What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-09 compared with 2021-05-10 · 423 added, 257 removed, 804 unchanged (46% of the section changed)

40 unchanged sentences

Since the third quarter of 2018, we have engaged in a series of transactions that dramatically reduced the regulatory capital required to operate our business, materially strengthened our solvency ratios, and ceased active reinsurance underwriting.

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

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

The measures we have taken were initiated in 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.

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Maiden NA now owns 100% of Maiden Reinsurance in the aggregate.

Maiden NA also maintains a portfolio of cash and fixed maturity investments, along with other strategic investments, of $34.2 million at March 31, 2021.

We believe Maiden NA’s investments, including its ownership of Maiden Reinsurance and its active asset management strategy, will create opportunities to utilize net operating loss carry-forwards ("NOLs") which were $212.5 million as of March 31, 2021.

These NOLs, in combination with additional net deferred tax assets ("DTAs") of

primarily related to our insurance liabilities, result in a net DTA (before valuation allowance) of $88.1 million or $1.02 per common share as of March 31, 2021.

Maiden NA also maintains a portfolio of cash and fixed maturity investments, along with other strategic investments, of $25.1 million at June 30, 2021.

$209.6 million as of June 30, 2021.

These NOLs, in combination with additional net deferred tax assets ("DTAs") of primarily related to our insurance liabilities, result in a net DTA (before valuation allowance) of $84.6 million or $0.98 per common share as of June 30, 2021.

These net DTAs are not presently recognized on the Company's consolidated balance sheet as a full valuation allowance is currently carried against them.

12 unchanged sentences

Recent trends have increased our confidence in our recorded ultimate losses for our insurance liabilities in run-off, however a prudent assessment dictates that the run-off portfolio still requires additional maturity to fully emerge.

While there is no guarantee that these recent loss development trends will persist, as confidence increases it allows us to consider continued capital management initiatives.

Our current assessment is that losses have stabilized sufficiently to consider certain capital management initiatives, although we are careful to approach these strategies in a deliberate fashion.

While there is no guarantee that these recent loss development trends will persist, as confidence has increased it has enabled us to pursue continued capital management initiatives, primarily the repurchase of our preference shares, which we believe provide the greatest risk-adjusted returns to our common shareholders.

Our current assessment is that losses have continued to stabilize sufficiently to continue to consider these capital management initiatives, although we are careful to approach these strategies in a deliberate fashion.

In November 2020, we formed Genesis Legacy Solutions (“GLS”) which specializes in providing a full range of legacy services to small insurance entities, particularly those in run-off or with blocks of reserves that are no longer core, working with clients to develop and implement finality solutions including acquiring entire companies.

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Our ability to execute our asset and capital management initiatives is dependent on maintaining adequate levels of unrestricted liquidity and cash flows.

Further, there can be no assurance that our insurance liabilities will run-off at levels that will permit further capital management activities, which we expect to continually review as part of our strategy.

Further, there can be no assurance that our insurance liabilities will run-off at levels that will permit further capital management activities, which we continually review as part of our strategy.

Please refer to the "Liquidity and Capital Resources" section for further information on our asset and capital management activities, in particular our various preference share repurchase measures.

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As described herein, we are not currently engaged in active reinsurance underwriting and continue to run off the remaining unearned exposures we have reinsured.

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

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

Our Swedish and UK insurance operations ("IIS unit") do write limited primary insurance coverage that could be exposed to COVID-19 claims.

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

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

Three Months Ended March 31, 2021 and 2020 Financial Highlights

For the Three Months Ended March 31, 2021 2020 Change

Three and Six Months Ended June 30, 2021 and 2020 Financial Highlights

For the Three Months Ended June 30, 2021 2020 Change

Summary Consolidated Statement of Income Data (unaudited):

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20.7 % 3.2 % 17.5

March 31, 2021 December 31, 2020 Change

For the Six Months Ended June 30, 2021 2020 Change

Summary Consolidated Statement of Income Data (unaudited):

($ in thousands except per share data)

Net income $ 17,398 $ 30,073 $ (12,675)

Gain from repurchase of preference shares 81,164 — 81,164

Net income attributable to Maiden common shareholders 98,562 30,073 68,489

Basic and diluted earnings per common share:

Net income attributable to Maiden common shareholders (2)

1.14 0.35 0.79

Gain from repurchase of preferred shares per common share 0.95 — 0.95

Gross premiums written 1,044 16,716 (15,672)

Net premiums earned 25,076 52,523 (27,447)

Underwriting income (loss) (3)

10,026 (3,710) 13,736

Net investment income 17,119 32,273 (15,154)

Combined ratio (4)

126.6 % 131.7 % (5.1)

Non-GAAP measures:

Non-GAAP operating earnings (1)

$ 61,249 $ 4,354 $ 56,895

Non-GAAP basic and diluted operating earnings per common share (1)

0.71 0.05 0.66

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

50.9 % 5.3 % 45.6

June 30, 2021 December 31, 2020 Change

Consolidated Financial Condition ($ in thousands except per share data)

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36.4 % 30.3 % 6.1

(1) Non-GAAP operating earnings (loss), non-GAAP operating earnings (loss) per common share, and annualized non-GAAP operating return on average common equity and underwriting loss are non-GAAP financial measures.

(1) Non-GAAP operating earnings, non-GAAP operating earnings per common share, and annualized non-GAAP operating return on average common equity and underwriting income (loss) are non-GAAP financial measures.

See " Key Financial Measures " for additional information.

(2) Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 12.

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

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

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

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

While the Company has continued to utilize this non-GAAP measure in this Quarterly Report on Form 10-Q for the three months ended March 31, 2021, it is important to note that as the run-off of our reinsurance portfolios progresses, such ratios may increasingly be of less value to readers as they evaluate the financial results of the Company, particularly compared to historical data.

While the Company has continued to utilize this non-GAAP measure in this Quarterly Report on Form 10-Q for the three and six months ended June 30, 2021, it is important to note that as the run-off of our reinsurance portfolios progresses, such ratios may increasingly be of less value to readers as they evaluate the financial results of the Company, particularly compared to historical data.

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

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Results of Operations

The following table sets forth our selected unaudited Condensed Consolidated Statement of Income data for the three months ended March 31, 2021 and 2020:

For the Three Months Ended March 31,

The following table sets forth our selected unaudited Condensed Consolidated Statement of Income data for the three and six months ended June 30, 2021 and 2020:

For the Three Months Ended June 30, For the Six Months Ended June 30,

($ in thousands) 2021 2020 2021 2020

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Other insurance revenue

539 250 808 658

Net loss and LAE

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Net investment income

7,278 14,309 17,119 32,273

Net realized gains on investment

849 8,875 8,950 19,913

Total other-than-temporary impairment losses

Foreign exchange and other gains 3,542 8,197

— — — (1,506)

Foreign exchange and other (losses) gains (1,588) (2,295) 1,954 5,902

Interest and amortization expenses (4,832) (4,830) (9,663) (9,661)

Income tax expense (49) (15)

Income tax benefit 257 18 208 3

Interest in income of equity method investments 2,775 — 5,722 —

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

Net income available to Maiden common shareholders for the three months ended March 31, 2021 was $71.7 million compared to $20.9 million for the same period in 2020.

The net improvement in results for the three months ended March 31, 2021 compared to the same period in 2020 was primarily due to the following:

• gain from repurchase of preference shares of $62.5 million for the three months ended March 31, 2021 resulting from the 2021 Preference Share Repurchase;

• interest in income of equity method investments of $2.9 million for the three months ended March 31, 2021 which were newly acquired in the third quarter of 2020;

• net income of $9.3 million compared to net income of $20.9 million for the same respective period in 2020 largely due to the following factors:

• underwriting income of $1.6 million for the three months ended March 31, 2021 compared to an underwriting loss of $3.7 million in the same period in 2020.

The improvement in underwriting income was driven by favorable prior year loss development of $5.6 million or 46.2 percentage points in the first quarter of 2021 compared to favorable prior year loss development of $0.5 million or 1.7 percentage points during the same period in 2020 due to favorable prior year loss development in the AmTrust Reinsurance segment in the first quarter of 2021.

The improvement in our underwriting results was partially offset by the following variances:

• a reduction in realized gains on investment of $2.9 million for the three months ended March 31, 2021 compared to the same period in 2020;

• a reduction in net investment income of $8.1 million or 45.2% for the three months ended March 31, 2021 compared to the same period in 2020 primarily due to the decline in average investable assets of 21.4%;

• a reduction in foreign exchange and other gains of $4.7 million for the three months ended March 31, 2021 compared to the same period in 2020.

Net income available to Maiden common shareholders for the three months ended June 30, 2021 was $26.8 million compared to $9.2 million for the same period in 2020.

The net improvement in results for the three months ended June 30, 2021 compared to the same period in 2020 was primarily due to the gain from repurchase of our preference shares of $18.7 million for the three months ended June 30, 2021.

Excluding the gain on the repurchase of our preference shares, net income for the three months ended June 30, 2021 was $8.1 million compared to net income of $9.2 million for the same period in 2020.

The most significant items affecting our financial performance during the second quarter of 2021 on a comparative basis to the second quarter of 2020 included:

• underwriting income of $8.5 million for the three months ended June 30, 2021 compared to an underwriting loss of $17.0 thousand in the same period in 2020.

The improvement in underwriting income was largely due to:

◦ favorable prior year loss development of $12.8 million or 92.5 percentage points in the second quarter of 2021 compared to favorable prior year loss development of $0.1 million or 0.3 percentage points during the same period in 2020.

This was primarily generated by favorable prior year loss development in the AmTrust Reinsurance segment in the second quarter of 2021;

and partially offset by:

◦ an underwriting loss of $4.3 million for the three months ended June 30, 2021 on a current accident year basis compared to an underwriting loss of $0.1 million for the same period in 2020 on a current accident year basis, due to higher loss ratios and higher general and administrative expenses, many of which will be nonrecurring.

• corporate general and administrative expenses decreased to $5.1 million for the three months ended June 30, 2021 compared to $6.8 million for the same period in 2020 due to incentive compensation incurred in the second quarter of 2020;

• net investment income decreased to $7.3 million for the three months ended June 30, 2021 compared to investment income of $14.3 million for the same period in 2020 primarily due to the decline in average invested assets of 22.6%;

• realized gains on investment decreased to $0.8 million for the three months ended June 30, 2021 compared to net realized gains of $8.9 million for the same period in 2020;

• interest in income of equity method investments of $2.8 million for the three months ended June 30, 2021.

Net income available to Maiden common shareholders for the six months ended June 30, 2021 was $98.6 million compared to a net income of $30.1 million for the same period in 2020.

The net improvement in our results for the six months ended June 30, 2021 compared to the same period in 2020 was primarily due to the gain from repurchase of our preference shares of $81.2 million for the six months ended June 30, 2021.

Excluding the gain on the repurchase of our preference shares, net income for the six months ended June 30, 2021 was $17.4 million compared to net income of $30.1 million for the same period in 2020.

The most significant items affecting our financial performance during the six months ended June 30, 2021 on a comparative basis to the same period in 2020 included:

• underwriting income of $10.0 million for the six months ended June 30, 2021 compared to an underwriting loss of $3.7 million during the six months ended June 30, 2020.

The improvement in underwriting income was largely due to:

◦ favorable prior year loss development of $18.4 million or 71.0 percentage points for the first half of 2021 compared to favorable prior year loss development of $0.6 million or 1.1 percentage points for the first half of 2020 which had been incurred primarily within the AmTrust Reinsurance segment for each respective period.

This was partially offset by:

◦ an underwriting loss of $8.3 million for the six months ended June 30, 2021 on a current accident year basis compared to an underwriting loss of $4.3 million for the same period in 2020 on a current accident year basis, due to higher expense ratios caused by a significant decrease in earned premium.

