable on unpaid losses, deferred commission and other acquisition expenses, funds withheld receivable, loan to related party and restricted cash and investments. All remaining assets are allocated to Corporate. As discussed in "Note 1. Basis of Presentation" and "Note 10. Related Party Transactions", the Partial Termination Amendment and the termination of the remaining business with AmTrust effective January 1, 2019 resulted in a significant reduction in gross premiums written. This was due to the return of unearned premium on certain lines covered by the Partial Termination Amendment, with no new business written since 2018 as a result of the termination of the AmTrust Quota Share and the European Hospital Liability Quota Share. The following tables summarize the underwriting results of our reportable segments and the reconciliation of our reportable segments and Other category's underwriting results to consolidated net income ( loss ) from continuing operations: For the Three Months Ended June 30, 2020 Diversified Reinsurance AmTrust Reinsurance Total Gross premiums written $ 9,687 $ ( 4,705 ) $ 4,982 Net premiums written $ 8,553 $ ( 4,463 ) $ 4,090 Net premiums earned $ 11,527 $ 9,781 $ 21,308 Other insurance revenue 250 — 250 Net loss and loss adjustment expenses ("loss and LAE") ( 6,038 ) ( 4,970 ) ( 11,008 ) Commission and other acquisition expenses ( 4,374 ) ( 3,780 ) ( 8,154 ) General and administrative expenses ( 1,746 ) ( 667 ) ( 2,413 ) Underwriting (loss) income $ ( 381 ) $ 364 ( 17 ) Reconciliation to net income from continuing operations Net investment income and realized gains on investment 23,184 Interest and amortization expenses ( 4,830 ) Foreign exchange and other losses, net ( 2,295 ) Other general and administrative expenses ( 6,848 ) Income tax benefit 18 Net income from continuing operations $ 9,212 Net loss and LAE ratio (1) 51.3 % 50.8 % 51.0 % Commission and other acquisition expense ratio (2) 37.1 % 38.6 % 37.8 % General and administrative expense ratio (3) 14.8 % 6.9 % 43.0 % Expense ratio (4) 51.9 % 45.5 % 80.8 % Combined ratio (5) 103.2 % 96.3 % 131.8 % 11 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 3. Segment Information (continued) For the Three Months Ended June 30, 2019 Diversified Reinsurance AmTrust Reinsurance Other Total Gross premiums written $ 11,244 $ ( 9,127 ) $ — $ 2,117 Net premiums written $ 8,718 $ ( 9,127 ) $ — $ ( 409 ) Net premiums earned $ 22,472 $ 111,514 $ — $ 133,986 Other insurance revenue 754 — — 754 Net loss and LAE ( 12,497 ) ( 109,088 ) 24 ( 121,561 ) Commission and other acquisition expenses ( 8,147 ) ( 41,509 ) — ( 49,656 ) General and administrative expenses ( 2,092 ) ( 562 ) — ( 2,654 ) Underwriting income (loss) $ 490 $ ( 39,645 ) $ 24 ( 39,131 ) Reconciliation to net income from continuing operations Net investment income and realized gains on investment 55,208 Interest and amortization expenses ( 4,830 ) Foreign exchange and other gains 1,207 Other general and administrative expenses ( 9,504 ) Income tax benefit 1,026 Net income from continuing operations $ 3,976 Net loss and LAE ratio (1) 53.8 % 97.8 % 90.2 % Commission and other acquisition expense ratio (2) 35.1 % 37.2 % 36.9 % General and administrative expense ratio (3) 9.0 % 0.5 % 9.0 % Expense ratio (4) 44.1 % 37.7 % 45.9 % Combined ratio (5) 97.9 % 135.5 % 136.1 % 12 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 3. Segment Information (continued) For the Six Months Ended June 30, 2020 Diversified Reinsurance AmTrust Reinsurance Total Gross premiums written $ 21,421 $ ( 4,705 ) $ 16,716 Net premiums written $ 18,925 $ ( 4,463 ) $ 14,462 Net premiums earned $ 24,058 $ 28,465 $ 52,523 Other insurance revenue 658 — 658 Net loss and LAE ( 13,079 ) ( 19,015 ) ( 32,094 ) Commission and other acquisition expenses ( 9,353 ) ( 10,774 ) ( 20,127 ) General and administrative expenses ( 3,359 ) ( 1,311 ) ( 4,670 ) Underwriting loss $ ( 1,075 ) $ ( 2,635 ) ( 3,710 ) Reconciliation to net income from continuing operations Net investment income and realized gains on investment 52,186 Total other-than-temporary impairment losses ( 1,506 ) Interest and amortization expenses ( 9,661 ) Foreign exchange and other gains 5,902 Other general and administrative expenses ( 13,141 ) Income tax benefit 3 Net income from continuing operations $ 30,073 Net loss and LAE ratio (1) 52.9 % 66.8 % 60.4 % Commission and other acquisition expense ratio (2) 37.8 % 37.8 % 37.8 % General and administrative expense ratio (3) 13.6 % 4.7 % 33.5 % Expense ratio (4) 51.4 % 42.5 % 71.3 % Combined ratio (5) 104.3 % 109.3 % 131.7 % 13 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 3. Segment Information (continued) For the Six Months Ended June 30, 2019 Diversified Reinsurance AmTrust Reinsurance Other Total Gross premiums written $ 26,582 $ ( 585,604 ) $ — $ ( 559,022 ) Net premiums written $ 23,665 $ ( 585,604 ) $ — $ ( 561,939 ) Net premiums earned $ 47,764 $ 269,324 $ — $ 317,088 Other insurance revenue 1,566 — — 1,566 Net loss and LAE ( 26,888 ) ( 247,158 ) ( 204 ) ( 274,250 ) Commission and other acquisition expenses ( 17,408 ) ( 101,865 ) — ( 119,273 ) General and administrative expenses ( 5,123 ) ( 1,828 ) — ( 6,951 ) Underwriting loss $ ( 89 ) $ ( 81,527 ) $ ( 204 ) ( 81,820 ) Reconciliation to net loss from continuing operations Net investment income and realized gains on investment 76,129 Interest and amortization expenses ( 9,659 ) Foreign exchange and other gains 6,186 Other general and administrative expenses ( 21,826 ) Income tax benefit 1,064 Net loss from continuing operations $ ( 29,926 ) Net loss and LAE ratio (1) 54.5 % 91.8 % 86.1 % Commission and other acquisition expense ratio (2) 35.3 % 37.8 % 37.4 % General and administrative expense ratio (3) 10.4 % 0.7 % 9.0 % Expense ratio (4) 45.7 % 38.5 % 46.4 % Combined ratio (5) 100.2 % 130.3 % 132.5 % (1) Calculated by dividing net loss and LAE by the sum of net premiums earned and other insurance revenue. (2) Calculated by dividing commission and other acquisition expenses by the sum of net premiums earned and other insurance revenue. (3) Calculated by dividing general and administrative expenses by the sum of net premiums earned and other insurance revenue. (4) Calculated by adding together the commission and other acquisition expense ratio and general and administrative expense ratio. (5) Calculated by adding together net loss and LAE ratio and the expense ratio. The following tables summarize the financial position of the Company's reportable segments including the reconciliation to the Company's consolidated total assets at June 30, 2020 and December 31, 2019 : June 30, 2020 Diversified Reinsurance AmTrust Reinsurance Total Total assets - reportable segments $ 157,302 $ 2,570,738 $ 2,728,040 Corporate assets — — 485,396 Total Assets $ 157,302 $ 2,570,738 $ 3,213,436 December 31, 2019 Diversified Reinsurance AmTrust Reinsurance Total Total assets - reportable segments $ 167,845 $ 2,843,802 $ 3,011,647 Corporate assets — — 556,549 Total Assets $ 167,845 $ 2,843,802 $ 3,568,196 14 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 3. Segment In formation (continued) The following tables set forth financial information relating to net premiums written by major line of business and reportable segment for the three and six months ended June 30, 2020 and 2019 : For the Three Months Ended June 30, 2020 2019 Net premiums written Total Total Diversified Reinsurance International $ 8,498 $ 8,736 Other 55 ( 18 ) Total Diversified Reinsurance 8,553 8,718 AmTrust Reinsurance Small Commercial Business ( 6,394 ) 5,515 Specialty Program 477 ( 16,031 ) Specialty Risk and Extended Warranty 1,454 1,389 Total AmTrust Reinsurance ( 4,463 ) ( 9,127 ) Total Net Premiums Written $ 4,090 $ ( 409 ) For the Six Months Ended June 30, 2020 2019 Net premiums written Total Total Diversified Reinsurance International $ 18,870 $ 23,683 Other 55 ( 18 ) Total Diversified Reinsurance 18,925 23,665 AmTrust Reinsurance Small Commercial Business ( 6,394 ) ( 337,166 ) Specialty Program 477 ( 28,639 ) Specialty Risk and Extended Warranty 1,454 ( 219,799 ) Total AmTrust Reinsurance ( 4,463 ) ( 585,604 ) Total Net Premiums Written $ 14,462 $ ( 561,939 ) The following tables set forth financial information relating to net premiums earned by major line of business and reportable segment for the three and six months ended June 30, 2020 and 2019 : For the Three Months Ended June 30, 2020 2019 Net premiums earned Total % of Total Total % of Total Diversified Reinsurance International $ 11,472 53.8 % $ 22,490 16.8 % Other 55 0.3 % ( 18 ) — % Total Diversified Reinsurance 11,527 54.1 % 22,472 16.8 % AmTrust Reinsurance Small Commercial Business ( 7,112 ) ( 33.4 )% 23,283 17.4 % Specialty Program 426 2.0 % 30,326 22.6 % Specialty Risk and Extended Warranty 16,467 77.3 % 57,905 43.2 % Total AmTrust Reinsurance 9,781 45.9 % 111,514 83.2 % Total Net Premiums Earned $ 21,308 100.0 % $ 133,986 100.0 % 15 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 3. Segment Information (continued) For the Six Months Ended June 30, 2020 2019 Net premiums earned Total % of Total Total % of Total Diversified Reinsurance International $ 24,003 45.7 % $ 47,782 15.1 % Other 55 0.1 % ( 18 ) — % Total Diversified Reinsurance 24,058 45.8 % 47,764 15.1 % AmTrust Reinsurance Small Commercial Business ( 6,173 ) ( 11.8 )% 62,738 19.8 % Specialty Program 501 1.0 % 106,547 33.6 % Specialty Risk and Extended Warranty 34,137 65.0 % 100,039 31.5 % Total AmTrust Reinsurance 28,465 54.2 % 269,324 84.9 % Total Net Premiums Earned $ 52,523 100.0 % $ 317,088 100.0 % 4. Investments a) Fixed Maturities The original or amortized cost, estimated fair value and gross unrealized gains and losses of fixed maturities at June 30, 2020 and December 31, 2019 are as follows: June 30, 2020 Original or amortized cost Gross unrealized gains Gross unrealized losses Fair value U.S. treasury bonds $ 210,512 $ 673 $ ( 2 ) $ 211,183 U.S. agency bonds – mortgage-backed 421,150 14,608 ( 375 ) 435,383 Non-U.S. government and supranational bonds 7,284 327 ( 46 ) 7,565 Asset-backed securities 186,908 935 ( 3,833 ) 184,010 Corporate bonds 596,444 22,360 ( 17,382 ) 601,422 Total fixed maturity investments $ 1,422,298 $ 38,903 $ ( 21,638 ) $ 1,439,563 December 31, 2019 Original or amortized cost Gross unrealized gains Gross unrealized losses Fair value U.S. treasury bonds $ 94,921 $ 704 $ — $ 95,625 U.S. agency bonds – mortgage-backed 533,296 6,717 ( 1,291 ) 538,722 Non-U.S. government and supranational bonds 11,796 294 ( 91 ) 11,999 Asset-backed securities 187,881 821 ( 532 ) 188,170 Corporate bonds 981,441 31,140 ( 15,725 ) 996,856 Municipal bonds 4,091 55 — 4,146 Total fixed maturity investments $ 1,813,426 $ 39,731 $ ( 17,639 ) $ 1,835,518 16 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 4. Investments (continued) The contractual maturities of our fixed maturities are shown in the table below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. June 30, 2020 Amortized cost Fair value Due in one year or less $ 238,418 $ 237,728 Due after one year through five years 476,319 479,611 Due after five years through ten years 99,503 102,831 814,240 820,170 U.S. agency bonds – mortgage-backed 421,150 435,383 Asset-backed securities 186,908 184,010 Total fixed maturity investments $ 1,422,298 $ 1,439,563 The following tables summarize fixed maturities in an unrealized loss position and the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position: Less than 12 Months 12 Months or More Total June 30, 2020 Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses U.S. treasury bonds $ 60,586 $ ( 2 ) $ — $ — $ 60,586 $ ( 2 ) U.S. agency bonds – mortgage-backed 39,380 ( 280 ) 14,104 ( 95 ) 53,484 ( 375 ) Non-U.S. government and supranational bonds 116 ( 6 ) 578 ( 40 ) 694 ( 46 ) Asset-backed securities 102,486 ( 2,398 ) 52,170 ( 1,435 ) 154,656 ( 3,833 ) Corporate bonds 51,660 ( 5,094 ) 114,729 ( 12,288 ) 166,389 ( 17,382 ) Total temporarily impaired fixed maturities $ 254,228 $ ( 7,780 ) $ 181,581 $ ( 13,858 ) $ 435,809 $ ( 21,638 ) At June 30, 2020 , there were 134 securities in an unrealized loss position with a fair value of $ 435,809 and unrealized losses of $ 21,638 . Of these securities, there were 65 securities that have been in an unrealized loss position for twelve months or greater with a fair value of $ 181,581 and unrealized losses of $ 13,858 . Less than 12 Months 12 Months or More Total December 31, 2019 Fair value Unrealized losses Fair value Unrealized losses Fair value Unrealized losses U.S. agency bonds – mortgage-backed $ 31,401 $ ( 257 ) $ 85,008 $ ( 1,034 ) $ 116,409 $ ( 1,291 ) Non-U.S. government and supranational bonds 1,824 ( 22 ) 701 ( 69 ) 2,525 ( 91 ) Asset-backed securities 60,863 ( 240 ) 17,594 ( 292 ) 78,457 ( 532 ) Corporate bonds 29,692 ( 305 ) 159,216 ( 15,420 ) 188,908 ( 15,725 ) Total temporarily impaired fixed maturities $ 123,780 $ ( 824 ) $ 262,519 $ ( 16,815 ) $ 386,299 $ ( 17,639 ) At December 31, 2019 , there were 104 securities in an unrealized loss position with a fair value of $ 386,299 and unrealized losses of $ 17,639 . Of these securities, there were 67 securities that have been in an unrealized loss position for twelve months or greater with a fair value of $ 262,519 and unrealized losses of $ 16,815 . Other-than-temporarily impaired The Company performs quarterly reviews of its fixed maturities in order to determine whether declines in fair value below the amortized cost basis were considered other-than-temporary in accordance with applicable guidance. At June 30, 2020 , we determined that unrealized losses on fixed maturities were primarily due to changes in interest rates as well as the impact of foreign exchange rate changes on certain foreign currency denominated fixed maturities since their date of purchase. All fixed maturity securities continue to pay the expected coupon payments under the contractual terms of the securities. Any credit-related impairment related to fixed maturity securities that the Company does not plan to sell and for which the Company is not more likely than not to be required to sell is recognized in net earnings, with the non-credit related impairment recognized in comprehensive earnings. Based on our analysis, our fixed maturity portfolio is of high credit quality and we believe the amortized cost basis of the securities will ultimately be recovered. The Company continually monitors the credit quality of the fixed maturity investments to assess if it is probable that it will receive contractual or estimated cash flows in the form of principal and interest. For the six months ended June 30, 2020 , $ 1,506 of OTTI charges were recognized in earnings on two fixed maturity securities. There were no OTTI losses recognized in the three months ended June 30, 2020 and in the three and six months ended June 30, 2019 . 17 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 4. Investments (continued) The following tables summarize the credit ratings of our fixed maturities as at June 30, 2020 and December 31, 2019 : June 30, 2020 Amortized cost Fair value % of Total fair value U.S. treasury bonds $ 210,512 $ 211,183 14.7 % U.S. agency bonds 421,150 435,383 30.2 % AAA 97,579 96,314 6.7 % AA+, AA, AA- 111,053 110,763 7.7 % A+, A, A- 233,775 236,501 16.4 % BBB+, BBB, BBB- 311,877 315,567 21.9 % BB+ or lower 36,352 33,852 2.4 % Total fixed maturities (1) $ 1,422,298 $ 1,439,563 100.0 % December 31, 2019 Amortized cost Fair value % of Total fair value U.S. treasury bonds $ 94,921 $ 95,625 5.2 % U.S. agency bonds 533,296 538,722 29.4 % AAA 99,212 99,542 5.4 % AA+, AA, AA- 101,491 101,467 5.5 % A+, A, A- 540,002 549,479 29.9 % BBB+, BBB, BBB- 438,731 445,202 24.3 % BB+ or lower 5,773 5,481 0.3 % Total fixed maturities (1) $ 1,813,426 $ 1,835,518 100.0 % (1) Ratings above are based on Standard & Poor’s ("S&P"), or equivalent, ratings . b) Other Investments The table below shows the fair value of the Company's other investments as at June 30, 2020 and December 31, 2019 : June 30, 2020 December 31, 2019 Fair value % of Total fair value Fair value % of Total fair value Investment in limited partnerships $ 2,908 50.9 % $ 3,077 63.1 % Other 2,800 49.1 % 1,800 36.9 % Total other investments $ 5,708 100.0 % $ 4,877 100.0 % The Company also holds other investments made by special purpose vehicles ("SPV") related to lending activities of $ 30,346 at June 30, 2020 ( December 31, 2019 - $ 26,871 ). These investments are carried at cost less impairment, if any, with any indication of impairment recognized in income when determined. Because these investments are carried at cost, they are not included in the table above. Please see "Note 5 - Fair Value Measurements" for additional information. The Company has remaining unfunded commitments on its investment in limited partnerships of $ 333 at June 30, 2020 ( December 31, 2019 - $ 340 ). The Company also has a remaining unfunded commitment on its investment in special purpose vehicles focused on lending activities of $ 215 at June 30, 2020 ( December 31, 2019 - $ 767 ). 18 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 4. Investments (continued) c) Net Investment Income Net investment income was derived from the following sources: For the Three Months Ended June 30, For the Six Months Ended June 30, 2020 2019 2020 2019 Fixed maturities $ 9,635 $ 23,522 $ 22,286 $ 49,742 Funds withheld interest 4,009 5,169 7,862 9,706 Loan to related party 860 1,842 2,225 3,664 Cash and cash equivalents and other 159 1,316 655 1,591 14,663 31,849 33,028 64,703 Investment expenses ( 354 ) ( 727 ) ( 755 ) ( 1,559 ) Net investment income $ 14,309 $ 31,122 $ 32,273 $ 63,144 d) Realized Gains (Losses) on Investment Realized gains or losses on the sale of investments are determined on the basis of the first in first out cost method. The following tables show the net realized gains (losses) on investment included in the Condensed Consolidated Statements of Income: For the Three Months Ended June 30, 2020 Gross gains Gross losses Net Fixed maturities $ 9,059 $ — $ 9,059 Other investments — ( 184 ) ( 184 ) Net realized gains (losses) on investment $ 9,059 $ ( 184 ) $ 8,875 For the Three Months Ended June 30, 2019 Gross gains Gross losses Net Fixed maturities $ 25,436 $ ( 1,501 ) $ 23,935 Other investments 151 — 151 Net realized gains (losses) on investment $ 25,587 $ ( 1,501 ) $ 24,086 For the Six Months Ended June 30, 2020 Gross gains Gross losses Net AFS fixed maturities $ 19,991 $ ( 1 ) $ 19,990 Other investments 107 ( 184 ) ( 77 ) Net realized gains (losses) on investment $ 20,098 $ ( 185 ) $ 19,913 For the Six Months Ended June 30, 2019 Gross gains Gross losses Net AFS fixed maturities $ 27,860 $ ( 14,881 ) $ 12,979 Other investments 151 ( 145 ) 6 Net realized gains (losses) on investment $ 28,011 $ ( 15,026 ) $ 12,985 Proceeds from sales of fixed maturities were $ 181,030 and $ 405,501 for the three and six months ended June 30, 2020 , respectively ( 2019 - $ 625,254 and $ 709,615 , respectively). Net unrealized gains on investments were as follows at June 30, 2020 and December 31, 2019 , respectively: June 30, 2020 December 31, 2019 Fixed maturities $ 17,266 $ 22,092 Deferred income tax ( 82 ) ( 96 ) Net unrealized gains, net of deferred income tax $ 17,184 $ 21,996 Change, net of deferred income tax $ ( 4,812 ) $ 81,758 19 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 4. Investments (continued) e) Restricted Cash and Cash Equivalents and Investments The Company is required to provide collateral for its reinsurance liabilities under various reinsurance agreements and utilizes trust accounts to collateralize business with reinsurance counterparties. The assets in trust as collateral are primarily cash and highly rated fixed maturities. The fair values of these restricted assets were as follows at June 30, 2020 and December 31, 2019 : June 30, 2020 December 31, 2019 Restricted cash – third party agreements $ 22,652 $ 21,447 Restricted cash – related party agreements 58,218 37,634 Total restricted cash 80,870 59,081 Restricted investments – in trust for third party agreements at fair value ( amortized cost: 2020 – $59,951; 2019 – $65,539) 60,082 65,678 Restricted investments – in trust for related party agreements at fair value (amo rtized cost: 2020 – $1,050,781; 2019 – $1,366,873) 1,066,310 1,382,994 Restricted investments – liability for investments purchased for related party agreements (1) ( 31,997 ) — Total restricted investments 1,094,395 1,448,672 Total restricted cash and investments $ 1,175,265 $ 1,507,753 (1) $ 31,997 of the restricted cash held for related party agreements as of June 30, 2020 was used to settle the liability for investments purchased of $ 44,996 as of June 30, 2020 subsequent to the quarter end. 5. Fair Value of Financial Instruments (a) Fair Values of Financial Instruments Fair Value Measurements — Accounting Standards Codification ("ASC") Topic 