Maiden Holdings, Ltd. 10-Q

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 2022 to conform to the 2023 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, 2022 that was filed with the U.S. Securities and Exchange Commission ("SEC") on March 15, 2023, 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. 35 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. We are not currently underwriting reinsurance business on new prospective risks but are actively underwriting risks on a retroactive basis through Genesis Legacy Solutions ("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 our 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" . 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"). 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 as of 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, 2022 that was filed on March 15, 2023 for further information on recent developments within the Company. Business Strategy We continued to deploy our revised operating strategy during 2023 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. 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. However, as interest rates have increased and moved towards historically observed levels, risk-adjusted returns for active reinsurance underwriting of new prospective risks may become more attractive and while we have no immediate plans to resume such underwriting, we continue to evaluate if such a strategy would produce suitable value for shareholders. 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 should also increase the likelihood of fully utilizing the significant net operating loss ("NOL") carryforwards as described further below which would create additional common shareholder value. 36 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. As our insurance liabilities run-off and our other strategies potentially develop along timelines longer than initially anticipated, we may allocate capital to other insurance activities that produce more consistent levels of revenue and profit as we seek to create longer-term shareholder value. Please refer to the "Liquidity and Capital Resources" section for further information on our asset and capital management activities. Asset Management 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 $263.5 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. Recent development and trends in financial markets, particularly the rapid rise in interest rates and heightened risk of economic recession, indicate that it may take longer than expected to achieve those returns and we expect that to factor into future capital allocation decisions. In particular, as interest rates have risen to more historically observed levels, we have focused on investing in assets that produce higher levels of current income as opposed to longer-term gains, in order to increase returns to shareholders and increase the opportunity to recognize our deferred tax assets discussed below. Legacy Underwriting In November 2020, we formed 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 (an 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 included an ADC cover. GLS continues to write additional retroactive reinsurance transactions consistent with its business plan. In addition to producing long-term returns that may 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. The nature of GLS business plan is that it may take a sustained period of growth in insurance liabilities to produce the targeted returns. In addition, early stage initiatives such as GLS may take a period of time to reach profitability. Finally, the nature of legacy transactions which GLS seeks to execute may be inconsistent as to their timing and not predictable as regards how many transactions may be completed in any fiscal period. As of March 31, 2023, GLS and its subsidiaries hold insurance related liabilities of $31.7 million including total reserves of $25.0 million, an underwriting-related derivative liability of $4.0 million, net deferred gains on retroactive reinsurance of $2.3 million and reinsurance losses payable of $0.4 million. Capital Management 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. Trends in recent years have increased our confidence in our recorded ultimate losses for our insurance liabilities in run-off, however a prudent assessment dictates that the run-off portfolio still requires additional maturity to fully emerge, as evidenced by the adverse loss development we experienced in 2022. While there is no assurance that these recent positive long-term 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 and the subsequent exchange of those shares for common shares ("Exchange"), which we believe provided the greatest risk-adjusted returns to our common shareholders. Please refer to "Notes to Consolidated Financial Statements - Note 6 — Shareholders' Equity" under Item 8 "Financial Statements and Supplementary Data" of the Annual Report on Form 10-K for the year ended December 31, 2022 for further information on the Exchange. Completion of the Exchange represented a significant milestone in our capital management plan and we continue to evaluate other capital management options that may be available to us, and our Board has recently authorized the repurchase of up to $100.0 million of our senior notes. Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 14. Subsequent Events " included under Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q for further information. However, there can be no assurance that we will pursue such initiatives, or that they will provide appropriate risk-adjusted returns. 37 Maiden NA We believe Maiden NA’s investments, including its ownership of Maiden Reinsurance and its active asset management strategy, will create opportunities to utilize NOL carryforwards of $296.8 million at March 31, 2023. The NOL carryforwards combined with additional net deferred tax assets ("DTA") primarily related to our insurance liabilities result in net U.S. DTA (before valuation allowance) of $120.3 million or $1.18 per common share at March 31, 2023. Net U.S. DTA of $120.3 million is not presently recognized on the Company's condensed consolidated balance sheets as a full valuation allowance is carried against it. At this time, while positive evidence in support of reducing the valuation allowance is growing, the Company believes it is necessary to maintain a full valuation allowance against the net U.S. DTA as more evidence is needed regarding the utilization of these losses. As circumstances further develop, we will continuously evaluate the amount of the valuation allowance held against the net U.S. DTA. For further details please see " Note 13 — Income Taxes " included under Item 8 " Financial Statements and Supplementary Data " of the Annual Report on Form 10–K for the year ended December 31, 2022. Taken together, we believe these measures should generate additional income for Maiden NA in a tax-efficient manner, while sharing in the improvement in profitability anticipated in Maiden Reinsurance as a result of the measures enacted as described above. Three Months Ended March 31, 2023 and 2022 Financial Highlights For the Three Months Ended March 31, 2023 2022 Change Summary Consolidated Statement of Income Data (unaudited): ($ in thousands except per share data) Net loss $ (11,328) $ (1,949) $ (9,379) Gain from repurchase of preference shares — 3,543 (3,543) Net (loss) income attributable to Maiden common shareholders (11,328) 1,594 (12,922) Basic and diluted earnings per common share: Net (loss) income attributable to common shareholders (2) (0.11) 0.02 (0.13) Gain from repurchase of preference securities per common share — 0.04 (0.04) Gross premiums written 836 (10,170) 11,006 Net premiums earned 9,002 1,122 7,880 Underwriting loss (3) (8,253) (1,655) (6,598) Net investment results (13) 10,499 10,147 352 Non-GAAP measures: Non-GAAP operating loss (1) (7,893) (6,935) (958) Non-GAAP basic and diluted operating loss per common share (1) (0.08) (0.08) — Annualized non-GAAP operating return on average common shareholders' equity (1) (9.9) % (10.5) % 0.6 38 March 31, 2023 December 31, 2022 Change Consolidated Financial Condition ($ in thousands except per share data) Total investments and cash and cash equivalents (4) $ 618,209 $ 633,684 $ (15,475) Total assets 1,756,081 1,846,866 (90,785) Reserve for loss and LAE 1,071,623 1,131,408 (59,785) Senior notes - principal amount 262,500 262,500 — Shareholders' equity 270,794 284,579 (13,785) Total capital resources (5) 533,294 547,079 (13,785) Ratio of debt to total capital resources (10) 49.2 % 48.0 % 1.2 Book Value calculations: Book value per common share (6) $ 2.66 $ 2.80 $ (0.14) Accumulated dividends per common share (12) 4.27 4.27 — Book value per common share plus accumulated dividends $ 6.93 $ 7.07 $ (0.14) Change in book value per common share plus accumulated dividends (2.0) % Diluted book value per common share (7) $ 2.64 $ 2.79 $ (0.15) Non-GAAP measures: Adjusted book value per common share (8) $ 3.12 $ 3.25 $ (0.13) Adjusted shareholders' equity (9) 317,775 329,987 (12,212) Adjusted total capital resources (9) 580,275 592,487 (12,212) Ratio of debt to adjusted total capital resources (11) 45.2 % 44.3 % 0.9 (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 (loss) 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. (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 shareholders’ equity 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 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 shareholders' equity, adjusted by adding to shareholders' equity the unamortized deferred gain on retroactive reinsurance arising from the LPT/ADC Agreement, 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 to shareholders' equity the unamortized deferred gain on retroactive reinsurance arising 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. (13) Net investment results include the sum of net investment income, net realized and unrealized gains (losses), and interest in income (loss) of equity method investments. 