• no investment impairment losses for the six months ended June 30, 2021 compared to $1.5 million in 2020;

• net investment income decreased to $17.1 million for the six months ended June 30, 2021 compared to $32.3 million for the same period in 2020, primarily due to the decline in average invested assets of 22.0%;

• realized gains on investment decreased to $9.0 million for the six months ended June 30, 2021 compared to $19.9 million for the same period in 2020;

• corporate general and administrative expenses increased to $16.9 million for the six months ended June 30, 2021 compared to $13.1 million for the same period in 2020 due to higher incentive compensation costs incurred;

• foreign exchange and other gains decreased to $2.0 million for the six months ended June 30, 2021 compared to $5.9 million for the same period in 2020;

• interest in income of equity method investments of $5.7 million for the six months ended June 30, 2021.

Net Premiums Written

The table below compares net premiums written by our reportable segments, reconciled to the total consolidated net premiums written for the three months ended March 31, 2021 and 2020:

For the Three Months Ended March 31, 2021 2020 Change in

The tables below compare net premiums written by our reportable segments, reconciled to the total consolidated net premiums written for the three and six months ended June 30, 2021 and 2020:

For the Three Months Ended June 30, 2021 2020 Change in

($ in thousands) Total Total $ %

1 unchanged sentence

$ 5,018 $ 8,553 $ (3,535) (41.3) %

AmTrust Reinsurance (2,462) — (2,462) NM

AmTrust Reinsurance (1,757) (4,463) 2,706 (60.6) %

Total $ 3,261 $ 4,090 $ (829) (20.3) %

NM - not meaningful

Net premiums written for the three months ended March 31, 2021 decreased to $(2,696) compared to net premiums written of $10,372 in the same respective period in 2020 due to the following:

• Premiums written in the Diversified Reinsurance segment decreased by $10.6 million or 102.3% for the three months ended March 31, 2021 compared to the same respective period in 2020 due to the return of unearned premiums after the non-renewal of the German Auto Programs reinsurance contract in our IIS business on January 1, 2021.

For the Six Months Ended June 30, 2021 2020 Change in

($ in thousands) Total Total $ %

Diversified Reinsurance

$ 4,784 $ 18,925 $ (14,141) (74.7) %

AmTrust Reinsurance (4,219) (4,463) 244 (5.5) %

Total $ 565 $ 14,462 $ (13,897) (96.1) %

Net premiums written for the three and six months ended June 30, 2021 decreased to $3.3 million and $0.6 million, respectively, compared to net premiums written of $4.1 million and $14.5 million in the same respective periods in 2020 due to:

• Premiums written in the Diversified Reinsurance segment decreased by $3.5 million or 41.3% and $14.1 million or 74.7% for the three and six months ended June 30, 2021 compared to the same respective periods in 2020 largely due to the return of unearned premiums after the non-renewal of the German Auto Programs reinsurance contract in our IIS business on January 1, 2021.

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

Negative premiums for the three months ended March 31, 2021 were due to premium adjustments on Small Commercial Business policies.

Negative premiums for the three and six months ended June 30, 2021 were mainly due to premium adjustments on Small Commercial Business policies.

Please refer to the analysis below of our Diversified Reinsurance and AmTrust Reinsurance segments for further details.

Net Premiums Earned

Net premiums earned decreased by $19.5 million or 62.3% for the three months ended March 31, 2021, compared to the same respective period in 2020.

The table below compares net premiums earned by our reportable segments, reconciled to the total consolidated net premiums earned, for the three months ended March 31, 2021 and 2020:

For the Three Months Ended March 31, 2021 2020 Change in

Net premiums earned decreased by $8.0 million or 37.5% and $27.4 million or 52.3% for the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020.

The tables below compare net premiums earned by our reportable segments, reconciled to the total consolidated net premiums earned, for the three and six months ended June 30, 2021 and 2020:

For the Three Months Ended June 30, 2021 2020 Change in

($ in thousands) Total % of Total Total % of Total $ %

4 unchanged sentences

$ 13,312 100.0 % $ 21,308 100.0 % $ (7,996) (37.5) %

Net premiums earned in the AmTrust Reinsurance segment for the three months ended March 31, 2021 decreased by $13.2 million or 70.4% compared to the same respective period in 2020 due to termination of the AmTrust Quota Share and European Hospital Liability Quota Share effective January 1, 2019.

For the Six Months Ended June 30, 2021 2020 Change in

($ in thousands) Total % of Total Total % of Total $ %

Diversified Reinsurance

$ 13,202 52.6 % $ 24,058 45.8 % $ (10,856) (45.1) %

AmTrust Quota Share Reinsurance

11,874 47.4 % 28,465 54.2 % (16,591) (58.3) %

$ 25,076 100.0 % $ 52,523 100.0 % $ (27,447) (52.3) %

Net premiums earned in the AmTrust Reinsurance segment for the three and six months ended June 30, 2021 decreased by $3.4 million or 35.1% and $16.6 million or 58.3%, respectively, compared to the same respective periods in 2020 due to termination of the AmTrust Quota Share and European Hospital Liability Quota Share effective January 1, 2019.

Please refer to the analysis of our AmTrust Reinsurance segment for further discussion.

Net premiums earned in our Diversified Reinsurance segment for the three months ended March 31, 2021 decreased by $6.3 million or 50.2% compared to the same respective period in 2020 due to German Auto programs quota share reinsurance contract which went into run-off on January 1, 2021 in our IIS business.

Net premiums earned in our Diversified Reinsurance segment for the three and six months ended June 30, 2021 decreased by $4.6 million or 39.6% and $10.9 million or 45.1%, respectively, compared to the same respective periods in 2020 due to German Auto programs quota share reinsurance contract which went into run-off on January 1, 2021 in our IIS business.

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

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Net Investment Income

Net investment income decreased by $8.1 million or 45.2% for the three months ended March 31, 2021 compared to the same period in 2020 largely due to the decline in average investable assets of 21.4%.

The decline in investable assets is driven by the cessation of active reinsurance underwriting which materially reduced our revenues resulting in significant negative operating cash flows as we run-off our existing reinsurance liabilities.

Net investment income also decreased due to the decline in average book yields to 1.9% for the three months ended March 31, 2021 compared to 2.7% for the three months ended March 31, 2020, which is the result of both lower interest rates and shorter duration of assets in our fixed income portfolios.

The following table details our average invested assets and book yield for the three months ended March 31, 2021 and 2020:

For the Three Months Ended March 31,

Net investment income decreased by $7.0 million or 49.1% and $15.2 million or 47.0% for the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020 largely due to the decline in average invested assets of 22.6% and 22.0% in those same respective periods.

The decline in invested assets is driven by the cessation of active reinsurance underwriting which materially reduced our revenues resulting in significant negative operating cash flows as we run-off our existing reinsurance liabilities.

Net investment income also decreased due to the decline in average book yields to 1.5% and 1.7% for the three and six months ended June 30, 2021, respectively, compared to 2.3% and 2.5% for the three and six months ended June 30, 2020, which is the result of both lower interest rates and shorter duration of assets in our fixed income portfolios.

The following table details our average invested assets and book yield for the three and six months ended June 30, 2021 and 2020:

For the Three Months Ended June 30, For the Six Months Ended June 30,

($ in thousands) 2021 2020 2021 2020

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Average book yield (2)

1.5 % 2.3 % 1.7 % 2.5 %

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

1 unchanged sentence

Net Realized Gains on Investment

Net realized gains on investment were $8.1 million for the three months ended March 31, 2021, compared to net realized gains of $11.0 million for the same respective period in 2020.

Net realized gains for the three months ended March 31, 2021 include the recognition of $4.5 million in unrealized gains related to an investment in an insurtech start-up company that was acquired by a special purpose acquisition company.

In addition, realized gains for the three months ended March 31, 2021 and 2020 also reflect sales of corporate bonds for the settlement of claim payments to AmTrust.

Net realized gains on investment were $0.8 million and $9.0 million for the three and six months ended June 30, 2021, respectively, compared to net realized gains of $8.9 million and $19.9 million for the same respective periods in 2020.

Net realized gains for the three and six months ended June 30, 2021 included the recognition of $0.6 million in unrealized losses and $3.9 million in unrealized gains, respectively, related to an investment in an insurtech start-up company that was acquired by a special purpose acquisition company.

In addition, realized gains for the three and six months ended June 30, 2021 and 2020 reflect sales of corporate bonds for the settlement of claim payments to AmTrust.

Net Impairment Losses Recognized in Earnings

The Company did not recognize any OTTI losses on its fixed maturity portfolio for the three months ended March 31, 2021 compared to $1.5 million of OTTI losses recorded on two fixed maturity securities for the three months ended March 31, 2020.

The Company did not recognize any OTTI losses on its fixed maturity portfolio for the three and six months ended June 30, 2021 and three months ended June 30, 2020.

There were $1.5 million of OTTI losses recorded on two fixed maturity securities for the six months ended June 30, 2020.

Interest in Income of Equity Method Investments

The Company recognized interest in income of equity method investments of $2.9 million for the year ended March 31, 2021.

These investments include hedge fund investments of $31.1 million which were newly acquired in the third quarter of 2020.

The Company recognized interest in income of equity method investments of $2.8 million and $5.7 million for the three and six months ended June 30, 2021, respectively.

These investments include hedge fund investments of $33.1 million as well as investments in limited partnerships of $27.1 million.

Net Loss and LAE

Net loss and LAE decreased by $18.7 million during the three months ended March 31, 2021 compared to the same respective period in 2020 largely due to favorable prior year reserve development of $5.6 million for the first quarter of 2021.

The loss ratio for the first quarter of 2021 was impacted by net favorable prior year reserve development of $5.6 million or 46.2 percentage points compared to net favorable prior year reserve development of $0.5 million or 1.7 percentage points during the same period in 2020.

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

The net loss and LAE ratios decreased to 19.6% for the three months ended March 31, 2021 compared to 66.7% for the same respective period in 2020 due to significant favorable prior year loss experience in the AmTrust Reinsurance segment that developed in the first quarter of 2021.

Net loss and LAE decreased by $16.3 million and $35.1 million during the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020 largely due to lower earned premiums and favorable prior year reserve development of $12.8 million and $18.4 million for the three and six months ended June 30, 2021, respectively.

The loss ratio for the second quarter of 2021 was impacted by net favorable prior year reserve development of $12.8 million or 92.5 percentage points compared to net favorable prior year reserve development of $0.1 million or 0.3 percentage points during the same period in 2020.

The development was primarily generated within the AmTrust Reinsurance segment.

The loss ratio for the six months ended June 30, 2021 was impacted by net favorable prior year reserve development of $18.4 million or 71.0 percentage points compared to net favorable prior year reserve development of $0.6 million or 1.1 percentage points during the same period in 2020.

The prior year development was primarily within the AmTrust Reinsurance segment and is discussed in greater detail in the individual segment discussion and analysis.

The net loss and LAE ratios decreased to (38.5)% and (11.5)% for the three and six months ended June 30, 2021, respectively, compared to 51.0% and 60.4% for the same respective periods in 2020 due to significant favorable prior year loss experience in the AmTrust Reinsurance segment that developed in the three and six months ended June 30, 2021.

Commission and Other Acquisition Expenses

Commission and other acquisition expenses decreased by $6.0 million or 50.4% for the three months ended March 31, 2021, compared to the same respective period in 2020.

The commission and other acquisition expense ratio increased to 49.4% for the three months ended March 31, 2021 compared to 37.9% for the same respective period in 2020 largely due to a change in mix of premiums written in our Diversified Reinsurance segment.

Commission and other acquisition expenses decreased by $1.3 million or 15.4% and $7.3 million or 36.2% for the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020.

The commission and other acquisition expense ratio increased to 49.8% and 49.6% for the three and six months ended June 30, 2021, respectively, compared to 37.8% for both respective periods in 2020 largely due to a change in mix of premiums written in our Diversified Reinsurance segment.

General and Administrative Expenses

General and administrative expenses, which include both segment and corporate expenses segregated for analytical purposes as a component of underwriting income, for the three months ended March 31, 2021 and 2020 were comprised of:

For the Three Months Ended March 31,

General and administrative expenses, which include both segment and corporate expenses segregated for analytical purposes as a component of underwriting income, for the three and six months ended June 30, 2021 and 2020 were comprised of:

For the Three Months Ended June 30, For the Six Months Ended June 30,

($ in thousands) 2021 2020 2021 2020

2 unchanged sentences

General and administrative expenses – corporate

5,098 6,848 16,918 13,141

Total general and administrative expenses

$ 8,906 $ 9,261 $ 22,903 $ 17,811

Total general and administrative expenses increased by $5.4 million, or 63.7% for the three months ended March 31, 2021, compared to the same respective period in 2020.