820, "Fair Value Measurements and Disclosures" ("ASC 820") defines fair value as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between open market participants at the measurement date. Additionally, ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy is broken down into three levels based on the reliability of inputs as follows: • Level 1 — Valuations based on unadjusted quoted market prices for identical assets or liabilities that we have the ability to access. Because valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Examples of assets and liabilities utilizing Level 1 inputs include: U.S. Treasury bonds; • Level 2 — Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets, or valuations based on models where the significant inputs are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severities, etc.) or can be corroborated by observable market data. Examples of assets and liabilities utilizing Level 2 inputs include: U.S. government-sponsored agency securities; non-U.S. government and supranational obligations; commercial mortgage-backed securities ("CMBS"); collateralized loan obligations ("CLO"); corporate and municipal bonds; and • Level 3 — Valuations based on models where significant inputs are not observable. The unobservable inputs reflect our own assumptions about assumptions that market participants would use. Examples of assets and liabilities utilizing Level 3 inputs include: an investment in preference shares of a start-up insurance producer. The availability of observable inputs can vary and is affected by a wide variety of factors, including, for example, the type of financial instrument, whether the financial instrument is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires significantly more judgment. Accordingly, the degree of judgment exercised by management in determining fair value is greatest for instruments categorized in Level 3. We use prices and inputs that are current at the measurement date. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified between levels. For investments that have quoted market prices in active markets, the Company uses the quoted market prices as fair value and includes these in the Level 1 hierarchy. The Company receives the quoted market prices from a third party nationally recognized provider ("the Pricing Service"). When quoted market prices are unavailable, the Company utilizes the Pricing Service to determine an estimate of fair value. The fair value estimates are included in the Level 2 hierarchy. The Company will challenge any prices for its investments which are considered not to be representative of fair value. If quoted market prices and an estimate from the Pricing Service are unavailable, the Company produces an estimate of fair value based on dealer quotations for recent activity in positions with the same or similar characteristics to that being valued. The Company determines whether the fair value estimate 20 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 5. Fair Value of Financial Instruments (continued) is in the Level 2 or Level 3 hierarchy depending on the level of observable inputs available when estimating the fair value. The Company bases its estimates of fair values for assets on the bid price as it represents what a third party market participant would be willing to pay in an orderly transaction. ASC 825, "Disclosure About Fair Value of Financial Instruments" , requires all entities to disclose the fair value of their financial instruments, both assets and liabilities recognized and not recognized in the balance sheet, for which it is practicable to estimate fair value. The following describes the valuation techniques used by the Company to determine the fair value of financial instruments held at June 30, 2020 and December 31, 2019 . U.S. government and U.S. agency — Bonds issued by the U.S. Treasury, the Federal Home Loan Bank, the Federal Home Loan Mortgage Corporation, Government National Mortgage Association, Federal National Mortgage Association and the Federal Farm Credit Banks Funding Corporation. The fair values of U.S. treasury bonds are based on quoted market prices in active markets, and are included in the Level 1 fair value hierarchy. We believe the market for U.S. treasury bonds is an actively traded market given the high level of daily trading volume. The fair values of U.S. agency bonds are determined using the spread above the risk-free yield curve. As the yields for the risk-free yield curve and the spreads for these securities are observable market inputs, the fair values of U.S. agency bonds are included in the Level 2 fair value hierarchy. Non-U.S. government and supranational bonds — These securities are generally priced by independent pricing services. The Pricing Service may use current market trades for securities with similar quality, maturity and coupon. If no such trades are available, the Pricing Service typically uses analytical models which may incorporate spreads, interest rate data and market/sector news. As the significant inputs used to price non-U.S. government and supranational bonds are observable market inputs, the fair values of non-U.S. government and supranational bonds are included in the Level 2 fair value hierarchy. Asset-backed securities — These securities comprise CMBS and CLO originated by a variety of financial institutions that on acquisition are rated BBB-/Baa3 or higher. These securities are priced by independent pricing services and brokers. The pricing provider applies dealer quotes and other available trade information, prepayment speeds, yield curves and credit spreads to the valuation. As the significant inputs used to price the CMBS and CLO are observable market inputs, the fair value of the CMBS and CLO securities are included in the Level 2 fair value hierarchy. Corporate and municipal bonds — Bonds issued by corporations, U.S. state and municipality entities or agencies that on acquisition are rated BBB-/Baa3 or higher. These securities are generally priced by independent pricing services. The credit spreads are sourced from broker/dealers, trade prices and the new issue market. Where pricing is unavailable from pricing services, custodian pricing or non-binding quotes are obtained from broker-dealers to estimate fair values. As the significant inputs used to price corporate and municipal bonds are observable market inputs, the fair values are included in the Level 2 fair value hierarchy. Other investments — Includes unquoted investments comprised of investments in limited partnerships and other investments which includes investments in special purpose vehicles focused on lending activities as well as investments in start-up insurance entities. The fair values of the limited partnerships are determined by the fund manager based on recent filings, operating results, balance sheet stability, growth and other business and market sector fundamentals. The fair value of these investments are measured using the NAV practical expedient and therefore have not been categorized within the fair value hierarchy. If there is a reporting lag between the current period end and reporting date of the latest available fund valuation, fair values are estimated by starting with the most recently available valuation and adjusting for return estimates as well as any subscriptions and distributions that took place during the current period. The investments made by SPVs focused on lending activities are carried at cost less impairment, if any, with any indication of impairment recognized in income when determined. As these investments are carried at cost, they are not included in the fair value hierarchy below. The fair value of the start-up insurance entities are determined using recent private market transactions and as such, the fair value of these investments are included in the Level 3 fair value hierarchy. Cash and cash equivalents (including restricted amounts), accrued investment income, reinsurance balances receivable, and certain other assets and liabilities — The carrying values reported in the Condensed Consolidated Balance Sheets for these financial instruments approximate their fair value due to their short term nature and are classified within the Level 2 fair value hierarchy. Loan to related party, reinsurance recoverable on unpaid losses, and funds withheld receivable — The carrying values reported in the Condensed Consolidated Balance Sheets for these financial instruments approximate their fair value and are included in the Level 2 fair value hierarchy. Senior notes — The carrying value for these financial instruments represents the principal value of the notes less any unamortized issuance costs. As these notes are presented at carrying value, they are not included in the fair value hierarchy below. (b) Fair Value Hierarchy The Company’s estimates of fair value for financial assets and financial liabilities are based on the framework established in ASC 820. The framework is based on the inputs used in valuation and gives the highest priority to quoted prices in active markets and requires that observable inputs be used in the valuations when available. The disclosure of fair value estimates in the ASC 820 hierarchy is based on whether the significant inputs into the valuation are observable. In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs that reflect the Company’s significant market assumptions. 