39 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 earnings (loss) and non-GAAP diluted operating earnings (loss) per common share : Management believes that the use of non-GAAP operating earnings and non-GAAP diluted operating 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 earnings should not be viewed as a substitute for U.S. GAAP net income. Non-GAAP operating earnings (loss) 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 investment gains (losses); (2) foreign exchange and other gains (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 related changes in amortization of the deferred gain liability; and (4) interest in income (loss) of equity method investments. We excluded net realized investment gains (losses), interest in income (loss) of equity method investments and foreign exchange and other gains (losses) 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, 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, 2023, 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 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 Shareholders' Equity ("Non-GAAP Operating ROACE"): Management uses non-GAAP operating return on average adjusted 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 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 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) and Non-GAAP Net Loss and LAE: Management has further adjusted underwriting income (loss), as defined above, as well as reported net loss and LAE 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. The 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. 40 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 to shareholders' equity the unamortized deferred gain on ceded retroactive reinsurance under the LPT/ADC Agreement. 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, 2022, filed with the SEC on March 15, 2023, 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, 2022, filed with the SEC on March 15, 2023. 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, 2022, filed with the SEC on March 15, 2023. There have been no material changes in the application of our critical accounting estimates subsequent to that report. 41 Results of Operations The following table sets forth our selected unaudited Condensed Consolidated Statement of Income data for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, ($ in thousands) 2023 2022 Gross premiums written $ 836 $ (10,170) Net premiums written $ 760 $ (10,323) Net premiums earned $ 9,002 $ 1,122 Other insurance (expense) revenue, net (59) 51 Net loss and LAE (9,815) 2,283 Commission and other acquisition expenses (4,235) (2,528) General and administrative expenses (1) (3,146) (2,583) Underwriting loss (2) (8,253) (1,655) Other general and administrative expenses (1) (6,962) (8,303) Net investment income 9,545 6,567 Net realized and unrealized investment gains 1,005 2,309 Foreign exchange and other (losses) gains (2,816) 3,949 Interest and amortization expenses (3,824) (4,832) Income tax benefit (expense) 28 (1,255) Interest in (loss) income of equity method investments (51) 1,271 Net loss (11,328) (1,949) Gain from repurchase of preference shares — 3,543 Net (loss) income (attributable) available to Maiden common shareholders $ (11,328) $ 1,594 (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 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 loss attributable to Maiden common shareholders for the three months ended March 31, 2023 was $11.3 million compared to net income available to Maiden common shareholders of $1.6 million for the same respective period in 2022. Net income available to Maiden common shareholders for the three months ended March 31, 2022 included gains from repurchase of our preference shares of $3.5 million. Excluding the gain on the repurchase of our preference shares in 2022, there was a net loss of $11.3 million for the first quarter of 2023 compared to a net loss of $1.9 million for the first quarter of 2022, primarily due to the following: • underwriting loss of $8.3 million for the three months ended March 31, 2023 compared to underwriting loss of $1.7 million in the same period in 2022 largely due to: ◦ adverse prior year loss development of $3.7 million in the first quarter of 2023 compared to favorable prior year loss development of $7.3 million during the same period in 2022; and ◦ on a current accident year basis, underwriting loss of $4.6 million for the three months ended March 31, 2023 compared to an underwriting loss of $8.9 million for the same period in 2022, largely due to lower negative premium adjustments reported by AmTrust in the first quarter of 2023 as compared to the same period in 2022. • foreign exchange and other losses were $2.8 million for the three months ended March 31, 2023, compared to foreign exchange and other gains of $3.9 million for the same period in 2022. These unfavorable movements were partly offset by the following favorable results: • total income from investment activities was $10.5 million for the three months ended March 31, 2023 compared to $10.1 million for the same period in 2022 which was comprised of: ◦ net investment income increased to $9.5 million for the three months ended March 31, 2023 compared to $6.6 million for the same period in 2022; 42 ◦ realized and unrealized investment gains were $1.0 million for the three months ended March 31, 2023 compared to gains of $2.3 million for the same period in 2022; and ◦ interest in loss of equity method investments was $0.1 million for the three months ended March 31, 2023 compared to income of $1.3 million for the same period in 2022. • corporate general and administrative expenses decreased to $7.0 million for the three months ended March 31, 2023 compared to $8.3 million for the same period in 2022. Net Premiums Written The tables below compare net premiums written by our reportable segments, reconciled to the total consolidated net premiums written for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, 2023 2022 Change in ($ in thousands) Total Total $ Diversified Reinsurance $ 6,773 $ 4,583 $ 2,190 AmTrust Reinsurance (6,013) (14,906) 8,893 Total $ 760 $ (10,323) $ 11,083 Net premiums written for the three months ended March 31, 2023 increased to $0.8 million, compared to net premiums written of $(10.3) million for the same respective period in 2022: • Premiums written in the Diversified Reinsurance segment increased by $2.2 million for the three months ended March 31, 2023, compared to the same respective period in 2022 due to growth in direct premiums for Credit Life programs written by Maiden LF and Maiden GF. • Premiums written in the AmTrust Reinsurance segment increased by $8.9 million for the three months ended March 31, 2023 compared to the same respective period in 2022 largely due to lower negative cession adjustments made in the first quarter of 2023 compared to the same period in 2022. Please refer to the analysis below of our Diversified Reinsurance and AmTrust Reinsurance segments for further details. Net Premiums Earned Net premiums earned increased by $7.9 million for the three months ended March 31, 2023, compared to the same respective period in 2022. The table below compares net premiums earned by our reportable segments, reconciled to the total consolidated net premiums earned, for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, 2023 2022 Change in ($ in thousands) Total Total $ Diversified Reinsurance $ 7,471 $ 5,955 $ 1,516 AmTrust Quota Share Reinsurance 1,531 (4,833) 6,364 Total $ 9,002 $ 1,122 $ 7,880 Net premiums earned in the Diversified Reinsurance segment for the three months ended March 31, 2023 increased by $1.5 million or 25.5% compared to the same respective period in 2022 mainly due to growth in Credit Life programs written by Maiden LF and Maiden GF. Please refer to the analysis of our Diversified Reinsurance segment for further discussion. Net premiums earned in the AmTrust Reinsurance segment for the three months ended March 31, 2023 increased by $6.4 million compared to the same respective period in 2022 primarily due to significant negative earned premium adjustments in the first quarter of 2022. Please refer to the analysis of our AmTrust 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. Net Investment Income Total net investment income increased by $3.0 million or 45.3% for the three months ended March 31, 2023, compared to the same respective period in 2022. Net investment income experienced an increase in annualized average book yields to 3.7% for the three months ended March 31, 2023 compared to 1.7% in 2022 due to the following factors: • shorter duration on our fixed income portfolio combined with 32.3% of our fixed income investments as of March 31, 2023 are floating rate investments which enabled us to take advantage of a higher interest rate environment by reinvesting at higher yields more quickly; • higher crediting interest rate on our funds withheld balance with AmTrust which increased to 3.5% in 2023 from 2.1% in 2022, which had an average ending balance of $384.2 million during the three months ended March 31, 2023; and • higher weighted average interest rate on our loan to related party of $168.0 million which increased to 6.4% during the three months ended March 31, 2023 compared to 2.1% for the same respective period in 2022. 