Corporate general and administrative expenses for the three months ended March 31, 2021 increased by $5.5 million or 87.8% compared to the same respective period in 2020 due to higher equity-based and cash incentive compensation paid to employees in the first quarter of 2021.

Total general and administrative expenses decreased by $0.4 million or 3.8% and increased by $5.1 million or 28.6% for the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020.

Corporate general and administrative expenses for the three and six months ended June 30, 2021 decreased by $1.8 million or 25.6% and increased by $3.8 million or 28.7% compared to the same respective periods in 2020.

The $3.8 million increase in corporate expenses for the six months ended June 30, 2021 compared to the same respective period in 2020 was due to higher discretionary equity-based and cash incentive compensation paid to employees in 2021 as compared to 2020.

The Company incurred operating expenses of $2.2 million and $2.9 million during the three and six months ended June 30, 2021, respectively, that are not considered part of our ongoing business operations, and which are largely related to accelerated depreciation for fixed assets connected with the termination of our principal office lease in Bermuda as well as salary and related costs associated with headcount reductions and certain regulatory costs in our international operations.

Interest and Amortization Expenses

The interest and amortization expenses related to the outstanding senior notes issued by Maiden Holdings in 2016 and Maiden NA in 2013 ("Senior Notes") were $4.8 million for the three months ended March 31, 2021 and 2020, respectively.

The interest and amortization expenses related to the outstanding senior notes issued by Maiden Holdings in 2016 and Maiden NA in 2013 ("Senior Notes") were $4.8 million and $9.7 million for the three and six months ended June 30, 2021 and 2020, respectively.

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

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

The weighted average effective interest rate for the Senior Notes was 7.6% for the three months ended March 31, 2021 and 2020, respectively.

Foreign Exchange and Other Gains

Net foreign exchange and other gains amounted to $3.5 million during the three months ended March 31, 2021 compared to net foreign exchange and other gains of $8.2 million for the same respective period in 2020.

Net foreign exchange gains of $3.4 million occurred during the three months ended March 31, 2021 largely due to the strengthening of the U.S.

The weighted average effective interest rate for the Senior Notes was 7.6% for the three and six months ended June 30, 2021 and 2020, respectively.

Foreign Exchange and Other Gains (Losses)

Net foreign exchange and other gains or losses amounted to losses of $1.6 million and gains of $2.0 million during the three and six months ended June 30, 2021, respectively, compared to net foreign exchange and other losses of $2.3 million and gains of $5.9 million for the same respective periods in 2020.

Net foreign exchange losses of $1.2 million and $2.1 million occurred during the three months ended June 30, 2021 and June 30, 2020, respectively, due to the weakening of the U.S.

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

Net foreign exchange gains of $8.4 million for the three months ended March 31, 2020 were attributable to the strengthening of the U.S.

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

Net foreign exchange gains of $2.2 million and $6.3 million for the six months ended June 30, 2021 and June 30, 2020, respectively, were attributable to the strengthening of the U.S.

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

Underwriting Results by Reportable Segment

Diversified Reinsurance Segment

The underwriting results and associated ratios for our Diversified Reinsurance segment for the three months ended March 31, 2021 and 2020 were as follows:

For the Three Months Ended March 31,

The underwriting results and associated ratios for our Diversified Reinsurance segment for the three and six months ended June 30, 2021 and 2020 were as follows:

For the Three Months Ended June 30, For the Six Months Ended June 30,

($ in thousands) 2021 2020 2021 2020

6 unchanged sentences

Other insurance revenue

539 250 808 658

Net loss and LAE

15 unchanged sentences

116.4 % 103.2 % 110.5 % 104.3 %

The combined ratio for the three months ended March 31, 2021 decreased to 103.6%, compared to 105.4% for the same respective period in 2020 largely due to significant declines in earned premium volume that increased the expense ratio which was offset by lower loss ratios.

Please see the respective sections on net loss, commissions and administrative expenses for factors that have impacted the combined ratios in the discussion below.

Premiums — Gross premiums written decreased by $11.7 million or 99.4% for the three months ended March 31, 2021, compared to the same respective period in 2020.

The combined ratio for the three and six months ended June 30, 2021 increased to 116.4% and 110.5%, respectively, compared to 103.2% and 104.3% for the same respective periods in 2020 largely due to significant declines in earned premium volume combined with higher non-recurring general and administrative expenses in our IIS business, which increased the expense ratio which was partly offset by lower loss ratios.

Please see the respective sections below on net loss and LAE, commissions and other acquisition expenses and general and administrative expenses for factors that have impacted the combined ratios.

Premiums — Gross premiums written decreased by $4.5 million or 46.4% and $16.2 million or 75.4% for the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020.

This was primarily due to the return of unearned premiums written in a German Auto quota share reinsurance contract in our IIS business which went into run-off on January 1, 2021.

While gross premiums written on primary policies in our IIS business only decreased by $0.2 million or 3.7% for the three months ended March 31, 2021 compared to the same respective period in 2020, net premiums written increased by $1.0 million or 26.1% due to organic growth in Maiden GF and Maiden LF that is not reinsured as flat gross premiums written largely due to loss of program that was 90% reinsured.

Net premiums written decreased by $10.6 million or 102.3% during the three months ended March 31, 2021 compared to the same respective period in 2020 due to return of unearned premiums written in our German Auto quota share reinsurance contract which went into run-off on January 1, 2021.

The table below shows net premiums written by line of business for the three months ended March 31, 2021 and 2020:

For the Three Months Ended March 31, 2021 2020 Change in

Net premiums written decreased by $3.5 million or 41.3% and $14.1 million or 74.7% during the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020 due to return of unearned premiums written in our German Auto quota share reinsurance contract which went into run-off on January 1, 2021.

Direct premiums written by Maiden LF and Maiden GF increased by $0.5 million or 10.0% and $0.3 million or 3.1% during the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020.

The tables below show net premiums written by line of business for the three and six months ended June 30, 2021 and 2020:

For the Three Months Ended June 30, 2021 2020 Change in

($ in thousands) Total Total $ %

2 unchanged sentences

$ 5,028 $ 8,498 $ (3,470) (40.8) %

(10) 55 (65) (118.2) %

Total Diversified Reinsurance

$ 5,018 $ 8,553 $ (3,535) (41.3) %

NM - not meaningful

Net premiums earned decreased by $6.3 million or 50.2% during the three months ended March 31, 2021 compared to the same respective period in 2020 primarily due to lower earned premiums from German Auto programs which is in run-off as of January 1, 2021.

The table below shows net premiums earned by line of business for the three months ended March 31, 2021 and 2020:

For the Three Months Ended March 31, 2021 2020 Change in

For the Six Months Ended June 30, 2021 2020 Change in

($ in thousands) Total Total $ %

Net Premiums Written

International

$ 4,784 $ 18,870 $ (14,086) (74.6) %

— 55 (55) (100.0) %

Total Diversified Reinsurance

$ 4,784 $ 18,925 $ (14,141) (74.7) %

Net premiums earned decreased by $4.6 million or 39.6% and $10.9 million or 45.1% during the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020 primarily due to lower earned premiums from German Auto programs which have been in run-off since January 1, 2021.

The tables below show net premiums earned by line of business for the three and six months ended June 30, 2021 and 2020:

For the Three Months Ended June 30, 2021 2020 Change in

($ in thousands) Total Total $ %

Net Premiums Earned

1 unchanged sentence

$ 6,972 $ 11,472 $ (4,500) (39.2) %

(10) 55 (65) (118.2) %

Total Diversified Reinsurance

$ 6,962 $ 11,527 $ (4,565) (39.6) %

NM - not meaningful

Other Insurance Revenue — Other insurance revenue represents fee income from our IIS business that is not directly associated with premium revenue assumed by the Company as well as other income earned from transitional services relating to the sale of Maiden US.

Such revenue decreased by $0.1 million or 34.1% for the three months ended March 31, 2021 compared to the same respective period in 2020 partly due to the end of transitional services provided on behalf of Maiden US.

The tables below show other insurance revenue by source for the three months ended March 31, 2021 and 2020:

For the Three Months Ended March 31, 2021 2020 Change

For the Six Months Ended June 30, 2021 2020 Change in

($ in thousands) Total Total $ %

Net Premiums Earned

International

$ 13,202 $ 24,003 $ (10,801) (45.0) %

— 55 (55) (100.0) %

Total Diversified Reinsurance

$ 13,202 $ 24,058 $ (10,856) (45.1) %

Other Insurance Revenue — Other insurance revenue represents $0.2 million of fee income earned from our GLS business for the three and six months ended June 30, 2021, as well as fee income derived from our IIS business that is not directly associated with premium revenue assumed by the Company for the three and six months ended June 30, 2021 and 2020 as specified in the table below.

Other income of $11.0 thousand and $66.0 thousand for the three and six months ended June 30, 2020, respectively, was generated from transitional services provided relating to the sale of Maiden US.

Other insurance revenue increased by $0.3 million or 115.6% and $0.2 million or 22.8% for the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020.

The tables below show other insurance revenue by source for the three and six months ended June 30, 2021 and 2020, respectively:

For the Three Months Ended June 30, 2021 2020 Change

($ in thousands)

2 unchanged sentences

Total Diversified Reinsurance $ 539 $ 250 $ 289 115.6 %

Net Loss and LAE — Net loss and LAE decreased by $5.6 million or 79.9% for the three months ended March 31, 2021 compared to the same respective period in 2020.

Net loss and LAE ratio decreased to 21.7% for the three months ended March 31, 2021 compared with 54.4% during the same respective period in 2020.

During the three months ended March 31, 2021, the net loss and LAE ratio decreased by 32.7 percentage points compared to the same period in 2020.

The 2021 loss ratio was impacted by adverse prior year loss reserve development which was $14.0 thousand or 0.2 percentage points during the three months ended March 31, 2021 compared to the impact of favorable development of $0.5 million or 4.1 percentage points on the loss ratio for the same period in 2020.

The loss development in 2021 was due to adverse development experienced in European Capital Solutions and other run-off business while the loss development in 2020 was driven by favorable experience in our German Auto quota share reinsurance contract.

For the Six Months Ended June 30, 2021 2020 Change

($ in thousands) %

International $ 653 $ 592 $ 61 10.3 %

Other income 155 66 89 134.8 %

Total Diversified Reinsurance $ 808 $ 658 $ 150 22.8 %

Net Loss and LAE — Net loss and LAE decreased by $4.8 million or 79.3% and $10.4 million or 79.6% for the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020 due to lower earned premiums.

Net loss and LAE ratio decreased to 16.6% and 19.0% for the three and six months ended June 30, 2021, respectively, compared with 51.3% and 52.9% during the same respective periods in 2020.

During the three months ended June 30, 2021, the net loss and LAE ratio decreased by 34.7 percentage points comp ared to the same period in 2020.

The 2021 loss ratio was impacted by favorable prior year loss reserve development which was $951.0 thousand or 12.7 percentage points during the three months ended June 30, 2021 compared to the impact of adverse development of $0.4 million or 3.1 percentage points on the loss ratio for the same period in 2020.

The loss development in 2021 was due to favorable development experienced in European Capital Solutions and other run-off business while the loss development in 2020 was driven by adverse experience in specific German Auto programs.

During the six months ended June 30, 2021, the net loss and LAE ratio decreased by 33.9 percentage points compared to the same period in 2020.

The 2021 loss ratio was impacted by favorable prior year loss reserve development of $937.0 thousand or 6.7 percentage points during 2021, compared to the impact of favorable development of $0.2 million or 0.7 percentage points on the loss ratio in 2020.

The 2021 development was driven by favorable experience in European Capital Solutions and other run-off business while the 2020 development was due to favorable experience in German Auto programs.

The impact on the net loss and LAE ratios should be considered in conjunction with the commission and other acquisition expense ratio as changes to either ratio can be effected by changes in the mix of business and the impact of increases in the commission and other acquisition expense rates on pro-rata contracts with loss sensitive features.