21 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 5. Fair Value of Financial Instruments (continued) At June 30, 2020 and December 31, 2019 , the Company classified its financial instruments measured at fair value on a recurring basis in the following valuation hierarchy: June 30, 2020 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value Based on NAV Practical Expedient Total Fair Value Fixed maturities U.S. treasury bonds $ 211,183 $ — $ — $ — $ 211,183 U.S. agency bonds – mortgage-backed — 435,383 — — 435,383 Non-U.S. government and supranational bonds — 7,565 — — 7,565 Asset-backed securities — 184,010 — — 184,010 Corporate bonds — 601,422 — — 601,422 Other investments — — 2,800 2,908 5,708 Total $ 211,183 $ 1,228,380 $ 2,800 $ 2,908 $ 1,445,271 As a percentage of total assets 6.6 % 38.2 % 0.1 % 0.1 % 45.0 % December 31, 2019 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value Based on NAV Practical Expedient Total Fair Value Fixed maturities U.S. treasury bonds $ 95,625 $ — $ — $ — $ 95,625 U.S. agency bonds – mortgage-backed — 538,722 — — 538,722 Non-U.S. government and supranational bonds — 11,999 — — 11,999 Asset-backed securities — 188,170 — — 188,170 Corporate bonds — 996,856 — — 996,856 Municipal bonds — 4,146 — — 4,146 Other investments — — 1,800 3,077 4,877 Total $ 95,625 $ 1,739,893 $ 1,800 $ 3,077 $ 1,840,395 As a percentage of total assets 2.7 % 48.8 % 0.1 % 0.1 % 51.7 % The Company utilizes the Pricing Service to assist in determining the fair value of its investments; however, management is ultimately responsible for all fair values presented in the Company’s financial statements. This includes responsibility for monitoring the fair value process, ensuring objective and reliable valuation practices and pricing of assets and liabilities and pricing sources. The Company analyzes and reviews the information and prices received from the Pricing Service to ensure that the prices represent a reasonable estimate of the fair value. The Pricing Service was utilized to estimate fair value measurements for 99.6 % and 99.7 % of our fixed maturities at June 30, 2020 and December 31, 2019 , respectively. The Pricing Service utilizes market quotations for fixed maturity securities that have quoted market prices in active markets. Because fixed maturities other than U.S. treasury bonds generally do not trade actively on a daily basis, the Pricing Service prepares estimates of fair value measurements using relevant market data, benchmark curves, sector groupings and matrix pricing and these have been classified as Level 2 within the fair value hierarchy. At June 30, 2020 and December 31, 2019 , 0.4 % and 0.3 % , respectively, of the Level 2 fixed maturities are valued using the market approach. At June 30, 2020 and December 31, 2019 , one security or $ 5,491 and $ 5,481 , respectively, of Level 2 fixed maturities, was priced using a quotation from a broker and/or custodian as opposed to the Pricing Service due to lack of information available. At June 30, 2020 and December 31, 2019 , the Company has not adjusted any pricing provided to it based on the review performed by its investment managers. During the year ended December 31, 2019 , the Company transferred its investment in special purpose vehicles focused on lending activities out of Level 3 within the fair value hierarchy due to a change in accounting policy to report these investments at cost less any impairment instead of fair market value. There were no other transfers to or from Level 3 during the periods represented by these Condensed Consolidated Financial Statements. 22 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 5. Fair Value of Financial Instruments (continued) (c) Level 3 Financial Instruments At June 30, 2020 , the Company has other investments of $ 2,800 (December 31, 2019 - $ 1,800 ) which includes investments in start-up insurance entities. Due to significant unobservable inputs in these valuations, the Company classifies the fair value estimate of these other investments as Level 3 within the fair value hierarchy. (d) Financial Instruments not measured at Fair Value The following table presents the respective carrying value and fair value for the financial instruments not measured at fair value on the Condensed Consolidated Balance Sheets as at June 30, 2020 and December 31, 2019 , respectively: June 30, 2020 December 31, 2019 Carrying Value Fair Value Carrying Value Fair Value Financial Assets Other investments in SPV related to lending activities $ 30,346 $ 42,382 $ 26,871 $ 42,156 Financial Liabilities Senior Notes - MHLA – 6.625% $ 110,000 $ 84,700 $ 110,000 $ 86,460 Senior Notes - MHNC – 7.75% 152,500 134,810 152,500 137,067 Total financial liabilities $ 262,500 $ 219,510 $ 262,500 $ 223,527 The fair value of other investments in SPV related to lending activities was determined using internally developed discounted cash flow models and therefore are included in the Level 3 fair value hierarchy. The fair values of the Senior Notes are based on indicative market pricing obtained from a third-party service provider and therefore are included in the Level 2 fair value hierarchy. 23 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 6. Discontinued Operations Sale of U.S. Treaty Reinsurance operations As described in Part II of our Annual Report on Form 10-K for the year ended December 31, 2019 , the Company entered into a renewal rights transaction with Transatlantic Reinsurance Company on August 29, 2018 and subsequently sold Maiden US on December 27, 2018 to Enstar. Maiden US was a substantial portion of the Diversified Reinsurance segment; therefore the Company concluded that the sale represented a strategic shift that has a major effect on its ongoing operations and financial results and that all of the held for sale criteria were met. Accordingly, all transactions related to the U.S. treaty reinsurance operations are reported and presented as part the results from discontinued operations in the Condensed Consolidated Statements of Income. As described in Part II of our Annual Report on Form 10-K for the year ended December 31, 2019 , Cavello Bay Reinsurance Limited ("Cavello"), Enstar’s Bermuda reinsurance affiliate, and Maiden Reinsurance entered into a retrocession agreement pursuant to which certain assets and liabilities associated with the U.S. treaty reinsurance business held by Maiden Reinsurance were retroceded to Cavello on December 27, 2018. As at December 31, 2018 , the assets and liabilities related to this business including the retrocession agreement were classified as held for sale, however, a decision was made to reclassify them as it is now considered unlikely that these reserves will be novated in the foreseeable future; therefore, there are no remaining assets and liabilities classified as held for sale as at June 30, 2020 and December 31, 2019 . The following table summarizes the major classes of items constituting the net loss from discontinued operations for the three and six months ended June 30, 2019 presented in the unaudited Condensed Consolidated Statements of Income: For the Three Months Ended June 30, For the Six Months Ended June 30, 2019 2019 Net loss and loss adjustment expenses $ 6,363 $ 6,363 General and administrative expenses ( 1,506 ) ( 1,843 ) Income from discontinued operations before income tax 4,857 4,520 Loss on disposal of discontinued operations ( 23,077 ) ( 25,474 ) Income tax expense ( 1,169 ) ( 1,169 ) Loss from discontinued operations, net of income tax $ ( 19,389 ) $ ( 22,123 ) As a result of the Settlement and Commutation Agreement entered into by Maiden and Enstar on July 31, 2019, Maiden recorded an additional loss from discontinued operations of $ 16,715 for the three and six months ended June 30, 2019 . 24 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 7. Long-Term Debt Senior Notes At June 30, 2020 and December 31, 2019 , both Maiden Holdings and its wholly owned subsidiary, Maiden NA, have outstanding publicly-traded senior notes which were issued in 2016 (" 2016 Senior Notes ") and 2013 (" 2013 Senior Notes "), respectively (collectively "Senior Notes"). The 2013 Senior Notes issued by Maiden NA are fully and unconditionally guaranteed by Maiden Holdings. The Senior Notes are unsecured and unsubordinated obligations of the Company. The following tables detail the issuances of Senior Notes outstanding at June 30, 2020 and December 31, 2019 : June 30, 2020 2016 Senior Notes 2013 Senior Notes Total Principal amount $ 110,000 $ 152,500 $ 262,500 Less: unamortized issuance costs 3,541 3,943 7,484 Carrying value $ 106,459 $ 148,557 $ 255,016 December 31, 2019 2016 Senior Notes 2013 Senior Notes Total Principal amount $ 110,000 $ 152,500 $ 262,500 Less: unamortized issuance costs 3,565 4,027 7,592 Carrying value $ 106,435 $ 148,473 $ 254,908 Other details: Original debt issuance costs $ 3,715 $ 5,054 Maturity date June 14, 2046 December 1, 2043 Earliest redeemable date (for cash) June 14, 2021 December 1, 2018 Coupon rate 6.625 % 7.75 % Effective interest rate 7.07 % 8.04 % The interest expense incurred on the Senior Notes for the three and six months ended June 30, 2020 was $ 4,776 and $ 9,553 , respectively ( 2019 - $ 4,777 and $ 9,553 , respectively), of which $ 1,342 was accrued at both June 30, 2020 and December 31, 2019 , respectively. The issuance costs related to the Senior Notes were capitalized and are being amortized over the effective life of the Senior Notes. The amortization expense for the three and six months ended June 30, 2020 was $ 54 and $ 108 , respectively ( 2019 - $ 53 and $ 106 , respectively). Under the terms of the 2013 Senior Notes , the 2013 Senior Notes can be redeemed, in whole or in part after December 1, 2018 at Maiden NA's option at any time and from time to time, until maturity at a redemption price equal to 100 % of the principal amount of the notes to be redeemed plus accrued but unpaid interest on the principal amount being redeemed to, but not including, the redemption date. Maiden NA is required to give at least thirty and not more than sixty days notice prior to the redemption date. 25 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 8. Reinsurance The Company uses reinsurance and retrocessional agreements ("ceded reinsurance") to mitigate volatility, reduce its exposure to certain risks and provide capital support. Ceded reinsurance provides for the recovery of a portion of loss and LAE under certain circumstances without relieving the Company of its obligations to the policyholders. The Company remains liable to the extent that any of its reinsurers or retrocessionaires fails to meet their obligations. Loss and LAE incurred and premiums earned are reported after deduction for ceded reinsurance. In the event that one or more of our reinsurers or retrocessionaires are unable to meet their obligations under these agreements, the Company would not realize the full value of the reinsurance recoverable balances. The effect of ceded reinsurance on net premiums written and earned and on net loss and LAE for the six months ended June 30, 2020 and 2019 was as follows: For the Six Months Ended June 30, 2020 2019 Premiums written Direct $ 10,218 $ 9,443 Assumed 6,498 ( 568,465 ) Ceded ( 2,254 ) ( 2,917 ) Net $ 14,462 $ ( 561,939 ) Premiums earned Direct $ 9,719 $ 8,170 Assumed 44,631 310,749 Ceded ( 1,827 ) ( 1,831 ) Net $ 52,523 $ 317,088 Loss and LAE Gross loss and LAE $ 32,452 $ 274,543 Loss and LAE ceded ( 358 ) ( 293 ) Net $ 32,094 $ 274,250 The Company's reinsurance