43 Average aggregate fixed income assets at March 31, 2023 experienced a decline of 33.1% compared to March 31, 2022 due to continued run-off of reinsurance liabilities previously written on prospective risks, resulting in negative operating cash flows as we run-off our existing reinsurance liabilities. The following table details our average aggregate fixed income assets (at cost) and annualized investment book yield for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, ($ in thousands) 2023 2022 Average aggregate fixed income assets, at cost (1) $ 947,270 $ 1,416,353 Annualized investment book yield 3.7 % 1.7 % (1) Fixed income assets include available-for-sale ("AFS") securities, cash and restricted cash, funds withheld 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 Investment Gains Net realized and unrealized investment gains of $1.0 million were recognized for the three months ended March 31, 2023, compared to net realized and unrealized investment gains of $2.3 million for the same respective period in 2022. Total net realized and unrealized investment gains for the three months ended March 31, 2023 and 2022 are summarized in the table below by investment category: For the Three Months Ended March 31, 2023 2022 Net realized gains: ($ in thousands) Fixed income assets (1) $ — $ 1,143 Other investments, including equity securities 176 79 Total net realized gains 176 1,222 Net unrealized gains: Other investments, including equity securities 829 1,087 Total net unrealized gains 829 1,087 Total net realized and unrealized investment gains $ 1,005 $ 2,309 (1) Fixed income assets includes AFS securities as well as cash, restricted cash, funds withheld receivable, and loan to related party. Interest in (Loss) Income of Equity Method Investments The Company had interest in loss of equity method investments of $0.1 million for the three months ended March 31, 2023, compared to interest in income of equity method investments of $1.3 million for the same respective period in 2022. Equity method investments consist of hedge fund investments of $0.5 million, real estate investments of $41.1 million and other investments of $30.3 million as of March 31, 2023. Interest in (loss) income of equity method investments for the three months ended March 31, 2023 and 2022 is detailed by investment category in the following table: For the Three Months Ended March 31, ($ in thousands) 2023 2022 Hedge fund investments $ 167 $ (68) Real estate investments (218) — Other investments — 1,339 Interest in (loss) income of equity method investments $ (51) $ 1,271 Net Loss and LAE Net loss and LAE increased by $12.1 million during the three months ended March 31, 2023, compared to the same respective period in 2022 largely due to adverse prior year loss development in both reporting 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 2023 was primarily impacted by net adverse prior year loss development of $3.7 million compared to net favorable prior year loss development of $7.3 million for the same period in 2022. This net loss development 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. 44 Commission and Other Acquisition Expenses Commission and other acquisition expenses increased by $1.7 million or 67.5% for the three months ended March 31, 2023, compared to the same respective period in 2022 driven by lower earned premium adjustments in the AmTrust Reinsurance segment during the first quarter of 2023 compared to the same respective period in 2022 which resulted in a corresponding increase in commission costs and brokerage fees. 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 $0.8 million, or 7.1% for the three months ended March 31, 2023, compared to the same respective period in 2022 primarily due to lower stock-based incentive compensation costs incurred. General and administrative expenses for the three months ended March 31, 2023 and 2022 were comprised of: For the Three Months Ended March 31, ($ in thousands) 2023 2022 General and administrative expenses – segments $ 3,146 $ 2,583 General and administrative expenses – corporate 6,962 8,303 Total general and administrative expenses $ 10,108 $ 10,886 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 $3.8 million for the three months ended March 31, 2023 compared to $4.8 million for the same respective period in 2022. This included interest expense incurred on the Senior Notes for the three months ended March 31, 2023 and 2022 of $4.8 million, respectively. The issuance costs related to the Senior Notes were capitalized and are amortized over their effective life using the effective interest method of amortization. Due to a change in the amortization method for the 2013 Senior Notes at March 31, 2023, there was amortization income of $1.0 million for the three months ended March 31, 2023 compared to amortization expense of $0.1 million for the same respective period in 2022. 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, 2023 and 2022, respectively. Foreign Exchange and Other (Losses) Gains Net foreign exchange and other losses amounted to $2.8 million during the three months ended March 31, 2023, compared to net foreign exchange and other gains of $3.9 million for the same respective period in 2022. At March 31, 2023, net foreign exchange losses 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, 2023 included net loss reserves of $328.4 million. Our foreign currency asset exposures at March 31, 2023 included $208.6 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 $21.1 million of equity method real estate investments denominated in Canadian dollars. Net foreign exchange losses of $2.0 million for the three months ended March 31, 2023 were attributable to the weakening of the U.S. dollar on the re-measurement of net loss reserves and insurance related liabilities denominated in British pound and euro. Net foreign exchange gains of $3.9 million during the three months ended March 31, 2022 were attributable to the strengthening of the U.S. dollar on the re-measurement of net loss reserves and insurance related liabilities denominated in British pound and euro. 45 Underwriting Results by Reportable Segment Diversified Reinsurance Segment The underwriting results for our Diversified Reinsurance segment for the three months ended March 31, 2023 and 2022 were as follows: For the Three Months Ended March 31, ($ in thousands) 2023 2022 Gross premiums written $ 6,849 $ 4,736 Net premiums written $ 6,773 $ 4,583 Net premiums earned $ 7,471 $ 5,955 Other insurance (expense) revenue, net (59) 51 Net loss and LAE (3,156) 1,360 Commission and other acquisition expenses (3,656) (3,771) General and administrative expenses (2,589) (2,098) Underwriting (loss) income $ (1,989) $ 1,497 Underwriting results in the Diversified Reinsurance segment decreased for the three months ended March 31, 2023 compared to 2022. This was primarily due to results from GLS operations, which reported an underwriting loss of $1.1 million for the three months ended March 31, 2023 compared to $0.1 million in 2022, driven by general and administrative expenses of $0.9 million and a decrease in the fair value of underwriting-related derivatives of $0.2 million due to the acceleration of covered payments which triggered coverage in excess of the contracts risk margin. Underwriting (loss) income by business unit is detailed in the table below for the Diversified Reinsurance segment for the three months ended March 31, 2023 and 2022, respectively: For the Three Months Ended March 31, ($ in thousands) 2023 2022 International $ (180) $ 753 GLS (1,064) (140) U.S. Treaty business (Motors) (123) — Other run-off lines (622) 884 Underwriting (loss) income $ (1,989) $ 1,497 Premiums — Gross premiums written increased by $2.1 million or 44.6% for the three months ended March 31, 2023, compared to the same respective period in 2022. Net premiums written increased by $2.2 million or 47.8% during the three months ended March 31, 2023, compared to the same respective period in 2022. Net premiums earned increased by $1.5 million or 25.5% during the three months ended March 31, 2023, compared to the same respective period in 2022. The written and earned premium growth was driven by new Credit Life programs written by Maiden LF and Maiden GF in the three months ended March 31, 2023. Other Insurance (Expense) Revenue, Net — Total other insurance (expense) revenue, net includes fee related income earned from our GLS business, fair value changes in underwriting-related derivatives related to certain coverages on retroactive reinsurance contracts written by GLS, and fee income derived from our IIS business not directly associated with premium revenue assumed by the Company as specified in the table below. Total other insurance (expense) revenue, net decreased by $0.1 million for the three months ended March 31, 2023, compared to the same respective period in 2022 primarily due to fair value changes in non-hedged underwriting-related derivatives on GLS contracts. The table below shows other insurance revenue by source for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, 2023 2022 Change ($ in thousands) International $ 97 $ 10 $ 87 Changes in fair value of non-hedged underwriting-related derivatives (212) — (212) Other service fee income 56 41 15 Total other insurance (expense) revenue, net $ (59) $ 51 $ (110) 46 Net Loss and LAE — Net loss and LAE increased by $4.5 million for the three months ended March 31, 2023, compared to the same respective period in 2022 primarily due to new premium growth in Credit Life programs written by Maiden LF and Maiden GF as well as adverse prior year development experienced in the current year period . The net loss and LAE was impacted by net adverse prior year loss development of $0.8 million for the three months ended March 31, 2023 , compared to favorable prior year development of $2.2 million for the same respective period in 2022. The net adverse loss development for the three months ended March 31, 2023 was due to unfavorable reserve development in other runoff business and also included the recognition of expected credit losses on reinsurance recoverable on unpaid losses. The favorable loss development in 2022 was experienced in German Auto Programs and other run-off business. Commission and Other Acquisition Expenses — Commission and other acquisition expenses decreased by $0.1 million or 3.0% for the three months ended March 31, 2023, compared to the same respective period in 2022. General and Administrative Expenses — General and administrative expenses increased by $0.5 million or 23.4% for the three months ended March 31, 2023 compared to the same respective period in 2022. AmTrust Reinsurance Segment The AmTrust Reinsurance segment reported an underwriting loss of $6.3 million during the three months ended March 31, 2023, compared to an underwriting loss of $3.2 million for the same respective period in 2022. The decrease in underwriting results for the three months ended March 31, 2023 was primarily due to adverse prior year loss development of $2.9 million during the three months ended March 31, 2023, which is detailed herein, compared to net favorable prior year loss development of $5.1 million for the same respective period in 2022. The underwriting results for the AmTrust Reinsurance segment for the three months ended March 31, 2023 and 2022 were as follows: For the Three Months Ended March 31, ($ in thousands) 2023 2022 Gross premiums written $ (6,013) $ (14,906) Net premiums written $ (6,013) $ (14,906) Net premiums earned $ 1,531 $ (4,833) Net loss and LAE (6,659) 923 Commission and other acquisition expenses (579) 1,243 General and administrative expenses (557) (485) Underwriting loss $ (6,264) $ (3,152) Premiums — The table below shows net premiums written by category for the three months ended March 31, 2023 and 2022, respectively: For the Three Months Ended March 31, 2023 2022 Change in ($ in thousands) Total Total $ Net Premiums Written Small Commercial Business $ (83) $ (11,722) $ 11,639 Specialty Program 156 837 (681) Specialty Risk and Extended Warranty (6,086) (4,021) (2,065) Total AmTrust Reinsurance $ (6,013) $ (14,906) $ 8,893 The negative gross and net premiums written for the three months ended March 31, 2023 and 2022 above reflect cession adjustments on Specialty Risk and Extended Warranty and Small Commercial Business policies in the AmTrust Quota Share ("AmTrust Cession Adjustments"). Furthermore, the termination of the AmTrust Quota Share and the European Hospital Liability Quota Share as of January 1, 2019 resulted in no new business written under these contracts since 2018. The negative gross and net premiums written for the three months ended March 31, 2023 reflect cession adjustments of $6.1 million due to the cancellation of cases in a certain program within Specialty Risk and Extended Warranty. 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 • $4.8 million of premium reductions to AmTrust's inuring reinsurance for certain programs in Specialty Risk and Extended Warranty which reduced the amount of premium ceded to Maiden. 47 The table below shows the AmTrust Cession Adjustments by category for the three months ended March 31, 2023 and 2022, respectively: For the Three Months Ended March 31, 2023 2022 Change in ($ in thousands) Total Total $ Net Premiums Written Small Commercial Business $ — $ (11,006) $ 11,006 Specialty Risk and Extended Warranty (6,135) (4,786) (1,349) Total AmTrust Reinsurance $ (6,135) (15,792) $ 9,657 Net premiums earned increased by $6.4 million for the three months ended March 31, 2023, compared to the same period in 2022 primarily due to lower negative premium adjustments during the first quarter of 2023 compared to significantly higher AmTrust Cession Adjustments made in the first quarter of 2022, due to negative premiums earned in Small Commercial Business policies. The table below provides detail on net premiums earned in the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, 2023 2022 Change in ($ in thousands) Total Total $ Net Premiums Earned Small Commercial Business $ (83) $ (11,710) $ 11,627 Specialty Program 156 838 (682) Specialty Risk and Extended Warranty 1,458 6,039 (4,581) Total AmTrust Reinsurance $ 1,531 $ (4,833) $ 6,364 Net Loss and LAE — Net loss and LAE increased by $7.6 million for the three months ended March 31, 2023, compared to the same respective period in 2022 driven by adverse prior year loss development in the current quarter compared to favorable development in 2022. Net adverse prior year loss development was $2.9 million during the three months ended March 31, 2023, compared to favorable prior year loss development of $5.1 million for the same period in 2022. Net adverse prior year loss development for the three months ended March 31, 2023 was driven by unfavorable movements in General Liability, Auto Liability and Specialty Risk & Extended Warranty partly offset by continued favorable development in Workers Compensation. Net favorable prior year loss development for the three months ended March 31, 2022 was driven by favorable development on the runoff of Workers Compensation business as well as AmTrust Cession Adjustments for Specialty Risk and Extended Warranty. Commission and Other Acquisition Expenses — Commission and other acquisition expenses increased by $1.8 million for the three months ended March 31, 2023, compared to the same respective period in 2022 due to lower negative earned premium adjustments in the first quarter of 2023. This was the result of lower AmTrust Cession Adjustments made in the first quarter of 2023 compared to the same period in 2022 which resulted in a corresponding increase in commission costs and brokerage fees. General and Administrative Expenses — General and administrative expenses increased by $0.1 million or 14.8% for the three months ended March 31, 2023, compared to the same respective period in 2022. 48 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 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, 2023, the Company had investable assets of $1.16 billion compared to $1.24 billion as of December 31, 2022. Investable assets are the combined total of our investments, cash and cash equivalents (including restricted cash), loan to a related party and funds withheld receivable. The decrease in our investable assets is due to the cessation of active reinsurance underwriting of new prospective risks which results in negative operating cash flows as we settle claim payments from the run-off of our reinsurance portfolio liabilities. 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, 2022, that was filed with the SEC on March 15, 2023. 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 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; and 2) the purchase of affiliated securities as demonstrated in previous preference share tender offers and the recently completed Exchange. The Investment Policy, as approved and as amended, maintains our established investment management and governance practices. During 2022, the Vermont DFR approved an annual dividend program to be paid by Maiden Reinsurance to Maiden NA, with notification to the Vermont DFR as dividends are paid. Subsequent to that approval, Maiden Reinsurance has paid $25.0 million in dividends to Maiden NA with $6.3 million paid during the three months ended March 31, 2023. 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. As previously noted, we engaged in 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 any active underwriting of new prospective reinsurance business 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, the run-off of our prior reinsurance business 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 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 continue to expect a trend of negative overall cash flows to continue to reduce our asset base going forward through the remainder of 2023 and beyond. 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. Our expanded asset management strategy can be impacted by both investment specific and broader financial market conditions and may not produce the expected liquidity and cash flows these investments are designed to achieve, or the timing thereof may also be impacted by those factors. 49 At March 31, 2023 and December 31, 2022, unrestricted cash, cash equivalents and fixed maturity investments were $68.9 million and $64.3 million, respectively. The increase of $4.6 million in unrestricted cash and fixed maturity investments during the three months ended 2023 was primarily the result of $9.0 million of net proceeds from sales and redemption of alternative investments including equity method investments, partly offset by $4.8 million for interest payments on the Senior Notes. Please see the related discussion on investing and financing cash flows below. The table below summarizes our operating, investing and financing cash flows for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, 2023 2022 ($ in thousands) Operating activities $ (20,347) $ (76,078) Investing activities 15,267 86,125 Financing activities (288) (3,893) Effect of exchange rate changes on foreign currency cash 105 (355) Total (decrease) increase in cash, restricted cash and cash equivalents $ (5,263) $ 5,799 Cash Flows used in Operating Activities Cash flows used in operating activities for the three months ended March 31, 2023 were $20.3 million compared to cash flows used in operating activities of $76.1 million for the three months ended March 31, 2022, a decrease of $55.7 million due to settlement of claim payments to AmTrust using the funds withheld receivable in the current year period whereas cash was primarily used in the prior year period. The operating cash flows used in operations for the three months ended March 31, 2023 and 2022 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. Cash Flows provided by Investing Activities Cash flows provided by investing activities consist primarily of proceeds from the sales and maturities of investments net of payments for investments acquired. Net cash provided by investing activities was $15.3 million for the three months ended March 31, 2023 compared to $86.1 million for the same period in 2022. Cash flows provided by investing activities included net proceeds of $9.0 million from alternative investments including equity method investments during the three months ended March 31, 2023 compared to net purchases of $18.0 million for the same respective period in 2022. For the three months ended March 31, 2023, the proceeds from the sales, maturities and calls exceeded the purchases of fixed maturity securities by $6.3 million compared to net proceeds of $104.1 million for the same respective period in 2022. Cash Flows used in Financing Activities Cash flows used in financing activities were $0.3 million for the three months ended March 31, 2023 compared to $3.9 million during the same respective period in 2022. The Company repurchased 274,861 preference shares during the first quarter of 2022 for an aggregate total consideration of $3.1 million which represent tax withholding in respect of tax obligations on the vesting of both non-performance-based and discretionary performance-based restricted shares. No dividends on common shares were paid during the three months ended March 31, 2023 and 2022. Our Board of Directors have not declared any common 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, 2022, that was filed with the SEC on March 15, 2023. At March 31, 2023 and December 31, 2022, restricted cash and cash equivalents and fixed maturity investments used as collateral were $285.8 million and $296.8 million, respectively. This collateral represents 80.6% and 82.2% of the fair value of total fixed maturity investments, cash, restricted cash and equivalents at March 31, 2023 and December 31, 2022, respectively. 50 Cash and Investments Historically, the investment of our funds had generally been designed to ensure safety of principal while generating current income. Accordingly, the majority of our funds had been invested in liquid, investment-grade fixed income securities which are all designated as AFS at March 31, 2023. As our insurance liabilities continue to run-off and the required capital to operate our business for regulatory purposes decreases, we have modified Maiden Reinsurance’s investment policy (which has been approved by the Vermont DFR as noted) and have expanded the range of asset classes we invest in to enhance the income and total returns our investment portfolio produces. We categorize these investments as alternative investments which include " Other Investments ", "Equity Securities" , and "Equity Method Investments" on our Condensed Consolidated Balance Sheets. As of March 31, 2023 and December 31, 2022, our cash and investments consisted of: March 31, 2023 December 31, 2022 ($ in thousands) Fixed maturities, available-for-sale, at fair value $ 313,363 $ 314,527 Equity securities, at fair value 45,266 43,621 Equity method investments 71,896 80,159 Other investments 146,323 148,753 Total investments 576,848 587,060 Cash and cash equivalents 24,194 30,986 Restricted cash and cash equivalents 17,167 15,638 Total Investments and Cash and Cash Equivalents $ 618,209 $ 633,684 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. Under this revised investment policy, we increased the amount of alternative investments in 2022, 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. The substantial majority of our current and future investments are held by Maiden Reinsurance, whose investment policy was approved by the Vermont DFR. Prior to the Exchange, we cumulatively invested $176.4 million in the preference shares of Maiden Holdings which have since been extinguished and exchanged for 41,439,348 common shares of the Company pursuant to the Exchange. As a result of the Exchange, there are no preference shares outstanding. The market value of our common shares held by Maiden Reinsurance was $86.6 million at March 31, 2023. Cash & Cash Equivalents At March 31, 2023, we consider the levels of cash and cash equivalents held to be within our targeted ranges. During periods when interest rates experience greater volatility, we have periodically maintained more cash and cash equivalents to better assess current market conditions and opportunities within our defined risk appetite, and may do so in future periods. 51 Fixed Maturity Investments The average yield and average duration of our fixed maturities, by asset class, and our cash and cash equivalents (restricted and unrestricted) are as follows at March 31, 2023 and December 31, 2022, respectively: March 31, 2023 Original or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Average yield (1) Average duration (2) ($ in thousands) U.S. treasury bonds $ 51,030 $ 2 $ (89) $ 50,943 4.2 % 0.5 U.S. agency bonds – mortgage-backed 37,900 — (3,739) 34,161 3.3 % 4.8 Collateralized mortgage-backed securities 7,199 — (386) 6,813 5.7 % 2.5 Non-U.S. government bonds 14,730 — (750) 13,980 0.7 % 2.2 Collateralized loan obligations 120,466 — (4,805) 115,661 3.8 % 0.3 Corporate bonds 96,014 — (4,209) 91,805 1.5 % 1.9 Total fixed maturities 327,339 2 (13,978) 313,363 3.0 % 1.4 Cash and cash equivalents 41,361 — — 41,361 1.7 % 0.0 Total $ 368,700 $ 2 $ (13,978) $ 354,724 2.9 % 1.3 December 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 $ 55,647 $ 1 $ (116) $ 55,532 4.0 % 0.7 U.S. agency bonds – mortgage-backed 38,767 — (4,402) 34,365 2.7 % 4.7 Collateralized mortgage-backed securities 7,199 — (432) 6,767 5.3 % 2.7 Non-U.S. government bonds 12,643 — (825) 11,818 0.3 % 2.8 Collateralized loan obligations 119,120 — (5,028) 114,092 3.1 % 0.3 Corporate bonds 97,063 — (5,110) 91,953 1.5 % 2.1 Total fixed maturities 330,439 1 (15,913) 314,527 2.7 % 1.5 Cash and cash equivalents 46,624 — — 46,624 1.2 % 0.0 Total $ 377,063 $ 1 $ (15,913) $ 361,151 2.5 % 1.3 (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, 2023, the yield on the 10-year U.S. Treasury bond decreased by 40 basis points to 3.48%. 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 slight shift during the three months ended March 31, 2023, reflecting concerns of the U.S. Federal Reserve about continuing ongoing inflation emanating from the combination of: 1) the strength of the U.S. economy; 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 required to temper these factors. Central banks globally have responded in similar fashion and suggest additional interest rate increases may occur. The movement in the market values of our fixed maturity portfolio during the three months ended March 31, 2023 generated net unrealized gains of $1.9 million which increased our book value per common share by $0.02 during the period. Current outlooks for global monetary policy indicate that quantitative tightening by central banks in the U.S. and globally are 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 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. 52 We also monitor the duration and structure of our investment portfolio as discussed below. As of March 31, 2023, 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 $8.6 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, 2023 and December 31, 2022, these respective durations in years were as follows: March 31, 2023 December 31, 2022 Fixed maturities and cash and cash equivalents 1.3 1.3 Reserve for loss and LAE - gross of LPT/ADC Agreement reserves 5.3 5.3 Reserve for loss and LAE - net of LPT/ADC Agreement reserves 1.1 1.1 During the three months ended March 31, 2023, the weighted average duration of our fixed maturity investment portfolio remained at 1.3 years while the duration for the reserve for loss and LAE remained at 5.3 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 U.S. agency mortgage-backed securities ("Agency MBS") and commercial mortgage-backed securities. At March 31, 2023, the duration of our loss reserves net of the LPT/ADC Agreement was slightly lower than the duration of our fixed maturity investment portfolio driven by the commutation of certain European Hospital Liability policies which were long-tailed in nature and not subject to the LPT/ADC Agreement. 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, 2023 and December 31, 2022, 32.3% and 29.6%, respectively, of our fixed income investments are comprised of floating rate securities. The floating rate investment holdings at March 31, 2023 and December 31, 2022 were as follows: March 31, 2023 December 31, 2022 ($ in thousands) Fair Value % of Total Fair Value % of Total Floating rate securities Collateralized loan obligations $ 115,661 12.9 % $ 114,092 11.8 % Collateralized mortgage-backed securities 4,835 0.6 % 4,773 0.5 % Total floating rate AFS fixed maturities at fair value 120,496 13.5 % 118,865 12.3 % Loan to related party 167,975 18.8 % 167,975 17.3 % Total floating rate securities $ 288,471 32.3 % $ 286,840 29.6 % Total fixed income investments at fair value (1) $ 894,115 $ 970,538 (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, 2023 and December 31, 2022, 100.0% of the Company’s U.S. agency bond holdings are mortgage-backed. Total U.S. agency MBS comprise 10.9% of our fixed maturity investment portfolio at March 31, 2023. 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. Additional details on our U.S. Agency MBS holdings at March 31, 2023 and December 31, 2022 were as follows: March 31, 2023 December 31, 2022 ($ in thousands) Fair Value % of Total Fair Value % of Total FNMA – fixed rate $ 18,573 54.4 % $ 18,750 54.6 % FHLMC – fixed rate 13,045 38.2 % 13,034 37.9 % GNMA – variable rate 2,543 7.4 % 2,581 7.5 % Total U.S. Agency MBS $ 34,161 100.0 % $ 34,365 100.0 % At March 31, 2023 and December 31, 2022, 98.4% and 98.5%, 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. 53 The security holdings by sector and financial strength rating of our corporate bond holdings at March 31, 2023 and December 31, 2022 were as follows: Ratings (1) March 31, 2023 AAA A+, A, A- BBB+, BBB, BBB- BB+ or lower Fair Value % of Corporate bonds portfolio Corporate bonds ($ in thousands) Basic Materials — % — % 11.4 % — % $ 10,451 11.4 % Communications — % 5.8 % 5.3 % — % 10,178 11.1 % Consumer — % 6.4 % 39.8 % — % 42,451 46.2 % Energy — % 0.9 % 1.9 % — % 2,595 2.8 % Financial Institutions 1.6 % 20.8 % 0.5 % 5.6 % 26,130 28.5 % Total 1.6 % 33.9 % 58.9 % 5.6 % $ 91,805 100.0 % Ratings (1) December 31, 2022 AAA A+, A, A- BBB+, BBB, BBB- BB+ or lower Fair Value % of Corporate bonds portfolio Corporate bonds ($ in thousands) Basic Materials — % — % 5.3 % — % $ 4,912 5.3 % Communications — % 5.7 % 5.2 % — % 10,004 10.9 % Consumer — % 6.3 % 39.1 % — % 41,767 45.4 % Energy — % 0.9 % 7.7 % — % 7,860 8.6 % Financial Institutions 1.6 % 20.3 % 0.4 % 5.2 % 25,272 27.5 % Industrials — % 2.3 % — % — % 2,138 2.3 % Total 1.6 % 35.5 % 57.7 % 5.2 % $ 91,953 100.0 % (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, 2023; of which 100.0% are euro denominated, with 54.4% in the Consumer Sector and 27.9% in the Financial Institutions sector. March 31, 2023 Fair Value % of Holdings Rating (1) ($ in thousands) Anheuser-Busch INBEV SA, 2.875%, Due 9/25/2024 $ 10,822 3.5 % BBB+ Chubb Ina Holdings Inc., 1.55%, Due 3/15/2028 6,375 2.0 % A Kraft Heinz Foods Co., 1.5%, Due 5/24/2024 6,206 2.0 % BBB Glencore Finance (Europe) LTD, 1.875%, Due 9/13/2023 5,377 1.7 % BBB+ Volkswagen International Finance NV, 1.125%, Due 10/2/2023 5,360 1.7 % A- Santander Consumer Finance SA, 1.125%, Due 10/9/2023 5,353 1.7 % A America Movil SAB DE CV, 1.5%, Due 3/10/2024 5,298 1.7 % A- Utah Acquisition Sub Inc., 2.25%, Due 11/22/2024 5,270 1.7 % BBB- Molson Coors Beverage Co., 1.25%, Due 7/15/2024 5,227 1.7 % BBB- FBD Insurance PLC, 5.0%, Due 10/9/2028 5,121 1.6 % NA Total $ 60,409 19.3 % (1) Ratings as assigned by S&P, or equivalent 54 At March 31, 2023 and December 31, 2022, respectively, we held the following non-U.S. dollar denominated securities: March 31, 2023 December 31, 2022 ($ in thousands) Fair Value % of Total Fair Value % of Total Non-U.S. dollar denominated collateralized loan obligations $ 104,317 50.0 % $ 102,812 50.1 % Non-U.S. dollar denominated corporate bonds 90,327 43.3 % 90,491 44.1 % Non-U.S. government bonds 13,980 6.7 % 11,818 5.8 % Total non-U.S. dollar denominated securities $ 208,624 100.0 % $ 205,121 100.0 % At March 31, 2023 and December 31, 2022, respectively, 100.0% of our non-U.S. dollar denominated securities above were invested in euro. The net increase in non-U.S. denominated fixed maturities is due to relative appreciation of euro denominated bonds during the three months ended March 31, 2023. At March 31, 2023 and December 31, 2022, all of the Company's non-U.S. government issuers have a rating of AA- or higher by S&P. For our non-U.S. dollar denominated corporate bonds, the following table summarizes the composition of the fair value of our fixed maturity investments at the dates indicated by ratings at March 31, 2023 and December 31, 2022: Ratings (1) March 31, 2023 December 31, 2022 ($ in thousands) Fair Value % of Total Fair Value % of Total A+, A, A- $ 31,159 34.5 % $ 32,633 36.0 % BBB+, BBB, BBB- 54,047 59.8 % 53,094 58.7 % BB+ or lower 5,121 5.7 % 4,764 5.3 % Total non-U.S. dollar denominated corporate bonds $ 90,327 100.0 % $ 90,491 100.0 % (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, 2023 and December 31, 2022, respectively. 55 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 condensed 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 alternative investments as of March 31, 2023 and December 31, 2022 consisted of the following asset classes: March 31, 2023 December 31, 2022 ($ in thousands) Carrying Value % of Total Carrying Value % of Total Publicly traded equity investments $ 402 0.2 % $ 386 0.1 % Privately held common stocks 31,911 12.1 % 32,290 11.9 % Privately held preferred stocks 12,953 4.9 % 10,945 4.0 % Total equity securities $ 45,266 17.2 % $ 43,621 16.0 % Hedge fund investments $ 517 0.2 % $ 5,376 2.0 % Real estate investments 41,104 15.6 % 40,944 15.0 % Other equity method investments 30,275 11.5 % 33,839 12.4 % Total equity method investments $ 71,896 27.3 % $ 80,159 29.4 % Private equity funds $ 38,213 14.5 % $ 34,278 12.6 % Private credit funds 17,605 6.7 % 24,374 8.9 % Privately held equity investments 33,255 12.6 % 34,014 12.5 % Investment in direct lending funds (at cost) 57,250 21.7 % 56,087 20.6 % Total other investments $ 146,323 55.5 % $ 148,753 54.6 % Total alternative investments $ 263,485 100.0 % $ 272,533 100.0 % Our allocation to alternative investments decreased to 42.6% of our total cash and investments as of March 31, 2023 compared to 43.0% as of December 31, 2022; and increased to 97.3% of our total shareholders' equity as of March 31, 2023 compared to 95.8% as of December 31, 2022. In addition to the categories described above, we also evaluate our alternative investments by the following asset classes: March 31, 2023 December 31, 2022 ($ in thousands) Carrying Value % of Total Carrying Value % of Total Private Equity $ 63,277 24.0 % $ 60,227 22.1 % Private Credit 44,676 17.0 % 51,783 19.0 % Hedge Funds 517 0.2 % 5,376 2.0 % Alternatives 83,636 31.7 % 85,866 31.5 % Venture Capital 23,346 8.9 % 21,126 7.7 % Real Estate 48,033 18.2 % 48,155 17.7 % Total alternative investments $ 263,485 100.0 % $ 272,533 100.0 % 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. 56 Investment Results The following table summarizes our investment results for the three months ended March 31, 2023 and 2022: For the Three Months Ended March 31, ($ in thousands) 2023 2022 Net investment income: Fixed income investments (1) $ 8,451 $ 6,157 Cash and restricted cash 306 (7) Other investments, including equities 887 600 Investment expenses (99) (183) Total net investment income 9,545 6,567 Net realized gains: Fixed income assets (1) — 1,143 Other investments, including equities 176 79 Total net realized gains 176 1,222 Net unrealized gains: Other investments, including equities 829 1,087 Total net unrealized gains 829 1,087 Interest in (loss) income of equity method investments: Interest in (loss) income of equity method investments (51) 1,271 Total interest in (loss) income of equity method investments (51) 1,271 Total investment return included in earnings (A) $ 10,499 $ 10,147 Other comprehensive income (loss): Unrealized gains (losses) on AFS fixed maturities and equity method investments excluding foreign exchange (B) $ 1,936 $ (11,392) Total investment return = (A) + (B) $ 12,435 $ (1,245) Annualized income from fixed income assets (2) $ 35,028 $ 24,600 Average aggregate fixed income assets, at cost (2) 947,270 1,416,353 Annualized investment book yield 3.7 % 1.7 % Average aggregate invested assets, at fair value (3) $1,200,336 $1,644,743 Investment return included in net earnings 0.9 % 0.6 % Total investment return 1.0 % (0.1) % 1. Fixed income investments include AFS securities as well as funds withheld receivable, and loan to related party. 2. Average aggregate fixed income assets and cash include AFS portfolio, cash and restricted cash, funds withheld receivable, and loan to related party and is computed as an average of the amounts disclosed in our quarterly U.S. GAAP consolidated financial statements. 3. Average aggregate invested assets include all investments (AFS and alternative investments), cash and restricted cash, loan to related party and funds withheld receivable and is computed as an average of the amounts disclosed in our quarterly U.S. GAAP consolidated financial statements. 57 The following table details total investment returns for our fixed income investments for the three months ended March 31, 2023 and 2022, respectively: Fixed Income Investments (1) For the Three Months Ended March 31, ($ in thousands) 2023 2022 Gross investment income $ 8,757 $ 6,150 Net realized and unrealized gains — 1,143 Change in AOCI (3) 1,936 (15,806) Gross investment returns $ 10,693 $ (8,513) Average invested assets, at fair value (4) $ 932,327 $ 1,406,804 Gross Investment Returns 1.1 % (0.6) % Investment expenses $ 73 $ 126 Net investment returns $ 10,620 $ (8,639) Net Investment Returns 1.1 % (0.6) % The following table details total investment returns for our alternative investments for the three months ended March 31, 2023 and 2022, respectively: Alternative Investments (2) For the Three Months Ended March 31, ($ in thousands) 2023 2022 Gross investment income $ 836 $ 1,871 Net realized and unrealized (losses) gains 1,005 1,166 Change in AOCI (3) — 4,414 Gross investment returns $ 1,841 $ 7,451 Average invested assets, at fair value (4) $ 268,009 $ 237,939 Gross Investment Returns 0.7 % 3.1 % Investment expenses $ 26 $ 57 Net investment returns $ 1,815 $ 7,394 Net Investment Returns 0.7 % 3.1 % 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 accumulated other comprehensive income ("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. 58 The following table details total investment returns for alternative investments by asset class for the three months ended March 31, 2023: March 31, 2023 Private Equity Private Credit Hedge Funds Alternative Assets Venture Capital Real Estate Total ($ in thousands) Gross investment income $ 109 $ 778 $ 167 $ — $ — $ (218) $ 836 Net realized and unrealized gains (losses) 665 (462) — — 1,083 (281) 1,005 Total Investment Return $ 774 $ 316 $ 167 $ — $ 1,083 $ (499) $ 1,841 Average Investments $61,752 $48,230 $2,947 $ 84,751 $ 22,236 $ 48,094 $ 268,009 Gross Investment Returns 1.3 % 0.7 % 5.7 % — % 4.9 % (1.0) % 0.7 % Annualized Gross Returns 5.0 % 2.6 % 22.7 % — % 19.5 % (4.2) % 2.7 % Total investment returns on alternative investments were positive and earned 0.7% during the three months ended March 31, 2023, however, gross and net investment returns were lower compared to the same respective period in 2022. During the three months ended March 31, 2023, positive returns were experienced across all of our asset classes other than our real estate investments. The following table details total investment returns for alternative investments by asset class for the three months ended March 31, 2022: March 31, 2022 Private Equity Private Credit Hedge Funds Alternative Assets Venture Capital Real Estate Total ($ in thousands) Gross investment income $ 108 $ 373 $ (68) $ 1,340 $ 118 $ — $ 1,871 Net realized and unrealized gains (losses) 1,576 (150) — 79 (339) — 1,166 Change in AOCI — — — 4,414 — — 4,414 Total Investment Return $ 1,684 $ 223 $ (68) $ 5,833 $ (221) $ — $ 7,451 Average Investments $ 61,779 $ 31,604 $ 32,895 $ 48,855 $ 7,177 $ 55,630 $ 237,939 Gross Investment Returns 2.7 % 0.7 % (0.2) % 11.9 % (3.1) % — % 3.1 % Annualized Gross Returns 10.9 % 2.8 % (0.8) % 47.8 % (12.3) % — % 12.5 % Total returns on alternative investments were positive and earned 3.1% during the three months ended March 31, 2022 partly due to the sale of an equity method investment which produced gross returns of $5.8 million and contributed 2.4% to the gross investment returns during the prior year period. Despite the recent volatility experienced in financial markets, we believe our alternative investment portfolio remains well positioned to achieve its targeted longer-term returns. Other Balance Sheet Changes The following table summarizes our other material balance sheet changes at March 31, 2023 and December 31, 2022: ($ in thousands) March 31, 2023 December 31, 2022 Change Change % Deferred commission and other acquisition expenses $ 21,989 $ 24,976 $ (2,987) (12.0) % Funds withheld receivable 371,416 441,412 (69,996) (15.9) % Reserve for loss and LAE 1,071,623 1,131,408 (59,785) (5.3) % Unearned premiums 58,789 67,081 (8,292) (12.4) % Accrued expenses and other liabilities 50,975 60,518 (9,543) (15.8) % The Company's deferred commission and other acquisition expenses decreased by 12.0% and unearned premiums decreased by 12.4% primarily due to the termination of the remaining business under both quota share contracts with AmTrust which have been in run-off since January 1, 2019. Funds withheld receivable decreased by 15.9% largely due to the settlement of reinsurance losses payable under the AmTrust Quota Share. 59 Accrued expenses and other liabilities decreased by 15.8% primarily driven by a decrease in underwriting-related derivative liability on GLS policies which was $4.0 million as of March 31, 2023 compared to $14.6 million at December 31, 2022 due to the acceleration of covered payments which triggered coverage in excess of the contracts risk margin. The Company's reserve for loss and LAE decreased by 5.3% primarily due to continued settlement of loss reserves for AmTrust Reinsurance contracts. Capital Resources During the three months ended March 31, 2023, book value per common share decreased by 5.0% to $2.66 and diluted book value per common share decreased by 5.4% to $2.64, compared to December 31, 2022. This was due to the net loss attributable to Maiden common shareholders of $11.3 million during the three months ended March 31, 2023 and an opening allowance for expected credit losses of $5.5 million in the beginning retained earnings on January 1, 2023; partly offset by a net increase in AOCI of $2.5 million during the period. Capital resources consist of funds deployed in support of our operations. The following table shows the movement in our capital resources at March 31, 2023 and December 31, 2022: March 31, 2023 December 31, 2022 Change Change (%) ($ in thousands) Common shares at par value $ 1,496 $ 1,492 $ 4 0.3 % Additional paid-in capital 885,125 884,259 866 0.1 % Accumulated other comprehensive loss (38,760) (41,234) 2,474 (6.0) % Accumulated deficit (459,704) (442,863) (16,841) 3.8 % Treasury shares, at cost (117,363) (117,075) (288) 0.2 % Total Maiden shareholders' equity 270,794 284,579 (13,785) (4.8) % Senior Notes - principal amount 262,500 262,500 — — % Total capital resources $ 533,294 $ 547,079 $ (13,785) (2.5) % Total capital resources decreased by $13.8 million, or 2.5% compared to December 31, 2022 due to the following items: • net increase in additional paid-in capital of $0.9 million mainly due to share-based compensation of $0.8 million; • net increase in AOCI of $2.5 million which arose due to: (1) net unrealized gains on investment of $1.9 million due to a increase of $1.9 million for our fixed income investment portfolio relating to market price movements in the three months ended March 31, 2023, and (2) an increase in cumulative translation adjustments of $0.6 million in the three months ended March 31, 2023 due to the impact of the U.S. dollar depreciation on the re-measurement of net assets denominated in British pound and euro; • accumulated deficit increased by $16.8 million due to an opening allowance for expected credit losses on our other investments, reinsurance recoverable, reinsurance balances receivable and funds withheld receivable of $5.5 million for the three months ended March 31, 2023 which decreased opening retained earnings as well as a net loss of $11.3 million for the three months ended March 31, 2023; and • treasury shares increased by $0.3 million due to common shares repurchased for tax withholding in respect of tax obligations on the vesting of both non-performance-based and discretionary performance-based restricted shares. Please refer to " Notes to Consolidated Financial Statements Note 6. Shareholders' Equity " included under Part II Item 8. " Financial Statements and Supplementary Data" of our Annual Report on Form 10-K for a discussion of the equity instruments issued by the Company as at December 31, 2022. Book value and diluted book value per common share at March 31, 2023 and December 31, 2022 were as follows: ($ in thousands except share and per share data) March 31, 2023 December 31, 2022 Ending common shareholders’ equity $ 270,794 $ 284,579 Proceeds from assumed conversion of dilutive options — 4 Numerator for diluted book value per common share calculation $ 270,794 $ 284,583 Common shares outstanding 101,763,727 101,532,151 Shares issued from assumed conversion of dilutive options and restricted shares 998,108 499,963 Denominator for diluted book value per common share calculation 102,761,835 102,032,114 Book value per common share $ 2.66 $ 2.80 Diluted book value per common share 2.64 2.79 60 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, 2023, the Company did not repurchase any common shares under its share repurchase authorization. At March 31, 2023, the Company had a remaining authorization of $74.2 million for share repurchases. Senior Notes There were no changes in the Company’s Senior Notes at March 31, 2023 compared to December 31, 2022 and the Company did not enter into any short-term borrowing arrangements during the three months ended March 31, 2023. 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 2013 Senior Notes issued by Maiden NA are fully and unconditionally guaranteed by Maiden Holdings. The Senior Notes are unsecured and unsubordinated obligations of the Company. As described in " Notes to Condensed Consolidated Financial Statements (unaudited) Note 14. Subsequent Events " included under Part I Item 1 " Financial Information" of this Form 10-Q, on May 3, 2023, the Company's Board of Directors approved the repurchase, including the repurchase by Maiden Reinsurance in accordance with its investment guidelines, of up to $100,000 of the Company's Senior Notes from time to time at market prices in open market purchases or as may be privately negotiated. Maiden Holdings does not have any significant operations or assets other than ownership of the shares of our subsidiaries. The dividends and other permitted distributions from Maiden NA (and its subsidiaries) will be our sole source of funds to meet ongoing cash requirements, including debt service payments. Factors that may affect payments to holders of the 2013 Senior Notes include restrictions on the payments of dividends by Maiden Reinsurance to Maiden NA which provides the sole source of income for interest payments on the 2013 Senior Notes. During the second quarter of 2022, the Vermont DFR approved an annual dividend program to be paid by Maiden Reinsurance to Maiden NA, with notification to the Vermont DFR as dividends are paid. Subsequent to that approval, Maiden Reinsurance paid a total of $25.0 million in dividends to Maiden NA as of March 31, 2023. Summarized financial information of Maiden NA and Maiden Holdings as of March 31, 2023 and for the three months ended March 31, 2023 were as follows: Maiden NA Maiden Holdings ($ in thousands) Total assets $ 4,219 $ 9,227 Total liabilities 149,186 108,489 Amounts due from subsidiaries (not included in total assets above) 1,237 402 Amounts due to subsidiaries (not included in total liabilities above) 13,644 4,715 Related party loan payable (not included in total liabilities above) — 275,191 Total revenue 113 3 Net loss (1,964) (9,762) The summarized financial information above has been presented on a combined basis for the issuer Maiden NA and the guarantor Maiden Holdings, excluding all other subsidiaries. Intercompany balances and transactions between Maiden NA and Maiden Holdings, whose information is presented above on a combined basis, were eliminated. Any investment by Maiden NA or Maiden Holdings in subsidiaries that are not issuers or guarantors is not presented in the financial information above. Intercompany balances with subsidiaries that are not issuers or guarantors and any related party transactions were separately disclosed above and are not included in the total assets and total liabilities presented for Maiden NA and Maiden Holdings. The net loss for Maiden NA and Maiden Holdings was due to interest and amortization expenses on the Senior Notes as well as general and administrative expenses. The net loss in Maiden NA was also due to income tax expense incurred. The ratio of Debt to Total Capital Resources at March 31, 2023 and December 31, 2022 was computed as follows: ($ in thousands) March 31, 2023 December 31, 2022 Senior notes - principal amount $ 262,500 $ 262,500 Maiden shareholders’ equity 270,794 284,579 Total capital resources $ 533,294 $ 547,079 Ratio of debt to total capital resources 49.2 % 48.0 % 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 61 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, 2023, guarantees of $42.3 million have been provided to lenders by the Company on behalf of the real estate joint venture, however, the likelihood of the Company incurring any losses pertaining to project level financing guarantees was determined to be remote. Therefore, no liability has been accrued under ASC 450-20. Non-GAAP Measures 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 $7.9 million for the three months ended March 31, 2023 compared to a non-GAAP operating loss of $6.9 million for the same period in 2022, and was largely due to a non-GAAP underwriting loss of $6.7 million for the three months ended March 31, 2023, compared to a non-GAAP underwriting loss of $2.7 million for the same period in 2022. The non-GAAP underwriting loss in both respective periods included 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, as well as loss development under the European Hospital Liability Quota Share. Also, it included an underwriting loss in the Diversified Reinsurance segment of $2.0 million for the three months ended March 31, 2023 compared to underwriting income of $1.5 million for the same period in 2022. Non-GAAP operating loss and Non-GAAP diluted operating loss per share attributable to common shareholders Non-GAAP operating loss and Non-GAAP diluted operating loss per share attributable to common shareholders can be reconciled to the nearest U.S. GAAP financial measure as follows: For the Three Months Ended March 31, 2023 2022 ($ in thousands except per share data) Net (loss) income (attributable) available to Maiden common shareholders $ (11,328) $ 1,594 Add (subtract): Net realized and unrealized investment gains (1,005) (2,309) Foreign exchange and other losses (gains) 2,816 (3,949) Interest in loss (income) of equity method investments 51 (1,271) Change in deferred gain on retroactive reinsurance under the LPT/ADC Agreement 1,573 (1,000) Non-GAAP operating loss $ (7,893) $ (6,935) Diluted (loss) earnings per share (attributable) available to common shareholders $ (0.11) $ 0.02 Add (subtract): Net realized and unrealized investment gains (0.01) (0.03) Foreign exchange and other losses (gains) 0.03 (0.05) Interest in loss (income) of equity method investments — (0.01) Change in deferred gain on retroactive reinsurance under the LPT/ADC Agreement 0.01 (0.01) Non-GAAP diluted operating loss per share attributable to common shareholders $ (0.08) $ (0.08) 62 Non-GAAP Underwriting Results The non-GAAP underwriting results for the three months ended March 31, 2023 and 2022 are as follows: For the Three Months Ended March 31, ($ in thousands) 2023 2022 Gross premiums written $ 836 $ (10,170) Net premiums written $ 760 $ (10,323) Net premiums earned $ 9,002 $ 1,122 Other insurance (expense) revenue, net (59) 51 Non-GAAP net loss and LAE (1) (8,242) 1,283 Commission and other acquisition expenses (4,235) (2,528) General and administrative expenses (3,146) (2,583) Non-GAAP underwriting loss (1) $ (6,680) $ (2,655) (1) Non-GAAP underwriting loss and non-GAAP net loss and LAE for the three months ended March 31, 2023 and 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 adverse 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 increase in the deferred gain under the LPT/ADC Agreement of $1.6 million during the three months ended March 31, 2023, the non-GAAP underwriting loss was $6.7 million. This compared to a non-GAAP underwriting loss of $2.7 million when 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 results above were driven by 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 as well as loss development related to the European Hospital Liability Quota Share. Also, it included an underwriting loss in the Diversified Reinsurance segment of $2.0 million for the three months ended March 31, 2023 compared to . Non-GAAP Net Loss and LAE Adjusted for the increase in the deferred gain for the LPT/ADC Agreement, the non-GAAP net loss and LAE for the three months ended March 31, 2023 decreased by $1.6 million as these amounts included adverse loss experience for AmTrust Quota Share reserves subject to the LPT/ADC Agreement which are ultimately recoverable from Cavello . Adjusted for the decrease in the deferred gain for the LPT/ADC Agreement for the three months ended March 31, 2022, the non-GAAP net loss and LAE increased by $1.0 million as these amounts included favorable loss experience for AmTrust Quota Share reserves subject to the LPT/ADC Agreement which are ultimately recoverable from Cavello. These adjustments are reflected in the calculation of non-GAAP Loss and LAE below: For the Three Months Ended March 31, ($ in thousands) 2023 2022 Net loss and LAE $ 9,815 $ (2,283) Less: change in deferred gain on retroactive reinsurance under the LPT/ADC Agreement 1,573 (1,000) Non-GAAP net loss and LAE $ 8,242 $ (1,283) 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, 2023 and December 31, 2022 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 $47.0 million at March 31, 2023 compared to $45.4 million at December 31, 2022, which relates to loss reserves subject to that agreement that are fully recoverable from Cavello. The increase in the unamortized deferred gain under the LPT/ADC Agreement for the three months ended March 31, 2023 is attributable to $1.6 million in loss and LAE recognized as adverse loss development in the Company's GAAP income statement for policies subject to the LPT/ADC Agreement. We believe the inclusion of this unamortized deferred gain under these metrics better reflects the ultimate economic benefit of the LPT/ADC Agreement, which will improve the Company's shareholders' equity over the settlement period under the terms of the agreement. 63 Reconciliation of shareholders' equity to Adjusted shareholders' equity and Adjusted Total Capital Resources The following table computes adjusted shareholders' equity and adjusted total capital resources by recognizing the unamortized deferred gain under the LPT/ADC Agreement at March 31, 2023 and December 31, 2022: ($ in thousands) March 31, 2023 December 31, 2022 Change Change % Total shareholders' equity $ 270,794 $ 284,579 $ (13,785) (4.8) % Unamortized deferred gain on LPT/ADC Agreement 46,981 45,408 1,573 3.5 % Adjusted shareholders' equity 317,775 329,987 (12,212) (3.7) % Senior Notes - principal amount 262,500 262,500 — — % Adjusted total capital resources $ 580,275 $ 592,487 $ (12,212) (2.1) % Non-GAAP Operating ROACE Non-GAAP Operating ROACE for the three months ended March 31, 2023 and 2022 was as follows: For the Three Months Ended March 31, ($ in thousands) 2023 2022 Non-GAAP operating loss $ (7,893) $ (6,935) Opening adjusted shareholders’ equity 329,987 274,990 Ending adjusted shareholders’ equity 317,775 260,187 Average adjusted shareholders’ equity 323,881 267,589 Non-GAAP Operating ROACE (9.9) % (10.5) % 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 at March 31, 2023 and December 31, 2022 was computed as follows: March 31, 2023 December 31, 2022 Book value per common share $ 2.66 $ 2.80 Unamortized deferred gain on LPT/ADC Agreement 0.46 0.45 Adjusted book value per common share $ 3.12 $ 3.25 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, 2023 and December 31, 2022 was computed as follows: ($ in thousands) March 31, 2023 December 31, 2022 Senior notes - principal amount $ 262,500 $ 262,500 Adjusted shareholders’ equity 317,775 329,987 Adjusted total capital resources $ 580,275 $ 592,487 Ratio of debt to adjusted total capital resources 45.2 % 44.3 % 64 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, 2023, 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 losses of $2.0 million were generated during the three months ended March 31, 2023, compared to net foreign exchange gains of $3.9 million for the three months ended March 31, 2022. At March 31, 2023, net foreign exchange losses 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, 2023 included reserve for net loss and LAE of $328.4 million. Our foreign currency asset exposures at March 31, 2023 include $208.6 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 $21.1 million of equity method real estate investments denominated in Canadian dollars. 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. We continue to monitor inflationary impacts resulting from recent government stimulus, sharp increases in demand, labor force and supply chain disruptions, among other factors, on our loss cost trends. Our reserves predominantly consist of workers’ compensation, general liability, and hospital liability. These long tailed lines of business have been subject to the longer term trend of social inflation, but we have not observed significant impacts for the recently elevated levels of inflation. We proactively analyze available data and we incorporate trends into our loss reserving assumptions to ensure we are considerate of current and future economic conditions. Governmental policy responses to inflation have significantly increased interest rates which, in the short term, have contributed to unrealized losses on our fixed income investments, particularly on our fixed maturity securities. There remains uncertainty around the rate and direction of inflation and we continue to monitor our liquidity, capital and potential earnings impact of these changes but remain focused on our asset allocation decisions as described in our "Business Strategy" section of Item 7 " Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview ". Inflation may also result in increased wage pressures for our operating expenses, as we remain focused on being a competitive employer in our market. Labor shortages arising from the conditions of the COVID-19 pandemic have contributed to uncertainty in attracting and retaining talent that may put pressure on higher wage costs. Currently, salaries and incentive compensation costs comprise more than one-half of our total general and administrative expenses and thereby could have a material impact our net operating results. Off-Balance Sheet Arrangements At March 31, 2023, 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. 65