As a result of these factors, as well as the impact on the loss ratio described above, the combined ratio decreased by 1.8 percentage points for the three months ended March 31, 2021 compared to the same respective period in 2020.

Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $1.2 million or 24.6% for the three months ended March 31, 2021 compared to the same respective period in 2020 primarily due to the corresponding amount of net premiums earned which similarly decreased in this segment.

The commission and other acquisition expense ratio for the three months ended March 31, 2021 increased to 57.7% compared to 38.5% for the same respective period in 2020, reflecting the change in the mix of pro rata versus excess of loss premiums written compared to the same respective periods in 2020.

As a result of these factors, as well as the impact on the loss ratio described above, the combined ratio increased by 13.2 and 6.2 percentage points for the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020.

Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $0.1 million or 1.8% and $1.1 million or 12.3% for the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020 primarily due to lower net premiums earned which similarly decreased in this segment.

The commission and other acquisition expense ratio for the three and six months ended June 30, 2021 increased to 59.4% and 58.6%, respectively, compared to 37.1% and 37.8% for the same respective periods in 2020, reflecting the change in the mix of pro rata versus excess of loss premiums written compared to the same respective periods in 2020.

Please refer to the preceding paragraph for other factors that can impact the combined ratio.

General and Administrative Expenses — General and administrative expenses decreased by $39.0 thousand or 2.4% for the three months ended March 31, 2021 compared to the same respective period in 2020.

The general and administrative expense ratio increased to 24.2% for the three months ended March 31, 2021 compared to 12.5% for the same respective period in 2020 largely due to lower net premiums earned in the current period.

The overall expense ratio (including commission and other acquisition expenses) for the three months ended March 31, 2021 increased to 81.9% compared to 51.0% for the same respective period in 2020 largely as a result of lower premium revenue in the current period.

General and Administrative Expenses — General and administrative expenses increased by $1.3 million or 73.7% and $1.2 million or 37.2% for the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020.

The general and administrative expense ratio increased to 40.4% and 32.9% for the three and six months ended June 30, 2021, respectively, compared to 14.8% and 13.6% for the same respective periods in 2020 largely due to lower net premiums earned which decreased significantly combined with higher non-recurring expenses.

This included severance costs and certain regulatory costs of approximately $1.0 million incurred in our IIS business unit which have largely driven the increased expense ratios for the three and six months ended June 30, 2021 compared to the same respective periods in 2020.

The overall expense ratio (including commission and other acquisition expenses) for the three and six months ended June 30, 2021 increased to 99.8% and 91.5%, respectively, compared to 51.9% and 51.4% for the same respective periods in 2020 largely due to net premiums earned which decreased combined with higher non-recurring expenses as discussed above.

AmTrust Reinsurance Segment

The AmTrust Reinsurance segment reported underwriting income of $1.8 million during the three months ended March 31, 2021 compared to an underwriting loss of $3.0 million in the same respective period in 2020.

The improvement in the underwriting results was due to impact of favorable prior year loss development during the three months ended March 31, 2021 compared to no loss development recognized in the same respective period in 2020.

The underwriting results and associated ratios for the AmTrust Reinsurance segment for the three months ended March 31, 2021 and 2020 were as follows:

For the Three Months Ended March 31,

The AmTrust Reinsurance segment reported underwriting income of $9.7 million and $11.5 million during the three and six months ended June 30, 2021, respectively, compared to underwriting income of $0.4 million and an underwriting loss of $2.6 million for the same respective periods in 2020.

The improvement in the underwriting results was largely due to impact of favorable prior year loss development during the three and six months ended June 30, 2021.

The underwriting results and associated ratios for the AmTrust Reinsurance segment for the three and six months ended June 30, 2021 and 2020 were as follows:

For the Three Months Ended June 30, For the Six Months Ended June 30,

($ in thousands) 2021 2020 2021 2020

10 unchanged sentences

General and administrative expenses

(775) (667) (1,378) (1,311)

Underwriting income (loss)

5 unchanged sentences

General and administrative expense ratio

12.2 % 6.9 % 11.6 % 4.7 %

Expense ratio

2 unchanged sentences

(52.8) % 96.3 % 3.2 % 109.3 %

The combined ratio decreased 48.5 percentage points to 67.6% for the three months ended March 31, 2021 compared to 116.1% for the same period in 2020.

This was driven by the impact of favorable prior year loss development of $5.6 million or 100.8 percentage points during the first quarter of 2021.

Prior year favorable development in 2021 was primarily due to Workers Compensation partly offset by adverse development within Hospital Liability.

Premiums — There were negative gross and net premiums written for the three months ended March 31, 2021 reflecting premium adjustments on Small Commercial Business policies in the AmTrust Quota Share.

Furthermore, the termination of the AmTrust Quota Share and the European Hospital Liability Quota Share as of January 1, 2019 resulted in no new business written under these contracts since 2018.

The table below shows net premiums written by category for the three months ended March 31, 2021 and 2020:

For the Three Months Ended March 31, 2021 2020

The combined ratio decreased 149.1 percentage points to (52.8)% for the three months ended June 30, 2021 compared to 96.3% for the same period in 2020.

This was primarily driven by the impact of favorable prior year loss development of $11.9 million or 186.7 percentage points during the second quarter of 2021 compared to favorable development of $0.4 million or 4.3 percentage points during the second quarter of 2020.

Prior year favorable development for the three months ended June 30, 2021 was driven by Workers Compensation and Commercial Auto Liability.

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

Underwriting loss for the current accident year during the three months ended June 30, 2021 was $2.2 million compared to an underwriting loss of $0.1 million for the current accident year in the same period in 2020.

The combined ratio decreased by 106.1 percentage points to 3.2% for the six months ended June 30, 2021 compared to 109.3% for 2020 primarily due to the impact of favorable prior year loss development of $17.4 million or 146.7 percentage points during 2021 compared to the impact of favorable prior year loss development of $0.4 million or 1.5 percentage points during 2020.

Prior year favorable development in 2021 was primarily due to Workers Compensation and Commercial Auto

Liability partly offset by adverse development within Hospital Liability.

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

Underwriting loss for the current accident year during the six months ended June 30, 2021 was $5.9 million compared to an underwriting loss of $3.1 million for the current accident year in the same period in 2020 which excludes the impact of prior period development in both respective periods.

Premiums — The tables below show net premiums written by category for the three and six months ended June 30, 2021 and 2020, respectively:

For the Three Months Ended June 30, 2021 2020

($ in thousands) Total Total

6 unchanged sentences

$ (1,757) $ (4,463)

Net premiums earned decreased by $13.2 million or 70.4% for the three months ended March 31, 2021 compared to the same respective period in 2020 due to termination of the AmTrust Quota Share and European Hospital Liability Quota Share as of January 1, 2019.

The negative premiums earned for the three months ended March 31, 2021 were due to premium adjustments on Small Commercial Business policies in the AmTrust Quota Share.

The table below details net premiums earned by category for the three months ended March 31, 2021 and 2020:

For the Three Months Ended March 31, 2021 2020 Change in

For the Six Months Ended June 30, 2021 2020

($ in thousands) Total Total

Net Premiums Written

Small Commercial Business

$ (4,072) $ (6,394)

Specialty Program

Specialty Risk and Extended Warranty

Total AmTrust Reinsurance

$ (4,219) $ (4,463)

The negative gross and net premiums written for the three and six months ended June 30, 2021 reflect premium adjustments on Small Commercial Business policies in the AmTrust Quota Share.

Furthermore, the termination of the AmTrust Quota Share and the European Hospital Liability Quota Share as of January 1, 2019 resulted in no new business written under these contracts since 2018.

Net premiums earned decreased by $3.4 million or 35.1% and $16.6 million, or 58.3% for the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020 due to termination of the AmTrust Quota Share and European Hospital Liability Quota Share as of January 1, 2019.

There were negative premiums earned for the three and six months ended June 30, 2021 in Small Commercial Business due to premium adjustments on such policies in the AmTrust Quota Share.

The tables below detail net premiums earned by category for the three and six months ended June 30, 2021 and 2020:

For the Three Months Ended June 30, 2021 2020 Change in

($ in thousands) Total % of Total Total % of Total $ %

8 unchanged sentences

$ 6,350 100.0 % $ 9,781 100.0 % $ (3,431) (35.1) %

Net Loss and LAE — Net loss and LAE decreased by $13.1 million or 93.3% for the three months ended March 31, 2021 compared to the same respective period in 2020 due to the impact of favorable prior year loss development of $5.6 million.

Net loss and LAE ratios decreased to 17.1% for the three months ended March 31, 2021 compared to 75.2% for the same respective period in 2020.

During the three months ended March 31, 2021, the net loss and LAE ratio decreased by 58.1 percentage points compared to the same period in 2020 primarily due to the impact of favorable prior year loss development of $5.6 million or 100.8 percentage points during the three months ended March 31, 2021 on the loss ratio.

There was no prior year loss development recognized for the same period in 2020.

Prior year favorable development in 2021 was primarily due to Workers Compensation partly offset by adverse development within Hospital Liability.

Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $4.8 million or 68.7% for the three months ended March 31, 2021 compared to the same respective period in 2020 due to lower net earned premiums as a result of terminating both quota share agreements with AmTrust effective as of January 1, 2019.

The commission and other acquisition expense ratio increased to 39.6% for the three months ended March 31, 2021 compared to 37.4% for the same respective period in 2020.

General and Administrative Expenses — General and administrative expenses decreased by $41.0 thousand or 6.4% for the three months ended March 31, 2021 compared to the same respective period in 2020.

The general and administrative expense ratios increased to 10.9% for the three months ended March 31, 2021 compared to 3.5% for the same respective period in 2020 as a result of lower earned premiums due to terminating both quota share agreements with AmTrust as of January 1, 2019.

The overall expense ratio (including commission and other acquisition expenses) increased to 50.5% for the three months ended March 31, 2021 compared to 40.9% for the same respective period in 2020 primarily due to significantly lower earned premiums as discussed above.

For the Six Months Ended June 30, 2021 2020 Change in

($ in thousands) Total % of Total Total % of Total $ %

Net Premiums Earned

Small Commercial Business

$ (3,846) (32.4) % $ (6,173) (21.7) % $ 2,327 (37.7) %

Specialty Program

(16) (0.1) % 501 1.8 % (517) (103.2) %

Specialty Risk and Extended Warranty

15,736 132.5 % 34,137 119.9 % (18,401) (53.9) %

Total AmTrust Reinsurance

$ 11,874 100.0 % $ 28,465 100.0 % $ (16,591) (58.3) %

Net Loss and LAE — Net loss and LAE decreased by $11.5 million or 232.3% and $24.6 million or 129.6% for the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020 due to the impact of

favorable prior year loss development of $11.9 million and $17.4 million, respectively.

Net loss and LAE ratios decreased to (103.5)% and (47.4)% for the three and six months ended June 30, 2021, respectively, compared to 50.8% and 66.8% for the same respective periods in 2020.

During the three months ended June 30, 2021, the net loss and LAE ratio decreased by 154.3 percentage points compared to the same period in 2020 primarily due to the impact of favorable prior year loss development of $11.9 million or 186.7 percentage points on the loss ratio during the three months ended June 30, 2021.

Prior year favorable development in 2021 was primarily driven by Workers Compensation and Commercial Auto Liability.

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

During the six months ended June 30, 2021, the net loss and LAE ratio decreased by 114.2 points compared to the six months ended in 2020 due to the impact of favorable prior year loss development of $17.4 million or 146.7 points in 2021 compared to favorable prior year development of $0.4 million or 1.5 points in 2020.

Prior year favorable development in 2021 was primarily due to favorable Workers Compensation and Commercial Auto Liability development partly offset by adverse development within Hospital Liability.

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

Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $1.3 million or 35.3% and $6.1 million or 57.0% for the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020 due to lower net earned premiums as a result of terminating both quota share agreements with AmTrust effective as of January 1, 2019.

The commission and other acquisition expense ratios were 38.5% and 39.0% for the three and six months ended June 30, 2021, respectively, compared to 38.6% and 37.8% for the same respective periods in 2020.

General and Administrative Expenses — General and administrative expenses increased by $0.1 million or 16.2% and $0.1 million or 5.1% for the three and six months ended June 30, 2021, respectively, compared to the same respective periods in 2020.