recoverable on unpaid losses balance as at June 30, 2020 was $ 617,496 ( December 31, 2019 - $ 623,422 ) presented in the Condensed Consolidated Balance Sheets. At June 30, 2020 and December 31, 2019 , the Company had no valuation allowance against reinsurance recoverable on unpaid losses. As discussed in "Note 1. Organization" , on December 27, 2018, Cavello and Maiden Reinsurance entered into a retrocession agreement pursuant to which certain assets and liabilities associated with the U.S. treaty reinsurance business held by Maiden Reinsurance were retroceded to Cavello in exchange for a ceding commission. The balance of reinsurance recoverable on unpaid losses due from Cavello under this retrocession agreement was $ 58,182 at June 30, 2020 ( December 31, 2019 - $ 62,699 ). On July 31, 2019, Maiden Reinsurance and Cavello entered into the LPT/ADC Agreement, pursuant to which Cavello assumed the loss reserves as of December 31, 2018 associated with the AmTrust Quota Share in excess of a $ 2,178,535 retention up to $ 600,000 , in exchange for a retrocession premium of $ 445,000 . The $ 2,178,535 retention is subject to adjustment for paid losses subsequent to December 31, 2018 . Please see " Note 1. Basis of Presentation " for further details. The LPT/ADC Agreement provides Maiden Reinsurance with $ 155,000 in adverse development cover over its carried AmTrust Quota Share loss reserves at December 31, 2018 . The LPT/ADC Agreement meets the criteria for risk transfer and is thus accounted for as retroactive reinsurance. Cumulative ceded losses exceeding $ 445,000 are recognized as a deferred gain liability and amortized into income over the settlement period of the ceded reserves in proportion to cumulative losses collected over the estimated ultimate reinsurance recoverable. The amount of the deferral is recalculated each period based on loss payments and updated estimates. Consequently, cumulative adverse development subsequent to December 31, 2018 may result in significant losses from operations until periods when the deferred gain is recognized as a benefit to earnings. As of June 30, 2020 , the reinsurance recoverable on unpaid losses under the retroactive reinsurance agreement were $ 556,540 while the deferred gain liability was $ 111,540 ( December 31, 2019 - $ 557,950 and $ 112,950 , respectively). Amortization of the deferred gain will not occur until paid losses have exceeded the minimum retention under the LPT/ADC Agreement, which is estimated to be in 2024 . Cavello has provided collateral in the form of a letter of credit in the amount of $ 445,000 to AmTrust under the LPT/ADC Agreement and Cavello is subject to additional collateral funding requirements as explained in "Note 10. Related Party Transactions" . Under the terms of the LPT/ADC Agreement, the covered losses associated with the Commutation and Release Agreement with AmTrust are eligible to be covered but recoverable only when such losses are paid or settled by AII or its affiliates, provided such losses and other related amounts shall not exceed $ 312,786 . Cavello's parent company, Enstar, has credit ratings of BBB from both Standard &Poor's and Fitch Ratings at June 30, 2020 . 26 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 9. Reserve for Loss and Loss Adjustment Expenses The Company uses both historical experience and industry-wide loss development factors to provide a reasonable basis for estimating future losses. In the future, certain events may be beyond the control of management, such as changes in law, judicial interpretations of law, and rates of inflation, which may favorably or unfavorably impact the ultimate settlement of the Company’s loss and LAE reserves. The anticipated effect of inflation is implicitly considered when estimating liabilities for loss and LAE. While anticipated changes in claim costs due to inflation are considered in estimating the ultimate claim costs, changes in average severity of claims are caused by a number of factors that vary with the individual type of policy written. Ultimate losses are projected based on historical trends adjusted for implemented changes in underwriting standards, claims handling, policy provisions, and general economic trends. Those anticipated trends are monitored based on actual development and are modified if necessary. The reserving process begins with the collection and analysis of paid losses and incurred claims data for each of the Company's contracts. While reserves are mostly reviewed on a contract by contract basis, paid loss and incurred claims data is also aggregated into reserving segments. The segmental data is disaggregated by reserving class and further disaggregated by either accident year (i.e. the year in which the loss event occurred) or by underwriting year (i.e. the year in which the contract generating the premium and losses incepted). The Company in some cases uses underwriting year information to analyze the Diversified Reinsurance segment and subsequently allocate reserves to the respective accident years. The reserve for loss and LAE consists of: June 30, 2020 December 31, 2019 Reserve for reported loss and LAE $ 1,114,598 $ 1,271,358 Reserve for losses incurred but not reported ("IBNR") 956,624 1,168,549 Reserve for loss and LAE $ 2,071,222 $ 2,439,907 The following table represents a reconciliation of our beginning and ending gross and net loss and LAE reserves: For the Six Months Ended June 30, 2020 2019 Gross loss and LAE reserves, January 1 $ 2,439,907 $ 3,126,134 Less: reinsurance recoverable on unpaid losses, January 1 623,422 71,901 Net loss and LAE reserves, January 1 1,816,485 3,054,233 Net incurred losses related to: Current year 32,687 240,978 Prior years ( 593 ) 33,272 32,094 274,250 Net paid losses related to: Current year ( 1,832 ) ( 3,186 ) Prior years ( 387,023 ) ( 272,136 ) ( 388,855 ) ( 275,322 ) Effect of foreign exchange rate movements ( 5,998 ) ( 3,880 ) Net loss and LAE reserves, June 30 1,453,726 3,049,281 Reinsurance recoverable on unpaid losses, June 30 617,496 67,304 Gross loss and LAE reserves, June 30 $ 2,071,222 $ 3,116,585 Prior period development arises from changes to loss estimates recognized in the current year that relate to loss reserves in previous calendar years. The favorable or unfavorable development reflects changes in management's best estimate of the ultimate losses under the relevant reinsurance policies after considerable review of changes in actuarial assessments. During the three and six months ended June 30, 2020 , the Company recognized net favorable prior year loss development of $ 60 and $ 593 , respectively ( 2019 - adverse $ 26,014 and $ 33,272 , respectively). In the Diversified Reinsurance segment, net prior year loss development was adverse $ 362 and favorable $ 171 for the three and six months ended June 30, 2020 , respectively ( 2019 - favorable $ 1,052 and $ 2,148 , respectively). Prior year loss development for the six months ended June 30, 2020 was primarily due to favorable reserve development in German Auto Programs partly offset by adverse development in specific German Auto Programs for the three months ended June 30, 2020 . The favorable loss development for the same respective periods in 2019 was largely due to favorable development in German Auto Programs and facultative reinsurance run-off lines. 27 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 9. Reserve for Loss and Loss Adjustment Expenses (continued) In the AmTrust Reinsurance segment, the net favorable prior year loss development was $ 422 for the three and six months ended June 30, 2020 , respectively ( 2019 - adverse $ 27,090 and $ 35,216 , respectively). The net favorable prior year loss development for the three and six months ended June 30, 2020 was primarily due to favorable development in Workers Compensation partly offset by adverse development within Commercial General Liability programs. The net adverse development in the three and six months ended June 30, 2019 was primarily driven by Commercial Auto Liability in accident years 2015 to 2018, partly offset by favorable development in Workers Compensation. The Other category had net favorable prior year loss development of $ 24 and net adverse prior year loss development of $ 204 for the three and six months ended June 30, 2019 due to increased reserves in the run-off of the NGHC Quota Share. This contract was commuted in November 2019. 10. Related Party Transactions The Founding Shareholders of the Company were Michael Karfunkel, George Karfunkel and Barry Zyskind. Based on each individual's most recent public filing, Leah Karfunkel (wife of the late Michael Karfunkel) owns or controls approximately 7.9 % of the outstanding shares of the Company and Barry Zyskind (the Company's non-executive chairman) owns or controls approximately 7.4 % of the outstanding shares of the Company. George Karfunkel owns or controls less than 5.0 % of the outstanding shares of the Company. Leah Karfunkel and George Karfunkel are directors of AmTrust, and Barry Zyskind is the chief executive officer and chairman of AmTrust. Leah Karfunkel, George Karfunkel and Barry Zyskind own or control approximately 53.4 % of the ownership interests of Evergreen Parent LP, the ultimate parent of AmTrust. AmTrust The following describes transactions between the Company and AmTrust: AmTrust Quota Share Effective July 1, 2007, the Company and AmTrust entered into a master agreement, as amended ("Master Agreement"), by which they caused Maiden Reinsurance, and AmTrust's Bermuda reinsurance subsidiary, AII, to enter into the AmTrust Quota Share by which AII retroceded to Maiden Reinsurance an amount equal to 40 % of the premium written by subsidiaries of AmTrust, net of the cost of unaffiliated inuring reinsurance and 40 % of losses. The Master Agreement further provided that AII receive a ceding commission of 31 % of ceded written premiums. On June 11, 2008, Maiden Reinsurance and AII amended the AmTrust Quota Share to add Retail Commercial Package Business to the Covered Business. AII receives a ceding commission of 34.375 % on Retail Commercial Package Business. On July 1, 2016, the agreement was renewed through June 30, 2019. Effective July 1, 2018, the amount AEL ceded to Maiden Reinsurance was reduced to 20 % . Effective July 1, 2013, for the Specialty Program portion of Covered Business only, AII was responsible for ultimate net loss otherwise recoverable from Maiden Reinsurance to the