MHLA filing — read by section

Item 2. Management’s Discussion and Analysis

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 
 The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this "Form 10-Q" or this "Report"). References in this Form 10-Q to the terms "we", "us", "our", "the Company", "Maiden" or other similar terms mean the consolidated operations of Maiden Holdings, Ltd. and its subsidiaries, unless the context requires otherwise. References in this Form 10-Q to the term "Maiden Holdings" means Maiden Holdings, Ltd. only. Certain reclassifications have been made for 2021 to conform to the 2022 presentation and have no impact on consolidated net income and total equity previously reported. 
 Note on Forward-Looking Statements 
 This Quarterly Report on Form 10-Q includes projections concerning financial information and statements concerning future economic performance and events, plans and objectives relating to management, operations, products and services, and assumptions underlying these projections and statements. These projections and statements are forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 and are not historical facts but instead represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control. These projections and statements may address, among other things, our strategy for growth, product development, financial results and reserves. Our actual results and financial condition may differ, possibly materially, from these projections and statements and therefore you should not place undue reliance on them. 
 Factors that could cause our actual results and financial condition to differ, possibly materially, from those in the specific projections and statements are discussed throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations and in "Risk Factors" in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2021 that was filed with the U.S. Securities and Exchange Commission ("SEC") on March 14, 2022, however, these factors should not be construed as exhaustive. Forward-looking statements speak only as of the date they are made and we undertake no obligation to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by law. 
 32 

 
 
 

 Overview 
 Maiden Holdings is a Bermuda-based holding company. 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. We also provide a full range of legacy services to small insurance companies, 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 that enable our clients to meet their capital and risk management objectives. We expect our legacy solutions business to contribute to our active asset and capital management strategies. 
 Short-term income protection business is written on a primary basis by our wholly owned subsidiaries Maiden Life Försäkrings AB ("Maiden LF") and Maiden General Försäkrings AB ("Maiden GF") in the Scandinavian and Northern European markets. Insurance support services are provided to Maiden LF and Maiden GF through our wholly owned subsidiary, Maiden Global Holdings, Ltd. ("Maiden Global") which is also a licensed intermediary in the United Kingdom. Maiden Global had previously operated internationally by providing branded auto and credit life insurance products through insurer partners, particularly those in Europe and other global markets. These products also produced reinsurance programs which were underwritten by our wholly owned subsidiary Maiden Reinsurance Ltd. ("Maiden Reinsurance"). 
 We are not currently underwriting reinsurance business on new prospective risks but are actively underwriting risks on a retroactive basis through GLS. We also have various historic reinsurance programs underwritten by Maiden Reinsurance which are in run-off, including the liabilities associated with AmTrust Financial Services, Inc. ("AmTrust") which we terminated in 2019 as discussed in " Note 10. Related Party Agreements " of the Notes to Condensed Consolidated Financial Statements in Part I Item 1. "Financial Information" . In addition, we have a Loss Portfolio Transfer and Adverse Development Cover Agreement ("LPT/ADC Agreement") with Cavello Bay Reinsurance Limited ("Cavello") and a commutation agreement that further reduces our exposure to and limits the potential volatility related to these AmTrust liabilities in run-off, as discussed in " Note 8. Reinsurance " of the Notes to Condensed Consolidated Financial Statements in Part I Item 1. "Financial Information" . 
 Our business currently consists of two reportable segments: Diversified Reinsurance and AmTrust Reinsurance. Our Diversified Reinsurance segment consists of a portfolio of predominantly property and casualty reinsurance business focusing on regional and specialty property and casualty insurance companies located primarily in Europe. This segment also includes transactions entered into by GLS which was formed in November 2020 . Our AmTrust Reinsurance segment includes all business ceded to Maiden Reinsurance by AmTrust, primarily the quota share reinsurance agreement (“AmTrust Quota Share”) between Maiden Reinsurance and AmTrust’s wholly owned subsidiary, AmTrust International Insurance, Ltd. (“AII”) and the European hospital liability quota share reinsurance contract ("European Hospital Liability Quota Share") with AmTrust’s wholly owned subsidiaries AmTrust Europe Limited ("AEL") and AmTrust International Underwriters DAC ("AIU DAC"), both of which are in run-off effective January 1, 2019. 
 Please refer to " Management's Discussion and Analysis of Financial Condition and Results of Operations " section included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021 for further information on recent developments within the Company. 
 We believe Maiden Holdings North America, Ltd.'s ("Maiden NA") investments, including its ownership of Maiden Reinsurance and its active asset management strategy, will create opportunities to utilize net operating loss carry-forwards ("NOL") of $235.7 million as of March 31, 2022. These NOL carryforwards, in combination with additional net deferred tax assets ("DTA") primarily related to our insurance liabilities result in a net U.S. DTA (before valuation allowance) of $94.3 million or $1.08 per common share at March 31, 2022. 
 These net DTA are not presently recognized on the Company's consolidated balance sheet as a full valuation allowance is carried against them. At this time, while positive evidence in support of reducing the valuation allowance is accumulating, the Company believes it is necessary to maintain its full valuation allowance against the net U.S. DTA due to insufficient accumulation of evidence at this time regarding the utilization of these losses. As our profitability continues to improve, we will continuously evaluate the amount of the valuation allowance held against the net U.S. DTA. 
 For further details, please see "Note 13. Income Taxes" included under Item 8 "Financial Statements and Supplementary Data" in our Annual Report on Form 10-K for the year ended December 31, 2021. Taken together, we believe these measures should generate additional income for Maiden NA in a tax-efficient manner, while sharing in the improvement in profitability anticipated in Maiden Reinsurance as a result of the measures enacted as described above. 
 Business Strategy 
 We continued to deploy our revised operating strategy during 2022 which leverages the significant assets and capital we retain. In addition to restoring operating profitability, our strategic focus centers on creating the greatest risk-adjusted shareholder returns in order to increase book value for our common shareholders, both near and long-term. This strategy has three principal areas of focus: 
 • Asset management - investing in assets and asset classes in a prudent but expansive manner in order to maximize investment returns and is principally enabled by limiting the amount of insurance risk we assume in relation to the assets we hold and maintaining required regulatory capital at very strong levels to manage our aggregate risk profile; 
 • Legacy underwriting - judiciously building a portfolio of legacy run-off acquisitions and retroactive reinsurance transactions which we believe will produce attractive underwriting returns; and 
 • Capital management - effectively managing the capital we hold on our balance sheet and when appropriate, repurchasing securities or returning capital to enhance common shareholder returns. 
 33 

 
 

 The returns expected to be produced by each pillar of our strategy are evaluated in relation to our cost of debt capital, which carries a weighted average effective interest rate of 7.6%. To the extent our experience or belief indicates we cannot exceed the cost of debt capital, we expect to refrain from activities in those areas. As an example, 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 prospective risks are likely to be lower over the long-term than our cost of capital. 
 The measures implemented in recent years have allowed us to more flexibly allocate capital to those activities most likely to produce the greatest returns for shareholders, and we are actively engaged in evaluating and deploying funds in all pillars of the strategies as discussed herein. We also believe that these areas of strategic focus will enhance our profitability through increased returns, which we believe also increase the likelihood of fully utilizing the significant NOL carryforwards described above which would create additional common shareholder value. 
 As part of our expanded asset management activities, we have evaluated and continue to consider investing in various initiatives in the insurance industry across a variety of segments which we believe will produce appropriate risk-adjusted returns while maintaining the option to consider underwriting activities in the future. We believe these expanded activities will produce a broad range of positive impacts on our financial condition, including current income, longer-term gains and in certain instances, fee income. 
 In recent years, we have invested approximately $250.4 million into alternative investments which include equity securities, other investments and equity method investments in a wide variety of asset classes and we believe these activities will exceed that benchmark cost of capital with adjustments as necessary if those returns do not emerge. 
 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 that enable our clients to meet their capital and risk management objectives. We acquire legacy liabilities and (re)insurance reserves from companies and provide retroactive reinsurance coverage for portfolios of (re)insurance business, primarily via loss portfolio transfer contracts (“LPT”). Additionally, we provide reinsurance contracts to other (re)insurers to mitigate some of their risk of future adverse development (adverse development cover, or “ADC”) on insurance risks relating to prior accident years. 
 We believe the formation of GLS is highly complementary to our overall longer-term strategy. and will produce risk-adjusted returns in excess of our debt cost of capital. In addition, while we anticipate profitable growth from the GLS portfolio as it develops, we expect our required capital to continue to decline as insurance risk incurred by GLS will be more than offset by the run-off of insurance liabilities from our prior reinsurance strategies. GLS, along with other recent insurance industry investments, enables us to leverage our knowledge base while not re-entering active underwriting of new prospective risks and maintaining an efficient operating profile. 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 completed its first loss portfolio transfer transaction which includes an ADC cover. GLS and its subsidiaries have completed additional transactions in the first quarter of 2022 and as of March 31, 2022, GLS and its subsidiaries have insurance related liabilities totaling $37.1 million which included total reserves of $29.2 million and deferred gains on retroactive reinsurance of $7.9 million. GLS continues to write additional retroactive reinsurance transactions consistent with its business plan. In addition to producing returns that exceed the target cost of capital, we expect the business produced through GLS should further enhance our ability to pursue the asset and capital management pillars of our business strategy. 
 Our capital management strategy is significantly informed by the required capital needed to operate our business in a prudent manner and our ongoing analysis of our loss development trends. Recent trends continue to increase 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 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 the capital management initiatives we initiated in 2020, although we have approached these strategies in a deliberate fashion. 
 On March 3, 2021, the Company's Board of Directors approved the repurchase, including the repurchase by Maiden Reinsurance in accordance with its investment guidelines, of up to $100.0 million of the Company's preference shares from time to time at market prices in open market purchases or as may be privately negotiated. On May 6, 2021, the Company's Board of Directors approved the additional repurchase, including the repurchase by Maiden Reinsurance in accordance with its investment guidelines, of up to $50.0 million of the Company's preference shares from time to time at market prices in open market purchases or as may be privately negotiated. The authorizations approved on March 3, 2021 and May 6, 2021 as described above are collectively referred to as "2021 Preference Share Repurchase Program". The Company has a remaining authorization of $10.7 million for preference share repurchases at March 31, 2022. 
 Please refer to "Notes to Condensed Consolidated Financial Statements - Note 6. Shareholders' Equity" under Item 8 "Financial Statements and Supplementary Data" in Part I Item 1. "Financial Information" for recent repurchases and further detail on our preference shares. 
 Our ability to execute our asset and capital management initiatives is dependent on maintaining adequate levels of unrestricted liquidity and cash flows. Further, there can be no assurance that our insurance liabilities will run-off at levels that will permit further capital management activities, which we continually review as part of our strategy. Please refer to the "Liquidity and Capital Resources" section for further information on our asset and capital management activities, in particular our various preference share repurchase measures. 
 34 

 
 

 Three Months Ended March 31, 2022 and 2021 Financial Highlights 
 
 For the Three Months Ended March 31, 2022 2021 Change 
 Summary Consolidated Statement of Income Data (unaudited): ($ in thousands except per share data) 
 
 
 Net (loss) income $ (1,949) $ 9,286 $ (11,235) 
 Gain from repurchase of preference shares 3,543 62,450 (58,907) 
 Net income attributable to Maiden common shareholders 1,594 71,736 (70,142) 
 Basic and diluted earnings per common share: 
 Net income attributable to common shareholders (2) 
 0.02 0.83 (0.81) 
 Gain from repurchase of preference securities per common share 0.04 0.73 (0.69) 
 Gross premiums written (10,170) (2,390) (7,780) 
 Net premiums earned 1,122 11,764 (10,642) 
 Underwriting (loss) income (3) 
 (1,655) 1,555 (3,210) 
 Net investment income 6,567 9,841 (3,274) 
 