The general and administrative expense ratios increased to 12.2% and 11.6% for the three and six months ended June 30, 2021, respectively, compared to 6.9% and 4.7% for the same respective periods in 2020 as a result of lower earned premiums due to terminating both quota share agreements with AmTrust as of January 1, 2019.

The overall expense ratio (including commission and other acquisition expenses) increased to 50.7% and 50.6% for the three and six months ended June 30, 2021, respectively, compared to 45.5% and 42.5% for the same respective periods in 2020 primarily due to significantly lower earned premiums as discussed above.

Liquidity and Capital Resources

2 unchanged sentences

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

As of March 31, 2021, the Company had investable assets of $2.0 billion compared to $2.3 billion as of December 31, 2020.

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

The decrease in our investable assets is primarily the result of significant negative operating cash flows during three months ended March 31, 2021, particularly as a result of our cessation of active reinsurance underwriting combined with the disbursement of cash and investments to settle claim payments in 2021.

As of June 30, 2021, the Company had investable assets of $2.0 billion compared to $2.3 billion as of December 31, 2020.

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

The decrease in our investable assets is primarily the result of our cessation of active reinsurance underwriting in 2018 and 2019 which subsequently results in negative operating cash flows to settle claim payments from the run-off of the liabilities from that reinsurance portfolio in 2021.

The regulatory and liquidity requirements of the Company's operating segments are discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" section included under Item 7 of our Annual Report on Form 10- K for the year ended December 31, 2020, that was filed with the SEC on March 15, 2021.

22 unchanged sentences

While we continue to expect our cash flows to be sufficient to meet our cash requirements and to operate our business, our ability to execute our asset and capital management initiatives are dependent on maintaining adequate levels of unrestricted liquidity and cash flows.

At March 31, 2021 and December 31, 2020, unrestricted cash and cash equivalents and unrestricted fixed maturity investments were $216.4 million and $269.2 million, respectively.

The decrease in these balances during 2021

was partly the result of the $97.4 million utilized for the 2021 Preference Share Repurchase and $8.0 million utilized for net purchases of other investments, as described further in the discussion on investing and financing cash flows below.

The table below summarizes our operating, investing and financing cash flows for the three months ended March 31, 2021 and 2020:

For the Three Months Ended March 31, 2021 2020

At June 30, 2021 and December 31, 2020, unrestricted cash and cash equivalents and unrestricted fixed maturity investments were $189.3 million and $269.2 million, respectively.

The decrease in unrestricted balances during 2021 was largely the result of $124.7 million utilized for the 2021 Preference Share Repurchases, $21.6 million utilized for net purchases of other investments, and $17.9 million utilized for net purchases of equity method investments, as described further in the discussion on investing and financing cash flows below.

The table below summarizes our operating, investing and financing cash flows for the six months ended June 30, 2021 and 2020:

For the Six Months Ended June 30, 2021 2020

($ in thousands)

4 unchanged sentences

Financing activities

(127,183) (1)

Effect of exchange rate changes on foreign currency cash

1 unchanged sentence

Cash Flows used in Operating Activities

Cash flows used in operating activities for the three months ended March 31, 2021 were $102.8 million compared to cash flows used in operating activities of $218.5 million for the three months ended March 31, 2020, a decrease of $115.7 million.

The operating cash flows used in operations for the three months ended March 31, 2021 and 2020 were primarily the result of the termination of the AmTrust Quota Share including both the Partial Termination Amendment and the Commutation and Release Agreement, and the termination of the European Hospital Liability Quota Share, which produced negligible gross premiums written while claim payments have been principally from the run-off of existing reserves for loss and LAE.

Cash flows used in operating activities for the six months ended June 30, 2021 were $185.8 million compared to cash flows used in operating activities of $419.2 million for the six months ended June 30, 2020, a decrease of $233.4 million.

The operating cash flows used in operations for the six months ended June 30, 2021 and 2020 were primarily the result of claims payments from the terminated AmTrust Quota Share and the European Hospital Liability Quota Share contracts, which produced negligible gross premiums written which were more than offset by claim payments from the run-off of existing reserves for loss and LAE under those agreements.

Cash Flows from Investing Activities

Cash flows from investing activities consist primarily of proceeds from the sales and maturities of investments and payments for investments acquired.

Net cash provided by investing activities was $199.2 million for the three months ended March 31, 2021 compared to $288.5 million for the same period in 2020 due to proceeds from the sale of fixed maturity investments which were made to settle claim payments during the three months ended March 31, 2021 and 2020.

For the three months ended March 31, 2021, the proceeds from the sales, maturities and calls exceeded the purchases of fixed maturity securities by $205.1 million compared to an inflow of $291.4 million for the same period in 2020.

Net cash provided by investing activities was $251.0 million for the six months ended June 30, 2021 compared to $448.0 million for the same period in 2020 due to proceeds from the sale of fixed maturity investments which were made primarily to settle claim payments and repurchase preference shares during the six months ended June 30, 2021 and 2020.

For the six months ended June 30, 2021, the proceeds from the sales, maturities and calls exceeded the purchases of fixed maturity securities by $290.1 million compared to net proceeds of $453.0 million for the same period in 2020.

This was partly offset by $21.6 million utilized for net purchases of other investments and $17.9 million utilized for net purchases of equity method investments during the six months ended June 30, 2021.

Cash Flows from Financing Activities

Cash flows used in financing activities were $99.9 million for the three months ended March 31, 2021 due to the repurchase of the Company's preference shares.

During March 2021, the Company paid $97.4 million for the repurchase of 6,614,493 preference shares pursuant to the 2021 Preference Share Repurchase as part of its recent capital management strategy.

No dividends on common or preference shares were paid during the three months ended March 31, 2021 and 2020.

Cash flows used in financing activities were $127.2 million for the six months ended June 30, 2021 due to the repurchase of the Company's preference shares.

During the six months ended June 30, 2021, the Company paid $124.7 million for the repurchase of 8,517,037 preference shares pursuant to the 2021 Preference Share Repurchase Program as part of its recent capital management strategy.

No dividends on common or preference shares were paid during the six months ended June 30, 2021 and 2020.

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

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The Company's restrictions, collateral and specific requirements are discussed in " Management's Discussion and Analysis of Financial Condition and Results of Operations " section included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020, that was filed with the SEC on March 15, 2021.

At March 31, 2021 and December 31, 2020, restricted cash and cash equivalents and fixed maturity investments used as collateral were $0.9 billion and $1.1 billion, respectively.

This collateral represents 80.5% and 80.0% of the fair value of our total fixed maturity investments and cash, restricted cash and cash equivalents at March 31, 2021 and December 31, 2020, respectively.

At June 30, 2021 and December 31, 2020, restricted cash and cash equivalents and fixed maturity investments used as collateral were $0.8 billion and $1.1 billion, respectively.

This collateral represents 81.3% and 80.0% of the fair value of our respective total fixed maturity investments, cash, restricted cash and cash equivalents at June 30, 2021 and December 31, 2020, respectively.

Cash and Investments

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

Accordingly, the majority of our funds are invested in liquid, investment-grade fixed income securities which are all designated as available-for-sale at March 31, 2021.

As of March 31, 2021 and December 31, 2020, our cash and investments consisted of:

March 31, 2021 December 31, 2020

Accordingly, the majority of our funds are invested in liquid, investment-grade fixed income securities which are all designated as available-for-sale at June 30, 2021.

As of June 30, 2021 and December 31, 2020, our cash and investments consisted of:

June 30, 2021 December 31, 2020

($ in thousands)

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We categorize these investments as " Other Investments " and "Equity Method Investments" on our condensed consolidated balance sheets.

During 2020 and 2021, under this revised investment policy, we increased the amount of investments in these categories, and we expect to continue to increase the amounts invested therein.

Under our investment policy, investments included in these categories could include, but are not limited to, privately held investments, private equity, private credit lending funds, fixed-income funds, hedge funds, equity funds, real estate and other non-fixed-income investments.

For further details on these other investments, please see " Notes to Condensed Consolidated Financial Statements (unaudited) Note 4(b).

Other Investments" included under Part I Item 1 " Financial Information " of this Form 10-Q.

During 2020 and 2021, under this revised investment policy, we have increased the amount of investments in these categories, and we expect to continue to increase the amounts invested therein.

For further details on these other investments, in addition to the discussion of these investments herein, please see " Notes to Condensed Consolidated Financial Statements (unaudited) Note 4(b).

Other Investments and Equity Method Investments" included under Part I Item 1 " Financial Information " of this Form 10-Q.

Our investment performance is subject to a variety of risks, including risks related to general economic conditions, market volatility, interest rate fluctuations, foreign exchange risk, liquidity risk and credit and default risk.

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We believe our other investments and equity method investments portfolio provides diversification against our fixed-income investments and an opportunity for improved risk-adjusted return, however, the returns of these investments may be more volatile and we may experience significant unrealized gains or losses in any particular quarter or year.

In addition, we believe the returns produced by these investments will exceed our cost of capital, in particular our cost of debt capital.

It is too soon to determine if the actual returns will achieve this objective and it may be an extended period of time before that determination can be made.

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

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The substantial majority of our current and planned future investments are held by Maiden Reinsurance, whose investment policy has been approved by the Vermont DFR.

We may utilize a portion of Maiden Reinsurance's unrestricted assets to purchase affiliated securities and, during the first quarter of 2021, we utilized $97.4 million in conjunction with the 2021 Preference Share Repurchase.

We may utilize a portion of Maiden Reinsurance's unrestricted assets to purchase affiliated securities and, during the first half of 2021, we utilized $124.7 million in conjunction with the 2021 Preference Share Repurchases.

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

Cash & Cash Equivalents

At March 31, 2021, we consider the levels of cash and cash equivalents we are holding to be within our targeted ranges.

At June 30, 2021, we consider the levels of cash and cash equivalents we are holding to be within our targeted ranges.

During periods when interest rates experience greater volatility, we have periodically maintained more cash and equivalents to better assess current market conditions and opportunities within our defined risk appetite, and may do so in future periods.

Fixed Maturity Investments

The average yield and average duration of our fixed maturities, by asset class, and our cash and cash equivalents (restricted and unrestricted) are as follows at March 31, 2021 and December 31, 2020, respectively:

March 31, 2021 Original or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Average yield (1)

The average yield and average duration of our fixed maturities, by asset class, and our cash and cash equivalents (restricted and unrestricted) are as follows at June 30, 2021 and December 31, 2020, respectively:

June 30, 2021 Original or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Average yield (1)

Average duration (2)

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(2) Average duration in years.

During the three months ended March 31, 2021, the yield on the 10-year U.S.

During the six months ended June 30, 2021, the yield on the 10-year U.S.

Treasury bond increased by 52 basis points to 1.45%.

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

Treasury yield curve experienced a material upward shift during the three months ended March 31, 2021, reflecting concerns about potential inflation emanating from the combination of:

Treasury yield curve experienced a material upward shift during the six months ended June 30, 2021, reflecting concerns about potential inflation emanating from the combination of:

1) growing confidence in the U.S.

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and 3) continued accommodative monetary policy pursued by central banks globally.

The movement in the market values of our fixed maturity portfolio during the three months ended March 31, 2021 generated net unrealized losses of $23.8 million.

The movement in the market values of our fixed maturity portfolio during the six months ended June 30, 2021 generated net unrealized losses of $22.4 million.

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

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As noted, the fair value of our fixed maturity investments will fluctuate with changes in interest rates and credit spreads.

We attempt to maintain adequate liquidity in our fixed maturity investments portfolio with a strategy designed to emphasize the preservation of our invested assets and provide sufficient liquidity for the prompt payment of claims and contract liabilities.

We attempt to maintain adequate liquidity in our fixed maturity investments portfolio with a

strategy designed to emphasize the preservation of our invested assets and provide sufficient liquidity for the prompt payment of claims and contract liabilities.

Because we collateralize a significant portion of our insurance liabilities, unanticipated or large increases in interest rates could require us to utilize significant amounts of unrestricted cash and fixed maturity securities to provide additional collateral, which could impact our asset and capital management strategy described herein.