extent that the loss ratio to Maiden Reinsurance, which shall be determined on an inception to date basis from July 1, 2007 through the date of calculation, is between 81.5 % and 95 % ("Loss Corridor"). Above and below the Loss Corridor, Maiden Reinsurance continued to reinsure losses at its proportional 40 % share of the AmTrust Quota Share. Effective July 31, 2019, the Loss Corridor was amended such that the maximum amount covered is $ 40,500 , the amount calculated by Maiden Reinsurance for the Loss Corridor coverage as of June 30, 2019 . Any development above this maximum amount will be subject to the coverage of the LPT/ADC Agreement. Please refer to Note 1. "Basis of Presentation" for additional information . Effective January 1, 2019, Maiden Reinsurance and AII entered into the Partial Termination Amendment which amended the AmTrust Quota Share. The Partial Termination Amendment provided for the cut-off of the ongoing and unearned premium of AmTrust’s Small Commercial Business, comprising workers’ compensation, general liability, umbrella liability, professional liability (including cyber liability) insurance coverages, and U.S. Specialty Risk and Extended Warranty ("Terminated Business") as of December 31, 2018 . Under the Partial Termination Amendment, the ceding commission payable by Maiden Reinsurance for its remaining in-force business immediately prior to January 1, 2019 increased by five percentage points with respect to in-force remaining business (excluding Terminated Business) and related unearned premium as of January 1, 2019. The Partial Termination Amendment resulted in Maiden Reinsurance returning $ 647,980 in unearned premium to AII, or $ 436,760 net of applicable ceding commission and brokerage as calculated during the second quarter of 2019. Subsequently, on January 30, 2019, Maiden Reinsurance and AII agreed to terminate the remaining business subject to the AmTrust Quota Share on a run-off basis effective as of January 1, 2019. Effective July 31, 2019, Maiden Reinsurance and AII entered into a Commutation and Release Agreement which provided for AII to assume all reserves ceded by AII to Maiden Reinsurance with respect to its proportional 40 % share of the ultimate net loss under the AmTrust Quota Share related to the Commuted Business. Please refer to Note 1 "Basis of Presentation" f or additional information. AII and Maiden Reinsurance also agreed that, as of July 31, 2019, the AmTrust Quota Share shall be deemed amended as applicable so that the Commuted Business is no longer included as part of the Covered Business under the AmTrust Quota Share. On January 30, 2019, in connection with the termination of the reinsurance agreement described above, the Company and AmTrust entered into a second amendment to the Master Agreement between the parties, originally entered into on July 3, 2007, to remove the provisions requiring AmTrust to reinsure business with the Company. 28 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 10. Related Party Transactions (continued) European Hospital Liability Quota Share Effective April 1, 2011, Maiden Reinsurance entered into the European Hospital Liability Quota Share with AEL and AIU DAC, both wholly owned subsidiaries of AmTrust. Pursuant to the terms of the European Hospital Liability Quota Share, Maiden Reinsurance assumed 40 % of the premiums and losses related to policies classified as European Hospital Liability, including associated liability coverages and policies covering physician defense costs, written or renewed on or after April 1, 2011. The European Hospital Liability Quota Share also covers policies written or renewed on or before March 31, 2011, but only with respect to losses that occur, accrue or arise on or after April 1, 2011. The maximum limit of liability attaching shall be € 5,000 ( € 10,000 effective January 1, 2012) or currency equivalent (on a 100 % basis) per original claim for any one original policy. Maiden Reinsurance paid a ceding commission of 5 % on contracts assumed under the European Hospital Liability Quota Share. Effective July 1, 2016, the European Hospital Liability Quota Share was amended such that Maiden Reinsurance assumes from AEL 32.5 % of the premiums and losses of all policies written or renewed on or after July 1, 2016 until June 30, 2017 and 20 % of all policies written or renewed on or after July 1, 2017. Subsequently, on January 30, 2019, Maiden Reinsurance, AEL and AIU DAC agreed to terminate the European Hospital Liability Quota Share on a run-off basis effective as of January 1, 2019. The table below shows the effect of both of these quota share arrangements with AmTrust on the Company's Condensed Consolidated Income Statements for the three and six months ended June 30, 2020 and 2019 , respectively: For the Three Months Ended June 30, For the Six Months Ended June 30, 2020 2019 2020 2019 Gross and net premiums written $ ( 4,705 ) $ ( 9,127 ) $ ( 4,705 ) $ ( 585,604 ) Net premiums earned 9,540 111,833 28,224 269,963 Net loss and LAE ( 4,970 ) ( 109,091 ) ( 19,015 ) ( 247,035 ) Commission expenses ( 3,780 ) ( 41,509 ) ( 10,774 ) ( 101,865 ) Collateral provided to AmTrust a) AmTrust Quota Share To provide AmTrust's U.S. insurance subsidiaries with credit for reinsurance on their statutory financial statements, AII, as the direct reinsurer of AmTrust's insurance subsidiaries, established trust accounts ("Trust Accounts") for their benefit. Maiden Reinsurance has agreed to provide appropriate collateral to secure its proportional share under the AmTrust Quota Share of AII's obligations to the AmTrust subsidiaries to whom AII is required to provide collateral. This collateral may be in the form of (a) assets loaned by Maiden Reinsurance to AII for deposit into the Trust Accounts, pursuant to a loan agreement between those parties, (b) assets transferred by Maiden Reinsurance for deposit into the Trust Accounts, or (c) a letter of credit obtained by Maiden Reinsurance and delivered to an AmTrust subsidiary on AII's behalf. Maiden Reinsurance may provide any or a combination of these forms of collateral, provided that the aggregate value thereof equals Maiden Reinsurance's proportionate share of its obligations under the AmTrust Quota Share. Maiden Reinsurance satisfied its collateral requirements under the AmTrust Quota Share with AII as follows: • by lending funds in the amount of $ 167,975 at June 30, 2020 and December 31, 2019 pursuant to a loan agreement entered into between those parties. Advances under the loan are secured by promissory notes. This loan was assigned by AII to AmTrust effective December 31, 2014 and is carried at cost. Interest is payable at a rate equivalent to the Federal Funds Effective Rate ("Fed Funds") plus 200 basis points per annum. Please see "Note 4. (c) Investments" for the total amount of interest earned from this loan. The interest income on the loan was $ 860 and $ 2,225 for the three and six months ended June 30, 2020 , respectively ( 2019 - $ 1,842 and $ 3,664 , respectively) and the effective yield was 2.0 % and 2.6 % for the same respective periods ( 2019 - 4.4 % and 4.4 % ). On January 30, 2019, in connection with the termination of the reinsurance agreements described above, the Company and AmTrust entered into an amendment to the Loan Agreement between Maiden Reinsurance, AmTrust and AII, originally entered into on November 16, 2007, extending the maturity date to January 1, 2025 and acknowledges that due to the termination of the AmTrust Quota Share, no further loans or advances may be made pursuant to the Loan Agreement; • effective December 1, 2008, the Company entered into a Reinsurer Trust Assets Collateral agreement to provide to AII sufficient collateral to secure its proportional share of AII's obligations to the U.S. AmTrust subsidiaries. The amount of the collateral at June 30, 2020 was $ 861,978 (December 31, 2019 - $ 1,155,955 ) and the accrued interest was $ 3,273 (December 31, 2019 - $ 7,366 ). Please refer to "Note 4. (e) Investments" for additional information; • on January 11, 2019, a portion of the existing trust accounts used for collateral on the AmTrust Quota Share were converted to a funds withheld arrangement. The Company transferred cash and investments of $ 575,000 to AmTrust as a funds withheld receivable which initially had an annual interest rate of 3.5 % , subject to annual adjustment. The annual interest rate was adjusted to 2.65 % for the three and six months ended June 30, 2020 . At June 30, 2020 , the balance of funds withheld was $ 575,000 (December 31, 2019 - $ 575,000 ) and the accrued interest was $ 3,803 (December 31, 2019 - $ 5,073 ). The interest income on the funds withheld receivable was $ 3,806 and $ 7,606 for the three and six months ended June 30, 2020 , respectively ( 2019 - $ 5,017 and $ 9,443 , respectively). 29 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 10. Related Party Transactions (continued) Pursuant to the terms of the LPT/ADC Agreement, Maiden Reinsurance, Cavello and AmTrust and certain of its affiliated companies entered into a Master Collateral Agreement (“MCA”) to define and enable the operation of collateral provided under the AmTrust Quota Share. Under the MCA, Cavello provided letters of credit on behalf of Maiden Reinsurance to AmTrust in an amount representing Cavello’s obligations under the LPT/ADC Agreement. Because these letters of credit replaced other collateral previously provided directly by Maiden Reinsurance to AmTrust, the MCA coordinates the collateral protection that will be provided to AmTrust to ensure that no gaps in collateral funding occur by operation of the LPT/ADC Agreement and related MCA. As a result of entering into both the LPT/ADC Agreement and the MCA, certain post-termination endorsements (“PTEs”) to the AmTrust Quota Share between AII and Maiden Reinsurance were required. Effective July 31, 2019, the PTEs: i) enable the operation of both the LPT/ADC Agreement and MCA by making provision for certain forms of collateral, including letters of credit provided by Cavello on Maiden Reinsurance’s behalf, and further defines the permitted use and return of collateral; and ii) increase the required funding percentage for Maiden Reinsurance under the collateral arrangements between the parties to 105 % of its obligations, subject to a minimum excess funding requirement of $ 54,000 , as may be mutually amended by the parties from time to time. Under certain defined conditions, Maiden