 Non-GAAP measures: 
 Non-GAAP operating (loss) earnings (1) 
 (6,935) 47,301 (54,236) 
 Non-GAAP basic and diluted operating (loss) earnings per common share (1) 
 (0.08) 0.55 (0.63) 
 Annualized non-GAAP operating return on average common shareholders' equity (1) 
 (10.5) % 81.4 % (91.9) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 March 31, 2022 December 31, 2021 Change 
 Consolidated Financial Condition ($ in thousands except per share data) 
 Total investments and cash and cash equivalents (4) 
 $ 793,526 $ 888,699 $ (95,173) 
 Total assets 2,215,972 2,322,610 (106,638) 
 Reserve for loss and LAE 1,386,023 1,489,373 (103,350) 
 Senior notes - principal amount 262,500 262,500 — 
 Common shareholders' equity 215,327 225,047 (9,720) 
 Shareholders' equity 367,665 384,257 (16,592) 
 Total capital resources (5) 
 630,165 646,757 (16,592) 
 Ratio of debt to total capital resources (10) 
 41.7 % 40.6 % 1.1 
 Book Value calculations: 
 Book value per common share (6) 
 $ 2.47 $ 2.60 $ (0.13) 
 Accumulated dividends per common share (12) 
 4.27 4.27 — 
 Book value per common share plus accumulated dividends $ 6.74 $ 6.87 $ (0.13) 
 Change in book value per common share plus accumulated dividends (1.9) % 
 Diluted book value per common share (7) 
 $ 2.46 $ 2.59 $ (0.13) 
 
 Non-GAAP measures: 
 Adjusted book value per common share (8) 
 $ 2.99 $ 3.18 $ (0.19) 
 Adjusted shareholders' equity (9) 
 412,525 434,200 (21,675) 
 Adjusted total capital resources (9) 
 675,025 696,700 (21,675) 
 Ratio of debt to adjusted total capital resources (11) 
 38.9 % 37.7 % 1.2 

 (1) Non-GAAP operating earnings (loss), non-GAAP operating earnings (loss) per common share, and annualized non-GAAP operating return on average common shareholders' equity are non-GAAP financial measures. See " Key Financial Measures " for additional information. 
 (2) Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 12. Earnings per Common Share " for the calculation of basic and diluted income per common share. 
 (3) Underwriting income or loss is a non-GAAP measure and is calculated as net premiums earned plus other insurance revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities. See " Key Financial Measures " for additional information. 
 35 

 
 

 (4) Total investments and cash and cash equivalents includes both restricted and unrestricted. 
 (5) Total capital resources is the sum of the Company's principal amount of debt and shareholders' equity. See " Key Financial Measures " for additional information. 
 (6) 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. 
 (7) 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. 
 (8) 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. 
 (9) 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. Under U.S. GAAP, the deferred gain shall be amortized over the estimated remaining settlement period. See " Key Financial Measures " for additional information. 
 (10) Ratio of debt to total capital resources is calculated using the total principal amount of debt divided by the sum of total capital resources. 
 (11) Ratio of debt to adjusted total capital resources is calculated using the total principal amount of debt divided by the sum of adjusted total capital resources. 
 (12) Accumulated dividends per common share includes the cumulative sum of dividends declared and paid in the past on the Company's issued common shares since inception. 
 
 
 Key Financial Measures 
 In addition to our key financial measures presented in accordance with GAAP in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Income and Comprehensive Income, management uses certain non-GAAP financial measures to evaluate the Company's financial performance and the overall growth in value generated for the Company’s common shareholders. Management believes that these measures, which may be defined differently by other companies, explain the Company’s results to investors in a manner that allows for a more complete understanding of the underlying trends in the Company’s business. The non-GAAP measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. The calculation of these key financial measures including the reconciliation of non-GAAP measures to the nearest GAAP measure and relevant discussions are found within Item 2 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" . These non-GAAP financial measures are: 
 Non-GAAP operating (loss) earnings and non-GAAP diluted operating (loss) earnings per common share : Management believes that the use of non-GAAP operating (loss) earnings and non-GAAP diluted operating (loss) earnings per common share enables investors and other users of the Company’s financial information to analyze its performance in a manner similar to how management analyzes performance. Management also believes that these measures generally follow industry practice therefore allowing the users of financial information to compare the Company’s performance with its industry peer group, and that the equity analysts and certain rating agencies which follow the Company, and the insurance industry as a whole, generally exclude these items from their analyses for the same reasons. Non-GAAP operating (loss) earnings should not be viewed as a substitute for U.S. GAAP net income. 
 Non-GAAP operating (loss) earnings is an internal performance measure used by management as these measures focus on the underlying fundamentals of the Company's operations by excluding, on a recurring basis: (1) net realized gains or losses on investment; (2) foreign exchange and other gains or losses; (3) the portion of favorable or unfavorable prior year reserve development for which we have ceded the risk under the LPT/ADC Agreement; and (4) interest in income of equity method investments. We have excluded net realized gains on investment, interest in income of equity method investments and foreign exchange and other gains as we believe these are influenced by market opportunities and other factors. We do not believe that ceded risks under the LPT/ADC Agreement are representative of our ongoing and future business which are different to retroactive reinsurance risks written by GLS that are representative of our ongoing and future business. We believe all of these amounts are substantially independent of our business and any potential future underwriting process, and therefore including them would distort the analysis of underlying trends in our operations. 
 Underwriting income (loss) is a non-GAAP measure and is calculated as net premiums earned plus other insurance revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities. For purposes of these non-GAAP operating measures, the fee-generating business which is included in our Diversified Reinsurance segment, is considered part of the underwriting operations of the Company. Management believes that this measure is important in evaluating the underwriting performance of the Company and its segments. This measure is also a useful tool to measure the profitability of the Company separately from the investment results and is also a widely used performance indicator in the insurance industry. A reconciliation of the Company's underwriting results can be found in the Condensed Consolidated Financial Statements in the " Notes to Condensed Consolidated Financial Statements (unaudited) Note 3. Segment Information " included under Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q. 
 The Company no longer presents certain non-GAAP measures such as combined ratio and its related components in this Quarterly Report on Form 10-Q for the three months ended March 31, 2022, as it believes that as the run-off of our reinsurance portfolios progresses, such ratios are increasingly not meaningful and of less value to readers as they evaluate the financial results of the Company, particularly compared to historical data. 
 While an important metric of success, underwriting income (loss) does not reflect all components of profitability, as it does not recognize the impact of investment income earned on premiums between the time premiums are received and the time loss payments are ultimately paid to clients. Because we do not manage our cash and investments by segment, investment income 
 36 

 
 

 and interest expense are not allocated to the reportable segments. Certain general and administrative expenses are generally allocated to segments based on actual costs incurred. 
 Non-GAAP Operating Return on Average Adjusted Common Equity ("Non-GAAP Operating ROACE"): Management uses non-GAAP operating return on average adjusted common shareholders' equity as a measure of profitability that focuses on the return to common shareholders. It is calculated using non-GAAP operating earnings (loss) available to common shareholders (as defined above) divided by average adjusted common shareholders' equity. 
 Book Value per Common Share and Diluted Book Value per Common Share: Book value per common share and diluted book value per common share are non-GAAP measures. Management uses growth in both of these metrics as a prime measure of the value we are generating for our common shareholders, because management believes that growth in each metric ultimately results in growth in the Company’s common share price. These metrics are impacted by the Company’s net income and external factors, such as interest rates, which can drive changes in unrealized gains or losses on our fixed income investment portfolio, as well as common or preference share repurchases. 
 Ratio of Debt to Total Capital Resources: Management uses this non-GAAP measure to monitor the financial leverage of the Company. This measure is calculated using the total principal amount of debt divided by the sum of total capital resources. 
 Non-GAAP underwriting income (loss): Management has further adjusted underwriting income (loss), as defined above, by excluding the portion of favorable or unfavorable prior year reserve development for which we have ceded the risk under retroactive reinsurance agreements such as the LPT/ADC Agreement. These losses are estimated to be fully recoverable from Cavello and management believes adjusting for this development shows the ultimate economic benefit of the LPT/ADC Agreement on our underwriting results. We believe reflecting the economic benefit of this retroactive reinsurance agreement is helpful for understanding future trends in our operations. 
 Adjusted Total Shareholders' Equity, Adjusted Total Capital Resources, Ratio of Debt to Adjusted Total Capital Resources and Adjusted Book Value per Common Share: Management has adjusted GAAP shareholders' equity by adding the following items to shareholders' equity: 1) unamortized deferred gain on ceded retroactive reinsurance under 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 ("LP Investment Adjustment"). 
 The unamortized deferred gain on ceded retroactive reinsurance under the LPT/ADC Agreement includes the aggregate impact of: 1) cumulative increases to losses incurred prior to December 31, 2018 for which we have ceded the risk under the LPT/ADC Agreement; 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. The deferred gain liability on retroactive reinsurance under the LPT/ADC Agreement represents loss reserves 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 non-recurring retroactive reinsurance agreement is helpful to understand future trends in our operations, which will improve the Company's shareholders' equity over the settlement or contract periods, respectively. 
 Alternative investments is the total of the Company's holdings of equity securities, other investments and equity method investments as reported on the Company's Condensed Consolidated Balance Sheets. 
 Certain Operating Measures 
 Refer to " Management's Discussion and Analysis of Financial Condition and Results of Operations " section included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 14, 2022, for a general discussion on " Certain Operating Measures" utilized by the Company. 
 Critical Accounting Policies and Estimates 
 The Company's critical accounting policies and estimates are discussed in " Management's Discussion and Analysis of Financial Condition and Results of Operations " section included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 14, 2022. The critical accounting policies and estimates should be read in conjunction with " Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) Note 2. Significant Accounting Policies " included in this Form 10-Q and " Notes to Consolidated Financial Statements Note 2. Significant Accounting Policies " included within the audited Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 14, 2022. There have been no material changes in the application of our critical accounting estimates subsequent to that report. 
 
 
 37 

 
 
 

 Results of Operations 
 The following table sets forth our selected unaudited Condensed Consolidated Statement of Income data for the three months ended March 31, 2022 and 2021: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2022 2021 
 Gross premiums written 
 $ (10,170) $ (2,390) 
 Net premiums written 
 $ (10,323) $ (2,696) 
 Net premiums earned 
 $ 1,122 $ 11,764 
 Other insurance revenue 
 51 269 
 Net loss and LAE 
 2,283 (2,359) 
 Commission and other acquisition expenses 
 (2,528) (5,942) 
 General and administrative expenses (1) 
 (2,583) (2,177) 
 Underwriting (loss) income (2) 
 (1,655) 1,555 
 Other general and administrative expenses (1) 
 (8,303) (11,820) 
 Net investment income 
 6,567 9,841 
 Net realized and unrealized gains on investment 2,309 8,101 
 
 
 
 Foreign exchange and other gains 3,949 3,542 
 Interest and amortization expenses (4,832) (4,831) 
 Income tax expense (1,255) (49) 
 Interest in income of equity method investments 1,271 2,947 
 
 
 Net (loss) income (1,949) 9,286 
 Gain from repurchase of preference shares 3,543 62,450 
 Net income available to Maiden common shareholders $ 1,594 $ 71,736 
 
 
 
 
 
 
 

 (1) Underwriting related general and administrative expenses is a non-GAAP measure. Please refer to "General and Administrative Expenses" below for additional information related to these corporate expenses and the reconciliation to those presented in our unaudited Condensed Consolidated Statements of Income. 
 (2) Underwriting income (loss) is a non-GAAP measure and is calculated as net premiums earned plus other insurance revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities. 
 (3) The Company no longer presents certain non-GAAP measures such as combined ratio and its related components in its results of operation, as it believes that as the run-off of its reinsurance portfolios progresses, such ratios are increasingly not meaningful and of less value to readers as they evaluate our financial results. 
 