We also monitor the duration and structure of our investment portfolio as discussed below.

As of March 31, 2021, the aggregate hypothetical change in fair value from an immediate 100 basis points increase in interest rates, assuming credit spreads remain constant, in our fixed maturity investments portfolio would decrease the fair value of that portfolio by $33.3 million.

As of June 30, 2021, the aggregate hypothetical change in fair value from an immediate 100 basis points increase in interest rates, assuming credit spreads remain constant, in our fixed maturity investments portfolio would decrease the fair value of that portfolio by $27.8 million.

Actual shifts in interest rates may not change by the same magnitude across the maturity spectrum or on an individual security and, as a result, the impact on the fair value of our fixed maturity securities may be materially different from the resulting change in value described above.

To limit our exposure to unexpected interest rate increases which would reduce the value of our fixed income securities and reduce our shareholders' equity, we attempt to maintain the duration of our fixed maturity investment portfolio combined with our cash and cash equivalents, both restricted and unrestricted, within a reasonable range of the duration of our loss reserves.

At March 31, 2021 and December 31, 2020, these respective durations in years were as follows:

March 31, 2021 December 31, 2020

At June 30, 2021 and December 31, 2020, these respective durations in years were as follows:

June 30, 2021 December 31, 2020

Fixed maturities and cash and cash equivalents

Reserve for loss and LAE (1)

(1) The duration regarding our reserve for loss and LAE at March 31, 2021 is gross of LPT/ADC Agreement reserves.

On a net basis, the duration of our reserve for loss and LAE is 0.9 years at March 31, 2021 (December 31, 2020 - 0.9 years).

During the three months ended March 31, 2021, the weighted average duration of our fixed maturity investment portfolio increased by 0.2 years to 2.3 years while the duration for the reserve for loss and LAE remains unchanged at 3.9 years.

(1) The duration regarding our reserve for loss and LAE at June 30, 2021 is gross of LPT/ADC Agreement reserves.

On a net basis, the duration of our reserve for loss and LAE is 0.9 years at June 30, 2021 (December 31, 2020 - 0.9 years).

During the six months ended June 30, 2021, the weighted average duration of our fixed maturity investment portfolio remained unchanged at 2.1 years while the duration for the reserve for loss and LAE increased by 0.3 years to 4.2 years.

The differential in duration between these assets and liabilities may fluctuate over time and in the case of fixed maturities, historically has been affected by factors such as market conditions, changes in asset mix and prepayment speeds in the case of both our agency mortgage-backed securities ("Agency MBS") and commercial mortgage-backed securities.

At March 31, 2021, the duration of our fixed maturity investment portfolio increased slightly compared to December 31, 2020.

At March 31, 2021, the duration of our loss reserves net of the LPT/ADC Agreement was in line with the duration of our fixed maturity investment portfolio.

At March 31, 2021 and December 31, 2020, 100.0% of the Company’s U.S.

At June 30, 2021, the duration of our loss reserves net of the LPT/ADC Agreement was lower than the duration of our fixed maturity investment portfolio.

At June 30, 2021 and December 31, 2020, 100.0% of the Company’s U.S.

agency bond holdings are mortgage-backed.

Additional details on the Agency MBS holdings at March 31, 2021 and December 31, 2020 were as follows:

March 31, 2021 December 31, 2020

Additional details on the Agency MBS holdings at June 30, 2021 and December 31, 2020 were as follows:

June 30, 2021 December 31, 2020

($ in thousands) Fair Value % of Total Fair Value % of Total

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$ 153,453 100.0 % $ 281,437 100.0 %

Agency MBS bonds comprise 19.5% of our fixed maturity investments at March 31, 2021.

Agency MBS bonds comprise 16.3% of our fixed maturity investments at June 30, 2021.

Given their relative size to our total investments, if faster prepayment patterns were to occur over an extended period of time, this could potentially limit the growth in our investment income in certain circumstances or reduce the total amount of investment income we earn.

At March 31, 2021 and December 31, 2020, 96.2% and 96.1%, respectively, of our fixed maturity investments consisted of investment grade securities.

At June 30, 2021 and December 31, 2020, 95.3% and 96.1%, respectively, of our fixed maturity investments consisted of investment grade securities.

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

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

The security holdings by sector and financial strength rating of our corporate bond holdings at March 31, 2021 and December 31, 2020 were as follows:

March 31, 2021 AAA, AA+, AA, AA- A+, A, A- BBB+, BBB, BBB- BB+ or lower Fair Value % of Corporate bonds portfolio

The security holdings by sector and financial strength rating of our corporate bond holdings at June 30, 2021 and December 31, 2020 were as follows:

June 30, 2021 AAA, AA+, AA, AA- A+, A, A- BBB+, BBB, BBB- BB+ or lower Fair Value % of Corporate bonds portfolio

Corporate bonds

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(1) Ratings as assigned by S&P, or equivalent

At March 31, 2021, the Company’s ten largest corporate holdings, 46.3% of which are U.S.

dollar denominated, 38.3% of which are in the Consumer Sector and 39.6% of which are in the Financial Institutions sector, at fair value and as a percentage of all fixed income securities were as follows:

March 31, 2021 Fair Value % of Holdings Rating (1)

The table below includes the Company’s ten largest corporate holdings at fair value and as a percentage of all fixed income securities held as at June 30, 2021.

As of June 30, 2021, 46.0% are U.S.

dollar denominated and 54.0% are Euro denominated, 38.2% are in the Consumer Sector and 39.7% are in the Financial Institutions sector.

June 30, 2021 Fair Value % of Holdings Rating (1)

($ in thousands)

Electricite de France, 4.625%, Due 9/11/2024 $ 17,601 1.9 % A-

Brookfield Asset Management Inc., 4.00% Due 1/15/2025 13,106 1.3 % A-

Nordea Bank ABP, 0.875% Due 6/26/2023 13,209 1.4 % A

Brookfield Asset Management Inc., 4.00% Due 1/15/2025 13,127 1.4 % A-

Deutsche Bank AG, 1.25%, Due 9/8/2021 13,080 1.4 % BBB-

Bayer US Finance LLC, 3.375% Due 10/8/2024 12,925 1.3 % BBB+

Anheuser-Busch INBEV NV, 2.875% Due 9/25/2024 13,012 1.4 % BBB+

Bayer US Finance LLC, 3.375% Due 10/8/2024 12,891 1.4 % BBB

Carlsberg Breweries A/S, 2.5%, Due 5/28/2024 12,690 1.4 % BBB

Deutsche Bank AG (NY Branch), 3.7%, Due 5/30/2024 11,786 1.3 % BBB-

Total Capital International SA, 3.75%, Due 4/10/2024 10,962 1.1 % A+

Total Energies Capital International SA, 3.75%, Due 4/10/2024 10,858 1.2 % A+

Thompson Reuters Corp, 4.3% Due 11/23/23 10,729 1.1 % BBB

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(1) Ratings as assigned by S&P, or equivalent

At March 31, 2021 and December 31, 2020, respectively, we hold the following non-U.S.

At June 30, 2021 and December 31, 2020, respectively, we hold the following non-U.S.

dollar denominated securities:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

($ in thousands) Fair Value % of Total Fair Value % of Total

dollar denominated corporate bonds $ 318,582 87.7 % $ 349,231 97.3 %

dollar denominated asset-backed securities 41,266 11.4 % — — %

government bonds 3,440 0.9 % 9,708 2.7 %

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$ 363,288 100.0 % $ 358,939 100.0 %

At March 31, 2021 and December 31, 2020, respectively, these non-U.S.

At June 30, 2021 and December 31, 2020, respectively, these non-U.S.

securities are invested in the following currencies:

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

($ in thousands) Fair Value % of Total Fair Value % of Total

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$ 363,288 100.0 % $ 358,939 100.0 %

The net decrease in non-U.S.

denominated fixed maturities is primarily due to the relative depreciation of Euro denominated corporate bonds during the three months ended March 31, 2021.

At March 31, 2021 and December 31, 2020, all of the Company's non-U.S.

The net increase in non-U.S.

denominated fixed maturities is primarily due to the relative appreciation of Euro denominated corporate bonds during the six months ended June 30, 2021.

At June 30, 2021 and December 31, 2020, all of the Company's non-U.S.

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

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

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

($ in thousands) Fair Value % of Total Fair Value % of Total

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

denominated currencies at March 31, 2021 and December 31, 2020, respectively.

denominated currencies at June 30, 2021 and December 31, 2020, respectively.

Other Investments, Equity Method Investments and Equity Securities

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These include private equity and hedge funds investments, investments in limited partnerships, as well as investments in direct lending entities and investments in technology-oriented insurance related businesses known as insurtechs.

Our allocation to alternative investments increased to 9.8% of our total cash and investments as of March 31, 2021 compared to 7.3% as of December 31, 2020;

and increased to 28.1% of our total shareholders' equity as of March 31, 2021 compared to 20.3% as of December 31, 2020.

For further details on these other investments, please see " Notes to Condensed Consolidated Financial Statements:

Private equity investments consist of direct investments in privately held entities, investments in private equity funds and private equity co-investments with sponsoring entities.

Our allocation to alternative investments increased to 13.1% of our total cash and investments as of June 30, 2021 compared to 7.3% as of December 31, 2020;

and increased to 37.9% of our total shareholders' equity as of June 30, 2021 compared to 20.3% as of December 31, 2020.

For further details on other investments, see " Notes to Condensed Consolidated Financial Statements:

Note 4 - Investments" included under Part I Item 1.

"Financial Information" of this Report on Form 10-Q.

C ertain of the Company's investments in limited partnerships are related to real estate joint ventures with interests in multi-property projects with varying strategies ranging from the development of properties to the ownership of income-producing properties.

In certain of these joint ventures, the Company has provided certain indemnities, guarantees and commitments to certain parties such that it may be required to make payments now or in the future.

For further details on these financial guarantees, please see " Notes to Condensed Consolidated Financial Statements:

Note 11 - Commitments, Contingencies and Guarantees" included under Part I Item 1.

"Financial Information" of this Report on Form 10-Q.

Other Balance Sheet Changes

The following table summarizes our other material balance sheet changes at March 31, 2021 and December 31, 2020:

($ in thousands) March 31, 2021 December 31, 2020 Change Change %

The following table summarizes our other material balance sheet changes at June 30, 2021 and December 31, 2020:

($ in thousands) June 30, 2021 December 31, 2020 Change Change %

Reinsurance recoverable on unpaid losses

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42,708 51,903 (9,195) (17.7) %

Other assets 18,462 8,051 10,411 129.3 %

Reserve for loss and LAE

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The Company's deferred commission and other acquisition expenses decreased by 17.7% and unearned premiums decreased by 17.8% primarily due to the Partial Termination Amendment with AmTrust on a cut-off basis and the termination of the remaining business under both quota share contracts with AmTrust which are now in run-off with no new business written beginning January 1, 2019.

Accrued expenses and other liabilities decreased by 22.2% as at March 31, 2021 compared to December 31, 2020 due to payment of reinsurance balances payable as a result of claims incurred under the run-off of AmTrust reinsurance contracts.

Accrued expenses and other liabilities increased by 12.9% as at June 30, 2021 compared to December 31, 2020 due to reinsurance balances payable as a result of claims incurred under the run-off of AmTrust reinsurance contracts.

The Company's reserve for loss and LAE decreased by 11.6% primarily due to the payment of prior year loss claims as well as favorable loss development recognized for the AmTrust Reinsurance segment.

The decrease in the deferred gain on retroactive reinsurance for the three months ended March 31, 2021 by 13.1% is attributable to $9.8 million in loss and loss adjustment expenses recognized as favorable loss development in the Company’s GAAP income statement that are covered by the LPT/ADC Agreement.

This also impacted the reinsurance recoverable on unpaid losses which decreased by $11.9 million or 2.0% as at March 31, 2021 compared to December 31, 2020.

Other assets increased by 129.3% as at March 31, 2021 compared to December 31, 2020 due to the receivable for securities sold at the end of the first quarter of 2021.

The decrease in the deferred gain on retroactive reinsurance for the six months ended June 30, 2021 by 27.6% is attributable to $20.7 million in loss and LAE recognized as favorable loss development in the Company’s GAAP income statement that are covered by the LPT/ADC Agreement.