Reinsurance may be required to increase this funding percentage to 110 % . Effective March 16, 2020, Maiden Reinsurance discontinued as a Bermuda company and completed its re-domestication to the State of Vermont. Bermuda is a Solvency II equivalent jurisdiction and the State of Vermont is not such a jurisdiction; therefore, the collateral provided under the respective agreements with AmTrust subsidiaries was strengthened to reflect the impact of the re-domestication concurrent with the date of Maiden Reinsurance’s re-domestication to Vermont. Maiden Reinsurance and AmTrust agreed to: 1) amend the AmTrust Quota Share pursuant to Post Termination Endorsement No. 2 effective March 16, 2020; and 2) amend the European Hospital Liability Quota Share pursuant to Post Termination Endorsement No. 1 effective March 16, 2020. Pursuant to the terms of Post Termination Endorsement No. 2 to the AmTrust Quota Share, Maiden Reinsurance strengthened the collateral protection provided by Maiden Reinsurance to AII by increasing the required funding percentage for Maiden Reinsurance under the collateral arrangements between the parties to 110 % of its obligations, subject to a minimum excess funding requirement of $ 54,000 , as may be mutually amended by the parties from time to time. Post Termination Endorsement No. 2 also sets forth conditions by which the funding percentage will be reduced and the sequence of how collateral will be utilized as obligations as defined under the AmTrust Quota Share are satisfied. Pursuant to the terms of Post Termination Endorsement No. 1 to the European Hospital Liability Quota Share, Maiden Reinsurance strengthened the collateral protection provided by Maiden Reinsurance to AEL and AIU DAC by increasing the required funding percentage for Maiden Reinsurance under the collateral arrangements between the parties to the greater of 120 % of the Exposure (as defined therein) and the amount of security required to offset the increase in the Solvency Capital Requirement (“SCR”) that results from the changes in the SCR which arise out of Maiden Reinsurance's re-domestication as compared to the SCR calculation if Maiden Reinsurance had remained domesticated in a Solvency II equivalent jurisdiction with a solvency ratio above 100 % and provided collateral equivalent to 100 % of the Exposure. b) European Hospital Liability Quota Share Collateral has been provided to both AEL and AIU DAC under the European Hospital Liability Quota Share. For AEL, the amount of the collateral held in reinsurance trust accounts at June 30, 2020 was $ 219,170 (December 31, 2019 - $ 253,631 ) and the accrued interest was $ 1,764 (December 31, 2019 - $ 1,821 ). For AIU DAC, the Company utilizes funds withheld to satisfy its collateral requirements. At June 30, 2020 , the amount of funds withheld was $ 93,188 ( December 31, 2019 - $ 57,305 ) and the accrued interest was $ 200 ( December 31, 2019 - $ 269 ). AIU DAC pays Maiden Reinsurance a fixed annual interest rate of 0.5 % , on the average daily funds withheld balance which is subject to annual adjustment.The interest income on the funds withheld receivable was $ 127 and $ 198 for the three and six months ended June 30, 2020 , respectively ( 2019 - $ 72 and $ 125 , respectively). Brokerage Agreement Effective July 1, 2007, the Company entered into a reinsurance brokerage agreement with AII Reinsurance Broker Ltd. ("AIIB"), a wholly owned subsidiary of AmTrust. Pursuant to the brokerage agreement, AIIB provided brokerage services relating to the AmTrust Quota Share and the European Hospital Liability Quota Share for a fee equal to 1.25 % of the premium assumed. AIIB was not the Company's exclusive broker. The brokerage agreement was terminated as of March 15, 2019. Maiden Reinsurance recorded $ 119 and $ 353 of reinsurance brokerage expense for the three and six months ended June 30, 2020 , respectively ( 2019 - $ 1,398 and $ 3,375 , respectively) and deferred reinsurance brokerage of $ 1,961 at June 30, 2020 (December 31, 2019 - $ 2,372 ) as a result of this agreement. Asset Management Agreement Effective July 1, 2007, the Company entered into an asset management agreement with AII Insurance Management Limited ("AIIM"), a wholly owned subsidiary of AmTrust, pursuant to which AIIM agreed to provide investment management services to the Company. Effective January 1, 2018, AIIM provides investment management services for a quarterly fee of 0.02125 % of the average value of the account. The agreement may be terminated upon 30 days written notice by either party. The Company recorded $ 350 and $ 750 of investment management fees for the three and six months ended June 30, 2020 , respectively ( 2019 - $ 678 and $ 1,453 , respectively) under this agreement. 30 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 10. Related Party Transactions (continued) Insurance Management Services Agreement Effective August 31, 2019, the Company entered into an agreement with Risk Services - Vermont, Inc. ("Risk Services"), an affiliate of AmTrust. Pursuant to the agreement, Risk Services agreed to provide insurance management services to the Company including regulatory compliance services in connection with the re-domestication, licensing and operation of Maiden Reinsurance in the State of Vermont. The initial term of the agreement is three years and will automatically renew for an additional three years until either party gives written notice of its intention to terminate this agreement at least three months prior to the commencement of the next applicable period. The fee for this agreement was an initial $ 100 retainer for re-domestication services and $ 100 annually and reimbursement for reasonable out-of-pocket expenses incurred by Risk Services pursuant to the terms of the agreement. The Company recorded $ 25 and $ 50 of fees for the three and six months ended June 30, 2020 , respectively. 683 Capital Partners, LP (“683 Partners”) 683 Partners and its affiliates currently own or control approximately 9.2 % of the outstanding common shares of the Company and is thus deemed a related party at June 30, 2020 . 683 Partners and its affiliates also reported that they own Preference Shares of the Company and Senior Notes issued by both Maiden Holdings and Maiden NA. Limited Partnership Agreement with 683 Capital Management, LLC ("683 Capital") In July 2020, the Company and 683 Capital entered into a limited partnership agreement (“683 LP Agreement”) whereby 683 Capital will separately manage certain funds of Maiden Reinsurance at its discretion, subject to guidelines established by the parties. Under the 683 LP Agreement, Maiden Reinsurance will pay 683 Capital a management fee and subject to certain metrics agreed to by the parties, an incentive fee upon attainment of those metrics. Maiden Reinsurance may periodically and in its discretion increase the amount invested under the 683 LP Agreement, and subject to certain conditions, reduce the amount invested under the 683 LP Agreement. 11. Commitments and Contingencies There are no material changes from the commitments, contingencies and concentrations previously disclosed in the Company’s Form 10-K for the year ended December 31, 2019 . a) Concentrations of Credit Risk At June 30, 2020 and December 31, 2019 , the Company’s assets where significant concentrations of credit risk may exist include investments, cash and cash equivalents, loan to related party, reinsurance balances receivable, reinsurance recoverable on unpaid losses and funds withheld receivable. Please refer to " Note 8. Reinsurance " for additional information regarding the Company's credit risk exposure on its reinsurance counterparties including the impact of the LPT/ADC Agreement effective January 1, 2019. The Company requires its reinsurers to have adequate financial strength. The Company evaluates the financial condition of its reinsurers and monitors its concentration of credit risk on an ongoing basis. Provisions are made for amounts considered potentially uncollectible. Letters of credit are provided by its reinsurers for material amounts recoverable as discussed further in " Note 8 — Reinsurance ". The Company manages concentration of credit risk in its investment portfolio through issuer and sector exposure limitations. The Company believes it bears minimal credit risk in its cash on deposit. The Company also monitors the credit risk related to the loan to related party and funds withheld receivable, within which the largest balance is due from AmTrust. AmTrust has a financial strength/credit rating of A- from A.M. Best at June 30, 2020 . To mitigate credit risk, the Company generally has a contractual right of offset thereby allowing claims to be settled net of any premiums or loan receivable. The Company believes these balances as at June 30, 2020 will be fully collectible. b) Operating Lease Commitments The Company leases office spaces, housing, office equipment and company vehicles under various operating leases expiring in various years through 2022 . The Company did not enter into any new lease arrangements during the three and six months ended June 30, 2020 . The Company's leases are all currently classified as operating leases and none of them have non-lease components. For operating leases that have a lease term of more than twelve months, the Company recognized a lease liability and a right-of-use asset in the Company's Condensed Consolidated Balance Sheets at the present value of the remaining lease payments until expiration. As the lease contracts generally do not provide an implicit discount rate, the Company used the weighted-average discount rate of 10 % , representing its secured incremental borrowing rate, in calculating the present value of the lease liability. The exercise of lease renewal options is at the sole discretion of the Company and none of our current lease renewal options are deemed to be reasonably certain to be exercised. The Company has made an accounting policy election not to include renewal, termination, or purchase options that are not reasonably certain of exercise when determining the term of the borrowing. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company's weighted-average remaining lease term is 2.3 years. At June 30, 2020 , the Company's future lease obligations of $ 1,775 ( December 31, 2019 - $ 2,342 ) was calculated based on the present value of future annual rental commitments excluding taxes, insurance and other operating costs for non-cancellable operating leases discounted using its secured incremental borrowing rate. This amount has been recognized on the Condensed Consolidated Balance Sheets as a lease liability of $ 1,775 within accrued expenses and other liabilities with an equivalent amount for the right-of-use asset presented as part of other assets. Under Topic 842, Leases , the Company continues to recognize the related leasing expense on a straight-line basis over the lease term in the Condensed Consolidated Statements of Income. 31 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 11. Commitments and Contingencies (continued) The Company's total lease expense for the three and six months ended June 30, 2020 was $ 449 and $ 859 , respectively ( 2019 - $ 389 and $ 810 , respectively) which was recognized within net income consistent with the accounting treatment in prior periods under Topic 840 . The operating cash outflows from operating leases included in the measurement of the lease liability during the three and six months ended June 30, 2020 was $ 340 and $ 680 , respectively ( 2019 - $ 340 and $ 681 , respectively). The scheduled maturity of the Company's operating lease liabilities are expected to be as follows: June 30, 2020 2020 $ 500 2021 741 2022 741 Discount for present value ( 207 ) Total discounted operating lease liabilities $ 1,775 c) Legal Proceedings Except as noted below, the Company is not a party to any material legal proceedings. From time to time, the Company is subject to routine legal proceedings, including arbitrations, arising in the ordinary course of business. These legal proceedings generally relate to claims asserted by or against the Company in the ordinary course of insurance or reinsurance operations. Based on the Company's opinion, the eventual outcome of these legal proceedings is not expected to have a material adverse effect on its financial condition or results of operations. In April 2009, the Company learned that Bentzion S. Turin, the former Chief Operating Officer, General Counsel and Secretary of Maiden Holdings and Maiden Reinsurance, sent a letter to the U.S. Department of Labor claiming that his employment with the Company was terminated in retaliation for corporate whistle-blowing in violation of the whistle-blower protection provisions of the Sarbanes-Oxley Act of 2002. Mr. Turin alleged that he was terminated for raising concerns regarding corporate governance with respect to the negotiation of the terms of the Trust Preferred Securities Offering. He seeks reinstatement as Chief Operating Officer, General Counsel and Secretary of Maiden Holdings and Maiden Reinsurance, back pay and legal fees incurred. On December 31, 2009, the U.S. Secretary of Labor found no reasonable cause for Mr. Turin’s claim and dismissed the complaint in its entirety. Mr. Turin objected to the Secretary's findings and requested a hearing before an administrative law judge in the U.S. Department of Labor. The Company moved to dismiss Mr. Turin's complaint, and its motion was granted by the Administrative Law Judge on June 30, 2011. On July 13, 2011, Mr. Turin filed a petition for review of the Administrative Law Judge's decision with the Administrative Review Board in the U.S. Department of Labor. On March 29, 2013, the Administrative Review Board reversed the dismissal of the complaint on procedural grounds, and remanded the case to the administrative law judge. The administrative hearing began in September 2014 and concluded in November 2018. The Company believes that it had good and sufficient reasons for terminating Mr. Turin's employment and that the claim is without merit. The Company will continue to vigorously defend itself against this claim. A putative class action complaint was filed against Maiden Holdings, Arturo M. Raschbaum, Karen L. Schmitt, and John M. Marshaleck in the United States District Court for the District of New Jersey on February 11, 2019. On February 19, 2020, the Court appointed lead plaintiffs, and on May 1, 2020, lead plaintiffs filed an amended class action complaint (the “Amended Complaint”).The Amended Complaint asserts violations of Section 10(b) of the Exchange Act and Rule 10b-5 (and Section 20(a) for control person liability) arising in large part from allegations that Maiden failed to take adequate loss reserves in connection with reinsurance provided to AmTrust. Plaintiffs further claim that certain of Maiden Holdings’ representations concerning its business, underwriting and financial statements were rendered false by the allegedly inadequate loss reserves, that these misrepresentations inflated the price of Maiden Holdings' common stock, and that when the truth about the misrepresentations was revealed, the Company’s stock price fell, causing Plaintiffs to incur losses. The Company believes the claims are without merit and intends to vigorously defend itself. It is possible that additional lawsuits will be filed against the Company, its subsidiaries and its respective officers due to the diminution in value of our securities as a result of our operating results and financial condition. It is currently uncertain as to the effect of such litigation on our business, operating results and financial condition. 32 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 12. Earnings per Common Share The following is a summary of the elements used in calculating basic and diluted earnings per common share: For the Three Months Ended June 30, For the Six Months Ended June 30, 2020 2019 2020 2019 Numerator: Net income (loss) from continuing operations $ 9,212 $ 3,976 $ 30,073 $ ( 29,926 ) Amount allocated to participating common shareholders (1) ( 168 ) — ( 390 ) — Income (loss) attributable to common shareholders, before discontinued operations 9,044 3,976 29,683 ( 29,926 ) Loss from discontinued operations, net of income tax — ( 19,389 ) — ( 22,123 ) Net income (loss) allocated to common shareholders $ 9,044 $ ( 15,413 ) $ 29,683 $ ( 52,049 ) Denominator: Weighted average number of common shares – basic (2) 84,537,385 83,058,123 83,896,804 83,008,888 Share options and restricted share units — 17,033 — — Adjusted weighted average number of common shares – diluted 84,537,385 83,075,156 83,896,804 83,008,888 Basic and diluted earnings (loss) from continuing operations per share attributable to common shareholders $ 0.11 $ 0.04 $ 0.35 $ ( 0.36 ) Basic and diluted loss from discontinued operations per share attributable to common shareholders — ( 0.23 ) — ( 0.27 ) Basic and diluted earnings (loss) per share attributable to common shareholders: $ 0.11 $ ( 0.19 ) $ 0.35 $ ( 0.63 ) (1) This represents the share in net income using the two class method of the holders of non-vested restricted shares issued to the Company's employees under the 2019 Omnibus Incentive Plan. (2) Please refer to "Note 13. Shareholders' Equity" and "Note 14. Share Compensation and Pension Plans" of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 , for the terms and conditions of securities that could potentially be dilutive in the future. For the three and six months ended June 30, 2020 , there were no potentially dilutive securities. 13. Shareholders' Equity a) Common Shares At June 30, 2020 , the aggregate authorized share capital of the Company is 150,000,000 shares from which the Company has issued 89,732,851 common shares, of which 84,718,837 common shares are outstanding, and 18,600,000 preference shares, all of which are outstanding. The remaining 41,667,149 shares are undesignated at June 30, 2020 . For further discussion on the components of Shareholders' Equity, please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2019 . b) Treasury Shares During the six months ended June 30, 2020 , the Company repurchased total shares of 834 ( 2019 - 23,220 ) at an average price per share of $ 1.13 ( 2019 - $ 0.78 ) from employees, which represent withholdings in respect of tax obligations on the vesting of restricted shares and performance based shares. The Company has a remaining authorization of $ 74,245 for share repurchases at June 30, 2020 ( December 31, 2019 - $ 74,245 ). No repurchases were made during the three and six months ended June 30, 2020 and 2019 under the share repurchase plan. 33 MAIDEN HOLDINGS, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands of U.S. dollars, except share and per share data) 13. Shareholders' Equity (continued) c) Accumulated Other Comprehensive Income (Loss) The following tables set forth financial information regarding the changes in the balances of each component of AOCI: For the Three Months Ended June 30, 2020 Change in net unrealized gains on investment Foreign currency translation Total Beginning balance $ ( 22,125 ) $ ( 4,163 ) $ ( 26,288 ) Other comprehensive income (loss) before reclassifications 41,677 ( 3,820 ) 37,857 Amounts reclassified from AOCI to net income, net of tax ( 2,368 ) — ( 2,368 ) Net current period other comprehensive income (loss) 39,309 ( 3,820 ) 35,489 Ending balance, Maiden shareholders $ 17,184 $ ( 7,983 ) $ 9,201 For the Three Months Ended June 30, 2019 Change in net unrealized gains on investment Foreign currency translation Total Beginning balance $ 1,714 $ ( 1,934 ) $ ( 220 ) Other comprehensive income (loss) before reclassifications 42,979 ( 6,192 ) 36,787 Amounts reclassified from AOCI to net loss, net of tax ( 15,415 ) — ( 15,415 ) Net current period other comprehensive income (loss) 27,564 ( 6,192 ) 21,372 Ending balance, Maiden shareholders $ 29,278 $ ( 8,126 ) $ 21,152 For the Six Months Ended June 30, 2020 Change in net unrealized gains on investment Foreign currency translation Total Beginning balance $ 21,996 $ ( 4,160 ) $ 17,836 Other comprehensive income (loss) before reclassifications 1,589 ( 3,823 ) ( 2,234 ) Amounts reclassified from AOCI to net income, net of tax ( 6,401 ) — ( 6,401 ) Net current period other comprehensive loss ( 4,812 ) ( 3,823 ) ( 8,635 ) Ending balance, Maiden shareholders $ 17,184 $ ( 7,983 ) $ 9,201 For the Six Months Ended June 30, 2019 Change in net unrealized gains on investment Foreign currency translation Total Beginning balance $ ( 59,762 ) $ ( 5,932 ) $ ( 65,694 ) Other comprehensive income (loss) before reclassifications 91,967 ( 2,194 ) 89,773 Amounts reclassified from AOCI to net loss, net of tax ( 2,927 ) — ( 2,927 ) Net current period other comprehensive income (loss) 89,040 ( 2,194 ) 86,846 Ending balance, Maiden shareholders $ 29,278 $ ( 8,126 ) $ 21,152 34