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Item 2. Management’s Discussion and Analysis

2021-11-09 compared with 2021-08-09 · 437 added, 354 removed, 873 unchanged (48% of the section changed)

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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this "Form 10-Q" or this "Report").

References in this Form 10-Q to the terms "we", "us", "our", "the Company" or other similar terms mean the consolidated operations of Maiden Holdings, Ltd.

References in this Form 10-Q to the terms "we", "us", "our", "the Company", "Maiden" or other similar terms mean the consolidated operations of Maiden Holdings, Ltd.

and its subsidiaries, unless the context requires otherwise.

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Forward-looking statements speak only as of the date they are made and we undertake no obligation to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by law.

Maiden Holdings is a Bermuda-based holding company, previously focused on serving the needs of regional and specialty insurers in the United States ("U.S."), Europe and select other global markets.

Maiden Holdings is a Bermuda-based holding company.

As a result of a series of actions we have taken in recent years discussed below under Recent Developments , we create shareholder value by actively managing and allocating our assets and capital, including through ownership and management of businesses and assets mostly in the insurance and related financial services industries where we can leverage our deep knowledge of those markets.

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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 $25.1 million at June 30, 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

$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.

Maiden NA also maintains a portfolio of cash and fixed maturity investments, along with other strategic investments, of $16.7 million at September 30, 2021.

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

primarily related to our insurance liabilities result in a net DTA (before valuation allowance) of $91.7 million or $1.06 per common share as of September 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.

As our profitability continues to improve, however, we are evaluating this valuation allowance and the appropriate amount required.

For further details, please see "Note 16.

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

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

As a result, our strategic focus has shifted to activities which utilize our unrestricted cash and investments to manage our capital and where prudent, enhance our investment return by investing in asset classes which we believe will produce appropriate returns.

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

As a result, our strategic focus continues on activities which utilize our unrestricted cash and investments to manage our capital and where prudent, enhance our investment return by investing in asset classes which we believe will produce appropriate returns.

By enhancing our profitability through increased investment returns, we believe we also increase the likelihood of fully utilizing the significant NOLs described above which may create additional shareholder value.

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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 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.

While there is no guarantee that these recent loss development trends will persist, as our 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 our 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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We believe GLS not only enhances our profitability through both fee income and effective claims management services, but it will also increase our asset base through the addition of blocks of reserves or companies that can be successfully wound down.

Effective October 1, 2021, GLS has completed its first transaction, a loss portfolio transfer transaction which includes an adverse development cover and GLS continues to develop additional opportunities consistent with its business plan.

This should further enhance our ability to pursue the asset and capital management pillars of our business strategy.

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

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

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

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

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

For the Three Months Ended June 30, 2021 2020 Change

Three and Nine Months Ended September 30, 2021 and 2020 Financial Highlights

For the Three Months Ended September 30, 2021 2020 Change

Summary Consolidated Statement of Income Data (unaudited):

($ in thousands except per share data)

Net income $ 8,112 $ 9,212 $ (1,100)

Net (loss) income $ (3,140) $ 2,162 $ (5,302)

Gain from repurchase of preference shares 6,004 — 6,004

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Net income attributable to common shareholders (2)

0.31 0.11 0.20

Gain from repurchase of preferred securities per common share 0.22 — 0.22

Gain from repurchase of preference securities per common share 0.07 — 0.07

Gross premiums written 6,821 3,517 3,304

Net premiums earned 15,030 24,305 (9,275)

Underwriting income (loss) (3)

Underwriting (loss) income (3)

(3,649) 3,402 (7,051)

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Non-GAAP measures:

Non-GAAP operating earnings (1)

Non-GAAP operating loss (1)

$ (3,114) $ (2,313) $ (801)

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

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

(0.04) (0.03) (0.01)

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(4.5) % (5.6) % 1.1

For the Six Months Ended June 30, 2021 2020 Change

For the Nine Months Ended September 30, 2021 2020 Change

Summary Consolidated Statement of Income Data (unaudited):

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1.17 0.38 0.79

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

Gain from repurchase of preference shares per common share 1.01 — 1.01

Gross premiums written 7,865 20,233 (12,368)

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32.3 % 1.8 % 30.5

June 30, 2021 December 31, 2020 Change

September 30, 2021 December 31, 2020 Change

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

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37.3 % 30.3 % 7.0

(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.

(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 income (loss) are non-GAAP financial measures.

See " Key Financial Measures " for additional information.

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See " Key Financial Measures " for additional information.

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

See " Key Financial Measures " for additional information.

(8) Diluted book value per common share is calculated by dividing common shareholders' equity, adjusted for assumed proceeds from the exercise of dilutive options, by the number of outstanding common shares plus dilutive options and restricted shares (assuming exercise of all dilutive share based awards).

See " Key Financial Measures " for additional information.

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

(9) Adjusted book value per common share is a non-GAAP measure that is calculated using common shareholders' equity, adjusted by adding the following items to shareholders' equity:

1) the unamortized deferred gain on retroactive reinsurance arising from the LPT/ADC Agreement;

and 2) an adjustment which reflects the equity method accounting related to the fair value of certain hedged liabilities within an equity method investment in a limited partnership investment held by the Company wherein the ultimate realizable value of the asset supporting the hedged liabilities cannot currently be recognized at fair value, divided by the number of common shares outstanding.

See " Key Financial Measures " for additional information.

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

(10) Adjusted shareholders' equity and adjusted total capital resources are calculated by adding the following items to shareholders' equity:

1) the unamortized deferred gain on retroactive reinsurance arising from the LPT/ADC Agreement;

and 2) an adjustment which reflects the equity accounting related to the fair value of certain hedged liabilities within an equity method investment held by the Company wherein the ultimate realizable value of the asset supporting the hedged liabilities cannot currently be recognized at fair value.

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

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See " Key Financial Measures " for additional information.

total principal amount of debt divided by the sum of adjusted total capital resources.

(11) Ratio of debt to total capital resources is calculated using the total principal amount of debt divided by the sum of total capital resources.

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(3) foreign exchange and other gains or losses;

and (4) the portion of favorable or unfavorable prior year reserve development for which we have ceded the risk under retroactive reinsurance agreements and related changes in amortization of the deferred gain liability;

(4) the portion of favorable or unfavorable prior year reserve development for which we have ceded the risk under retroactive reinsurance agreements and related changes in amortization of the deferred gain liability;

and (5) interest in income of equity method investments.

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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 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.

While the Company has continued to utilize this non-GAAP measure in this Quarterly Report on Form 10-Q for the three and nine months ended September 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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of the value we are generating for our common shareholders, because management believes that growth in each metric ultimately results in growth in the Company’s common share price.

These metrics are impacted by the Company’s net income and external factors, such as interest rates, which can drive changes in unrealized gains or losses on our fixed income investment portfolio, as well as common or preferred share repurchases.

Ratio of Debt to Total Capital Resources:

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

Management has adjusted GAAP shareholders' equity by adding the unamortized deferred gain on retroactive reinsurance arising from the LPT/ADC Agreement to shareholders' equity.

Management has adjusted GAAP shareholders' equity by adding the following items to shareholders' equity:

1) the unamortized deferred gain on retroactive reinsurance arising from the LPT/ADC Agreement;

The unamortized deferred gain on retroactive reinsurance arising from the LPT/ADC Agreement includes the aggregate impact of:

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and 2) changes in estimated ultimate losses for certain workers' compensation reserves previously commuted by the Company to AmTrust which are subject to specific terms and conditions pursuant to the LPT/ADC Agreement.

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

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

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

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

The LP Investment Adjustment reflects the fair value of the assets not presently able to be recognized currently.

We believe reflecting the economic benefit of both items is helpful to understand future trends in our operations, which will improve the Company's shareholders' equity over the settlement or contract periods, respectively.

Certain Operating Measures

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Results of Operations

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,

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

For the Three Months Ended September 30, For the Nine Months Ended September 30,

($ in thousands) 2021 2020 2021 2020

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(1,990) (2,448) (7,975) (7,118)

Underwriting income (loss) (2)

Underwriting (loss) income (2)

(3,649) 3,402 6,377 (308)

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7,477 12,686 24,596 44,959

Net realized gains on investment

849 8,875 8,950 19,913

Net realized (losses) gains on investment (937) 4,287 8,013 24,200

Total other-than-temporary impairment losses

— (962) — (2,468)

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

Foreign exchange and other gains (losses) 4,116 (6,536) 6,070 (634)

Interest and amortization expenses (4,832) (4,832) (14,495) (14,493)

Income tax benefit 257 18 208 3

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

Net income 8,112 9,212 17,398 30,073

Income tax benefit (expense) 155 (17) 363 (14)

Interest in (loss) income of equity method investments (810) (154) 4,912 (154)

Net (loss) income (3,140) 2,162 14,258 32,235

Gain from repurchase of preference shares 6,004 — 87,168 —

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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 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.

Net income available to Maiden common shareholders for the three months ended September 30, 2021 was $2.9 million compared to $2.2 million for the same period in 2020.

The net improvement in results for the three months ended September 30, 2021 compared to the same period in 2020 was primarily due to the gain from repurchase of our preference shares of $6.0 million for the three months ended September 30, 2021.

Excluding the gain on the repurchase of our preference shares, net loss for the three months ended September 30, 2021 was $3.1 million compared to net income of $2.2 million for the same period in 2020.

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

• underwriting loss of $3.6 million for the three months ended September 30, 2021 compared to underwriting income of $3.4 million in the same period in 2020.

The deterioration in underwriting loss was largely due to:

◦ an underwriting loss of $9.0 million for the three months ended September 30, 2021 on a current accident year basis compared to an underwriting loss of $3.8 million for the same period in 2020 on a current accident year basis, due primarily to higher loss ratios on the run-off of unearned premium for terminated reinsurance contracts in the AmTrust segment;

which was partially offset by:

◦ favorable prior year loss development of $5.4 million or 35.3 percentage points in the third quarter of 2021 compared to favorable prior year loss development of $7.2 million or 29.5 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 third quarter of 2021;

• corporate general and administrative expenses decreased to $4.7 million for the three months ended September 30, 2021 compared to $5.7 million for the same period in 2020 due to lower staff related costs;

• net investment income decreased to $7.5 million for the three months ended September 30, 2021 compared to investment income of $12.7 million for the same period in 2020 primarily due to the decline in average fixed income assets of 27.5%;

• realized and unrealized losses on investment were $0.9 million for the three months ended September 30, 2021 compared to net realized gains of $4.3 million for the same period in 2020;

• net foreign exchange and other gains amounted to $4.1 million during the three months ended September 30, 2021, compared to net foreign exchange and other losses of $6.5 million for the same period in 2020;

• interest in loss of equity method investments was $0.8 million for the three months ended September 30, 2021 compared to interest in loss of equity method investments of $0.2 million for the same period in 2020.

Net income available to Maiden common shareholders for the nine months ended September 30, 2021 was $101.4 million compared to a net income of $32.2 million for the same period in 2020.

The net improvement in our results for the nine months ended September 30, 2021 compared to the same period in 2020 was primarily due to the gain from repurchase of our preference shares of $87.2 million for the nine months ended September 30, 2021.

Excluding the gain on the repurchase of our preference shares, net income for the nine months ended September 30, 2021 was $14.3 million compared to net income of $32.2 million for the same period in 2020.

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

• underwriting income of $6.4 million for the nine months ended September 30, 2021 compared to an underwriting loss of $0.3 million during the nine months ended September 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.

◦ favorable prior year loss development of $23.7 million or 57.8 percentage points for the nine months ended September 30, 2021 compared to favorable prior year loss development of $7.8 million or 10.1 percentage points for the same period in 2020 which were incurred primarily in 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.

◦ an underwriting loss of $17.3 million for the nine months ended September 30, 2021 on a current accident year basis compared to an underwriting loss of $8.1 million for the same period in 2020 on a current accident year basis, due primarily to higher loss ratios on the run-off of unearned premium for terminated reinsurance contracts in the AmTrust Reinsurance segment along with higher expense ratios caused by a significant decrease in earned premium.

• no investment impairment losses for the nine months ended September 30, 2021 compared to $2.5 million in 2020;

• net investment income decreased to $24.6 million for the nine months ended September 30, 2021 compared to $45.0 million for the same period in 2020, primarily due to the decline in average fixed income assets of 25.8%;

• realized and unrealized gains on investment decreased to $8.0 million for the nine months ended September 30, 2021 compared to $24.2 million for the same period in 2020;

• corporate general and administrative expenses increased to $21.6 million for the nine months ended September 30, 2021 compared to $18.9 million for the same period in 2020 due to higher incentive compensation costs incurred;

• foreign exchange and other gains increased to $6.1 million for the nine months ended September 30, 2021 compared to foreign exchange and other losses of $0.6 million for the same period in 2020;

• interest in income of equity method investments of $4.9 million for the nine months ended September 30, 2021 compared to an interest in loss of equity method investments of $0.2 million for the same period in 2020.

Net Premiums Written

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

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

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

($ in thousands) Total Total $ %

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Total $ 6,953 $ 3,031 $ 3,922 129.4 %

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

For the Nine Months Ended September 30, 2021 2020 Change in

($ in thousands) Total Total $ %

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Total $ 7,518 $ 17,493 $ (9,975) (57.0) %

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

Net premiums written for the three and nine months ended September 30, 2021 increased to $7.0 million and decreased to $7.5 million, respectively, compared to net premiums written of $3.0 million and $17.5 million in the same respective periods in 2020 due to:

• Premiums written in the Diversified Reinsurance segment decreased by $2.9 million or 32.9% and $17.0 million or 61.6% for the three and nine months ended September 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 negligible 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 nine months ended September 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 $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

Net premiums earned decreased by $9.3 million or 38.2% and $36.7 million or 47.8% for the three and nine months ended September 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 nine months ended September 30, 2021 and 2020:

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

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

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$ 15,030 100.0 % $ 24,305 100.0 % $ (9,275) (38.2) %

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

For the Nine Months Ended September 30, 2021 2020 Change in

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

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$ 40,106 100.0 % $ 76,828 100.0 % $ (36,722) (47.8) %

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.

Net premiums earned in the AmTrust Reinsurance segment for the three and nine months ended September 30, 2021 decreased by $5.5 million or 42.2% and $22.1 million or 53.2%, 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 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.

Net premiums earned in our Diversified Reinsurance segment for the three and nine months ended September 30, 2021 decreased by $3.8 million or 33.6% and $14.7 million or 41.4%, respectively, compared to the same respective periods in 2020

due to the 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 $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,

Total net investment income decreased by $5.2 million or 41.1% and $20.4 million or 45.3% for the three and nine months ended September 30, 2021, respectively, compared to the same respective periods in 2020 largely due to the decline in average aggregate fixed income assets of 27.5% and 25.8% in those same respective periods.

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

In addition, during 2021, our investment expenses associated with our alternative investments have increased compared to 2020 due to the additional time and expertise required to manage these investments.

Net investment income decreased partly due to the decline in annualized average book yields to 1.9% and 1.9% for the three and nine months ended September 30, 2021, respectively, compared to 2.1% and 2.4% for the three and nine months ended September 30, 2020, respectively, which was the result of both lower interest rates and shorter duration of assets in our fixed income portfolios.

The following table details our average aggregate fixed income assets (at cost) and annualized investment book yield for the three and nine months ended September 30, 2021 and 2020:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

($ in thousands) 2021 2020 2021 2020

Average invested assets (1)

$ 1,948,866 $ 2,518,159 $ 2,045,586 $ 2,621,092

Average book yield (2)

Average aggregate fixed income assets, at cost (1)

$ 1,708,297 $ 2,356,494 $ 1,870,686 $ 2,521,380

(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.

(2) Ratio of net investment income over average invested assets at fair value.

Net Realized Gains on Investment

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.

Annualized investment book yield 1.9 % 2.1 % 1.9 % 2.4 %

(1) Fixed income assets include available-for-sale ("AFS") securities, cash and restricted cash, funds held receivable, and loan to related party.

These amounts are an average of the amounts disclosed in our quarterly U.S.

GAAP consolidated financial statements.

Net Realized and Unrealized Gains on Investment

Net realized and unrealized losses on investment of $0.9 million and net realized and unrealized gains on investment of $8.0 million were recognized for the three and nine months ended September 30, 2021, respectively, compared to net realized gains of $4.3 million and $24.2 million for the same respective periods in 2020.

Net realized and unrealized losses and gains for the three and nine months ended September 30, 2021 included the recognition of $3.0 million in unrealized losses and $0.9 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 nine months ended September 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 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 $2.8 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.

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

There were $1.0 million and $2.5 million of OTTI losses recorded on two and four fixed maturity securities for the three and nine months ended September 30, 2020, respectively.

Interest in (Loss) Income of Equity Method Investments

The Company recognized interest in loss of equity method investments of $0.8 million and interest in income of equity method investments of $4.9 million for the three and nine months ended September 30, 2021, respectively, compared to interest in loss of equity method investments of $0.2 million for the three and nine months ended September 30, 2020.

The equity method investments mainly include hedge fund investments of $31.2 million and real estate investments of $42.6 million.

The following table shows our interest in the (loss) income from equity method investments for the three and nine months ended September 30, 2021 and 2020:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

($ in thousands) 2021 2020 2021 2020

Hedge fund investments $ (1,838) $ 376 $ 1,786 $ 376

Other investments 1,028 (530) 3,126 (530)

Interest in (loss) income from equity method investments $ (810) $ (154) $ 4,912 $ (154)

Net Loss and LAE

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.

Net loss and LAE increased by $1.4 million and decreased by $33.6 million during the three and nine months ended September 30, 2021, respectively, compared to the same respective periods in 2020 as our reinsurance liabilities continue to run off, along with favorable prior year reserve development of $5.4 million and $23.7 million for the three and nine months ended September 30, 2021, respectively.

The loss ratio for the third quarter of 2021 was impacted by net favorable prior year reserve development of $5.4 million or 35.3 percentage points compared to net favorable prior year reserve development of $7.2 million or 29.5 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 loss ratio for the nine months ended September 30, 2021 was impacted by net favorable prior year reserve development of $23.7 million or 57.8 percentage points compared to net favorable prior year reserve development of $7.8 million or 10.1 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.

The net loss and LAE ratios increased to 69.3% and decreased to 18.4% for the three and nine months ended September 30, 2021, respectively, compared to 36.9% and 52.9% for the same respective periods in 2020.

The increased loss ratio for the third quarter of 2021 was due to higher current underwriting year loss ratios associated with the run-off of unearned premium for terminated reinsurance contracts within the AmTrust Reinsurance segment.

The decreased loss ratio for the nine months ended September 30, 2021 was largely due to significant favorable prior year loss experience in the AmTrust Reinsurance segment.

Commission and Other Acquisition Expenses

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.

Commission and other acquisition expenses decreased by $3.3 million or 34.6% and $10.6 million or 35.7% for the three and nine months ended September 30, 2021, respectively, compared to the same respective periods in 2020.

The commission and other acquisition expense ratio increased to 41.6% and 46.6% for the three and nine months ended September 30, 2021, respectively, compared to 39.3% and 38.3% for the 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 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,

General and administrative expenses include both segment and corporate expenses segregated for analytical purposes as a component of underwriting income.

Total general and administrative expenses decreased by $1.5 million or 18.5% and increased by $3.6 million or 13.8% for the three and nine months ended September 30, 2021, respectively, compared to the same respective periods in 2020.

Corporate general and administrative expenses for the three and nine months ended September 30, 2021 decreased by $1.1 million or 18.4% and increased by $2.7 million or 14.5% compared to the same respective periods in 2020.

The $2.7 million increase in corporate expenses for the nine months ended September 30, 2021 compared to the same respective period in 2020 was due to higher discretionary equity-based and cash incentive staff compensation and higher professional fees incurred in 2021.

General and administrative expenses for the three and nine months ended September 30, 2021 and 2020 were comprised of:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

($ in thousands) 2021 2020 2021 2020

5 unchanged sentences

$ 6,650 $ 8,160 $ 29,553 $ 25,971

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.

The Company incurred operating expenses of $0.1 million and $3.0 million during the three and nine months ended September 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 and $9.7 million for the three and six months ended June 30, 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 $14.5 million for the three and nine months ended September 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 and six months ended June 30, 2021 and 2020, respectively.

The weighted average effective interest rate for the Senior Notes was 7.6% for the three and nine months ended September 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 $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.

Net foreign exchange and other gains amounted to $4.1 million and $6.1 million during the three and nine months ended September 30, 2021, respectively, compared to net foreign exchange and other losses of $6.5 million and $0.6 million for the same respective periods in 2020.

Net foreign exchange gains of $4.1 million and $6.3 million for the three and nine months ended September 30, 2021, 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 British pound and euro.

Net foreign exchange losses of $6.5 million and $0.2 million occurred during the three and nine months ended September 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 British pound and euro.

Underwriting Results by Reportable Segment

Diversified Reinsurance Segment

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,

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

For the Three Months Ended September 30, For the Nine Months Ended September 30,

($ in thousands) 2021 2020 2021 2020

13 unchanged sentences

(1,583) (1,818) (6,190) (5,177)

Underwriting loss $ (1,231) $ (381) $ (1,466) $ (1,075)

Underwriting income (loss) $ 2,061 $ (1,062) $ 595 $ (2,137)

Net loss and LAE ratio

8 unchanged sentences

73.1 % 109.2 % 97.3 % 105.9 %

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.

The combined ratio for the three and nine months ended September 30, 2021 decreased to 73.1% and 97.3%, respectively, compared to 109.2% and 105.9% for the same respective periods in 2020, largely due to favorable loss development partly offset by higher non-recurring general and administrative expenses in our IIS business, which increased the expense ratio.

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

Premiums — Gross premiums written decreased by $3.5 million or 37.9% and $19.6 million or 64.2% for the three and nine months ended September 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.

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

Direct premiums written by Maiden LF and Maiden GF increased by $1.1 million or 25.5% and $1.5 million or 9.9% during the three and nine months ended September 30, 2021, respectively, compared to the same respective periods in 2020.

Net premiums written decreased by $2.9 million or 32.9% and $17.0 million or 61.6% during the three and nine months ended September 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.

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

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

($ in thousands) Total Total $ %

5 unchanged sentences

$ 5,816 $ 8,666 $ (2,850) (32.9) %

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

For the Nine Months Ended September 30, 2021 2020 Change in

($ in thousands) Total Total $ %

5 unchanged sentences

$ 10,600 $ 27,591 $ (16,991) (61.6) %

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

Net premiums earned decreased by $3.8 million or 33.6% and $14.7 million or 41.4% during the three and nine months ended September 30, 2021, respectively, compared to the same respective periods in 2020 primarily due to lower earned

premiums from German Auto programs which were in run-off since January 1, 2021.

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

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

($ in thousands) Total Total $ %

5 unchanged sentences

$ 7,521 $ 11,323 $ (3,802) (33.6) %

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

For the Nine Months Ended September 30, 2021 2020 Change in

($ in thousands) Total Total $ %

5 unchanged sentences

$ 20,723 $ 35,381 $ (14,658) (41.4) %

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

Other Insurance Revenue — Other insurance revenue includes $0.1 million and $0.2 million of fee income earned from our GLS business for the three and nine months ended September 30, 2021, respectively, 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 nine months ended September 30, 2021 and 2020 as specified in the table below.

Other income of $0.1 million and $0.1 million for the three and nine months ended September 30, 2020, respectively, was generated from transitional services provided relating to the sale of Maiden US.

Other insurance revenue decreased by $0.1 million or 47.1% and increased by $27.0 thousand or 2.9% for the three and nine months ended September 30, 2021, respectively, compared to the same respective periods in 2020.

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

For the Three Months Ended September 30, 2021 2020 Change

($ in thousands)

2 unchanged sentences

Total Diversified Reinsurance $ 138 $ 261 $ (123) (47.1) %

For the Six Months Ended June 30, 2021 2020 Change

For the Nine Months Ended September 30, 2021 2020 Change

($ in thousands) %

2 unchanged sentences

Total Diversified Reinsurance $ 946 $ 919 $ 27 2.9 %

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.

Net Loss and LAE — Net loss and LAE decreased by $6.1 million or 91.6% and $16.5 million or 83.7% for the three and nine months ended September 30, 2021, respectively, compared to the same respective periods in 2020 due primarily to the run-off of reinsurance liabilities associated with our German auto programs.

Net loss and LAE ratio decreased to 7.2% and 14.8% for the three and nine months ended September 30, 2021, respectively, compared with 57.2% and 54.3% during the same respective periods in 2020.

During the three months ended September 30, 2021, the net loss and LAE ratio decreased by 50.0 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 $1.7 million or 21.9 percentage points during the three months ended September 30, 2021 compared to the impact of adverse development of $0.5 million or 4.2 percentage points on the loss ratio for the same period in 2020.

The loss development in 2021 was due to favorable development experienced in IIS and other run-off business while the loss development in 2020 was driven by adverse development experienced in our former European Capital Solutions business.

During the nine months ended September 30, 2021, the net loss and LAE ratio decreased by 39.5 percentage points compared to the same period in 2020.

The 2021 loss ratio was impacted by favorable prior year loss reserve development of $2.6 million or 12.1 percentage points during 2021, compared to the impact of adverse development of $0.3 million or 0.9 percentage points on the loss ratio in 2020.

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

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

As a result of these factors, as well as the impact on the loss ratio described above, the combined ratio increased by 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.

As a result of these factors, as well as the impact on the loss ratio described above, the combined ratio decreased by 36.1 and 8.6 percentage points for the three and nine months ended September 30, 2021, respectively, compared to the same respective periods in 2020.

Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $0.7 million or 17.7% and $1.9 million or 13.9% for the three and nine months ended September 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 nine months ended September 30, 2021 increased to 45.2% and 53.9%, respectively, compared to 36.3% and 37.3% 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 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.

General and Administrative Expenses — General and administrative expenses decreased by $0.2 million or 12.9% and increased by $1.0 million or 19.6% for the three and nine months ended September 30, 2021, respectively, compared to the same respective periods in 2020.

The general and administrative expense ratio increased to 20.7% and 28.6% for the three and nine months ended September 30, 2021, respectively, compared to 15.7% and 14.3% for the same respective periods in 2020 largely due to lower net premiums earned which decreased significantly as noted previously, 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 increased the expense ratio for the nine months ended September 30, 2021 compared to the same period in 2020.

The overall expense ratio (including commission and other acquisition expenses) for the three and nine months ended September 30, 2021 increased to 65.9% and 82.5%, respectively, compared to 52.0% and 51.6% for the same respective periods in 2020 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 $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,

The AmTrust Reinsurance segment reported an underwriting loss of $5.7 million and underwriting income of $5.8 million during the three and nine months ended September 30, 2021, respectively, compared to an underwriting income of $4.5 million and $1.8 million for the same respective periods in 2020.

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

For the Three Months Ended September 30, For the Nine Months Ended September 30,

($ in thousands) 2021 2020 2021 2020

11 unchanged sentences

(407) (630) (1,785) (1,941)

Underwriting income (loss)

$ 9,702 $ 364 $ 11,492 $ (2,635)

Underwriting (loss) income $ (5,710) $ 4,464 $ 5,782 $ 1,829

Net loss and LAE ratio

8 unchanged sentences

176.0 % 65.6 % 70.1 % 95.6 %

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

The combined ratio increased 110.4 percentage points to 176.0% for the three months ended September 30, 2021 compared to 65.6% for the same period in 2020.

This was primarily driven by the impact of a higher underwriting loss for the current accident year during the three months ended September 30, 2021 of $9.4 million compared to an underwriting loss of $3.3 million for the current accident year in the same period in 2020.

These results were due primarily to higher loss ratios on the run-off of unearned premium for terminated reinsurance contracts.

The results were partially offset by favorable prior year loss development of $3.7 million or 49.0 percentage points during the third quarter of 2021 compared to favorable development of $7.7 million or 59.5 percentage points during the third quarter of 2020.

Prior year favorable development for the three months ended September 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 Auto and General Liability.

The combined ratio decreased by 25.5 percentage points to 70.1% for the nine months ended September 30, 2021 compared to 95.6% for 2020 primarily due to the impact of favorable prior year loss development of $21.1 million or 108.9 percentage points during 2021 compared to the impact of favorable prior year loss development of $8.1 million or 19.6 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 Auto and General Liability.

These results were partially offset by a higher underwriting loss for the current accident year during the nine months ended September 30, 2021 of $15.3 million compared to an underwriting loss of $6.3 million for the current accident year in the same period in 2020.

These results were due primarily to higher loss ratios on the run-off of unearned premium for terminated reinsurance contracts in the segment.

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

For the Three Months Ended September 30, 2021 2020

($ in thousands) Total Total

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Specialty Risk and Extended Warranty

2,424 (3,303)

Total AmTrust Reinsurance

$ 1,137 $ (5,635)

For the Six Months Ended June 30, 2021 2020

For the Nine Months Ended September 30, 2021 2020

($ in thousands) Total Total

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Specialty Risk and Extended Warranty

2,306 (1,849)

Total AmTrust Reinsurance

$ (3,082) $ (10,098)

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.

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

There were negative gross and net premiums written for the three and nine months ended September 30, 2020 reflecting premium adjustments under the AmTrust Quota Share from April 1, 2020.

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

Net premiums earned decreased by $5.5 million or 42.2% and $22.1 million, or 53.2% for the three and nine months ended September 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 nine months ended September 30, 2021 in Small Commercial Business due to premium adjustments on such policies in the AmTrust Quota Share.

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

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

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

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

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$ 7,509 100.0 % $ 12,982 100.0 % $ (5,473) (42.2) %

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

For the Nine Months Ended September 30, 2021 2020 Change in

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

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$ 19,383 100.0 % $ 41,447 100.0 % $ (22,064) (53.2) %

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.

Net Loss and LAE — Net loss and LAE increased by $7.5 million or 308.0% and decreased by $17.1 million or 79.8% for the three and nine months ended September 30, 2021, respectively, compared to the same respective periods in 2020 due to the impact of favorable prior year loss development of $3.7 million and $21.1 million, respectively.

Net loss and LAE ratios increased to 132.6% and decreased to 22.3% for the three and nine months ended September 30, 2021, respectively, compared to 18.8% and 51.8% for the same respective periods in 2020.

During the three months ended September 30, 2021, the net loss and LAE ratio increased by 113.8 percentage points compared to the same period in 2020.

The impact of favorable prior year loss development of $3.7 million was 49.0 percentage points on the loss ratio during the three months ended September 30, 2021 compared to favorable prior year development of $7.7 million or 59.5 points in 2020.

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 2020 was primarily due to Workers Compensation partly offset by adverse development within Commercial Auto and General Liability programs.

Excluding the impact of favorable development in both respective periods, the current year loss ratio was 181.6% for the three months ended September 30, 2021 compared to 78.3% in 2020 due to higher loss ratios on the run-off of unearned premium for terminated reinsurance contracts.

During the nine months ended September 30, 2021, the net loss and LAE ratio decreased by 29.5 points compared to the nine months ended in 2020 due to the impact of favorable prior year loss development of $21.1 million or 108.9 points in 2021 compared to favorable prior year development of $8.1 million or 19.6 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.

Excluding the impact of favorable development in both respective periods, the current year loss ratio was 131.2% for the nine months ended September 30, 2021 compared to 71.4% in 2020 due to higher loss ratios on the run-off of unearned premium for terminated reinsurance contracts.

Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $2.6 million or 47.6% and $8.7 million or 53.8% for the three and nine months ended September 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 38.0% and 38.6% for the three and nine months ended September 30, 2021, respectively, compared to 42.0% and 39.1% for the same respective periods in 2020.

General and Administrative Expenses — General and administrative expenses decreased by $0.2 million or 35.4% and $0.2 million or 8.0% for the three and nine months ended September 30, 2021, respectively, compared to the same respective periods in 2020.

The general and administrative expense ratios increased to 5.4% and 9.2% for the three and nine months ended September 30, 2021, respectively, compared to 4.8% 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) decreased to 43.4% and increased to 47.8% for the three and nine months ended September 30, 2021, respectively, compared to 46.8% and 43.8% for the same respective periods in 2020.

Liquidity and Capital Resources

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

As of September 30, 2021, the Company had investable assets of $1.8 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 decline 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.

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and 2) the purchase of affiliated securities as demonstrated in the recent preference share tender offers.

The Investment Policy, as approved and as may be amended, maintains our established investment management and governance practices.

The Investment Policy, as approved and as amended, maintains our established investment management and governance practices.

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

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

As noted in our Business Strategy, in November 2020, we formed GLS which will specialize in providing a full range of legacy services to small insurance entities, We believe the formation of GLS is highly complementary to our overall longer-term strategy and will not only enhance our profitability through both fee income and effective claims management services, but it will also increase our asset base through the addition of blocks of reserves or companies that can be successfully wound down.

As noted in our Business Strategy, in November 2020, we formed GLS which will specialize in providing a full range of legacy services to small insurance entities.

Effective October 1, 2020, GLS has completed its first transaction, a loss portfolio transfer transaction which includes an adverse development cover and GLS continues to develop additional opportunities consistent with its business plan.

We believe the formation of GLS is highly complementary to our overall longer-term strategy and will not only enhance our profitability through both fee income and effective claims management services, but it will also increase our asset base through the addition of blocks of reserves or companies that can be successfully wound down.

While the development of the GLS platform over time should further enhance our ability to pursue the asset and capital management pillars of our business strategy, we still expect the trend of negative overall cash flows to continue to reduce our asset base going forward into 2021 and beyond.

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The Company’s management believes its current sources of liquidity are adequate to meet its cash requirements for the next twelve months as we generally expect negative operating cash flows to be sufficiently offset by positive investing cash flows.

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 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

liquidity and cash flows.

At September 30, 2021 and December 31, 2020, unrestricted cash and cash equivalents and unrestricted fixed maturity investments were $127.5 million and $269.2 million, respectively.

The decrease of $141.6 million in unrestricted cash and fixed maturity investments during 2021 was primarily the result of $132.2 million utilized for the 2021 Preference Share Repurchase Program, $37.0 million utilized for net purchases of other investments, and $37.7 million utilized for net purchases of equity method investments, and $14.3 million for interest payments on the Senior Notes, offset by $80.0 million of excess collateral released by AmTrust.

Please see the related discussion on investing and financing cash flows below.

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

For the Nine Months Ended September 30, 2021 2020

($ in thousands)

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Cash Flows used in Operating Activities

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 used in operating activities for the nine months ended September 30, 2021 were $299.8 million compared to cash flows used in operating activities of $447.7 million for the nine months ended September 30, 2020, a decrease of $147.9 million.

The operating cash flows used in operations for the nine months ended September 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 $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.

Net cash provided by investing activities was $344.2 million for the nine months ended September 30, 2021 compared to $528.7 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 during the nine months ended September 30, 2021 and 2020 as well as repurchase preference shares during the nine months ended September 30, 2021.

For the nine months ended September 30, 2021, the proceeds from the sales, maturities and calls exceeded the purchases of fixed maturity securities by $418.5 million compared to net proceeds of $572.8 million for the same period in 2020.

This was partly offset by $37.0 million utilized for net purchases of other investments and $37.7 million utilized for net purchases of equity method investments during the nine months ended September 30, 2021.

Cash Flows from Financing Activities

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.

Cash flows used in financing activities were $129.0 million for the nine months ended September 30, 2021 due mainly to the repurchase of the Company's preference shares.

During the nine months ended September 30, 2021, the Company paid $132.2 million for the repurchase of 9,075,673 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 nine months ended September 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 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.

At September 30, 2021 and December 31, 2020, restricted cash and cash equivalents and fixed maturity investments used as collateral were $0.7 billion and $1.1 billion, respectively.

This collateral represents 84.5% and 80.0% of the fair value of our respective total fixed maturity investments, cash, restricted cash and cash equivalents at September 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 June 30, 2021.

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

June 30, 2021 December 31, 2020

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

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

September 30, 2021 December 31, 2020

($ in thousands)

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Restricted cash and cash equivalents 21,651 61,786

Total Investments and Cash (including cash equivalents) $ 1,165,698 $ 1,456,133

Total Investments and Cash and Cash Equivalents $ 1,004,229 $ 1,456,133

In addition to the discussion on Cash and Cash Equivalents and Fixed Maturities that follows herein, please see the " Notes to Condensed Consolidated Financial Statements (unaudited) Note 4.

Investments " included under Part I Item 1 " Financial Information" of this Form 10-Q for further discussion on our available-for-sale fixed income securities.

Investments " included under Part I Item 1 " Financial Information" of this Form 10-Q for further discussion on our AFS fixed income securities.

As our insurance liabilities continue to run-off and the required capital to operate our business for regulatory purposes decreases, we have modified Maiden Reinsurance’s investment policy (which has been approved by the Vermont DFR as noted) and have expanded the range of asset classes we invest in to enhance the income and returns our investment portfolio produces.

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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.

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 (including joint ventures and limited partnerships) and other non-fixed-income investments.

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).

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

For further details on our other investments, in addition to the discussion of the 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.

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An increase in interest rates could result in significant losses, realized or unrealized, in the value of our investment portfolio.

A portion of portfolio consists of alternative investments that subject us to restrictions on redemption, which may limit our ability to withdraw funds for some period of time after the initial investment.

A portion of our portfolio consists of alternative investments that subject us to restrictions on redemption, which may limit our ability to withdraw funds for some period of time after the initial investment.

The values of, and returns on, such investments may also be more volatile.

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.

During the third quarter of 2021, we recognized $1.8 million loss in the interest of our equity method investment in hedge funds and we recognized $3.0 million in unrealized losses related to an investment in an insurtech start-up company that was acquired by a special purpose acquisition company.While 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.

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

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 half of 2021, we utilized $124.7 million in conjunction with the 2021 Preference Share Repurchases.

In addition, costs associated with evaluating, analyzing and monitoring these investments may require additional expenditures than traditional marketable securities.

During 2021, our investment expenses associated with our alternative investments have increased significantly compared to 2020.

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

We may utilize a portion of Maiden Reinsurance's unrestricted assets to purchase affiliated securities and, during the nine months ended September 30, 2021, we utilized $132.2 million in conjunction with the 2021 Preference Share Repurchase Program.

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

Cash & Cash Equivalents

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.

At September 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 cash 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 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)

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 September 30, 2021 and December 31, 2020, respectively:

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

During the nine months ended September 30, 2021, the yield on the 10-year U.S.

Treasury bond increased by 59 basis points to 1.52%.

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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 six months ended June 30, 2021, reflecting concerns about potential inflation emanating from the combination of:

Treasury yield curve experienced a material upward shift during the nine months ended September 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 six months ended June 30, 2021 generated net unrealized losses of $22.4 million.

The movement in the market values of our fixed maturity portfolio during the nine months ended September 30, 2021 generated net unrealized losses of $34.9 million which reduced our book value per common share by $0.40 during that period.

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 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.

As of September 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 $24.3 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 June 30, 2021 and December 31, 2020, these respective durations in years were as follows:

June 30, 2021 December 31, 2020

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

September 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 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.

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

On a net basis, the duration of our reserve for loss and LAE is 1.2 years at September 30, 2021 (December 31, 2020 - 0.9 years).

During the nine months ended September 30, 2021, the weighted average duration of our fixed maturity investment portfolio decreased 0.2 years to 1.9 years while the duration for the reserve for loss and LAE increased by 0.1 years to 4.0 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 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.

At September 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 September 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 June 30, 2021 and December 31, 2020 were as follows:

June 30, 2021 December 31, 2020

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

September 30, 2021 December 31, 2020

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

GNMA – fixed rate

$ — — % $ 17,385 6.2 %

GNMA – variable rate

4,412 2.9 % 5,409 1.9 %

FNMA – fixed rate

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57,290 47.3 % 138,733 49.3 %

GNMA – variable rate 3,993 3.3 % 5,409 1.9 %

GNMA – fixed rate — — % 17,385 6.2 %

$ 121,017 100.0 % $ 281,437 100.0 %

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

Agency MBS bonds comprise 15.7% of our fixed maturity investments at September 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 June 30, 2021 and December 31, 2020, 95.3% and 96.1%, respectively, of our fixed maturity investments consisted of investment grade securities.

At September 30, 2021 and December 31, 2020, 97.0% 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 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

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

September 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

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.

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 September 30, 2021.

As of September 30, 2021, 55.4% are U.S.

dollar denominated and 44.6% are Euro denominated, 39.4% are in the Consumer Sector and 30.6% are in the Financial Institutions sector.

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

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

($ in thousands)

Electricite de France, 4.625%, Due 9/11/2024 $ 17,020 2.2 % 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 13,034 1.7 % A-

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

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

Nordea Bank ABP, 0.875% Due 6/26/2023 12,878 1.7 % A

Bayer US Finance LLC, 3.375% Due 10/8/2024 12,781 1.6 % BBB

Anheuser-Busch INBEV NV, 2.875% Due 9/25/2024 12,646 1.6 % BBB+

Carlsberg Breweries A/S, 2.5%, Due 5/28/2024 12,330 1.6 % BBB

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Thompson Reuters Corp, 4.3% Due 11/23/23 10,650 1.4 % BBB

International Business Machines Corp., 7.0%, Due 10/30/2025 9,106 1.2 % A-

$ 122,934 15.9 %

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

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

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

dollar denominated securities:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

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

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$ 320,620 100.0 % $ 358,939 100.0 %

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

securities are invested in the following currencies:

June 30, 2021 December 31, 2020

At September 30, 2021 and December 31, 2020, respectively, our non-U.S.

dollar denominated securities were invested in the following currencies:

September 30, 2021 December 31, 2020

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

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$ 320,620 100.0 % $ 358,939 100.0 %

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.

The net decrease in non-U.S.

denominated fixed maturities is primarily due to the relative depreciation of Euro denominated corporate bonds during the nine months ended September 30, 2021.

At September 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.

For our non-U.S.

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

June 30, 2021 December 31, 2020

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 at September 30, 2021 and December 31, 2020:

September 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 June 30, 2021 and December 31, 2020, respectively.

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

Other Investments, Equity Method Investments and Equity Securities

Our alternative investments are categorized as other investments, equity method investments, and equity securities.

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.

These include private equity, private credit 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.

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.

Private credit investments consist of loans and other debt securities of privately held entities or investment sponsors.

Our allocation to alternative investments increased to 18.0% of our total cash and investments as of September 30, 2021 compared to 7.3% as of December 31, 2020;

and increased to 47.2% of our total shareholders' equity as of September 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.

Investments" included under Part I Item 1.

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

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

Investment Results

The following table summarizes our investment results for the three and nine months ended September 30, 2021 and 2020, respectively:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Net investment income:

2021 2020 2021 2020

Fixed income assets (1)

$ 8,042 $ 12,514 $ 26,074 $ 44,887

Cash and restricted cash (5) 55 11 710

Other investments, including equities 382 493 602 493

Investment expenses (942) (376) (2,091) (1,131)

Total net investment income 7,477 12,686 24,596 44,959

Net realized gains:

Fixed income assets (1)

1,791 3,948 5,794 23,938

Other investments, including equities 274 339 1,316 262

Total net realized gains 2,065 4,287 7,110 24,200

Net unrealized (losses) gains:

Other investments, including equities (3,002) — 903 —

Total net unrealized (losses) gains (3,002) — 903 —

Interest in (loss) income of equity method investment:

Interest in (loss) income of equity method investments (810) (154) 4,912 (154)

Total interest in (loss) income of equity method investments (810) (154) 4,912 (154)

Total investment return included in earnings (A) $ 5,730 $ 16,819 $ 37,521 $ 69,005

Other comprehensive income (loss):

Unrealized (losses) gains on AFS and Equity Method Investments excluding foreign exchange (B) $ (9,066) $ 234 $ (26,453) $ (8,919)

Total investment return = (A) + (B) $ (3,336) $ 17,053 $ 11,068 $ 60,086

Annualized income from fixed income assets and cash (2)

$ 32,148 $ 50,276 $ 34,780 $ 60,796

Average aggregate fixed income assets and cash, at cost (2)

1,708,297 2,356,494 1,870,686 2,521,380

Annualized investment book yield 1.9 % 2.1 % 1.9 % 2.4 %

Average aggregate invested assets, at fair value (3)

$ 1,896,211 $ 2,435,362 $ 2,046,594 $ 2,600,508

Investment return included in net earnings 0.3 % 0.7 % 1.8 % 2.7 %

Total investment return (0.2) % 0.7 % 0.5 % 2.3 %

Includes AFS securities as well as funds withheld receivable, and loan to related party.

Average aggregate fixed income assets and cash include AFS securities, cash and restricted cash, funds withheld receivable, and loan to related party and is computed as an average of the amounts disclosed in our quarterly U.S.

GAAP consolidated financial statements.

Average aggregate invested assets include all investments (AFS and alternative investments), cash and restricted cash, loan to related party and funds withheld receivable and is computed as an average of the amounts disclosed in our quarterly U.S.

GAAP consolidated financial statements.

Other Balance Sheet Changes

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 %

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

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

Reinsurance balances receivable, net

$ 19,788 $ 5,777 $ 14,011 242.5 %

Reinsurance recoverable on unpaid losses

10 unchanged sentences

72,424 53,002 19,422 36.6 %

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 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 deferred commission and other acquisition expenses decreased by 22.5% and unearned premiums decreased by 23.7% 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 as of January 1, 2019.

Reinsurance balances receivable increased by 242.5% primarily due to $17.8 million of premiums receivable not yet due from European Hospital Liability Quota Share that was recognized during the third quarter of 2021.

Accrued expenses and other liabilities increased by 36.6% as at September 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 17.2% 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 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.

The decrease in the deferred gain on retroactive reinsurance for the nine months ended September 30, 2021 by 32.4% is attributable to $24.3 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 $30.9 million or 5.2% as at September 30, 2021 compared to December 31, 2020.

Capital Resources

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

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 %

In the nine months ended September 30, 2021, our total capital resources decreased by $144.6 million, or 18.3% 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.

During the three months ended September 30, 2021, book value per common share decreased by 3.1% to $2.50 and diluted book value per common share decreased by 3.1% to $2.48, compared to June 30, 2021.

This was largely due to a net loss of $3.1 million and net decrease in AOCI of $10.6 million during the three months ended September 30, 2021, which was partially offset by the gain of $6.0 million on the 2021 Preference Share Repurchase Program during the third quarter.

During the nine months ended September 30, 2021, book value per common share increased by 59.2% to $2.50 and diluted book value per common share increased by 60.0% to $2.48, compared to December 31, 2020.

This was primarily due to the gain of $87.2 million on the 2021 Preference Share Repurchase Program which increased book value by $1.01 per common share.

Book value also increased due to net income of $14.3 million during the nine months ended September 30, 2021, partially offset by a net decrease in AOCI of $28.7 million for the nine months ended September 30, 2021.

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

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

Preference shares

8 unchanged sentences

$ 645,674 $ 790,316 $ (144,642) (18.3) %

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;

The net decrease in total capital resources was due to the decline in total shareholders' equity at September 30, 2021 which decreased by $144.6 million, or 27.4% compared to December 31, 2020 due to the following:

• net decrease of $132.2 million from the 2021 Preference Share Repurchase Program composed of a decline in preference share capital of $226.9 million partly offset by:

(1) a gain on repurchase of preference shares of $87.2 million for the nine months ended September 30, 2021 which increased retained earnings;

and (2) a net increase in additional paid-in capital of $7.5 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 $28.7 million which arose due to:

(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;

(1) net unrealized losses on investment of $42.3 million resulting largely from the net decrease in the fair value of $34.9 million for our fixed income investment portfolio relating to market price movements due to rising interest rates during the nine months ended September 30, 2021 and $7.5 million related to equity method investments;

less (2) an increase in cumulative translation adjustments of $13.6 million due to the strengthening of the U.S.

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

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

partly offset by:

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

• net income attributable to Maiden of $14.3 million for the nine months ended September 30, 2021;

• net increase due to share-based compensation of $2.0 million.

2 unchanged sentences

" 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 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

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

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

Ending common shareholders’ equity

12 unchanged sentences

Diluted book value per common share

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 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.

During the nine months ended September 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 June 30, 2021, the Company had a remaining authorization of $74.2 million for share repurchases.

At September 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.

3 unchanged sentences

On April 24, 2020, the Company filed a Hearing Request Form to appeal NADSAQ’s determination with the Hearings Panel.

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

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

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

7 unchanged sentences

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 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 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.

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.

Shareholders' Equity and Note 14.

Subsequent Events" 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 nine months ended September 30, 2021 as well as those made subsequent to September 30, 2021.

The Company has a remaining authorization of $17.3 million for preference share repurchases.

There were no changes in the Company’s Senior Notes at September 30, 2021 compared to December 31, 2020 and the Company did not enter into any short-term borrowing arrangements during the nine months ended September 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 June 30, 2021 and December 31, 2020 was computed as follows:

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

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

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

Senior notes - principal amount

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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.

As discussed above, at September 30, 2021, guarantees of $33.2 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.

3 unchanged sentences

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 $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

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

Non-GAAP operating loss were $3.1 million for the three months ended September 30, 2021 compared to non-GAAP operating loss of $2.3 million for the same period in 2020.

The Company's non-GAAP operating results included a non-GAAP underwriting loss of $7.3 million for the three months ended September 30, 2021 compared to an underwriting loss of $4.4 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.

The deterioration in underwriting results are due primarily to higher loss ratios on the run-off of unearned premium for terminated reinsurance contracts in the AmTrust Reinsurance segment for the three months ended September 30, 2021 as well as higher expense ratios caused by a significant decrease in earned premium.

Non-GAAP operating earnings were $58.1 million for the nine months ended September 30, 2021, compared to a non-GAAP operating earnings of $2.0 million for the same period in 2020.

The Company's non-GAAP operating results included a non-GAAP underwriting loss of $17.9 million for the nine months ended September 30, 2021 compared to a non-GAAP underwriting loss of $9.6 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.

The deterioration in underwriting results are due primarily to higher loss ratios on the run-off of

unearned premium for terminated reinsurance contracts in the AmTrust Reinsurance segment for the nine months ended September 30, 2021 as well as higher expense ratios caused by a significant decrease in earned premium.

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

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

GAAP financial measure as follows:

For the Three Months Ended June 30, 2021 2020

For the Three Months Ended September 30, 2021 2020

($ in thousands except per share data)

1 unchanged sentence

Add (subtract):

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

Foreign exchange and other losses 1,588 2,295

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

Net realized and unrealized losses (gains) on investment 937 (4,287)

Total other-than-temporary impairment losses — 962

Foreign exchange and other (gains) losses (4,116) 6,536

Interest in loss of equity method investments 810 154

Favorable prior year loss development subject to LPT/ADC Agreement (3,609) (7,840)

Non-GAAP operating earnings $ 13,948 $ 1,222

Non-GAAP operating loss $ (3,114) $ (2,313)

Diluted earnings per share attributable to common shareholders $ 0.03 $ 0.03

Add (subtract):

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) —

Net realized and unrealized losses (gains) on investment 0.01 (0.05)

Total other-than-temporary impairment losses

Foreign exchange and other (gains) losses (0.05) 0.07

Interest in loss of equity method investments 0.01 —

Favorable prior year loss development subject to LPT/ADC Agreement (0.04) (0.09)

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

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

$ (0.04) $ (0.03)

For the Six Months Ended June 30, 2021 2020

For the Nine Months Ended September 30, 2021 2020

($ in thousands except per share data)

1 unchanged sentence

Add (subtract):

Net realized gains on investment

(8,950) (19,913)

Net realized and unrealized gains on investment (8,013) (24,200)

Total other-than-temporary impairment losses — 2,468

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

Foreign exchange and other (gains) losses (6,070) 634

Favorable prior year loss development subject to LPT/ADC Agreement (24,296) (9,250)

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

Interest in (income) loss of equity method investments (4,912) 154

Non-GAAP operating earnings $ 58,135 $ 2,041

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Add (subtract):

Net realized gains on investment

(0.10) (0.24)

Net realized and unrealized gains on investment (0.09) (0.29)

Total other-than-temporary impairment losses — 0.03

Foreign exchange and other gains (0.02) (0.07)

Foreign exchange and other (gains) losses (0.07) 0.01

Favorable prior year loss development subject to LPT/ADC Agreement (0.28) (0.11)

Interest in income of equity method investments (0.07) —

Interest in (income) loss of equity method investments (0.06) —

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

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Non-GAAP Operating ROACE

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,

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

For the Three Months Ended September 30, For the Nine Months Ended September 30,

($ in thousands) 2021 2020 2021 2020

Non-GAAP operating earnings $ 13,948 $ 1,222 $ 61,249 $ 4,354

Non-GAAP operating loss $ (3,114) $ (2,313) $ 58,135 $ 2,041

Opening adjusted common shareholders’ equity 277,082 177,279 208,447 155,668

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Non-GAAP Underwriting Results and Combined Ratio

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,

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

For the Three Months Ended September 30, For the Nine Months Ended September 30,

($ in thousands) 2021 2020 2021 2020

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178.6 % 141.3 % 196.2 % 136.5 %

(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.

(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 nine months ended September 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 $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.

As shown in the table above, adjusted for the impact of favorable prior year reserve development subject to the LPT/ADC Agreement of $3.6 million and $24.3 million during the three and nine months ended September 30, 2021, respectively, the non-GAAP underwriting loss was $7.3 million and $17.9 million, respectively.

This compared to a non-GAAP underwriting loss of $4.4 million and $9.6 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 $7.8 million and $9.3 million during the three and nine months ended September 30, 2020, respectively.

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 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,

Results in the Diversified Reinsurance segment during the three and nine months ended September 30, 2021 and 2020 were generally stable.

The non-GAAP combined ratio during the three and nine months ended September 30, 2021 was 178.6% and 196.2%, respectively, compared to 141.3% and 136.5% during the same respective periods in 2020 as shown in the table below:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2021 2020 2021 2020

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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 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.

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 nine months ended September 30, 2021 increased by $3.6 million and $24.3 million, respectively, as these amounts are 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 nine months ended September 30, 2020, the non-GAAP net loss and LAE increased by $7.8 million and $9.3 million, respectively, 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 June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

($ in thousands) 2021 2020 2021 2020

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$ 14,123 $ 16,905 $ 31,842 $ 50,409

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 for the impact of favorable prior year loss development on AmTrust reserves subject to the LPT/ADC Agreement of $3.6 million and $24.3 million during the three and nine months ended September 30, 2021, respectively, non-GAAP net loss and LAE was $14.1 million and $31.8 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 $7.8 million and $9.3 million during the three and nine months ended September 30, 2020, respectively, the non-GAAP loss and LAE was $16.9 million and $50.4 million, respectively.

The non-GAAP net loss and LAE ratio was 93.1% and 77.6% for the three and nine months ended September 30, 2021, respectively, compared to 68.8% and 64.8% 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 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.

The Adjusted Shareholders' Equity, Adjusted Total Capital Resources and Adjusted Book Value per Common Share at September 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 $50.6 million at September 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 nine months ended September 30, 2021 is attributable to $24.3 million in loss and LAE 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.

The Adjusted Shareholders' Equity, Adjusted Total Capital Resources and Adjusted Book Value per Common Share at September 30, 2021 also excludes the LP Investment Adjustment, which pertains to the equity accounting related to the fair value of certain hedged liabilities within an equity method investment held by the Company wherein the ultimate realizable value of the asset supporting the hedged liabilities cannot currently be recognized at fair value.

We believe that this adjustment recognizes future realizable value and reflects the ultimate economic benefit of this investment which will improve the Company's shareholders' equity over the hedged contract period within the investment.

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 June 30, 2021 and December 31, 2020:

($ in thousands) June 30, 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 as well as the LP Investment Adjustment for realizable value of intangible asset in limited partnership investment at September 30, 2021 and December 31, 2020:

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

Preference shares

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383,174 527,816 (144,642) (27.4) %

LP Investment Adjustment 7,164 — 7,164 NM

Unamortized deferred gain on retroactive reinsurance

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Adjusted total capital resources $ 703,483 $ 865,257 $ (161,774) (18.7) %

NM - non meaningful

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 June 30, 2021 and December 31, 2020 was computed as follows:

June 30, 2021 December 31, 2020

The adjusted book value per common share, as reconciled for the recognition of the unamortized deferred gain on retroactive reinsurance as well as the LP Investment Adjustment for realizable value of intangible asset in limited partnership investment at September 30, 2021 and December 31, 2020, was computed as follows:

September 30, 2021 December 31, 2020

Book value per common share

$ 2.50 $ 1.57

LP Investment Adjustment 0.08 —

Unamortized deferred gain on retroactive reinsurance

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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 June 30, 2021 and December 31, 2020 was computed as follows:

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

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

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

Senior notes - principal amount

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

At September 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 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.

Net foreign exchange gains of $4.1 million and $6.3 million were generated during the three and nine months ended September 30, 2021, respectively, compared to net foreign exchange losses of $6.5 million and $0.2 million for the three and nine months ended September 30, 2020, respectively.

Effects of Inflation

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Off-Balance Sheet Arrangements

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

At September 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

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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