This also impacted the reinsurance recoverable on unpaid losses which decreased by $27.0 million or 4.6% as at June 30, 2021 compared to December 31, 2020.

Capital Resources

Capital resources consist of funds deployed in support of our operations.

In the three months ended March 31, 2021, our total capital resources decreased by $101.2 million, or 12.8% compared to December 31, 2020 due to unrealized losses on our fixed maturity investment portfolio and repurchases of preference shares partially offset by net income attributable to common shareholders.

The following table shows the movement in total capital resources at March 31, 2021 and December 31, 2020:

($ in thousands) March 31, 2021 December 31, 2020 Change Change %

In the six months ended June 30, 2021, our total capital resources decreased by $123.6 million, or 15.6% compared to December 31, 2020 primarily due to repurchases of our preference shares and unrealized losses on our fixed maturity investment portfolio partially offset by net income attributable to common shareholders.

The following table shows the movement in total capital resources at June 30, 2021 and December 31, 2020:

($ in thousands) June 30, 2021 December 31, 2020 Change Change %

Preference shares

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$ 666,712 $ 790,316 $ (123,604) (15.6) %

The major factors contributing to the net decrease in total capital resources were primarily due to total shareholders' equity at March 31, 2021 which decreased by $101.2 million, or 19.2% compared to December 31, 2020 due to the following factors:

• net decrease of $97.4 million from the 2021 Preference Share Repurchase composed of a decline in preference share capital of $165.4 million partly offset by:

(1) a gain on repurchase of preference shares of $62.5 million for the three months ended March 31, 2021 which increased retained earnings;

The major factors contributing to the net decrease in total capital resources were primarily due to total shareholders' equity at June 30, 2021 which decreased by $123.6 million, or 23.4% compared to December 31, 2020 due to the following factors:

• net decrease of $124.7 million from the 2021 Preference Share Repurchases composed of a decline in preference share capital of $212.9 million partly offset by:

(1) a gain on repurchase of preference shares of $81.2 million for the six months ended June 30, 2021 which increased retained earnings;

and (2) a net increase in additional paid-in capital of $7.1 million relating to proportionate share in issuance costs of preference shares repurchased, which was previously recognized as a reduction in additional paid-in capital;

• net decrease in AOCI of $18.1 million which arose due to:

(1) net unrealized losses on investment of $24.7 million resulting from the net decrease in the fair value of our investment portfolio relating to market price movements due to rising interest rates during the three months ended March 31, 2021;

(1) net unrealized losses on investment of $25.7 million resulting from the net decrease in the fair value of our investment portfolio relating to market price movements due to rising interest rates during the six months ended June 30, 2021;

less (2) an increase in cumulative translation adjustments of $7.6 million due to the strengthening of the U.S.

dollar on the remeasurement of net insurance-related liabilities denominated in euro during the three months ended March 31, 2021;

dollar on the remeasurement of net insurance-related liabilities denominated in euro during the six months ended June 30, 2021;

partly offset by:

• net income attributable to Maiden of $9.3 million for the three months ended March 31, 2021;

• net income attributable to Maiden of $17.4 million for the six months ended June 30, 2021;

• net increase due to share-based compensation of $1.8 million.

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" Financial Statements and Supplementary Data" of our Annual Report on Form 10-K for a discussion of the equity instruments issued by the Company as at December 31, 2020.

Book value and diluted book value per common share at March 31, 2021 and December 31, 2020 were computed as follows:

($ in thousands except share and per share data) March 31, 2021 December 31, 2020

Book value and diluted book value per common share at June 30, 2021 and December 31, 2020 were computed as follows:

($ in thousands except share and per share data) June 30, 2021 December 31, 2020

Ending common shareholders’ equity

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Diluted book value per common share

During the three months ended March 31, 2021, book value per common share increased by 45.9% to $2.29 and diluted book value per common share increased by 47.1% to $2.28, compared to December 31, 2020.

This was primarily due to the gain of $62.5 million on the 2021 Preference Share Repurchase which increased book value by $0.73 per common share.

Book value also increased due to net income of $9.3 million during the three months ended March 31, 2021, partially offset by a net decrease in AOCI of $14.6 million for the three months ended March 31, 2021.

During the six months ended June 30, 2021, book value per common share increased by 64.3% to $2.58 and diluted book value per common share increased by 65.2% to $2.56, compared to December 31, 2020.

This was primarily due to the gain of $81.2 million on the 2021 Preference Share Repurchases which increased book value by $0.94 per common share.

Book value also increased due to net income of $17.4 million during the six months ended June 30, 2021, partially offset by a net decrease in AOCI of $18.1 million for the six months ended June 30, 2021.

Common Shares

On February 21, 2017, the Company's Board of Directors approved the repurchase of up to $100.0 million of the Company's common shares from time to time at market prices.

During the three months ended March 31, 2021, the Company did not repurchase any common shares under its share repurchase authorization as it is precluded from repurchasing its common shares due to its failure to pay dividends on its preference shares.

During the six months ended June 30, 2021, the Company did not repurchase any common shares under its share repurchase authorization as it is precluded from repurchasing its common shares due to its failure to pay dividends on its preference shares.

Until such time as dividends on preference shares are paid, the Company will not be able to repurchase or pay dividends on its common shares.

At March 31, 2021, the Company had a remaining authorization of $74.2 million for share repurchases.

At June 30, 2021, the Company had a remaining authorization of $74.2 million for share repurchases.

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

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The acquisition by Maiden Reinsurance of the preference shares pursuant to the tender offer was made in compliance with Maiden Reinsurance's investment policy previously approved b y the Vermont DFR.

The principal purpose of the 2020 Tender Offer was to adjust our capital structure to reflect current operations and the amount of capital required to operate Maiden Reinsurance.

The Board has not declared or paid a dividend on the preference shares since the fourth quarter of 2018 and there can be no assurance that it will declare and pay dividends on the preference shares in the future.

The preference shares are perpetual and there is no fixed date on which we are required to redeem or otherwise repurchase them.

Maiden Reinsurance used unrestricted cash of $29.7 million to repurchase the preference shares pursuant to the 2020 Tender Offer.

On March 3, 2021, the Company's Board approved the repurchase, including the repurchase by Maiden Reinsurance within its investment guidelines, of up to $100.0 million of the Company's preference shares.

Please refer to "Notes to Consolidated Financial Statements - Note 6 — Shareholders' Equity" under Part 1 Item 1 "Financial Information" of this Quarterly Report on Form 10-Q for further information on our preference shares.

During March 2021, Maiden Reinsurance accepted for purchase primarily via private negotiation with certain security holders, (i) 2,561,636 shares of the Company's 8.25% Non-Cumulative Preference Shares Series A at an average price of $14.88 per share, (ii) 2,028,961 shares of the Company's 7.125% Non-Cumulative Preference Shares Series C at an average price of $14.65 per share, and (iii) 2,023,896 shares o f the Company's 6.7% Non-Cumulative Preference Shares Series D at an average price of $14.60 per share for a total amount of $97.4 million.

The acquisition by Maiden Reinsurance of these preference shares was made in compliance with the Company's investment guidelines previously approved by the Vermont DFR.

These purchases have resulted in a gain on purchase of $62.5 million in the first quarter of 2021.

As of March 31, 2021 , the Company had a remaining authorization of $2.6 million for preference share repurchases.

On May 6, 2021, the Company's Board of Directors approved the additional repurchase, including the repurchase by Maiden Reinsurance in accordance with its investment guidelines (as may be amended), of up to $50.0 million the Company's preference shares from time to time at market prices in open market purchases or as may be privately negotiated.

There were no changes in the Company’s Senior Notes at March 31, 2021 compared to December 31, 2020 and the Company did not enter into any short-term borrowing arrangements during the three months ended March 31, 2021.

On May 6, 2021, the Company's Board of Directors approved the additional repurchase, including the repurchase by Maiden Reinsurance in accordance with its investment guidelines (as may be amended), of up to $50.0 million of the Company's preference shares from time to time at market prices in open market purchases or as may be privately negotiated.

The authorizations that were approved on March 3, 2021 and May 6, 2021 are collectively referred to as the "2021 Preference Share Repurchase Program".

The principal purpose of the 2020 Tender Offer and 2021 Preference Share Repurchase Program is to adjust our capital structure to reflect current operations and the amount of capital required to operate Maiden Reinsurance.

The preference shares are perpetual and there is no fixed date on which we are required to redeem or otherwise repurchase them.

Please refer to "Notes to Consolidated Financial Statements - Note 6.

Shareholders' Equity" under Part 1 Item 1 "Financial Information" of this Quarterly Report on Form 10-Q for further information on our preference shares, including a summary of repurchases made of the Company's preference shares during the three and six months ended June 30, 2021.

As of June 30, 2021 , the Company had a remaining authorization of $25.3 million for preference share repurchases.

There were no changes in the Company’s Senior Notes at June 30, 2021 compared to December 31, 2020 and the Company did not enter into any short-term borrowing arrangements during the six months ended June 30, 2021.

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

Long Term Debt " included under Part I Item 1 " Financial Information" of this Form 10-Q for a discussion of the Company’s Senior Notes.

The ratio of Debt to Total Capital Resources at March 31, 2021 and December 31, 2020 was computed as follows:

($ in thousands) March 31, 2021 December 31, 2020

The ratio of Debt to Total Capital Resources at June 30, 2021 and December 31, 2020 was computed as follows:

($ in thousands) June 30, 2021 December 31, 2020

Senior notes - principal amount

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39.4 % 33.2 %

Off-Balance Sheet Arrangements

In certain of these joint ventures, the Company has provided certain indemnities, guarantees and commitments to ce rtain parties such that it may be required to make payments now or in the future as further described in the " Notes to Condensed Consolidated Financial Statements (unaudited) Note 11.

Commitments, Contingencies and Guarantees " included under Part I Item 1 " Financial Information" of this Form 10-Q.

Any loss for which the Company could be liable would be contingent on the default of a loan by the real estate joint venture entity for which the Company provided a financial guarantee to a lender.

While the Company has committed to aggregate limits as to the amount of guarantees it will provide as part of its limited partnerships, guarantees are only provided on an individual transaction basis and are subject to the terms and conditions of each transaction mutually agreed by the parties involved.

The Company is not bound to such guarantees without its express authorization.

As discussed above, at June 30, 2021, guarantees of $8.5 million have been provided to lenders by the Company on behalf of the real estate joint venture, however, the likelihood of the Company incurring any losses pertaining to project level financing guarantees was determined to be remote.

Therefore, no liability has been accrued under ASC 450-20.

Non-GAAP Measures

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

Non-GAAP operating earnings were $47.3 million for the three months ended March 31, 2021 compared to non-GAAP operating earnings of $3.1 million for the same period in 2020.

The Company's non-GAAP operating results included a non-GAAP underwriting loss of $8.3 million for the three months ended March 31, 2021 compared to an underwriting loss of $3.7 million for the same period in 2020, due to underwriting results not covered by the LPT/ADC Agreement, specifically the run-off of the AmTrust Quota Share with losses occurring after December 31, 2018 (including the additional ceding commission paid under the Partial Termination Amendment) as well as claims related to the European Hospital Liability Quota Share.

Non-GAAP operating earnings were $13.9 million for the three months ended June 30, 2021 compared to non-GAAP operating earnings of $1.2 million for the same period in 2020.

The Company's non-GAAP operating results included a non-GAAP underwriting loss of $2.4 million for the three months ended June 30, 2021 compared to an underwriting loss of $1.4 million for the same period in 2020, due to underwriting results not covered by the LPT/ADC Agreement, specifically the run-off of the AmTrust Quota Share with losses occurring after December 31, 2018 (including the additional ceding commission paid under the Partial Termination Amendment) as well as claims related to the European Hospital Liability Quota Share.

Non-GAAP operating earnings were $61.2 million for the six months ended June 30, 2021, compared to a non-GAAP operating earnings of $4.4 million for the same period in 2020.