 
 Net Income 
 Net income available to Maiden common shareholders for the three months ended March 31, 2022 was $1.6 million compared to $71.7 million for the same period in 2021. The net decrease in results for the three months ended March 31, 2022 compared to the same period in 2021 was primarily due to the gain from repurchase of our preference shares which was $3.5 million for the three months ended March 31, 2022 compared to $62.5 million for the same period in 2021. 
 Excluding the gain on the repurchase of our preference shares, net loss for the three months ended March 31, 2022 was $1.9 million compared to net income of $9.3 million for the same period in 2021. The decrease in results as adjusted during the first quarter of 2022 compared to the first quarter of 2021 was primarily due to: 
 • underwriting loss of $1.7 million for the three months ended March 31, 2022 compared to underwriting income of $1.6 million in the same period in 2021 largely due to: 
 ◦ significantly higher than expected negative premium adjustments in the AmTrust Reinsurance segment related to adjustments for estimated surcharges on Workers' Compensation policies and inuring AmTrust reinsurance for certain programs in Specialty Risk and Extended Warranty cessions (collectively the "AmTrust Cession Adjustments" which are discussed in greater detail in the AmTrust Reinsurance segment), net of commission and loss adjustments, which contributed an underwriting loss of $5.1 million to our reported results for the three months ended March 31, 2022; 
 ◦ excluding the AmTrust Cession Adjustments, the Company had underwriting income of $3.4 million for the three months ended March 31, 2022 compared to underwriting income of $1.6 million for the same period in 2021 which consisted of the following: 
 ◦ favorable prior year loss development of $2.2 million in the first quarter of 2022 (adjusted for the AmTrust Cession Adjustments) compared to favorable prior year loss development of $5.6 million during the same period in 2021; and 
 ◦ on a current accident year basis, underwriting income of $1.2 million for the three months ended March 31, 2022 compared to an underwriting loss of $4.0 million for the same period in 2021. 
 38 

 
 

 • total income from investment activities were $10.1 million for the three months ended March 31, 2022 compared to $20.9 million for the same period in 2021 which was comprised of: 
 ◦ net investment income decreased to $6.6 million for the three months ended March 31, 2022 compared to $9.8 million for the same period in 2021 primarily due to the decline in average fixed income assets of 29.6%; 
 ◦ realized and unrealized gains on investment were $2.3 million for the three months ended March 31, 2022 compared to net realized gains of $8.1 million for the same period in 2021; 
 ◦ interest in income of equity method investments was $1.3 million for the three months ended March 31, 2022 compared to $2.9 million for the same period in 2021. 
 • corporate general and administrative expenses decreased to $8.3 million for the three months ended March 31, 2022 compared to $11.8 million for the same period in 2021 due to lower equity-based incentive compensation costs for employees; and 
 • foreign exchange and other gains increased to $3.9 million for the three months ended March 31, 2022, compared to $3.5 million for the same period in 2021. 
 Net Premiums Written 
 The table below compares net premiums written by our reportable segments, reconciled to the total consolidated net premiums written for the three months ended March 31, 2022 and 2021: 
 
 For the Three Months Ended March 31, 2022 2021 Change in 
 ($ in thousands) Total Total $ 
 Diversified Reinsurance 
 $ 4,583 $ (234) $ 4,817 
 AmTrust Reinsurance (14,906) (2,462) (12,444) 
 
 
 Total $ (10,323) $ (2,696) $ (7,627) 
 
 
 
 
 
 
 
 

 Net premiums written for the three months ended March 31, 2022 decreased to $(10.3) million compared to net premiums written of $(2.7) million for the same period in 2021 due to: 
 • Premiums written in the Diversified Reinsurance segment increased by $4.8 million for the three months ended March 31, 2022 compared to the same period in 2021 largely due to the prior year return of unearned premiums after the non-renewal of the German Auto Programs reinsurance contract in our IIS business on January 1, 2021. 
 • The negative written premiums are primarily related to the AmTrust Cession Adjustments in the AmTrust Reinsurance segment for the three months ended March 31, 2022. 
 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 $10.6 million or 90.5% for the three months ended March 31, 2022 compared to the same period in 2021. The table below compares net premiums earned by our reportable segments, reconciled to the total consolidated net premiums earned, for the three months ended March 31, 2022 and 2021: 
 
 For the Three Months Ended March 31, 2022 2021 Change in 
 ($ in thousands) Total Total $ 
 Diversified Reinsurance 
 $ 5,955 $ 6,240 $ (285) 
 AmTrust Quota Share Reinsurance 
 (4,833) 5,524 (10,357) 
 
 
 Total 
 $ 1,122 $ 11,764 $ (10,642) 
 
 
 
 
 
 
 
 

 Net premiums earned in the AmTrust Reinsurance segment for the three months ended March 31, 2022 decreased by $10.4 million compared to the same period in 2021 primarily due to the AmTrust Cession Adjustment s . Please refer to the analysis of our AmTrust Reinsurance segment for further discussion. 
 Net premiums earned in the Diversified Reinsurance segment for the three months ended March 31, 2022 decreased by $0.3 million or 4.6% compared to the same period in 2021 largely 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. 
 Other Insurance Revenue 
 All of our Other Insurance Revenue is produced by our Diversified Reinsurance segment. Please refer to the analysis below of our Diversified Reinsurance segment for further discussion. 
 
 
 
 
 39 

 
 

 Net Investment Income 
 Total net investment income decreased by $3.3 million or 33.3% for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to the decline in average aggregate fixed income assets of 29.6%. The decline in fixed income assets is driven by the cessation of active reinsurance underwriting on prospective risks which has materially reduced our revenues, resulting in significant negative operating cash flows as we run-off our existing reinsurance liabilities. 
 Net investment income decreased partly due to the decline in annualized average book yields to 1.7% for the three months ended March 31, 2022 compared to 2.0% for the three months ended March 31, 2021, 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 months ended March 31, 2022 and 2021: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2022 2021 
 Average aggregate fixed income assets, at cost (1) 
 $ 1,416,353 $ 2,011,055 
 Annualized investment book yield 1.7 % 2.0 % 
 

 (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 gains on investment of $2.3 million were recognized for the three months ended March 31, 2022, compared to net realized and unrealized gains of $8.1 million for the same period in 2021. 
 Net realized and unrealized gains for the three months ended March 31, 2021 included the recognition of $4.5 million in unrealized gains related to an investment in an insurtech start-up company that was acquired by a special purpose acquisition company. In addition, realized gains for the three months ended March 31, 2022 and 2021 primarily reflect sales of corporate bonds for the settlement of claim payments to AmTrust. 
 Interest in Income of Equity Method Investments 
 The Company had interest in income of equity method investments of $1.3 million for the three months ended March 31, 2022 compared to interest in income of equity method investments of $2.9 million for the three months ended March 31, 2021. Equity method investments consist of hedge fund investments of $32.9 million, real estate investments of $52.2 million and other investments of $8.2 million as of March 31, 2022. The following table details our interest in the income from equity method investments for the three months ended March 31, 2022 and 2021: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2022 2021 
 
 Hedge fund investments $ (68) $ 1,690 
 
 Other investments 1,339 1,257 
 Interest in income from equity method investments $ 1,271 $ 2,947 
 

 Net Loss and LAE 
 Net loss and LAE decreased by $4.6 million during the three months ended March 31, 2022 compared to the same period in 2021 due to favorable prior year loss development experienced in both of our reportable segments. The cessation of active reinsurance underwriting on prospective risks included the termination of the AmTrust Quota Share and European Hospital Liability Quota Share effective January 1, 2019. 
 Net loss and LAE for the first quarter of 2022 was impacted by net favorable prior year reserve development of $7.3 million compared to net favorable prior year reserve development of $5.6 million for the same period in 2021. The favorable loss development for the first quarter of 2022 and 2021 is discussed in greater detail in the individual segment discussion and analysis and is primarily associated with run-off of unearned premium for terminated reinsurance contracts in the AmTrust Reinsurance and Diversified Reinsurance segments. 
 Commission and Other Acquisition Expenses 
 Commission and other acquisition expenses decreased by $3.4 million or 57.5% for the three months ended March 31, 2022 compared to the same period in 2021 largely due to negative earned premiums in the AmTrust Reinsurance segment which reduced commission costs due to the AmTrust Cession Adjustments. Please see further discussion in the individual segment analysis below. 
 General and Administrative Expenses 
 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 $3.1 million or 22.2% for the three months ended March 31, 2022 compared to the same period in 2021 largely due to lower equity-based incentive compensation paid to employees. Excluding discretionary cash and equity-based incentive compensation expenses which are typically recorded in the first quarter of the calendar year, operating expenses were $6.5 million in the three months ended March 31, 2022 or 18.8% lower compared to $8.0 million for the same period in 2021. 
 40 

 
 

 General and administrative expenses for the three months ended March 31, 2022 and 2021 were comprised of: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2022 2021 
 General and administrative expenses – segments 
 $ 2,583 $ 2,177 
 General and administrative expenses – corporate 
 8,303 11,820 
 Total general and administrative expenses 
 $ 10,886 $ 13,997 

 The Company incurred operating expenses of $0.4 million during the three months ended March 31, 2022 that are not considered part of our ongoing business operations, which are salary and related costs associated with headcount reductions. 
 Interest and Amortization Expenses 
 The interest and amortization expenses related to the outstanding senior notes issued by Maiden Holdings in 2016 and Maiden NA in 2013 ("Senior Notes") were $4.8 million for the three months ended March 31, 2022 and 2021. Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 7. Long Term Debt " for further details on the Senior Notes. The weighted average effective interest rate for the Senior Notes was 7.6% for the three months ended March 31, 2022 and 2021, respectively. 
 Foreign Exchange and Other Gains 
 Net foreign exchange and other gains amounted to $3.9 million during the three months ended March 31, 2022 compared to net foreign exchange and other gains of $3.5 million for the same respective period in 2021. 
 Net foreign exchange gains of $3.9 million for the three months ended March 31, 2022 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 gains of $3.4 million during the three months ended March 31, 2021 were primarily due to the strengthening of the U.S. dollar on the re-measurement of net loss reserves and insurance related liabilities denominated in euro. 
 At March 31, 2022, net foreign exchange gains were primarily driven by exposures to euro, British pound and other non-USD denominated net loss reserves and insurance related liabilities in excess of foreign currency assets. Our non-USD denominated liabilities at March 31, 2022 included net loss reserves of $382.6 million. There was no new business written in non-USD currencies during the three months ended March 31, 2022. Our foreign currency asset exposures at March 31, 2022 included $252.5 million of fixed maturity securities managed by our investment managers who have the discretion to hold foreign currency exposures as part of their total return strategy as well as equity method real estate investments denominated in Canadian dollars. We also held $59.9 million of non-USD denominated funds withheld receivable at March 31, 2022. 
 Underwriting Results by Reportable Segment 
 Diversified Reinsurance Segment 
 The underwriting results for our Diversified Reinsurance segment for the three months ended March 31, 2022 and 2021 were as follows: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2022 2021 
 Gross premiums written 
 $ 4,736 $ 72 
 Net premiums written 
 $ 4,583 $ (234) 
 Net premiums earned 
 $ 5,955 $ 6,240 
 Other insurance revenue 
 51 269 
 Net loss and LAE 
 1,360 (1,415) 
 Commission and other acquisition expenses 
 (3,771) (3,755) 
 General and administrative expenses 
 (2,098) (1,574) 
 Underwriting income (loss) $ 1,497 $ (235) 
 
 
 
 
 
 

 Premiums — Gross premiums written increased by $4.7 million for the three months ended March 31, 2022 compared to the same period in 2021. This was primarily due to the prior year 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. Direct premiums written by Maiden LF and Maiden GF decreased by $0.3 million or 5.3% during the three months ended March 31, 2022 compared to the same period in 2021. 
 Net premiums written increased by $4.8 million during the three months ended March 31, 2022 compared to the same period in 2021 due to the prior year return of unearned premiums written in our German Auto quota share reinsurance contract which went into run-off on January 1, 2021. 
 
 
 41 

 
 

 The table below shows net premiums written by line of business for the three months ended March 31, 2022 and 2021: 
 
 For the Three Months Ended March 31, 2022 2021 Change in 
 ($ in thousands) Total Total $ 
 Net Premiums Written 
 
 International 
 $ 4,583 $ (244) $ 4,827 
 Other 
 — 10 (10) 
 
 Total Diversified Reinsurance 
 $ 4,583 $ (234) $ 4,817 
 
 
 
 
 
 
 
 

 Net premiums earned decreased by $0.3 million or 4.6% during the three months ended March 31, 2022 compared to the same period in 2021. The table below shows net premiums earned by line of business for the three months ended March 31, 2022 and 2021: 
 
 For the Three Months Ended March 31, 2022 2021 Change in 
 ($ in thousands) Total Total $ % 
 Net Premiums Earned 
 
 International 
 $ 5,955 $ 6,230 $ (275) (4.4) % 
 Other 
 — 10 (10) (100.0) % 
 
 Total Diversified Reinsurance 
 $ 5,955 $ 6,240 $ (285) (4.6) % 
 
 
 
 
 
 
 
 

 
 Other Insurance Revenue — Other insurance revenue decreased by $0.2 million or 81.0% for the three months ended March 31, 2022 compared to the same period in 2021. Other insurance revenue includes $41.0 thousand of fee income earned from our GLS business for the three months ended March 31, 2022 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 months ended March 31, 2022 and 2021 as specified in the table below. The decline of $0.3 million in International was primarily due to the loss of fee income from an auto customer program that went into run-off on July 31, 2021. 
 The table below shows other insurance revenue by source for the three months ended March 31, 2022 and 2021: 
 
 For the Three Months Ended March 31, 2022 2021 Change 
 ($ in thousands) 
 
 
 % 
 International $ 10 $ 269 $ (259) (96.3) % 
 Other income 41 — 41 NM 
 Total Diversified Reinsurance $ 51 $ 269 $ (218) (81.0) % 
 
 
 
 
 
 

 NM - not meaningful 
 Net Loss and LAE — Net loss and LAE decreased by $2.8 million or 196.1% for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to the run-off of reinsurance liabilities associated with our German Auto programs . 
 The net loss and LAE was impacted by favorable prior year loss reserve development which was $2.2 million for the three months ended March 31, 2022 compared to adverse development of $14.0 thousand for the same period in 2021. The favorable loss development for the three months ended March 31, 2022 was experienced in IIS and other run-off business while the adverse loss development in 2021 was experienced in European Capital Solutions and other run-off business. 
 Commission and Other Acquisition Expenses — Commission and other acquisition expenses increased by $16.0 thousand or 0.4% for the three months ended March 31, 2022 compared to the same period in 2021. 
 General and Administrative Expenses — General and administrative expenses increased by $0.5 million or 33.3% for the three months ended March 31, 2022 compared to the same period in 2021. 
 
 
 
 
 42 

 
 

 AmTrust Reinsurance Segment 
 The AmTrust Reinsurance segment reported an underwriting loss of $3.2 million during the three months ended March 31, 2022 compared to underwriting income of $1.8 million for the same period in 2021. The AmTrust Cession Adjustments contributed an underwriting loss of $5.1 million to the reported results during the three months ended March 31, 2022; excluding these adjustments the AmTrust Reinsurance segment had underwriting income of $1.9 million on the run-off of unearned premium for terminated AmTrust reinsurance contracts. The underwriting results for the AmTrust Reinsurance segment for the three months ended March 31, 2022 and 2021 were as follows: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2022 2021 
 Gross premiums written 
 $ (14,906) $ (2,462) 
 Net premiums written 
 $ (14,906) $ (2,462) 
 Net premiums earned 
 $ (4,833) $ 5,524 
 Net loss and LAE 
 923 (944) 
 Commission and other acquisition expenses 
 1,243 (2,187) 
 General and administrative expenses 
 (485) (603) 
 Underwriting (loss) income $ (3,152) $ 1,790 
 
 
 
 
 
 

 Premiums — The table below shows net premiums written by category for the three months ended March 31, 2022 and 2021, respectively: 
 
 For the Three Months Ended March 31, 2022 2021 Change in 
 ($ in thousands) Total Total $ 
 Net Premiums Written 
 Small Commercial Business 
 $ (11,722) $ (2,478) $ (9,244) 
 Specialty Program 
 837 (25) 862 
 Specialty Risk and Extended Warranty 
 (4,021) 41 (4,062) 
 Total AmTrust Reinsurance 
 $ (14,906) $ (2,462) $ (12,444) 
 
 
 
 
 
 
 
 

 The negative gross and net premiums written for the three months ended March 31, 2022 reflect the AmTrust Cession Adjustments which consist of higher than expected adjustments related to the following items: 
 • $11.0 million of premium reductions on Workers Compensation policy surcharges in Small Commercial Business subsequent to the termination of the AmTrust Quota Share; and 
 • $4.8 million of premium reductions to AmTrust's inuring reinsurance for certain programs in Specialty Risk and Extended Warranty which reduced the amount of premium ceded to Maiden. 
 There were also negative gross and net premiums written for the three months ended March 31, 2021 reflecting premium adjustments on Small Commercial Business policies in the AmTrust Quota Share. Furthermore, the termination of the AmTrust Quota Share and the European Hospital Liability Quota Share as of January 1, 2019 resulted in no new business written under these contracts since 2018. 
 Net premiums earned decreased by $10.4 million for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to the AmTrust Cession Adjustments as discussed above. 
 The tables below detail net premiums earned by category for the three months ended March 31, 2022 and 2021: 
 
 For the Three Months Ended March 31, 2022 2021 Change in 
 ($ in thousands) Total Total $ 
 Net Premiums Earned 
 Small Commercial Business 
 $ (11,710) $ (2,351) $ (9,359) 
 Specialty Program 
 838 (18) 856 
 Specialty Risk and Extended Warranty 
 6,039 7,893 (1,854) 
 Total AmTrust Reinsurance 
 $ (4,833) $ 5,524 $ (10,357) 
 
 
 
 
 
 
 
 

 Net Loss and LAE — Net loss and LAE decreased by $1.9 million for the three months ended March 31, 2022 compared to the same period in 2021 primarily due to favorable prior year loss development of $5.1 million during the three months ended March 31, 2022 which included $5.3 million of favorable loss adjustments on the AmTrust Cession Adjustments. 
 43 

 
 

 There was favorable prior year loss development of $5.1 million during the three months ended March 31, 2022 compared to favorable prior year development of $5.6 million for the same period in 2021. Prior year favorable development during the three months ended March 31, 2022 was primarily due to favorable development on the runoff of Workers Compensation business as well as AmTrust Cession Adjustments for Specialty Risk and Extended Warranty. The net favorable prior year loss development for the three months ended March 31, 2021 was due to favorable development in Workers Compensation partly offset by adverse development in Hospital Liability. 
 Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $3.4 million for the three months ended March 31, 2022 compared to the same period in 2021 due to the AmTrust Cession Adjustments discussed above which resulted in negative earned premiums and a reduction to brokerage fees. 
 General and Administrative Expenses — General and administrative expenses decreased by $0.1 million or 19.6% for the three months ended March 31, 2022 compared to the same period in 2021 as a result of lower earned premiums due to terminating both quota share agreements with AmTrust as of January 1, 2019. 
 
 
 
 Liquidity and Capital Resources 
 Liquidity 
 Maiden Holdings is a holding company and transacts no business of its own. We therefore rely on cash flows in the form of dividends, advances, loans and other permitted distributions from our subsidiary companies to pay expenses and make dividend payments on our common and preference shares. The jurisdictions in which our operating subsidiaries are licensed to write business impose regulations requiring companies to maintain or meet statutory solvency and liquidity requirements and also place restrictions on the declaration and payment of dividends and other distributions. 
 As of March 31, 2022, the Company had investable assets of $1.6 billion compared to $1.7 billion as of December 31, 2021. 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 decline in our investable assets is primarily the result of our cessation of active reinsurance underwriting of new prospective risks in 2018 and 2019 which subsequently resulted in negative operating cash flows to settle claim payments from the run-off of the liabilities from that reinsurance portfolio in 2022. 
 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, 2021, that was filed with the SEC on March 14, 2022. 
 As previously indicated, Maiden Reinsurance re-domesticated from Bermuda to Vermont on March 16, 2020. We continue to be actively engaged with the Vermont Department of Financial Regulation ("Vermont DFR") regarding the formulation of Maiden Reinsurance's longer term business plan, including its investment policy, changes to which require prior regulatory approval as stipulated by Vermont law or the Vermont DFR for any active underwriting, capital management or other strategic initiatives. Maiden Reinsurance has received all necessary approvals required to date by the Vermont DFR, including its activities via GLS and its investment policy which includes: 1) the expansion of approved asset classes for investment reflecting not only Maiden Reinsurance’s solvency position but the material reduction in required capital necessary to operate its business as discussed further in Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity & Capital Resources – Cash and Investments ; and 2) the purchase of affiliated securities as demonstrated in the recent preference share tender offers. 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. Further, we and our insurance subsidiaries may need additional capital to maintain compliance with regulatory capital requirements and/or be required to post additional collateral under existing reinsurance arrangements, which could reduce our liquidity. 
 Operating, investing and financing cash flows 
 Our sources of funds historically have consisted of premium receipts net of commissions and brokerage, investment income, net proceeds from capital raising activities, and proceeds from sales, maturities, pay downs and redemption of investments. Cash is currently used primarily to pay loss and LAE, ceded reinsurance premium, general and administrative expenses, and interest expense, with the remainder in excess of our operating requirements made available to our investment managers for investment in accordance with our investment policy as well as for capital management such as repurchasing our shares. 
 Our business has undergone significant changes since 2018. We have entered into a series of transactions that have materially reduced our balance sheet risk and transformed our operations. As a result of these transactions, we are not engaged in active underwriting of new prospective risks thus our net premiums written will continue to be materially lower and investment income will become a significantly larger portion of our total revenues. We are writing new retroactive risks through GLS, however this will be smaller in relation to the run-off of our prior reinsurance business. Despite the initial inflow of new business from GLS, this has continued to cause significant negative operating cash flows as we run off the AmTrust Reinsurance segment reserves as shown in the cash flows table further below. 
 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 through the remainder of 2022 and beyond. 
 44 

 
 

 We expect to use funds from cash and investment portfolios, collected premiums on reinsurance contracts in force or being run-off, investment income and proceeds from investment sales and redemptions to meet our expected claims payments and operational expenses. Claim payments will be principally from the run-off of existing reserves for loss and LAE. A significant portion of those liabilities are collateralized and claim payments will be funded by using this collateral which should provide sufficient funding to fulfill those obligations. 
 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 March 31, 2022 and December 31, 2021, unrestricted cash and cash equivalents and unrestricted fixed maturity investments were $74.6 million and $81.1 million, respectively. 
 The decrease of $6.5 million in unrestricted cash and fixed maturity investments during 2022 was primarily the result of $3.1 million utilized for the 2021 Preference Share Repurchase Program, $14.1 million utilized for net purchases of equity securities and other investments, $3.9 million utilized for net purchases of equity method investments, and $4.8 million for interest payments on the Senior Notes, partly offset by $15.0 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 three months ended March 31, 2022 and 2021: 
 
 For the Three Months Ended March 31, 2022 2021 
 ($ in thousands) 
 Operating activities 
 $ (76,078) $ (102,818) 
 Investing activities 
 86,125 199,170 
 Financing activities 
 (3,893) (99,918) 
 Effect of exchange rate changes on foreign currency cash 
 (355) (1,106) 
 Total increase (decrease) in cash, restricted cash and cash equivalents $ 5,799 $ (4,672) 
 
 

 Cash Flows used in Operating Activities 
 Cash flows used in operating activities for the three months ended March 31, 2022 were $76.1 million compared to cash flows used in operating activities of $102.8 million for the three months ended March 31, 2021, a decrease of $26.7 million. The operating cash flows used in operations for the three months ended March 31, 2022 and 2021 were primarily the result of claims payments for the runoff of existing reserves for terminated AmTrust Quota Share and the European Hospital Liability Quota Share contracts as well as return of premiums due to AmTrust Cession Adjustments. 
 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 $86.1 million for the three months ended March 31, 2022 compared to $199.2 million for the same period in 2021 due to proceeds from the sale of fixed maturity investments which were made primarily to settle claim payments during the three months ended March 31, 2022 and 2021 as well as repurchase preference shares during the three months ended March 31, 2022 and 2021. 
 For the three months ended March 31, 2022, the proceeds from the sales, maturities and calls exceeded the purchases of fixed maturity securities by $104.1 million compared to net proceeds of $205.1 million for the same period in 2021. This was partly offset by $14.1 million utilized for net purchases of other investments and $3.9 million utilized for net purchases of equity method investments during the three months ended March 31, 2022. 
 Cash Flows from Financing Activities 
 Cash flows used in financing activities were $3.9 million for the three months ended March 31, 2022 compared to $99.9 million during 2021 due mainly to the repurchase of the Company's preference shares. During the three months ended March 31, 2022, the Company paid $3.1 million for the repurchase of 274,861 preference shares pursuant to the 2021 Preference Share Repurchase Program as part of its recent capital management strategy compared to 6,614,493 preference shares repurchased by the Company during the first quarter of 2021 for aggregate total consideration of $97.4 million. 
 No dividends on common or preference shares were paid during the three months ended March 31, 2022 and 2021. Our Board of Directors have not declared any common or preference share dividends since the third quarter of 2018. 
 Restrictions, Collateral and Specific Requirements 
 The Company's restrictions, collateral and specific requirements are discussed in " Management's Discussion and Analysis of Financial Condition and Results of Operations " section included under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, that was filed with the SEC on March 14, 2022. 
 At March 31, 2022 and December 31, 2021, restricted cash and cash equivalents and fixed maturity investments used as collateral were $468.5 million and $582.1 million, respectively. This collateral represents 86.3% and 87.8% of the fair value of our respective total fixed maturity investments, cash, restricted cash and cash equivalents at March 31, 2022 and December 31, 2021, respectively. 
 45 

 
 

 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 have been invested in liquid, investment-grade fixed income securities which are all designated as AFS at March 31, 2022. As of March 31, 2022 and December 31, 2021, our cash and investments consisted of: 
 
 March 31, 2022 December 31, 2021 
 ($ in thousands) 
 Fixed maturities, available-for-sale, at fair value $ 471,230 $ 597,145 
 Equity securities, at fair value 48,932 44,062 
 Equity method investments 93,317 83,742 
 Other investments 108,161 97,663 
 Total investments 721,640 822,612 
 Cash and cash equivalents 36,975 26,668 
 Restricted cash and cash equivalents 34,911 39,419 
 Total Investments and Cash and Cash Equivalents $ 793,526 $ 888,699 

 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 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 total returns our investment portfolio produces. We categorize these investments as alternative investments which include " Other Investments ", "Equity Securities" , and "Equity Method Investments" as captioned on our condensed consolidated balance sheets. 
 Under this revised investment policy, we have increased the amount of alternative investments during 2022 and 2021, and we expect to continue to increase the amounts invested therein. Under our investment policy, alternative investments 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 alternative investments, in addition to the discussion of the investments herein, please see " Notes to Condensed Consolidated Financial Statements (unaudited) Note 4(b). Other Investments, Equity Securities and Equity Method Investments" included under Part I Item 1 " Financial Information " of this Form 10-Q. 
 Our investment performance is subject to a variety of risks, including risks related to general economic conditions, market volatility, interest rate fluctuations, foreign exchange risk, liquidity risk and credit and default risk. Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. An increase in interest rates could result in significant losses, realized or unrealized, in the value of our investment portfolio. 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, equity securities 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. 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. In addition, costs associated with evaluating, analyzing and monitoring these investments may require additional expenditures than traditional marketable securities. During 2022, our investment expenses associated with our alternative investments have decreased compared to 2021. 
 The substantial majority of our current and 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 three months ended March 31, 2022, we utilized $3.1 million in conjunction with the 2021 Preference Share Repurchase Program. As of March 31, 2022, we have cumulatively invested $168.9 million in the preference shares of Maiden Holdings. 
 
 
 
 
 46 

 
 

 Cash & Cash Equivalents 
 At March 31, 2022, we consider the levels of cash and cash equivalents held 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 March 31, 2022 and December 31, 2021, respectively: 
 
 March 31, 2022 Original or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Average yield (1) 
 Average duration (2) 
 
 ($ in thousands) 
 U.S. treasury bonds 
 $ 66,109 $ 1 $ (380) $ 65,730 0.3 % 0.6 
 U.S. agency bonds – mortgage-backed 
 85,607 75 (2,293) 83,389 2.8 % 3.1 
 Collateralized mortgage-backed securities 7,199 — (80) 7,119 2.5 % 3.6 
 Non-U.S. government bonds 3,160 — (151) 3,009 0.3 % 7.0 
 Collateralized loan obligations 174,842 22 (9,104) 165,760 1.2 % 0.3 
 Corporate bonds 
 155,214 1,668 (10,659) 146,223 1.8 % 2.6 
 
 Total fixed maturities 492,131 1,766 (22,667) 471,230 1.6 % 1.6 
 Cash and cash equivalents 
 71,886 — — 71,886 0.1 % 0.0 
 Total 
 $ 564,017 $ 1,766 $ (22,667) $ 543,116 1.4 % 1.4 

 
 December 31, 2021 Original or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Average yield (1) 
 Average duration (2) 
 
 ($ in thousands) 
 U.S. treasury bonds 
 $ 59,989 $ — $ (110) $ 59,879 0.2 % 0.9 
 U.S. agency bonds – mortgage-backed 
 96,554 2,429 (193) 98,790 2.7 % 2.1 
 Collateralized mortgage-backed securities 14,972 565 — 15,537 3.2 % 3.1 
 Non-U.S. government bonds 3,163 113 — 3,276 0.3 % 7.3 
 Collateralized loan obligations 183,974 140 (5,093) 179,021 1.3 % 0.3 
 Corporate bonds 
 236,692 10,094 (6,144) 240,642 2.5 % 2.7 
 
 Total fixed maturities 595,344 13,341 (11,540) 597,145 1.9 % 1.7 
 Cash and cash equivalents 
 66,087 — — 66,087 — % 0.0 
 Total 
 $ 661,431 $ 13,341 $ (11,540) $ 663,232 1.7 % 1.5 

 (1) Average yield is calculated by dividing annualized investment income for each sub-component of fixed maturity securities and cash and cash equivalents (including amortization of premium or discount) by amortized cost. 
 (2) Average duration in years. 
 During the three months ended March 31, 2022, the yield on the 10-year U.S. Treasury bond increased by 80 basis points to 2.32%. The 10-year U.S. Treasury rate is the key risk-free determinant in the fair value of many of the fixed maturity securities in our portfolio. The U.S. Treasury yield curve experienced a material upward shift during the three months ended March 31, 2022, reflecting concerns about ongoing inflation emanating from the combination of: 1) the strength of the U.S. economy as the economic effects of the COVID-19 pandemic continue to abate; 2) geopolitical instability in Eastern Europe which threatened additional inflation and global economic stability; 3) the levels of fiscal stimulus administered by the U.S. federal government to support the economy; and 4) the anticipated monetary policy responses by central banks globally in light of these other circumstances, which indicate measures which may increase interest rates broadly . 
 The movement in the market values of our fixed maturity portfolio during the three months ended March 31, 2022 generated net unrealized losses of $22.7 million which reduced our book value per common share by $0.26 during that period. Current outlooks for global monetary policy indicate that substantial quantitative tightening by central banks in the U.S. and globally is underway and appear likely to continue for at least the near term. Our investment portfolios, in particular our fixed maturity portfolio, may be adversely impacted by unfavorable market conditions caused by these measures, which could cause continued volatility in our results of operations and negatively impact our financial condition. 
 Interest rate risk is the price sensitivity of a security to changes in interest rates. Credit spread risk is the price sensitivity of a security to changes in credit spreads. 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. Because we collateralize a significant portion of our insurance liabilities, unanticipated or 
 47 

 
 

 large increases in interest rates could require us to utilize significant amounts of unrestricted cash and fixed maturity securities to provide additional collateral, which could impact our asset and capital management strategy described herein. 
 We also monitor the duration and structure of our investment portfolio as discussed below. As of March 31, 2022, 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 $15.7 million. Actual shifts in interest rates may not change by the same magnitude across the maturity spectrum or on an individual security and, as a result, the impact on the fair value of our fixed maturity securities may be materially different from the resulting change in value described above. 
 To limit our exposure to unexpected interest rate increases which would reduce the value of our fixed income securities and reduce our shareholders' equity, we attempt to maintain the duration of our fixed maturity investment portfolio combined with our cash and cash equivalents, both restricted and unrestricted, within a reasonable range of the duration of our loss reserves. At March 31, 2022 and December 31, 2021, these respective durations in years were as follows: 
 
 March 31, 2022 December 31, 2021 
 Fixed maturities and cash and cash equivalents 
 1.4 1.5 
 Reserve for loss and LAE - gross of LPT/ADC Agreement reserves 4.4 4.4 
 Reserve for loss and LAE - net of LPT/ADC Agreement reserves 1.4 1.4 

 During the three months ended March 31, 2022, the weighted average duration of our fixed maturity investment portfolio decreased 0.1 years to 1.4 years while the duration for the reserve for loss and LAE remained at 4.4 years. The differential in duration between these assets and liabilities may fluctuate over time and in the case of fixed maturities, historically has been affected by factors such as market conditions, changes in asset mix and prepayment speeds in the case of both our agency mortgage-backed securities ("Agency MBS") and commercial mortgage-backed securities. At March 31, 2022, the duration of our fixed maturity investment portfolio decreased compared to December 31, 2021 due to sales of fixed maturity investments primarily made to settle claim payments with AmTrust. At March 31, 2022, the duration of our loss reserves net of the LPT/ADC Agreement was consistent with the duration of our fixed maturity investment portfolio. 
 To limit our exposure to unexpected interest rate increases that could reduce the value of our fixed maturity securities and reduce our shareholders' equity, the Company holds floating rate securities whose fair values are less sensitive to interest rates. At March 31, 2022 and December 31, 2021, 25.3% and 23.6%, respectively, of the Company’s fixed income investments are floating-rate securities. The floating rate investment holdings at March 31, 2022 and December 31, 2021 were as follows: 
 
 March 31, 2022 December 31, 2021 
 ($ in thousands) Fair Value % of Total Fair Value % of Total 
 Floating rate securities 
 Collateralized loan obligations $ 165,760 12.3 % $ 174,873 11.9 % 
 Collateralized mortgage-backed securities 4,951 0.4 % 3,007 0.2 % 
 Corporate bonds 1,111 0.1 % 1,145 0.1 % 
 Total floating rate AFS fixed maturities at fair value 171,822 12.8 % 179,025 12.2 % 
 Loan to related party 167,975 12.5 % 167,975 11.4 % 
 Total floating rate securities $ 339,797 25.3 % $ 347,000 23.6 % 
 
 Total fixed income investments at fair value (1) 
 $ 1,345,989 $ 1,467,619 

 (1) Total fixed income investments at fair value include AFS fixed maturities, cash and restricted cash, funds withheld receivable, and loan to related party. 
 At March 31, 2022 and December 31, 2021, 100.0% of the Company’s U.S. agency bond holdings are mortgage-backed. Additional details on the Agency MBS holdings at March 31, 2022 and December 31, 2021 were as follows: 
 
 March 31, 2022 December 31, 2021 
 ($ in thousands) Fair Value % of Total Fair Value % of Total 
 
 FNMA – fixed rate 
 $ 40,043 48.0 % $ 47,419 48.0 % 
 
 FHLMC – fixed rate 
 40,131 48.1 % 47,758 48.3 % 
 GNMA – variable rate 3,215 3.9 % 3,613 3.7 % 
 
 Total U.S. Agency MBS $ 83,389 100.0 % $ 98,790 100.0 % 
 
 

 Agency MBS bonds comprise 17.7% of our fixed maturity investments at March 31, 2022. 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. 
 48 

 
 

 At March 31, 2022 and December 31, 2021, 98.8% and 97.8%, respectively, of our fixed maturity investments consisted of investment grade securities. We define a security as being below investment grade if it has an S&P credit rating of BB+ or equivalent, or less. Please see " Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) Note 4. Investments " for additional information on the credit rating of our fixed income portfolio. 
 The security holdings by sector and financial strength rating of our corporate bond holdings at March 31, 2022 and December 31, 2021 were as follows: 
 
 Ratings (1) 
 
 March 31, 2022 AAA A+, A, A- BBB+, BBB, BBB- BB+ or lower Fair Value % of Corporate bonds portfolio 
 Corporate bonds 
 ($ in thousands) 
 Basic Materials 
 — % 3.7 % — % — % $ 5,439 3.7 % 
 Communications 
 — % 3.8 % 3.6 % — % 10,892 7.4 % 
 Consumer 
 — % 0.4 % 38.4 % — % 56,636 38.8 % 
 Energy 
 — % 4.0 % 14.5 % — % 26,967 18.5 % 
 Financial Institutions 
 1.0 % 15.8 % 9.5 % 3.8 % 44,048 30.1 % 
 Industrials 
 — % 1.5 % — % — % 2,241 1.5 % 
 
 Total 
 1.0 % 29.2 % 66.0 % 3.8 % $ 146,223 100.0 % 

 
 Ratings (1) 
 
 December 31, 2021 AAA A+, A, A- BBB+, BBB, BBB- BB+ or lower Fair Value % of Corporate bonds portfolio 
 Corporate bonds 
 ($ in thousands) 
 Basic Materials 
 — % 2.4 % 1.7 % — % $ 9,995 4.1 % 
 Communications 
 — % 2.4 % 3.2 % — % 13,480 5.6 % 
 Consumer 
 — % 2.4 % 31.3 % 2.8 % 87,753 36.5 % 
 Energy 
 — % 9.4 % 4.8 % — % 34,068 14.2 % 
 Financial Institutions 
 0.6 % 18.8 % 12.9 % 2.6 % 84,025 34.9 % 
 Industrials 
 — % 1.0 % — % — % 2,393 1.0 % 
 Technology 
 — % 3.7 % — % — % 8,928 3.7 % 
 Total 
 0.6 % 40.1 % 53.9 % 5.4 % $ 240,642 100.0 % 

 (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 March 31, 2022; of which 100.0% are euro denominated, with 43.9% in the Consumer Sector and 22.8% in the Financial Institutions sector. 
 
 March 31, 2022 Fair Value % of Holdings Rating (1) 
 
 ($ in thousands) 
 Electricite de France, 4.625%, Due 9/11/2024 $ 15,587 3.3 % BBB+ 
 Anheuser-Busch INBEV NV, 2.875%, Due 9/25/2024 11,718 2.5 % BBB+ 
 Carlsberg Breweries A/S, 2.5%, Due 5/28/2024 11,376 2.4 % BBB 
 Chubb Ina Holdings Inc., 1.55%, Due 3/15/2028 7,123 1.5 % A 
 Kraft Heinz Food Co., 1.5%, Due 5/24/2024 6,533 1.4 % BBB- 
 Utah Acquistion Sub, Inc., 2.25%, Due 11/22/2024 5,617 1.2 % BBB- 
 America Movil SAB DE CV, 1.5%, Due 3/10/2024 5,602 1.2 % A- 
 Glencore Finance (Europe) LTD, 1.875%, Due 9/13/2023 5,599 1.2 % BBB+ 
 FBD Insurance PLC, 5%, Due 10/9/2028 5,595 1.2 % NA 
 Santanger Consumer Finance SA, 1.125%, Due 10/9/2023 5,590 1.2 % A 
 Total 
 $ 80,340 17.1 % 

 (1) Ratings as assigned by S&P, or equivalent 
 
 
 
 
 49 

 
 

 At March 31, 2022 and December 31, 2021, respectively, we held the following non-U.S. dollar denominated securities: 
 
 March 31, 2022 December 31, 2021 
 ($ in thousands) Fair Value % of Total Fair Value % of Total 
 Non-U.S. dollar denominated corporate bonds $ 139,819 55.4 % $ 147,740 55.9 % 
 Non-U.S. dollar denominated collateralized loan obligations 109,667 43.4 % 113,399 42.9 % 
 Non-U.S. government bonds 3,009 1.2 % 3,275 1.2 % 
 Total non-U.S. dollar denominated securities 
 $ 252,495 100.0 % $ 264,414 100.0 % 

 At March 31, 2022 and December 31, 2021, respectively, 100.0% of our non-U.S. dollar denominated securities above were invested in euro. The net decrease in non-U.S. denominated fixed maturities is due to the relative depreciation of euro denominated corporate bonds during the three months ended March 31, 2022. At March 31, 2022 and December 31, 2021, all of the Company's non-U.S. government issuers have a rating of AA- or higher by S&P. 
 
 March 31, 2022 December 31, 2021 
 
 
 
 
 
 

 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 at March 31, 2022 and December 31, 2021: 
 
 Ratings (1) 
 March 31, 2022 December 31, 2021 
 ($ in thousands) Fair Value % of Total Fair Value % of Total 
 
 
 A+, A, A- $ 37,838 27.1 % $ 56,669 38.4 % 
 BBB+, BBB, BBB- 96,386 68.9 % 78,021 52.8 % 
 BB+ or lower 5,595 4.0 % 13,050 8.8 % 
 Total non-U.S. dollar denominated corporate bonds $ 139,819 100.0 % $ 147,740 100.0 % 

 (1) Ratings as assigned by S&P, or equivalent 
 The Company does not employ any credit default protection against any of the fixed maturities held in non-U.S. denominated currencies at March 31, 2022 and December 31, 2021, respectively. 
 Other Investments, Equity Securities and Equity Method Investments 
 Our alternative investments are categorized as other investments, equity securities, and equity method investments as reported on our consolidated balance sheets. These include private equity funds, private credit funds and hedge fund 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. Private credit investments consist of loans and other debt securities of privately held entities or investment sponsors. 
 Our allocation to alternative investments increased to 31.6% of our total cash and investments as of March 31, 2022 compared to 25.4% as of December 31, 2021; and increased to 68.1% of our total shareholders' equity as of March 31, 2022 compared to 58.7% as of December 31, 2021. 
 Our alternative investments as of March 31, 2022 and December 31, 2021 consist of the following asset classes: 
 
 March 31, 2022 December 31, 2021 
 ($ in thousands) Carrying Value % of Total Carrying Value % of Total 
 Real estate equity method investments $ 52,210 20.9 % $ 44,050 19.5 % 
 Hedge fund equity method investments 32,861 13.1 % 32,929 14.6 % 
 Investments in direct lending entities 46,175 18.4 % 42,976 19.1 % 
 Private equity funds 27,608 11.0 % 23,324 10.3 % 
 Private credit funds 21,781 8.7 % 20,863 9.3 % 
 Privately held other investments 12,597 5.0 % 10,500 4.7 % 
 Other equity method investments 8,246 3.3 % 6,763 3.0 % 
 Privately held equity securities 48,224 19.3 % 42,888 19.0 % 
 Publicly traded equity securities 708 0.3 % 1,174 0.5 % 
 Total alternative investments $ 250,410 100.0 % $ 225,467 100.0 % 

 50 

 
 

 For further details on these alternative investments, see " Notes to Condensed Consolidated Financial Statements: Note 4(b) Other Investments, Equity Securities and Equity Method Investments" included under Part I Item 1. "Financial Information" of this Report on Form 10-Q. 
 C ertain of the Company's investments in limited partnerships are related to real estate joint ventures with interests in multi-property projects with varying strategies ranging from the development of properties to the ownership of income-producing properties. In certain of these joint ventures, the Company has provided certain indemnities, guarantees and commitments to certain parties such that it may be required to make payments now or in the future. For further details on these financial guarantees, please see " Notes to Condensed Consolidated Financial Statements: Note 11 - Commitments, Contingencies and Guarantees" included under Part I Item 1. "Financial Information" of this Report on Form 10-Q. 
 Investment Results 
 The following table summarizes our investment results for the three months ended March 31, 2022 and 2021, respectively: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2022 2021 
 Net investment income: 
 Fixed income assets (1) 
 $ 6,157 $ 10,056 
 Cash and restricted cash (7) 19 
 Other investments, including equities 600 110 
 Investment expenses (183) (344) 
 Total net investment income 6,567 9,841 
 
 Net realized gains: 
 Fixed income assets (1) 
 1,143 2,894 
 Other investments, including equities 1,658 716 
 Total net realized gains 2,801 3,610 
 
 Net unrealized (losses) gains: 
 Other investments, including equities (492) 4,491 
 Total net unrealized (losses) gains (492) 4,491 
 
 Interest in income of equity method investments: 
 Interest in income of equity method investments 1,271 2,947 
 Total interest in income of equity method investments 1,271 2,947 
 
 Total investment return included in earnings (A) 
 $ 10,147 $ 20,889 
 
 Other comprehensive income (loss): 
 Unrealized losses on AFS and Equity Method Investments excluding foreign exchange (B) 
 $ (11,392) $ (12,784) 
 Total investment return = (A) + (B) $ (1,245) $ 8,105 
 
 Annualized income from fixed income assets and cash (2) 
 $ 24,600 $ 40,300 
 Average aggregate fixed income assets and cash, at cost (2) 
 1,416,353 2,011,055 
 Annualized investment book yield 1.7 % 2.0 % 
 
 Average aggregate invested assets, at fair value (3) 
 $ 1,644,743 $ 2,162,060 
 Investment return included in net earnings 0.6 % 1.0 % 
 Total investment return (0.1) % 0.4 % 

 1. Includes AFS securities as well as funds withheld receivable, and loan to related party. 
 2. 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. 
 3. 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. 
 51 

 
 

 The following table details total investment returns for our fixed income investments and alternative investments for the three months ended March 31, 2022 and 2021, respectively: 
 
 Fixed Income Investments (1) 
 Alternative Investments (2) 
 
 For the Three Months Ended March 31, For the Three Months Ended March 31, 
 ($ in thousands) 2022 2021 2022 2021 
 Gross investment income $ 6,150 $ 10,075 $ 1,871 $ 3,057 
 Net realized and unrealized gains 1,143 2,894 1,166 5,207 
 Change in AOCI (3) 
 (15,806) (11,772) 4,414 (1,012) 
 Gross investment returns $ (8,513) $ 1,197 $ 7,451 $ 7,252 
 
 Average invested assets, at fair value (4) 
 $ 1,406,804 $ 2,048,654 $ 237,939 $ 113,406 
 
 Gross Investment Returns (0.6) % 0.1 % 3.1 % 6.4 % 
 
 Investment expenses $ 126 $ 271 $ 57 $ 73 
 Net investment returns $ (8,639) $ 926 $ 7,394 $ 7,179 
 
 Net Investment Returns (0.6) % — % 3.1 % 6.3 % 

 1. Fixed income investments includes AFS securities as well as cash, restricted cash, funds withheld receivable, and loan to related party. 
 2. Alternative investments includes other investments, equity securities, and equity method investments. 
 3. Change in AOCI excludes unrealized foreign exchange gains and losses. 
 4. Average invested assets is the average of the amounts disclosed in our quarterly U.S. GAAP consolidated financial statements. 
 Total returns on fixed income investments were adversely impacted by the increase in interest rates during the three months ended March 31, 2022 compared to same period in 2021. Total returns on alternative investments were positive for the three months ended March 31, 2022 partly due to the sale of an equity method investment which produced gross returns of $5.8 million which contributed 2.4% to the gross investment returns during the current period. On a percentage basis however, the investment returns in 2022 were lower compared to the same period in 2021 due to higher average invested assets in 2022. For the three months ended March 31, 2021, gross investment returns included unrealized gains of $4.5 million from an investment in an insurtech start-up company that was acquired by a special purpose acquisition company which contributed 4.0% to the gross investment returns for the prior year period. 
 Other Balance Sheet Changes 
 The following table summarizes our other material balance sheet changes at March 31, 2022 and December 31, 2021: 
 
 ($ in thousands) March 31, 2022 December 31, 2021 Change Change % 
 
 Reinsurance recoverable on unpaid losses 
 $ 558,262 $ 562,845 $ (4,583) (0.8) % 
 Deferred commission and other acquisition expenses 
 32,692 36,703 (4,011) (10.9) % 
 
 
 Reserve for loss and LAE 
 1,386,023 1,489,373 (103,350) (6.9) % 
 Unearned premiums 
 88,882 100,131 (11,249) (11.2) % 
 Deferred gain on retroactive reinsurance 
 52,805 48,960 3,845 7.9 % 
 
 Accrued expenses and other liabilities 
 65,195 44,542 20,653 46.4 % 

 The Company's deferred commission and other acquisition expenses decreased by 10.9% and unearned premiums decreased by 11.2% 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 have been in run-off since January 1, 2019. 
 Accrued expenses and other liabilities increased by 46.4% as at March 31, 2022 compared to December 31, 2021 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 6.9% primarily due to the payment of prior year loss claims as well as favorable loss development recognized for the AmTrust Reinsurance segment. 
 The increase in deferred gains on retroactive reinsurance for the three months ended March 31, 2022 by 7.9% is attributable to new retroactive reinsurance business assumed by GLS partly offset by $1.0 million in loss and LAE recognized as favorable loss development in the AmTrust Reinsurance segment covered by the LPT/ADC Agreement. The favorable loss development on reserves covered by the LPT/ADC Agreement also impacted the reinsurance recoverable on unpaid losses which decreased by $4.6 million or 0.8% as at March 31, 2022 compared to December 31, 2021. 
 52 

 
 

 Capital Resources 
 During the three months ended March 31, 2022, book value per common share decreased by 5.0% to $2.47 and diluted book value per common share decreased by 5.0% to $2.46, compared to December 31, 2021. This was largely due to a net loss of $1.9 million and net decrease in AOCI of $12.6 million during the three months ended March 31, 2022, partially offset by the $3.5 million gain on the 2021 Preference Share Repurchase Program during the first quarter which increased book value by $0.04 per common share. 
 Capital resources consist of funds deployed in support of our operations. The following table shows the movement in total capital resources at March 31, 2022 and December 31, 2021: 
 
 ($ in thousands) March 31, 2022 December 31, 2021 Change Change % 
 Preference shares 
 $ 152,338 $ 159,210 $ (6,872) (4.3) % 
 Common shareholders' equity 
 215,327 225,047 (9,720) (4.3) % 
 Total shareholders' equity 
 367,665 384,257 (16,592) (4.3) % 
 Senior Notes - principal amount 
 262,500 262,500 — — % 
 Total capital resources 
 $ 630,165 $ 646,757 $ (16,592) (2.6) % 

 Total capital resources decreased by $16.6 million, or 2.6% at March 31, 2022 compared to December 31, 2021 primarily due to the decrease in total shareholders'' equity as follows: 
 • net decrease of $3.1 million from the 2021 Preference Share Repurchase Program composed of a decline in preference share capital of $6.9 million partly offset by: (1) a gain on repurchase of preference shares of $3.5 million for the three months ended March 31, 2022 which increased retained earnings; and (2) a net increase in additional paid-in capital of $0.2 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 $12.6 million which arose due to: (1) net unrealized losses on investment of $18.2 million resulting largely from a decrease in the fair value of $22.7 million for our fixed income investment portfolio relating to market price movements due to rising interest rates during the three months ended March 31, 2022 offset by $4.4 million related to equity method investments; less (2) an increase in cumulative translation adjustments of $5.6 million due to the strengthening of the U.S. dollar on the remeasurement of net insurance-related liabilities denominated in euro during the three months ended March 31, 2022; 
 • net loss attributable to Maiden of $1.9 million for the three months ended March 31, 2022; and partly offset by: 
 • net increase due to share-based compensation of $1.0 million. 
 Please refer to " Notes to Consolidated Financial Statements Note 6. Shareholders' Equity " included under Part II Item 8. " Financial Statements and Supplementary Data" of our Annual Report on Form 10-K for a discussion of the equity instruments issued by the Company as at December 31, 2021. 
 Book value and diluted book value per common share at March 31, 2022 and December 31, 2021 were as follows: 
 
 ($ in thousands except share and per share data) March 31, 2022 December 31, 2021 
 Ending common shareholders’ equity 
 $ 215,327 $ 225,047 
 Proceeds from assumed conversion of dilutive options 
 10 10 
 Numerator for diluted book value per common share calculation 
 $ 215,337 $ 225,057 
 
 Common shares outstanding 
 87,058,833 86,467,242 
 Shares issued from assumed conversion of dilutive options and restricted shares 
 456,964 494,926 
 Denominator for diluted book value per common share calculation 
 87,515,797 86,962,168 
 
 Book value per common share 
 $ 2.47 $ 2.60 
 Diluted book value per common share 
 2.46 2.59 

 Common Shares 
 On February 21, 2017, the Company's Board of Directors approved the repurchase of up to $100.0 million of the Company's common shares from time to time at market prices. During the three months ended March 31, 2022, the Company did not repurchase any common shares under its share repurchase authorization as it is precluded from repurchasing its common shares due to its failure to pay dividends on its preference shares. Until such time as dividends on preference shares are paid, the Company will not be able to repurchase or pay dividends on its common shares. At March 31, 2022, the Company had a remaining authorization of $74.2 million for share repurchases. 
 
 
 53 

 
 

 Preference Shares 
 On March 3, 2021, the Company's Board approved the repurchase, including the repurchase by Maiden Reinsurance within its investment guidelines, of up to $100.0 million of the Company's preference shares. On May 6, 2021, the Company's Board of Directors approved the additional repurchase, including the repurchase by Maiden Reinsurance in accordance with its investment guidelines (as may be amended), of up to $50.0 million of the Company's preference shares from time to time at market prices in open market purchases or as may be privately negotiated. The authorizations that were approved on March 3, 2021 and May 6, 2021 are collectively referred to as the "2021 Preference Share Repurchase Program". 
 The principal purpose of the 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 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 months ended March 31, 2022. The Company has a remaining authorization of $10.7 million for preference share repurchases. 
 Senior Notes 
 There were no changes in the Company’s Senior Notes at March 31, 2022 compared to December 31, 2021 and the Company did not enter into any short-term borrowing arrangements during the three months ended March 31, 2022. Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 7. Long Term Debt " included under Part I Item 1 " Financial Information" of this Form 10-Q for a discussion of the Company’s Senior Notes. 
 The ratio of Debt to Total Capital Resources at March 31, 2022 and December 31, 2021 was computed as follows: 
 
 ($ in thousands) March 31, 2022 December 31, 2021 
 Senior notes - principal amount 
 $ 262,500 $ 262,500 
 Maiden shareholders’ equity 
 367,665 384,257 
 Total capital resources 
 $ 630,165 $ 646,757 
 Ratio of debt to total capital resources 
 41.7 % 40.6 % 

 Off-Balance Sheet Arrangements 
 C ertain of the Company's investments in limited partnerships are related to real estate joint ventures with interests in multi-property projects with varying strategies ranging from the development of properties to the ownership of income-producing properties. In certain of these joint ventures, the Company has provided certain indemnities, guarantees and commitments to ce rtain parties such that it may be required to make payments now or in the future as further described in the " Notes to Condensed Consolidated Financial Statements (unaudited) Note 11. Commitments, Contingencies and Guarantees " included under Part I Item 1 " Financial Information" of this Form 10-Q. 
 Any loss for which the Company could be liable would be contingent on the default of a loan by the real estate joint venture entity for which the Company provided a financial guarantee to a lender. While the Company has committed to aggregate limits as to the amount of guarantees it will provide as part of its limited partnerships, guarantees are only provided on an individual transaction basis and are subject to the terms and conditions of each transaction mutually agreed by the parties involved. The Company is not bound to such guarantees without its express authorization. 
 As discussed above, at March 31, 2022, guarantees of $36.2 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. 
 
 
 
 54 

 
 

 Non-GAAP Measures 
 As defined and described in the Key Financial Measures section , m anagement uses certain key financial measures, some of which are non-GAAP measures, to evaluate the Company's financial performance and the overall growth in value generated for the Company’s common shareholders. Management believes that these measures, which may be defined differently by other companies, explain the Company’s results to investors in a manner that allows for a more complete understanding of the underlying trends in the Company’s business. The calculation, reconciliation to nearest GAAP measure and discussion of relevant non-GAAP measures used by management are as follows: 
 Non-GAAP operating loss was $6.9 million for the three months ended March 31, 2022 compared to non-GAAP operating earnings of $47.3 million for the same period in 2021. The reduction in non-GAAP operating results was largely due to: 
 • gains of $3.5 million from the repurchase of preference shares at market values for the three months ended March 31, 2022 compared to gains of $62.5 million for preference share repurchases during the same period in 2021; 
 • underwriting loss of $1.7 million for the three months ended March 31, 2022 compared to underwriting income of $1.6 million for 2021 largely due to the AmTrust Cession Adjustments which contributed an underwriting loss of $5.1 million to the reported results during the three months ended March 31, 2022; and 
 • lower net investment income which decreased by $3.3 million compared to 2021. 
 The Company's non-GAAP operating results included a non-GAAP underwriting loss of $2.7 million for the three months ended March 31, 2022 compared to an underwriting loss of $8.3 million for the same period in 2021, 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 and Non-GAAP diluted operating 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 March 31, 2022 2021 
 ($ in thousands except per share data) 
 Net income available to Maiden common shareholders $ 1,594 $ 71,736 
 Add (subtract): 
 
 Net realized and unrealized gains on investment (2,309) (8,101) 
 
 Foreign exchange and other gains (3,949) (3,542) 
 Interest in income of equity method investments (1,271) (2,947) 
 Decrease in deferred gain on retroactive reinsurance under the LPT/ADC Agreement (1,000) (9,845) 
 
 
 
 Non-GAAP operating (loss) earnings $ (6,935) $ 47,301 
 
 Diluted earnings per share attributable to common shareholders $ 0.02 $ 0.83 
 Add (subtract): 
 
 Net realized and unrealized gains on investment (0.03) (0.09) 
 
 Foreign exchange and other gains (0.05) (0.04) 
 Interest in income of equity method investments (0.01) (0.03) 
 Decrease in deferred gain on retroactive reinsurance under the LPT/ADC Agreement (0.01) (0.12) 
 
 
 
 Non-GAAP diluted operating (loss) earnings per share available to common shareholders 
 $ (0.08) $ 0.55 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 Non-GAAP Operating ROACE 
 Non-GAAP Operating ROACE for the three months ended March 31, 2022 and 2021 was computed as follows: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2022 2021 
 Non-GAAP operating (loss) earnings $ (6,935) $ 47,301 
 Opening adjusted common shareholders’ equity 274,990 208,447 
 Ending adjusted common shareholders’ equity 260,187 262,759 
 Average adjusted common shareholders’ equity 267,589 235,603 
 Non-GAAP Operating ROACE 
 (10.5) % 81.4 % 

 55 

 
 

 Non-GAAP Underwriting Results 
 The following summarizes our non-GAAP underwriting results for the three months ended March 31, 2022 and 2021: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2022 2021 
 Gross premiums written $ (10,170) $ (2,390) 
 Net premiums written $ (10,323) $ (2,696) 
 Net premiums earned $ 1,122 $ 11,764 
 Other insurance revenue 51 269 
 Non-GAAP net loss and LAE (1) 
 1,283 (12,204) 
 Commission and other acquisition expenses (2,528) (5,942) 
 General and administrative expenses (2,583) (2,177) 
 Non-GAAP underwriting loss (1) 
 $ (2,655) $ (8,290) 
 
 
 
 
 
 
 

 (1) Non-GAAP underwriting loss and non-GAAP net loss and LAE for the three months ended March 31, 2022 are adjusted for prior year reserve development subject to the LPT/ADC Agreement. Please see "Key Financial Measures" section for the definitions of Non-GAAP underwriting loss and net loss and LAE. 
 The non-GAAP underwriting results include the impact of favorable prior year loss reserve development under the AmTrust Quota Share which is fully recoverable from Cavello under the LPT/ADC Agreement to show the ultimate economic benefit to the Company. As shown in the table above, adjusted for the decrease in the deferred gain under the LPT/ADC Agreement of $1.0 million during the three months ended March 31, 2022, the non-GAAP underwriting loss was $2.7 million. This compared to a non-GAAP underwriting loss of $8.3 million when adjusted for the decrease in the deferred gain under the LPT/ADC Agreement of $9.8 million during the three months ended March 31, 2021. 
 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. Underwriting income in the Diversified Reinsurance segment during the three months ended March 31, 2022 increased by $1.7 million compared to the same period in 2021. 
 Non-GAAP Net Loss and LAE 
 Adjusted for the decrease in the deferred gain for the LPT/ADC Agreement, the non-GAAP net loss and LAE for the three months ended March 31, 2022 increased by $1.0 million (2021 - $9.8 million), as these amounts included favorable loss experience for AmTrust reserves subject to the LPT/ADC Agreement which are ultimately recoverable from Cavello. This adjustment is reflected in the calculation of non-GAAP Loss and LAE as shown below: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2022 2021 
 Net loss and LAE 
 $ (2,283) $ 2,359 
 Less: decrease in deferred gain on retroactive reinsurance for the LPT/ADC Agreement (1,000) (9,845) 
 Non-GAAP net loss and LAE 
 $ (1,283) $ 12,204 

 Adjusted for the impact of favorable prior year loss development on AmTrust reserves subject to the LPT/ADC Agreement of $1.0 million during the three months ended March 31, 2022 (2021 - $9.8 million), non-GAAP net loss and LAE was $(1.3) million (2021 - $12.2 million). 
 Adjusted Shareholders' Equity, Adjusted Total Capital Resources, Adjusted Book Value per Common Share, and Ratio of Debt to Total Adjusted Capital Resources 
 The Adjusted Shareholders' Equity, Adjusted Total Capital Resources and Adjusted Book Value per Common Share at March 31, 2022 and December 31, 2021 reflect the addition of the unamortized deferred gain under the LPT/ADC Agreement to the GAAP shareholders' equity as depicted in the computations below. The deferred gain under the LPT/ADC Agreement was $44.9 million at March 31, 2022 compared to $45.9 million at December 31, 2021, and relates to loss reserves subject to that agreement that are fully recoverable from Cavello. 
 The decrease in the unamortized deferred gain under the LPT/ADC Agreement for the three months ended March 31, 2022 is attributable to $1.0 million in loss and LAE recognized as favorable loss development in the Company's GAAP income statement subject to the LPT/ADC Agreement. We believe the inclusion of this 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 December 31, 2021 also reflected the LP Investment Adjustment of $4.1 million, which pertained to the equity accounting related to the fair value of certain hedged liabilities in an equity method investment held by the Company wherein the ultimate realizable value of the asset supporting the hedged liabilities was not recognized at fair value until its sale in the three months 
 56 

 
 

 ended March 31, 2022. We believe that this adjustment recognized the future realizable value and reflected the ultimate economic benefit of this investment which was sold at a realized gain in the three months ended March 31, 2022 and improved the Company's shareholders' equity over the hedged contract period of 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 under the LPT/ADC Agreement at March 31, 2022 and December 31, 2021 as well as the LP Investment Adjustment for realizable value of intangible asset in a limited partnership investment at December 31, 2021: 
 
 ($ in thousands) March 31, 2022 December 31, 2021 Change Change % 
 Preference shares 
 $ 152,338 $ 159,210 $ (6,872) (4.3) % 
 Common shareholders' equity 
 215,327 225,047 (9,720) (4.3) % 
 Total shareholders' equity 
 367,665 384,257 (16,592) (4.3) % 
 LP Investment Adjustment — 4,083 (4,083) (100.0) % 
 Unamortized deferred gain on LPT/ADC Agreement 44,860 45,860 (1,000) (2.2) % 
 Adjusted shareholders' equity 
 412,525 434,200 (21,675) (5.0) % 
 Senior Notes - principal amount 
 262,500 262,500 — — % 
 Adjusted total capital resources $ 675,025 $ 696,700 $ (21,675) (3.1) % 

 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 under the LPT/ADC Agreement as well as the LP Investment Adjustment for realizable value of intangible asset in limited partnership investment at March 31, 2022 and December 31, 2021 was computed as follows: 
 
 March 31, 2022 December 31, 2021 
 Book value per common share 
 $ 2.47 $ 2.60 
 LP Investment Adjustment — 0.05 
 Unamortized deferred gain on LPT/ADC Agreement 0.52 0.53 
 Adjusted book value per common share 
 $ 2.99 $ 3.18 

 Ratio of Debt to Adjusted Total Capital Resources 
 Management uses this non-GAAP measure to monitor the financial leverage of the Company. This measure is calculated using the total principal amount of debt divided by the sum of adjusted total capital resources as computed in the table above. The ratio of Debt to Adjusted Total Capital Resources at March 31, 2022 and December 31, 2021 was computed as follows: 
 
 ($ in thousands) March 31, 2022 December 31, 2021 
 Senior notes - principal amount 
 $ 262,500 $ 262,500 
 Adjusted shareholders’ equity 
 412,525 434,200 
 Adjusted total capital resources 
 $ 675,025 $ 696,700 
 
 Ratio of debt to adjusted total capital resources 38.9 % 37.7 % 

 
 
 57 

 
 
 

 Currency and Foreign Exchange 
 We conduct business in a variety of foreign (non-U.S.) currencies, the principal exposures being the euro and the British pound. Assets and liabilities denominated in foreign currencies are exposed to changes in currency exchange rates. Our reporting currency is the U.S. dollar, and exchange rate fluctuations relative to the U.S. dollar may materially impact our results and financial position. Our principal exposure to foreign currency risk is our obligation to settle claims in foreign currencies. In addition, in order to minimize this risk, we maintain and expect to continue to maintain a portion of our investment portfolio in investments denominated in currencies other than the U.S. dollar. We may employ various strategies (including hedging) to manage our exposure to foreign currency exchange risk. To the extent that these exposures are not fully hedged or the hedges are ineffective, our results of operations or equity may be adversely affected. At March 31, 2022, no such hedges or hedging strategies were in force or had been entered into. We measure monetary assets and liabilities denominated in foreign currencies at period end exchange rates, with the resulting foreign exchange gains and losses recognized in the unaudited Condensed Consolidated Statements of Income. Revenues and expenses in foreign currencies are converted at average exchange rates during the period. The effect of the translation adjustments for foreign operations is included in AOCI. 
 Net foreign exchange gains of $3.9 million were generated during the three months ended March 31, 2022 compared to net foreign exchange gains of $3.4 million for the three months ended March 31, 2021. 
 Effects of Inflation 
 The anticipated effects of inflation are considered explicitly in the pricing of the insured exposures, which are used as the initial estimates of reserves for loss and LAE. In addition, inflation is also implicitly accounted for in subsequent estimates of loss and LAE reserves, as the expected rate of emergence is in part predicated upon the historical levels of inflation that impact ultimate claim costs. To the extent inflation causes these costs, particularly medical treatments and litigation costs, to vary from the assumptions made in the pricing or reserving estimates, the Company will be required to change the reserve for loss and LAE with a corresponding change in its earnings in the period in which the variance is identified. The actual effects of inflation on the results of operations of the Company cannot be accurately known until claims are ultimately settled. 
 Off-Balance Sheet Arrangements 
 At March 31, 2022, we did not have any off-balance sheet arrangements as defined by Item 303(a) (4) of Regulation S-K. 
 Recent Accounting Pronouncements 
 See " Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) Note 2. Significant Accounting Policies " for a discussion on recently issued accounting pronouncements not yet adopted.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
Maiden Holdings, Ltd. 10-Q

Item 2. Management’s Discussion and Analysis