The Company's non-GAAP operating results included a non-GAAP underwriting loss of $10.7 million for the six months ended June 30, 2021 compared to a non-GAAP underwriting loss of $5.1 million for the same period in 2020, due to underwriting results not covered by the LPT/ADC Agreement, specifically the run-off of the AmTrust Quota Share with losses occurring after December 31, 2018 (including the additional ceding commission paid under the Partial Termination Amendment) and claims related to the European Hospital Liability Quota Share.

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

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GAAP financial measure as follows:

For the Three Months Ended March 31, 2021 2020

For the Three Months Ended June 30, 2021 2020

($ in thousands except per share data)

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Net realized gains on investment (849) (8,875)

Total other-than-temporary impairment losses — 1,506

Foreign exchange and other gains (3,542) (8,197)

Foreign exchange and other losses 1,588 2,295

Interest in income of equity method investments (2,775) —

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Net realized gains on investment (0.01) (0.11)

Foreign exchange and other losses 0.02 0.03

Interest in income of equity method investments (0.03) —

Favorable prior year loss development subject to LPT/ADC Agreement (0.13) (0.02)

Non-GAAP diluted operating earnings per share available to common shareholders

$ 0.16 $ 0.01

For the Six Months Ended June 30, 2021 2020

($ in thousands except per share data)

Net income available to Maiden common shareholders $ 98,562 $ 30,073

Add (subtract):

Net realized gains on investment

(8,950) (19,913)

Total other-than-temporary impairment losses — 1,506

Foreign exchange and other gains (1,954) (5,902)

Favorable prior year loss development subject to LPT/ADC Agreement (20,687) (1,410)

Interest in income of equity method investments (5,722) —

Non-GAAP operating earnings $ 61,249 $ 4,354

Diluted earnings per share attributable to common shareholders $ 1.14 $ 0.35

Add (subtract):

Net realized gains on investment

(0.10) (0.24)

Total other-than-temporary impairment losses — 0.02

Foreign exchange and other gains (0.02) (0.07)

Favorable prior year loss development subject to LPT/ADC Agreement (0.24) (0.01)

Non-GAAP diluted operating earnings per share available to common shareholders

Interest in income of equity method investments (0.07) —

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

$ 0.71 $ 0.05

Non-GAAP Operating ROACE

Non-GAAP Operating ROACE for the three months ended March 31, 2021 and 2020 was computed as follows:

For the Three Months Ended March 31,

Non-GAAP Operating ROACE for the three and six months ended June 30, 2021 and 2020 was computed as follows:

For the Three Months Ended June 30, For the Six Months Ended June 30,

($ in thousands) 2021 2020 2021 2020

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Non-GAAP Operating ROACE

20.7 % 3.2 % 50.9 % 5.3 %

Non-GAAP Underwriting Results and Combined Ratio

The following summarizes our non-GAAP underwriting results for the three months ended March 31, 2021 and 2020:

For the Three Months Ended March 31,

The following summarizes our non-GAAP underwriting results for the three and six months ended June 30, 2021 and 2020:

For the Three Months Ended June 30, For the Six Months Ended June 30,

($ in thousands) 2021 2020 2021 2020

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153.9 % 138.4 % 206.6 % 134.3 %

(1) Non-GAAP underwriting loss, non-GAAP net loss and LAE, non-GAAP net loss and LAE ratio, and non-GAAP combined ratio for the three months ended March 31, 2021 include the impact of prior year reserve development subject to the LPT/ADC Agreement.

(1) Non-GAAP underwriting loss, non-GAAP net loss and LAE, non-GAAP net loss and LAE ratio, and non-GAAP combined ratio for the three and six months ended June 30, 2021 include the impact of prior year reserve development subject to the LPT/ADC Agreement.

Please see the "Key Financial Measures" section for definitions of Non-GAAP underwriting loss, net loss and LAE, non-GAAP net loss and LAE ratio, and non-GAAP combined ratio.

The non-GAAP underwriting results as well as the non-GAAP loss and LAE and ratios and non-GAAP combined ratios include the impact of prior year loss reserve development related to the AmTrust Quota Share which is fully recoverable from Cavello and subject to the LPT/ADC Agreement to show the ultimate economic benefit to the Company.

As shown in the table above, adjusted for the impact of favorable prior year reserve development subject to the LPT/ADC Agreement of $9.8 million during the three months ended March 31, 2021, the non-GAAP underwriting loss was $8.3 million.

This compared to a non-GAAP underwriting loss of $3.7 million for the same period in 2020.

As shown in the table above, adjusted for the impact of favorable prior year reserve development subject to the LPT/ADC Agreement of $10.8 million and $20.7 million during the three and six months ended June 30, 2021, respectively, the non-GAAP underwriting loss was $2.4 million and $10.7 million, respectively.

This compared to a non-GAAP underwriting loss of $1.4 million and an underwriting loss of $5.1 million for the same respective periods in 2020 when adjusted for the impact of favorable prior year reserve development subject to the LPT/ADC Agreement of $1.4 million during the three and six months ended June 30, 2020.

The non-GAAP underwriting results above were due to underwriting results in the AmTrust Reinsurance segment not covered by the LPT/ADC Agreement, specifically the run-off of the AmTrust Quota Share with losses occurring after December 31, 2018 (including the additional ceding commission paid under the Partial Termination Amendment) as well as claims related to the European Hospital Liability Quota Share.

Results in the Diversified Reinsurance segment during the three months ended March 31, 2021 and 2020, respectively, were stable.

The non-GAAP combined ratio during the three months ended March 31, 2021 was 267.1%, compared to 131.6% during the same period in 2020 as shown in the table below:

For the Three Months Ended March 31,

Results in the Diversified Reinsurance segment during the three and six months ended June 30, 2021 and 2020 were relatively stable.

The non-GAAP combined ratio during the three and six months ended June 30, 2021 was 153.9% and 206.6%, respectively, compared to 138.4% and 134.3% during the same respective periods in 2020 as shown in the table below:

For the Three Months Ended June 30, For the Six Months Ended June 30,

2021 2020 2021 2020

Combined ratio

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Non-GAAP Net Loss and LAE

Adjusted for the impact of favorable prior year loss development on AmTrust reserves subject to the LPT/ADC Agreement, non-GAAP net loss and LAE for the three months ended March 31, 2021 increased by $9.8 million as this amount is ultimately recoverable from Cavello.

Adjusted for the impact of favorable prior year loss development on AmTrust reserves subject to the LPT/ADC Agreement, non-GAAP net loss and LAE for the three and six months ended June 30, 2021 increased by $10.8 million and $20.7 million, respectively, as this amount is ultimately recoverable from Cavello.

In comparison, adjusted for the impact of favorable prior year loss development on AmTrust reserves subject to the LPT/ADC Agreement during the three and six months ended June 30, 2020, the non-GAAP net loss and LAE increased by $1.4 million as these reserves are ultimately recoverable from Cavello.

This adjustment is reflected in the calculation of non-GAAP Loss and LAE as shown below:

For the Three Months Ended March 31,

For the Three Months Ended June 30, For the Six Months Ended June 30,

($ in thousands) 2021 2020 2021 2020

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$ 5,515 $ 12,418 $ 17,719 $ 33,504

Adjusted for the impact of favorable prior year loss development on AmTrust reserves subject to the LPT/ADC Agreement of $9.8 million during the three months ended March 31, 2021, non-GAAP net loss and LAE was $12.2 million as shown in the

The non-GAAP net loss and LAE ratio was 101.4% for the three months ended March 31, 2021 compared to 66.7% for the same period in 2020.

Adjusted for the impact of favorable prior year loss development on AmTrust reserves subject to the LPT/ADC Agreement of $10.8 million and $20.7 million during the three and six months ended June 30, 2021, respectively, non-GAAP net loss and LAE was $5.5 million and $17.7 million, respectively, as shown in the table above.

Adjusted for the impact of favorable prior year loss development on AmTrust reserves subject to the LPT/ADC Agreement of $1.4 million during the three and six months ended June 30, 2020, the non-GAAP loss and LAE was $12.4 million and $33.5 million, respectively.

The non-GAAP net loss and LAE ratio was 39.8% and 68.5% for the three and six months ended June 30, 2021, respectively, compared to 57.6% and 63.0% for the same respective periods in 2020.

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

The Adjusted Shareholders' Equity, Adjusted Total Capital Resources and Adjusted Book Value per Common Share at March 31, 2021 and December 31, 2020 reflect the addition of the unamortized deferred gain on retroactive reinsurance to the GAAP shareholders' equity as depicted in the computations below.

The estimated deferred gain of $65.1 million at March 31, 2021 and $74.9 million at December 31, 2020 arises from the LPT/ADC Agreement with Cavello relating to losses subject to that agreement which are fully recoverable from Cavello.

The decrease in the unamortized deferred gain on retroactive reinsurance for the three months ended March 31, 2021 is attributable to $9.8 million in loss and loss adjustment expenses recognized as favorable loss development in the Company's GAAP income statement that are subject to the LPT/ADC Agreement.

The Adjusted Shareholders' Equity, Adjusted Total Capital Resources and Adjusted Book Value per Common Share at June 30, 2021 and December 31, 2020 reflect the addition of the unamortized deferred gain on retroactive reinsurance to the GAAP shareholders' equity as depicted in the computations below.

The estimated deferred gain of $54.3 million at June 30, 2021 and $74.9 million at December 31, 2020 arises from the LPT/ADC Agreement with Cavello relating to losses subject to that agreement which are fully recoverable from Cavello.

The decrease in the unamortized deferred gain on retroactive reinsurance for the six months ended June 30, 2021 is attributable to $20.7 million in loss and loss adjustment expenses recognized as favorable loss development in the Company's GAAP income statement that are subject to the LPT/ADC Agreement.

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

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

The following table computes adjusted shareholders' equity and adjusted total capital resources by recognizing the unamortized deferred gain on retroactive reinsurance at March 31, 2021 and December 31, 2020:

($ in thousands) March 31, 2021 December 31, 2020 Change Change %

The following table computes adjusted shareholders' equity and adjusted total capital resources by recognizing the unamortized deferred gain on retroactive reinsurance at June 30, 2021 and December 31, 2020:

($ in thousands) June 30, 2021 December 31, 2020 Change Change %

Preference shares

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Reconciliation of Book Value per Common Share to Adjusted Book Value per Common Share

The adjusted book value per common share as reconciled for the recognition of the unamortized deferred gain on retroactive reinsurance at March 31, 2021 and December 31, 2020 was computed as follows:

March 31, 2021 December 31, 2020

The adjusted book value per common share as reconciled for the recognition of the unamortized deferred gain on retroactive reinsurance at June 30, 2021 and December 31, 2020 was computed as follows:

June 30, 2021 December 31, 2020

Book value per common share

6 unchanged sentences

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

The ratio of Debt to Adjusted Total Capital Resources at March 31, 2021 and December 31, 2020 was computed as follows:

($ in thousands) March 31, 2021 December 31, 2020

The ratio of Debt to Adjusted Total Capital Resources at June 30, 2021 and December 31, 2020 was computed as follows:

($ in thousands) June 30, 2021 December 31, 2020

Senior notes - principal amount

15 unchanged sentences

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

At March 31, 2021, no such hedges or hedging strategies were in force or had been entered into.

At June 30, 2021, no such hedges or hedging strategies were in force or had been entered into.

We measure monetary assets and liabilities denominated in foreign currencies at period end exchange rates, with the resulting foreign exchange gains and losses recognized in the unaudited Condensed Consolidated Statements of Income.

1 unchanged sentence

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

Net foreign exchange gains of $3.4 million were generated during the three months ended March 31, 2021, compared to foreign exchange gains of $8.4 million for the three months ended March 31, 2020.

Net foreign exchange losses of $1.2 million and foreign exchange gains of $2.2 million were generated during the three and six months ended June 30, 2021, respectively, compared to net foreign exchange losses of $2.1 million and net foreign exchange gains of $6.3 million for the three and six months ended June 30, 2020, respectively.

Effects of Inflation

4 unchanged sentences

Off-Balance Sheet Arrangements

At March 31, 2021, we did not have any off-balance sheet arrangements as defined by Item 303(a) (4) of Regulation S-K.

At June 30, 2021, we did not have any off-balance sheet arrangements as defined by Item 303(a) (4) of Regulation S-K.

Recent Accounting Pronouncements

2 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis