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 2023 to conform to the 2024 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, 2023 that was filed with the U.S. Securities and Exchange Commission ("SEC") on March 12, 2024, 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. 41 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. As discussed in the “Legacy Underwriting” section further below, we have fulfilled our capital commitment to Genesis Legacy Solutions ("GLS") and recently determined we will not commit any further capital to GLS for new accounts and we presently do not anticipate any further contracts in the legacy management segment, as we no longer consider it part of our strategy to produce acceptable shareholder returns. We are not currently underwriting reinsurance business on new prospective risks but have recently underwritten risks on a retroactive basis through GLS. We also have various historic reinsurance programs underwritten by Maiden Reinsurance Ltd. ("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 presently 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. Our wholly owned subsidiary, Maiden Global Holdings, Ltd. ("Maiden Global") is 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 ("IIS business"). These products also produced reinsurance programs which were underwritten by our wholly owned subsidiary Maiden Reinsurance. On May 3, 2024, Maiden LF and Maiden GF entered into a Renewal Rights and Asset Purchase Agreement with AmTrust Nordic AB, a Swedish unit of AmTrust Financial Services, Inc. ("AmTrust") which is expected to cover certain programs of Maiden LF and Maiden GF's primary business written in Sweden, Norway and other Nordic countries. On June 20, 2024, Maiden LF and Maiden GF entered into an additional Renewal Rights and Asset Purchase Agreement with AmTrust Europe Limited ("AEL") and AmTrust International Underwriters DAC ("AIU DAC"), both wholly owned subsidiaries of AmTrust, which is expected to cover certain programs of Maiden LF and Maiden GF's primary business written in the United Kingdom and Ireland. These agreements are collectively referred to as the "AmTrust Renewal Rights Agreements". Under these agreements, those AmTrust subsidiaries in collaboration with existing Maiden LF and Maiden GF distribution partners, will offer renewals to select policyholders in exchange for a fee at standard market terms for business successfully renewed. All programs written by Maiden LF and GF, including those covered by the AmTrust Renewal Rights Agreements, are in the process of being cancelled in accordance with requirements of the AmTrust Renewal Rights Agreements, or their contractual terms. These transactions are part of our broader plan to divest the IIS businesses as a result of our recently concluded strategic review of the IIS business platform. The purpose of that review was to evaluate the strategic value of Maiden LF and Maiden GF in relation to their ongoing growth and profitability prospects, regulatory capital requirements and ability to create shareholder value in excess of our target return on capital levels. As part of these conclusions, Maiden LF and Maiden GF are no longer writing new business and we expect to enter into additional transactions to either sell or wind-up Maiden GF and Maiden LF as we actively evaluate current potential transactions. 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 since 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, AEL and 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, 2023 that was filed on March 12, 2024 for further information on recent developments within the Company. Business Strategy 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. In that respect, management’s focus is to increase non-GAAP book value, which fully reflects the steps we have taken to protect our balance sheet, primarily through our LPT/ADC Agreement with Cavello, as this represents the ultimate economic value of Maiden. In recent years we have pursued a revised operating strategy which leveraged the significant assets and capital we retain. Our assessment had been that these areas of strategic focus would enhance our profitability through increased returns, which would also increase the likelihood of fully utilizing the significant net operating loss ("NOL") carryforwards, as described further below, which would increase both GAAP and non-GAAP book value and create additional common shareholder value. To date, that strategy presently has had two principal areas of focus: 42 • 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; 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. As the run-off of our insurance liabilities has been more volatile than expected and our asset management strategies develop along timelines longer than initially anticipated, the need to allocate capital to other activities that produce more consistent levels of revenue and profit as we seek to create longer-term shareholder value has increased. As part of our ongoing strategic evaluation of both the insurance and reinsurance marketplace and the ability of both the fee-based, distribution and the reinsurance markets to increase our current income and improve our ability to utilize and recognize our deferred tax assets, we increasingly believe near-term expansion of those strategies is appropriate. We are actively exploring fee-based and distribution opportunities which are non-risk bearing and capital efficient and given ongoing changes in reinsurance markets, can be potentially complemented by limited and selective deployment of reinsurance capacity to supplement those activities and enhance returns to shareholders. During 2024, we have continued to evaluate numerous opportunities in pursuit of these objectives. Our results for the three months ended September 30, 2024 were impacted by expenditures in pursuit of these objectives. To date, we invested $9.5 million in insurance distribution platforms and these investments have achieved an internal rate of return of 24.4% and a multiple of capital of 1.77x on those investments. Further, while we have not engaged or pursued active reinsurance underwriting of new prospective risks recently, we continue to evaluate if such a strategy, even on a limited basis, would produce suitable value for shareholders. While we currently have not pursued such a strategy on a stand alone basis, such an approach could complement and enhance an approach to investing in and acquiring fee-based and distribution properties and strengthen those entities, and we believe numerous opportunities to execute a complimentary strategy are available. In light of our increased activities in these areas, during the third quarter of 2024 we took steps to begin to reduce the asset management pillar of our strategy which are discussed below. Our alternative investments portfolio decreased by 24.8% during the three months ended September 30, 2024 due to recent sales and redemptions of private equity and private credit funds and this portfolio may reduce further in future periods as we continue to refine our strategy. While we remain confident that our asset management strategy will achieve the returns we have set out to achieve, we believe it is more critical to reposition our balance sheet currently and increase our liquidity in support of the current initiatives being pursued. The returns expected to be produced by each pillar of our strategy are primarily 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 evidenced in our decisions regarding legacy management. Our ability to execute our business strategies are dependent on maintaining adequate levels of unrestricted liquidity and cash flows. Please refer to the "Liquidity and Capital Resources" section for further information. 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. In recent years, losses reported in our AmTrust Reinsurance segment continue to produce significant levels of adverse prior period loss development, including amounts increasingly not covered by the LPT/ADC Agreement. In addition, with regard to the European Hospital Liability Quota Share, certain tables used in determining non-economic damages were recently updated by the applicable authorities in Italy and increased compensation values for subject claims. The Company is currently analyzing the potential impact of the changes to these tables on its estimate of ultimate loss for this contract, including consultation with specialist third-party subject matter experts. In combination with the continued emergence of loss data from adverse claims verdicts noted above, these revisions could significantly impact the Company's evaluation of ultimate loss on these claims. As a result, during the third quarter of 2024 and currently, we are pursuing finality solutions to resolve the AmTrust liabilities not covered by the LPT/ADC Agreement, including through third-parties. These solutions could involve significant charges to execute and we are actively evaluating the potential costs and benefits of such solutions, to the extent they are available to the Company. We have also retained third-party specialists and subject matter experts as part of our evaluation of the claims and actuarial impact of these exposures. There can be no guarantee that we will execute such finality solutions. To the extent these solutions are not available or do not occur, we may incur significant additional reserve charges based on the final analysis of this process. Asset Management As part of our asset management activities, as noted we have previously 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. However as noted, we are actively exploring fee-based and distribution opportunities which are non-risk bearing and capital efficient. As these strategic plans continue to develop, we have modified our approach to this aspect of our current strategy, including reducing our investments and commitments to alternative investments as recently accomplished in the third quarter of 2024. 43 As of September 30, 2024 , we have invested approximately $253.4 million into alternative investments which include equity securities, other investments and equity method investments in a wide variety of asset classes, and we believe these activities will exceed that benchmark cost of capital with adjustments as necessary if those returns do not emerge. Please refer to the "Liquidity and Capital Resources" section on " Other Investments, Equity Investments and Equity Method Investments" for further information on our alternative asset classes and a detailed discussion of their investment returns. Recent development and trends in financial markets, particularly the rapid rise in interest rates and associated economic uncertainty as a result of those changes, indicate that it may take longer than expected to achieve those returns and we expect that to factor into future capital allocation decisions. 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. While our recorded ultimate losses for our insurance liabilities have experienced significant adverse loss development in recent years, as our insurance liabilities further mature we remain confident that we can continue the prudent and disciplined repurchase of our common shares and senior notes, both of which are authorized for repurchase, 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 common shares issued as part of the exchange for preference shares held by Maiden Reinsurance and other preference shareholders in 2022 ("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, including repurchase of the Company's common shares and senior notes from time to time at market prices or as may be privately negotiated as approved by our Board in its respective authorizations. The Company expects to deploy its capital management strategy on a long-term and disciplined basis, balanced along with its other strategic initiatives. We note that recognition of the deferred tax asset on our balance sheet is a leading priority for the Company to increase its GAAP and non-GAAP book value and we will balance these considerations against opportunities to repurchase shares at what we believe are appropriate prices as we pursue our capital management initiatives. Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 6. Shareholders' Equity " included under Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q for further information on the recent repurchases made by Maiden Reinsurance during the three and nine months ended September 30, 2024. There can be no assurance that we will continue to pursue such capital management initiatives, or that they will provide appropriate risk-adjusted returns. As we revised our strategy in recent years, we continuously evaluate the effectiveness of those strategies in achieving its goals and have been and continue to be prepared to adjust those strategies as our performance dictates. Legacy Underwriting In November 2020, the Company formed GLS to specialize 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 to those companies' operations, 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.The goal of GLS was to 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, GLS provided 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 believed the formation of GLS was highly complementary to our overall longer-term strategy and would produce risk-adjusted returns in excess of our debt cost of capital. However, GLS did not achieve either the volume or profitability expected and we concluded that the outlook would not change materially. At the time we formed GLS, we committed a certain level of capital to support this business which we have since fulfilled. After carefully evaluating the performance of this platform, ongoing market conditions, the competitive landscape and a variety of other factors, we have concluded that we will not commit additional capital to new accounts in this segment and will be running off the small number of accounts we underwrote since the formation of GLS. We presently do not anticipate any further contracts in the legacy management segment, and we no longer consider it part of our strategy to produce acceptable shareholder returns. At September 30, 2024, GLS and its subsidiaries have total insurance related liabilities of $23.6 million which consisted of total loss reserves of $17.3 million, an underwriting-related derivative liability of $4.0 million, and net deferred gains on retroactive reinsurance of $2.3 million. 2024 Developments During the nine months ended September 30, 2024, our book value decreased by 15.7% to $2.09 per common share at September 30, 2024, and our non-GAAP book value decreased by 6.6% to $2.98 per common share at September 30, 2024. We made additional progress in the capital management pillar of our business strategy, repurchasing 388,728 and 1,488,400 common shares during the three and nine months ended September 30, 2024, respectively. The run-off of our historic reinsurance programs produced an underwriting loss of $18.8 million and $36.0 million for the three and nine months ended September 30, 2024, respectively. This was driven by adverse prior year reserve development of $11.7 million and $25.1 million for three and nine months ended September 30, 2024, respectively, which offset the positive progress made in our capital and asset management strategies. Approximately $11.8 million or 101.0% and $22.5 million or 89.6% of total adverse prior year reserve development for the three and nine months ended September 30, 2024, respectively, is recoverable under the LPT/ADC Agreement and is expected to be recognized as future GAAP income over time as recoveries are received, including recoveries on Workers Compensation paid commuted amounts, under the provisions of the LPT/ADC Agreement and the applicable GAAP accounting rules. 44 During the nine months ended September 30, 2024, our alternative investment portfolio decreased by 18.0% primarily due to sales and redemptions of equity securities, private equity investments and private credit funds in the third quarter of 2024. These sales were part of a broader effort to reposition our balance sheet as part of ongoing group strategic initiatives we are actively pursuing while also strengthening overall liquidity. Our alternative investment portfolio produced a positive net return of 4.1% during the nine months ended September 30, 2024 compared to 5.0% for the same period in 2023. We believe our alternative investment portfolio remains well positioned to achieve its targeted longer-term returns. As interest rates have risen, we are increasingly focusing our investing activities on opportunities that will produce current income. Maiden Holdings North America ("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 $345.6 million at September 30, 2024. Approximately $186.2 million of these NOL carryforwards expire in various years beginning in 2029. As of September 30, 2024, $159.4 million or 46.1% of the Company's NOL carryforwards have no expiry date under the relevant U.S. tax law. 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 $126.0 million or $1.27 per common share at September 30, 2024. Net U.S. DTA of $126.0 million is not presently recognized on the Company's condensed consolidated balance sheets as a full valuation allowance is carried against it. At this time, while positive evidence in support of reducing the valuation allowance is growing, the Company believes it is necessary to maintain a full valuation allowance against the net U.S. DTA as more evidence is needed regarding the utilization of these losses. As circumstances further develop, we will continuously evaluate the amount of the valuation allowance held against the net U.S. DTA. For further details please see " Note 13 — Income Taxes " included under Item 8 " Financial Statements and Supplementary Data " of the Annual Report on Form 10–K for the year ended December 31, 2023. Taken together, we believe these measures should generate additional income for Maiden NA in a tax-efficient manner, while sharing in the improvement in profitability anticipated in Maiden Reinsurance as a result of the measures enacted as described above. 45 Three and Nine Months Ended September 30, 2024 and 2023 Financial Highlights For the Three Months Ended September 30, 2024 2023 Change Summary Consolidated Statement of Income Data (unaudited): ($ in thousands except per share data) Net loss $ (34,468) $ (3,527) $ (30,941) Basic and diluted loss per common share: Net loss attributable to common shareholders (2) (0.35) (0.03) (0.32) Gross premiums written 8,861 8,660 201 Net premiums earned 13,403 12,479 924 Underwriting loss (3) (18,751) (10,910) (7,841) Net investment results (13) 1,825 11,482 (9,657) Non-GAAP measures: Non-GAAP operating loss (1) (15,682) (11,747) (3,935) Non-GAAP basic and diluted operating loss per common share (1) (0.16) (0.12) (0.04) Annualized non-GAAP operating return on average adjusted shareholders' equity (1) (20.4) % (14.4) % (6.0) For the Nine Months Ended September 30, 2024 2023 Change Summary Consolidated Statement of Income Data (unaudited): ($ in thousands except per share data) Net loss $ (42,980) $ (17,788) $ (25,192) Basic and diluted loss per common share: Net loss attributable to Maiden common shareholders (2) (0.43) (0.18) (0.25) Gross premiums written 25,633 16,371 9,262 Net premiums earned 37,888 32,520 5,368 Underwriting loss (3) (36,040) (28,425) (7,615) Net investment results (13) 28,754 38,447 (9,693) Non-GAAP measures: Non-GAAP operating loss (1) (31,236) (15,173) (16,063) Non-GAAP basic and diluted operating loss per common share (1) (0.31) (0.15) (0.16) Annualized non-GAAP operating return on average adjusted shareholders' equity (1) (13.5) % (6.2) % (7.3) 46 September 30, 2024 December 31, 2023 Change Consolidated Financial Condition ($ in thousands except per share data) Total investments and cash and cash equivalents (4) $ 606,914 $ 602,318 $ 4,596 Total assets 1,393,511 1,518,934 (125,423) Reserve for loss and LAE 721,436 867,433 (145,997) Senior notes - principal amount 262,361 262,361 — Shareholders' equity 208,182 249,160 (40,978) Total capital resources (5) 470,543 511,521 (40,978) Ratio of debt to total capital resources (10) 55.8 % 51.3 % 4.5 Book Value calculations: Book value per common share (6) $ 2.09 $ 2.48 $ (0.39) Accumulated dividends per common share (12) 4.27 4.27 — Book value per common share plus accumulated dividends $ 6.36 $ 6.75 $ (0.39) Change in book value per common share plus accumulated dividends (5.8) % Diluted book value per common share (7) $ 2.05 $ 2.46 $ (0.41) Non-GAAP measures: Adjusted book value per common share (8) $ 2.98 $ 3.19 $ (0.21) Adjusted shareholders' equity (9) 296,203 320,076 (23,873) Adjusted total capital resources (9) 558,564 582,437 (23,873) Ratio of debt to adjusted total capital resources (11) 47.0 % 45.0 % 2.0 (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. 47 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 ongoing business. We believe all of these amounts are substantially independent of our business and any potential future underwriting process, therefore their inclusion 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 and nine months ended September 30, 2024, 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. 48 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 to shareholders' equity. The deferred gain liability on retroactive reinsurance under the LPT/ADC Agreement represents loss reserves estimated to be fully recoverable from Cavello. 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. We believe adjusting for this shows the ultimate economic benefit of the LPT/ADC Agreement and 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, 2023, filed with the SEC on March 12, 2024, for a general discussion on " Certain Operating Measures" utilized by the Company. Critical Accounting Policies and Estimates 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, 2023, filed with the SEC on March 12, 2024. There have been no material changes in the application of our critical accounting estimates subsequent to that report. 49 Results of Operations The following table sets forth our selected unaudited Condensed Consolidated Statement of Income data for the three and nine months ended September 30, 2024 and 2023: For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 Gross premiums written $ 8,861 $ 8,660 $ 25,633 $ 16,371 Net premiums written $ 8,843 $ 8,625 $ 25,496 $ 16,260 Net premiums earned $ 13,403 $ 12,479 $ 37,888 $ 32,520 Other insurance (expense) revenue , net — (16) 46 3 Net loss and LAE (19,857) (15,156) (45,453) (36,503) Commission and other acquisition expenses (9,068) (5,340) (19,474) (14,520) General and administrative expenses (1) (3,229) (2,877) (9,047) (9,925) Underwriting loss (2) (18,751) (10,910) (36,040) (28,425) Other general and administrative expenses (1) (6,785) (3,910) (16,906) (13,809) Net investment income 4,878 9,048 19,531 29,111 Net realized and unrealized investment (losses) gains (3,804) 244 6,403 2,394 Foreign exchange and other (losses) gains (5,915) 4,594 (3,862) (843) Interest and amortization expenses (4,817) (4,814) (14,448) (13,411) Income tax (expense) benefit (25) 31 (478) 253 Interest in income of equity method investments 751 2,190 2,820 6,942 Net loss $ (34,468) $ (3,527) $ (42,980) $ (17,788) (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 loss Net loss for the three months ended September 30, 2024 was $34.5 million compared to a net loss of $3.5 million for the same respective period in 2023. The decrease in our financial results for the third quarter of 2024 compared to the third quarter of 2023 was primarily due to: • an underwriting loss of $18.8 million for the three months ended September 30, 2024 compared to an underwriting loss of $10.9 million in the same period in 2023 largely due to: • adverse prior year loss development ("PPD") of $11.7 million in the third quarter of 2024 compared to adverse PPD of $7.8 million during the same period in 2023, detailed as follows; • Our AmTrust Reinsurance segment had adverse PPD of $11.7 million in the third quarter of 2024 compared to adverse PPD of $6.0 million for the third quarter of 2023. Of the total adverse PPD experienced in this segment for the third quarter of 2024, $11.8 million is recoverable under the LPT/ADC Agreement and will be recognized as future GAAP income over time as recoveries are received under provisions of the LPT/ADC Agreement and the applicable GAAP accounting rules. • Our Diversified Reinsurance segment had favorable PPD of $15.0 thousand in the third quarter of 2024 compared to adverse PPD of $1.9 million for the third quarter of 2023. • On a current accident year basis, underwriting loss was $7.0 million for the three months ended September 30, 2024 compared to an underwriting loss of $3.1 million for the same period in 2023. • lower income from investment activities which totaled $1.8 million for the three months ended September 30, 2024 compared to $11.5 million for the same period in 2023. The investment results for the third quarter of 2024 include $6.6 million in losses related to the disposition of alternative investments discussed previously, including $1.6 million in expenses related to these sales, along with continued declines in income from restricted assets as the associated liabilities continue to run-off; • corporate general and administrative expenses increased to $6.8 million for the three months ended September 30, 2024 compared to corporate expenses of $3.9 million for the same period in 2023; and 50 • foreign exchange and other losses of $5.9 million for the three months ended September 30, 2024, compared to foreign exchange and other gains of $4.6 million for the same period in 2023. Net loss for the nine months ended September 30, 2024 was $43.0 million compared to a net loss of $17.8 million for the same period in 2023. The net decrease in our financial results for the nine months ended September 30, 2024 compared to 2023 was largely due to: • underwriting loss of $36.0 million in the nine months ended September 30, 2024 compared to an underwriting loss of $28.4 million for the same period in 2023 largely due to: • adverse PPD of $25.1 million for the nine months ended September 30, 2024 compared to adverse PPD of $16.0 million for the same period in 2023 detailed as follows: • Our AmTrust Reinsurance segment had adverse PPD of $24.2 million in 2024, compared to adverse PPD of $12.0 million in 2023. Of the total adverse PPD experienced in this segment for 2024, $22.5 million is recoverable under the LPT/ADC Agreement and is expected to be recognized as future GAAP income over time as recoveries are received under provisions of the LPT/ADC Agreement and the applicable GAAP accounting rules. • Our Diversified Reinsurance segment had adverse PPD of $0.9 million in 2024, compared to adverse PPD of $3.9 million for the same period in 2023. • on a current accident year basis, an underwriting loss of $11.0 million for the nine months ended September 30, 2024 compared to an underwriting loss of $12.4 million for the same period in 2023, primarily due to results in AmTrust Reinsurance segment as discussed further below in the segment analysis. • lower income from investment activities which totaled $28.8 million for the nine months ended September 30, 2024 compared to $38.4 million in 2023. The investment results for the nine months ended September 30, 2024 included $5.7 million in losses related to the disposition of alternative investments discussed previously, including $1.6 million in expenses related to these sales, along with continued declines in income from restricted assets as the associated liabilities continue to run-off; • corporate general and administrative expenses increased to $16.9 million for the nine months ended September 30, 2024 compared to corporate expenses of $13.8 million for the same period in 2023; and • foreign exchange and other losses of $3.9 million for the nine months ended September 30, 2024 compared to foreign exchange and other losses of $0.8 million earned for the same period in 2023. Net Premiums Written The tables below compare net premiums written by our reportable segments, reconciled to the total consolidated net premiums written for the three and nine months ended September 30, 2024 and 2023: For the Three Months Ended September 30, 2024 2023 Change in ($ in thousands) Total Total $ % Diversified Reinsurance $ 9,035 $ 6,727 $ 2,308 34.3 % AmTrust Reinsurance (192) 1,898 (2,090) (110.1) % Total $ 8,843 $ 8,625 $ 218 2.5 % For the Nine Months Ended September 30, 2024 2023 Change in ($ in thousands) Total Total $ % Diversified Reinsurance $ 26,237 $ 20,152 $ 6,085 30.2 % AmTrust Reinsurance (741) (3,892) 3,151 (81.0) % Total $ 25,496 $ 16,260 $ 9,236 56.8 % Net premiums written for the three and nine months ended September 30, 2024 increased to $8.8 million and $25.5 million, respectively, compared to net premiums written of $8.6 million and $16.3 million for the same respective periods in 2023: • Premiums written in the Diversified Reinsurance segment increased by $2.3 million and $6.1 million for the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023 due to growth in direct premiums for Credit Life programs written by Maiden LF and Maiden GF. • Premiums written in the AmTrust Reinsurance segment decreased by $2.1 million and increased by $3.2 million for the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023. The negative written premiums for the nine months ended September 30, 2023 reflect cession adjustments of $6.1 million due to the cancellation of cases in one specific program within Specialty Risk and Extended Warranty. Please refer to the analysis below of our Diversified Reinsurance and AmTrust Reinsurance segments for further details. 51 Net Premiums Earned Net premiums earned increased by $0.9 million and $5.4 million for the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023 due to higher earned premiums in our Diversified Reinsurance segment driven by growth in Credit Life programs written by Maiden LF and Maiden GF. The tables below compare net premiums earned by our reportable segments, reconciled to the total consolidated net premiums earned, for the three and nine months ended September 30, 2024 and 2023: For the Three Months Ended September 30, 2024 2023 Change in ($ in thousands) Total Total $ % Diversified Reinsurance $ 9,576 $ 7,207 $ 2,369 32.9 % AmTrust Quota Share Reinsurance 3,827 5,272 (1,445) (27.4) % Total $ 13,403 $ 12,479 $ 924 7.4 % For the Nine Months Ended September 30, 2024 2023 Change in ($ in thousands) Total Total $ % Diversified Reinsurance $ 26,796 $ 21,882 $ 4,914 22.5 % AmTrust Quota Share Reinsurance 11,092 10,638 454 4.3 % Total $ 37,888 $ 32,520 $ 5,368 16.5 % Net premiums earned in the Diversified Reinsurance segment for the three and nine months ended September 30, 2024 increased by $2.4 million or 32.9% and $4.9 million or 22.5%, respectively, compared to the same respective periods in 2023 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 and nine months ended September 30, 2024 decreased by $1.4 million or 27.4% and increased by $0.5 million or 4.3%, respectively, compared to the same respective periods in 2023. 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 Net investment income decreased by $4.2 million or 46.1% and $9.6 million or 32.9% for the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023 largely due to lower interest income earned on our funds withheld balance with AmTrust as claim payments continued to be settled through the funds held receivable combined with higher investment expenses compared to the prior year periods. Annualized average book yields increased to 4.4% and 4.2% for the three and nine months ended September 30, 2024, respectively, compared to 4.3% and 4.1% for the same respective periods in 2023 due to the following factors: • Floating rate investments comprise 43.6% of our fixed income investments as of September 30, 2024; • Loan to related party carried a higher weighted average interest rate on a balance of $168.0 million which increased to 7.3% for the three and nine months ended September 30, 2024, respectively, compared to 7.3% and 6.9% for the same respective periods in 2023; partly offset by: • Interest income on our funds withheld receivable decreased by $2.2 million and $7.3 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. This was driven by lower average funds withheld balances with AmTrust which were $8.9 million and $51.8 million for the three and nine months ended September 30, 2024, respectively, compared to $250.0 million and $317.1 million for the same respective periods in 2023. Funds withheld receivable from AmTrust earned an annual interest rate of 3.5% for the three and nine months ended September 30, 2024 and 2023, respectively. At September 30, 2024, the funds withheld balance with AmTrust decreased to $0.0 million compared to a balance of $213.1 million held at September 30, 2023; and • Investment expenses increased by $1.7 million and $1.8 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 driven by $1.6 million of fees incurred related to sales and redemptions in our alternative investment portfolio during the third quarter of 2024. Average aggregate fixed income assets for the three and nine months ended September 30, 2024 decreased by 33.1% and 31.5%, respectively, compared to the same periods in 2023 due to continued run-off of our reinsurance liabilities previously written on prospective risks through the funds withheld receivable. For the three and nine months ended September 30, 2024 and 2023, we experienced negative operating cash flows due to settlement of claim payments to AmTrust as we run-off existing reinsurance liabilities in the AmTrust Reinsurance segment. 52 The following table details our average aggregate fixed income assets (at cost) and annualized investment book yield for the three and nine months ended September 30, 2024 and 2023: For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 Average aggregate fixed income assets, at cost (1) $ 502,098 $ 750,448 $ 576,755 $ 842,212 Annualized investment book yield 4.4 % 4.3 % 4.2 % 4.1 % (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 (Losses) Gains Net realized and unrealized investment losses of $3.8 million and gains of $6.4 million were recognized for the three and nine months ended September 30, 2024, respectively, compared to net realized and unrealized investment gains of $0.2 million and $2.4 million for the same respective periods in 2023. Net realized and unrealized investment (losses) gains for the three and nine months ended September 30, 2024 and 2023 are summarized in the table below by investment category: For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 Net realized gains (losses): Fixed income assets (1) $ (429) $ (301) $ (724) $ (1,087) Other investments 9,353 — 9,353 — Equity securities (3,538) — (3,538) 186 Total net realized gains (losses) 5,386 (301) 5,091 (901) Net unrealized (losses) gains: Other investments (11,043) 597 371 2,434 Equity securities 1,853 (52) 941 861 Total net unrealized (losses) gains (9,190) 545 1,312 3,295 Net realized and unrealized investment (losses) gains $ (3,804) $ 244 $ 6,403 $ 2,394 (1) Fixed income assets includes AFS securities as well as cash, restricted cash, funds withheld receivable, and loan to related party. For the three months ended September 30, 2024, net investment losses of $3.8 million were primarily due to net unrealized losses of $11.0 million on other investments and net realized losses of $3.5 million on equity securities, partially offset by net realized gains of $9.4 million on other investments and net unrealized gains of $1.9 million on equity securities. For the nine months ended September 30, 2024, the net investment gains of $6.4 million were primarily due to net realized gains of $9.4 million on the sale of other investments, partially offset by net realized losses of $3.5 million on equity securities. The net realized gains on other investments for the three and nine months ended September 30, 2024 were mainly from sales and redemptions of private credit funds and private equity funds during the third quarter of 2024. The sales and redemptions of other investments including equity securities during the three and nine months ended September 30, 2024 were part of a broader effort to reposition our balance sheet as part of ongoing group strategic initiatives while also strengthening overall liquidity. Interest in Income of Equity Method Investments Total interest in income of equity method investments of $0.8 million and $2.8 million were recognized for the three and nine months ended September 30, 2024, respectively, compared to an interest in the income of equity method investments of $2.2 million and $6.9 million for the same respective periods in 2023. Equity method investments consist of real estate investments of $57.3 million and other investments of $28.9 million as of September 30, 2024. Interest in income of equity method investments for the three and nine months ended September 30, 2024 and 2023 is detailed by investment category below: For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 Other investments $ 688 $ 2,360 $ 2,540 $ 7,432 Real estate investments 63 (170) 280 (573) Hedge fund investments — — — 83 Interest in income of equity method investments $ 751 $ 2,190 $ 2,820 $ 6,942 53 Net Loss and LAE Net loss and LAE increased by $4.7 million for the third quarter of 2024 compared to the same period in 2023. Net losses were impacted by net adverse PPD of $11.7 million for the third quarter of 2024 compared to net adverse PPD of $7.8 million for the same period in 2023. Excluding adverse development, the current year losses were $8.2 million for the third quarter of 2024 compared to $7.3 million for the third quarter of 2023. Net loss and LAE increased by $9.0 million or 24.5% during the nine months ended September 30, 2024 compared to the same respective period in 2023 driven by higher net adverse PPD experienced in the AmTrust Reinsurance Segment. Net loss and LAE was impacted by net adverse PPD of $25.1 million in 2024 compared to net adverse PPD of $16.0 million in 2023. Of the total adverse development in the AmTrust Reinsurance segment experienced to date in 2024, approximately $22.5 million is recoverable under the LPT/ADC Agreement and is expected to be recognized as future GAAP income over time as recoveries are received under the provisions of the LPT/ADC Agreement and the applicable GAAP accounting rules. 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. The segment 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. Commission and Other Acquisition Expenses Commission and other acquisition expenses increased by $3.7 million or 69.8% and increased by $5.0 million or 34.1% for the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023. The year-to-date movement was primarily due to lower earned premium adjustments in the AmTrust Reinsurance segment as negative premium adjustments in the first quarter of 2023 resulted in lower commission costs and brokerage fees. Total acquisition expenses increased as a percentage of net premiums earned for both respective periods driven by the accelerated amortization of deferred acquisition costs upon the recognition of a premium deficiency of $3.7 million in the AmTrust Reinsurance segment. Please see further discussion in the individual segment analysis further 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 increased by $3.2 million or 47.5% and $2.2 million or 9.3% for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. Excluding non-recurring expenses, our adjusted operating expenses increased 8.8% to $7.4 million for the three months ended September 30, 2024, compared to $6.8 million for the same period in 2023 and decreased 3.8% to $22.7 million for the nine months ended September 30, 2024, compared to $23.6 million for the same period in 2023. Corporate expenses increased by $2.9 million and $3.1 million for the three and nine months ended September 30, 2024, respectively, largely due to higher legal and actuarial fees incurred in the third quarter of 2024. The majority of these expenses were related to significant and ongoing strategic initiatives being pursued by the Company, including but not limited to potential acquisitions and active exploration of finality solutions related to the Company's reinsurance liabilities as discussed in the Business Strategy section. Corporate expenses also included higher stock-based awards which were $1.5 million for the nine months ended September 30, 2024 compared to $1.4 million for the same period in 2023. General and administrative expenses for the three and nine months ended September 30, 2024 and 2023 were comprised of: For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 General and administrative expenses – segments $ 3,229 $ 2,877 $ 9,047 $ 9,925 General and administrative expenses – corporate 6,785 3,910 16,906 13,809 Total general and administrative expenses $ 10,014 $ 6,787 $ 25,953 $ 23,734 Expenses related to the Company’s IIS business, which is no longer writing new business and has entered into the AmTrust Renewal Rights Agreements, were 19.6% and 18.1% of the Company's recurring operating expenses for the three and nine months ended September 30, 2024, respectively. Interest and Amortization Expenses Total interest and amortization expenses related to outstanding senior notes issued by Maiden Holdings in 2016 and Maiden NA in 2013 ("Senior Notes") were $4.8 million and $14.4 million for the three and nine months ended September 30, 2024, respectively, compared to $4.8 million and $13.4 million for the same respective periods in 2023. This included interest expense incurred on the Senior Notes for the three and nine months ended September 30, 2024 and 2023 of $4.8 million and $14.3 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 in the prior year period, amortization expenses were $40.0 thousand and $0.1 million for the three and nine months ended September 30, 2024, respectively, compared to amortization expense of $37.0 thousand and income of $0.9 million for the same respective periods in 2023. 54 During the nine months ended September 30, 2023, the Company realized a gain of $39.9 thousand due to the partial repurchase of the 2013 Senior Notes which was offset against total interest and amortization expenses discussed above. Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 7. Long Term Debt " for further details on the Senior Notes. The weighted average effective interest rate for the Senior Notes was 7.6% for the three and nine months ended September 30, 2024 and 2023, respectively. Foreign Exchange and Other (Losses) Gains Net foreign exchange and other losses of $5.9 million and $3.9 million were realized during the three and nine months ended September 30, 2024 compared to net foreign exchange and other gains of $4.6 million and losses of $0.8 million for the same respective periods in 2023. For the three and nine months ended September 30, 2024, net foreign exchange losses of $5.9 million and $3.9 million were attributable to the weakening of the U.S. dollar on the re-measurement of net loss reserves and insurance related liabilities denominated in the British pound and euro. Net foreign exchange gains of $4.6 million and losses of $0.1 million were realized for the three and nine months ended September 30, 2023 respectively. The net foreign exchange gains of $4.6 million in the third quarter of 2023 were driven by modest strengthening of the U.S. dollar on the re-measurement of net loss reserves and insurance related liabilities denominated in British pound and euro during the period. Net foreign exchange losses of $0.1 million for the nine months ended September 30, 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 since the start of the year. Foreign currency fluctuations are 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 September 30, 2024 included net loss reserves of $258.4 million. Our foreign currency asset exposures at September 30, 2024 included $149.5 million of fixed maturity securities managed by our investment managers who have the discretion to hold foreign currency exposures as part of their total return strategy, $31.1 million of equity method real estate investments denominated in Canadian dollars, as well as $14.8 million of funds withheld receivable. Underwriting Results by Reportable Segment Diversified Reinsurance Segment The underwriting results for our Diversified Reinsurance segment for the three and nine months ended September 30, 2024 and 2023 were as follows: For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 Gross premiums written $ 9,053 $ 6,762 $ 26,374 $ 20,263 Net premiums written $ 9,035 $ 6,727 $ 26,237 $ 20,152 Net premiums earned $ 9,576 $ 7,207 $ 26,796 $ 21,882 Other insurance (expense) revenue , net — (16) 46 3 Net loss and LAE (4,036) (4,142) (12,314) (11,126) Commission and other acquisition expenses (3,975) (3,374) (11,564) (10,544) General and administrative expenses (2,512) (2,216) (6,960) (7,863) Underwriting loss $ (947) $ (2,541) $ (3,996) $ (7,648) Underwriting loss by business unit is detailed in the table below for the Diversified Reinsurance segment for the three and nine months ended September 30, 2024 and 2023: For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 International $ (381) $ (2,015) $ (2,057) $ (4,040) GLS (872) (737) (1,782) (2,948) Other run-off lines 306 211 (157) (660) Underwriting loss $ (947) $ (2,541) $ (3,996) $ (7,648) Premiums — The growth in written and earned premium was the result of new Credit Life programs written by Maiden LF and Maiden GF in the three and nine months ended September 30, 2024. However, as discussed in the "Overview" section, Maiden LF and Maiden GF are no longer writing new business and have entered into the AmTrust Renewal Rights Agreements which are expected to cover certain programs of Maiden LF and Maiden GF's primary business written in Sweden, Norway, other Nordic countries, the United Kingdom and Ireland. As a result, Maiden LF and Maiden GF should begin to experience declines in premium written during the remainder of 2024. 55 Gross premiums written increased by $2.3 million or 33.9% and $6.1 million, or 30.2% for the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023. Net premiums written increased by $2.3 million or 34.3% and $6.1 million or 30.2% during the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023. Net premiums earned increased by $2.4 million or 32.9% and $4.9 million or 22.5% during the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023. Other insurance (expense) revenue , net — Other insurance (expense) revenue , net includes fee related income generated from our GLS business, fair value changes in underwriting-related derivatives related to certain coverages on retroactive reinsurance contracts written by GLS, and fee income derived from our IIS business not directly associated with premium revenue assumed. The tables below show other insurance revenue by source for the three and nine months ended September 30, 2024 and 2023: For the Three Months Ended September 30, 2024 2023 Change ($ in thousands) International $ — $ 3 $ (3) Other service fee income — (19) 19 Total other insurance expense , net $ — $ (16) $ 16 For the Nine Months Ended September 30, 2024 2023 Change ($ in thousands) International $ — $ 100 $ (100) Changes in fair value of non-hedged underwriting-related derivatives — (230) 230 Other service fee income 46 133 (87) Total other insurance revenue, net $ 46 $ 3 $ 43 Net Loss and LAE — Net loss and LAE decreased by $0.1 million and increased by $1.2 million for the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023. The net loss and LAE was impacted by net favorable PPD of $15.0 thousand and net adverse PPD of $0.9 million for the three and nine months ended September 30, 2024, respectively, compared to adverse PPD of $1.9 million and $3.9 million for the same periods in 2023. The net favorable PPD for the three months ended September 30, 2024 was primarily from favorable development in other runoff business lines partly offset by adverse development in International. The net adverse PPD for the nine months ended September 30, 2024 was due to International and facultative runoff lines partly offset by favorable development in GLS business . The net adverse development for the three and nine months ended September 30, 2023 was primarily from a German Auto program in run-off, along with development in European Capital Solutions and other runoff business lines. It also included the recognition of expected credit losses on reinsurance recoverable on unpaid losses for the nine months ended September 30, 2023. Commission and Other Acquisition Expenses — Commission and other acquisition expenses increased by $0.6 million or 17.8% and $1.0 million or 9.7% for the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023 due to growth in new Credit Life programs written by Maiden LF and GF. Total acquisition costs as a percentage of net premiums earned decreased for both respective periods due to lower profit commissions incurred as a result of recent loss experience on certain programs. General and Administrative Expenses — General and administrative expenses increased by $0.3 million or 13.4% and decreased by $0.9 million or 11.5% for the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023. The year-to-date movement was largely due to lower staff incentive compensation compared to the prior year period. 56 AmTrust Reinsurance Segment The AmTrust Reinsurance segment reported an underwriting loss of $17.8 million and $32.0 million during the three and nine months ended September 30, 2024, respectively, compared to an underwriting loss of $8.4 million and $20.8 million for the same respective periods in 2023. The underwriting results for the AmTrust Reinsurance segment for the three and nine months ended September 30, 2024 and 2023 were as follows: For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 Gross premiums written $ (192) $ 1,898 $ (741) $ (3,892) Net premiums written $ (192) $ 1,898 $ (741) $ (3,892) Net premiums earned $ 3,827 $ 5,272 $ 11,092 $ 10,638 Net loss and LAE (15,821) (11,014) (33,139) (25,377) Commission and other acquisition expenses (5,093) (1,966) (7,910) (3,976) General and administrative expenses (717) (661) (2,087) (2,062) Underwriting loss $ (17,804) $ (8,369) $ (32,044) $ (20,777) Premiums — The tables below show net premiums written by category for the three and nine months ended September 30, 2024 and 2023: For the Three Months Ended September 30, 2024 2023 Change in ($ in thousands) Total Total $ Net Premiums Written Small Commercial Business $ (73) $ (160) $ 87 Specialty Program 14 — 14 Specialty Risk and Extended Warranty (133) 2,058 (2,191) Total AmTrust Reinsurance $ (192) $ 1,898 $ (2,090) For the Nine Months Ended September 30, 2024 2023 Change in ($ in thousands) Total Total $ Net Premiums Written Small Commercial Business $ (620) $ (318) $ (302) Specialty Program (31) 157 (188) Specialty Risk and Extended Warranty (90) (3,731) 3,641 Total AmTrust Reinsurance $ (741) $ (3,892) $ 3,151 The negative premiums for the nine months ended September 30, 2024 and September 30, 2023 reflect the termination of the AmTrust Quota Share and the European Hospital Liability Quota Share as of January 1, 2019 which has resulted in no new business written under these contracts since 2018. The negative gross and net premiums written for the nine months ended September 30, 2023 reflect cession adjustments of $6.1 million due to the cancellation of cases in a certain program within Specialty Risk and Extended Warranty. Net premiums earned decreased by $1.4 million and increased by $0.5 million for the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023. The year-to-date movement was due to lower negative premium adjustments during 2024 compared to the prior year period. 57 The tables below provide detail on net premiums earned in the three and nine months ended September 30, 2024 and 2023: For the Three Months Ended September 30, 2024 2023 Change in ($ in thousands) Total Total $ Net Premiums Earned Small Commercial Business $ (73) $ (160) $ 87 Specialty Program 14 — 14 Specialty Risk and Extended Warranty 3,886 5,432 (1,546) Total AmTrust Reinsurance $ 3,827 $ 5,272 $ (1,445) For the Nine Months Ended September 30, 2024 2023 Change in ($ in thousands) Total Total $ Net Premiums Earned Small Commercial Business $ (620) $ (318) $ (302) Specialty Program (31) 157 (188) Specialty Risk and Extended Warranty 11,743 10,799 944 Total AmTrust Reinsurance $ 11,092 $ 10,638 $ 454 Net Loss and LAE — Net loss and LAE increased by $4.8 million and $7.8 million for the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023. The movement was driven by higher adverse PPD under the AmTrust Quota Share for the three and nine months ended September 30, 2024 compared to the same respective periods in 2023. Net adverse PPD was $11.7 million and $24.2 million during the three and nine months ended September 30, 2024, respectively, compared to net adverse development of $6.0 million and $12.0 million for the same respective periods in 2023, incurred primarily within the AmTrust Quota Share and European Hospital Liability Quota Share. The table below shows PPD for the AmTrust Reinsurance segment for the three and nine months ended September 30, 2024 and 2023: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2024 2023 2024 2023 Prior Year Loss Development adverse (favorable) ($ in thousands) AmTrust Quota Share $ 11,818 $ (22) $ 21,893 $ 6,414 AmTrust other runoff (79) (20) (305) (360) European Hospital Liability Quota Share (21) 6,012 2,591 5,992 Total AmTrust Prior Year Development $ 11,718 $ 5,970 $ 24,179 $ 12,046 Net adverse PPD for the three and nine months ended September 30, 2024 was primarily due to the AmTrust Quota Share contract, with European Hospital Liability also producing adverse loss development in the year-to-date period. In the AmTrust Quota Share, U.S. Program business experienced continuing adverse development from construction defect coverage for accident years 2015 to 2018 as new claims emergence reported by AmTrust was again far greater than expected; this was partly offset by continued favorable development within Workers Compensation business for accident years 2014 to 2018. Net adverse loss development on European Hospital Liability Quota Share was primarily driven by emergence of loss data from adverse claim verdicts on older claims prior to 2014, resulting in strengthening of loss development tail on underwriting years 2011 to 2014. Net adverse PPD for the three and nine months ended September 30, 2023 was primarily from European Hospital Liability for the three months ended September 30, 2023, and European Hospital Liability and the AmTrust Quota Share (General Liability and Commercial Auto Liability partly offset by continued favorable development in Workers Compensation) for the nine months ended September 30, 2023. Net adverse loss development on European Hospital Liability was primarily driven by emergence of loss data during 2023 on underwriting years 2011 to 2016. With regard to the European Hospital Liability Quota Share, certain tables used in determining non-economic damages were recently updated by the applicable authorities in Italy and increased compensation values for subject claims. The Company is currently analyzing the potential impact of the changes to these tables on its estimate of ultimate loss for this contract, including consultation with specialist third-party subject matter experts. In combination with the continued emergence of loss data from adverse claims verdicts noted above, these revisions could significantly impact the Company's evaluation of ultimate loss on these claims. 58 As of September 30, 2024, the reinsurance recoverable on unpaid losses under the LPT/ADC Agreement was $532.9 million. The LPT/ADC Agreement provides Maiden Reinsurance with $155.0 million in adverse PPD cover over its carried AmTrust Quota Share loss reserves at December 31, 2018. The reinsurance recoverable includes the deferred gain liability under the LPT/ADC Agreement of $88.0 million. At September 30, 2024, there was $67.0 million remaining in available coverage under the LPT/ADC Agreement. For the three and nine months ended September 30, 2024, $11.8 million and $22.5 million of total adverse PPD from the AmTrust Quota Share reported in the table above, respectively, are recoverable under the LPT/ADC Agreement that is expected to be recognized as future GAAP income over time as recoveries are received subject to the provisions of the LPT/ADC Agreement and the applicable GAAP accounting rules. To the extent recent adverse loss development in European Hospital Liability continues, the European Hospital Liability Quota Share may have a more significant negative impact on our results than the AmTrust Quota Share, in particular once recoveries from the LPT/ADC Agreement commence and are recognized as GAAP income pursuant to the applicable GAAP accounting rules. Commission and Other Acquisition Expenses — Commission and other acquisition expenses increased by $3.1 million and $3.9 million for the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023 driven by lower earned premium adjustments in the AmTrust Reinsurance segment as negative premium adjustments in the first quarter of 2023 resulted in lower commission costs and brokerage fees. This was partially offset by higher earned premiums in Specialty Risk and Extended Warranty programs for the nine months ended September 30, 2024 Total acquisition costs increased as a percentage of net premiums earned for both respective periods due to the accelerated amortization of deferred acquisition costs upon the recognition of a premium deficiency of $3.7 million in the AmTrust Reinsurance segment for the three and nine months ended September 30, 2024. General and Administrative Expenses — General and administrative expenses increased by $0.1 million and $25.0 thousand for the three and nine months ended September 30, 2024, respectively, compared to the same respective periods in 2023. 59 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 September 30, 2024, the Company had investable assets of $789.7 million compared to $914.3 million as of December 31, 2023. Investable assets include the combined total of our investments, cash and restricted cash including cash equivalents, loan to a related party and funds withheld receivable. Our investable assets decreased by $124.6 million during the nine months ended September 30, 2024 due to the continued run-off of our reinsurance portfolio liabilities as claim payments were settled from the funds withheld receivable, which decreased by $129.2 million in the nine months ended September 30, 2024. 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, 2023, that was filed with the SEC on March 12, 2024. 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 Exchange. The Investment Policy, as approved and as amended, maintains our established investment management and governance practices. In 2023 and 2024, 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. During the nine months ended September 30, 2024, Maiden Reinsurance paid dividends of $18.8 million to Maiden NA (2023: $18.8 million) as part of the approved dividend program. During the nine months ended September 30, 2024 and 2023, Maiden NA did not pay any dividends to Maiden Holdings. 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 presently 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 have not written any new retroactive risks through GLS since December 30, 2022, and this will be smaller in relation to the run-off of our prior reinsurance business. During the nine months ended September 30, 2024, we experienced negative operating cash flows as we run off the AmTrust Reinsurance segment reserves as shown in the cash flows table further below. We currently expect a trend of positive investing cash flows through 2024, and 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 our current sources of liquidity are adequate to meet its cash requirements for the next twelve months as we generally expect operating cash flows to be sufficiently offset by 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. 60 At September 30, 2024, unrestricted cash, cash equivalents and fixed maturity investments were $139.8 million compared to $73.4 million held at December 31, 2023, an increase of $66.4 million during the nine months ended September 30, 2024. This was primarily driven by $65.1 million of net proceeds from sales and redemption for alternative investments during the nine months ended September 30, 2024. The significant sales and redemptions of alternative investments during the three months ended September 30, 2024 was part of a broader effort to reposition our balance sheet as part of ongoing group strategic initiatives while also strengthening overall liquidity. There was also $15.3 million of collateral released by AmTrust through the funds withheld receivable during the nine months ended September 30, 2024 and the balance is now fully depleted. This was partly offset by $14.3 million utilized for interest payments on the Senior Notes and $3.1 million for common share repurchases made under the Company's authorized repurchase plan and employee tax obligations on vesting of restricted shares. Please see the related discussion on investing and financing cash flows below. The table below summarizes our operating, investing and financing cash flows for the nine months ended September 30, 2024 and 2023: For the Nine Months Ended September 30, 2024 2023 ($ in thousands) Operating activities $ (19,156) $ (65,997) Investing activities 107,074 51,137 Financing activities (3,133) (1,971) Effect of exchange rate changes on foreign currency cash 325 (263) Total increase (decrease) in cash, restricted cash and cash equivalents $ 85,110 $ (17,094) Cash Flows used in Operating Activities Cash flows used in operating activities for the nine months ended September 30, 2024 was $19.2 million compared to cash flows used in operating activities of $66.0 million for the nine months ended September 30, 2023. The decrease in cash used in in operating activities was due to the settlement of claims through funds withheld in the nine months ended September 30, 2024 compared to the same respective period in 2023. Cash Flows provided by Investing Activities Cash flows provided by investing activities consist primarily of proceeds from sales and maturities of investments net of purchases. Net cash provided by investing activities was $107.1 million for the nine months ended September 30, 2024 compared to net cash provided by investing activities of $51.1 million for the same period in 2023. For the nine months ended September 30, 2024, the proceeds from the sales, maturities and calls exceeded the purchases of fixed maturity securities by $42.4 million compared to net proceeds from sales and maturities of $60.7 million for the same period in 2023. The size of the fixed income investment portfolio has diminished as claims payments are made for the runoff of existing loss reserves for the terminated AmTrust Quota Share and the European Hospital Liability Quota Share contracts. Cash flows provided by investing activities for nine months ended September 30, 2024 included the proceeds from the sales and redemptions which exceeded the purchases of alternative investments. There were net proceeds from sales and redemption of $65.1 million for alternative investments during the nine months ended September 30, 2024 compared to net purchases of alternative investments of $9.5 million for the same period in 2023. Cash Flows used in Financing Activities Cash flows used in financing activities were $3.1 million for the nine months ended September 30, 2024 compared to $2.0 million for the same period in 2023. During the nine months ended September 30, 2024, the Company repurchased 1,488,400 common shares at an average price of $1.95 per share for a total cost of $2.9 million under the Company's authorized common share repurchase plan. During the nine months ended September 30, 2023, the Company repurchased 820,105 common shares at an average price of $1.93 per share for a total cost of $1.6 million under the Company's authorized common share repurchase plan. No dividends on common shares were paid during the nine months ended September 30, 2024 and 2023. 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, 2023, that was filed with the SEC on March 12, 2024. Please also refer to " Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) "Note 4.(e) Restricted Cash, Cash Equivalents and Investments " included in this Form 10-Q for details of the fair values of restricted assets at September 30, 2024 and December 31, 2023. At September 30, 2024 and December 31, 2023, restricted cash and cash equivalents and fixed maturity investments used as collateral were $213.7 million and $219.9 million, respectively. This collateral represents 60.5% and 75.0% of the fair value of total fixed maturity investments, cash, restricted cash and cash equivalents at September 30, 2024 and December 31, 2023, respectively. 61 Cash and Investments Historically, the investment of our funds had generally been designed to ensure safety of principal while generating current income. Accordingly, our fixed income investment portfolio is invested in liquid, investment-grade fixed maturity securities which are all designated as AFS at September 30, 2024. Further, as our insurance liabilities continue to run-off and the required capital to operate our business for regulatory purposes decreases, we expanded Maiden Reinsurance’s investment policy which has been approved by the Vermont DFR. Under this modified investment policy, we expanded the range of asset classes we invest in to enhance the income and total returns our investment portfolio produces. We categorize these investments as alternative investments which include " Other Investments ", "Equity Securities" , and "Equity Method Investments" on our Condensed Consolidated Balance Sheets. As of September 30, 2024 and December 31, 2023, our cash and investments consisted of: September 30, 2024 December 31, 2023 ($ in thousands) Fixed maturities, available-for-sale, at fair value $ 225,756 $ 250,601 Equity securities, at fair value 19,311 45,299 Equity method investments 86,236 80,929 Other investments 147,823 182,811 Total investments 479,126 559,640 Cash and cash equivalents 109,965 35,412 Restricted cash and cash equivalents 17,823 7,266 Total Investments and Cash and Cash Equivalents $ 606,914 $ 602,318 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 had increased the amount of alternative investments held. Previously, we had expected to continue to increase the amounts invested therein. However, as our strategic plans continue to develop, we have begun to modify our approach to this investment policy, and began to reduce our investments and commitments to alternative investments under this policy. The sales and redemptions of other investments including equity securities during the three months ended September 30, 2024 were part of a broader effort to reposition our balance sheet as part of ongoing group strategic initiatives while also strengthening overall liquidity. 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, the Company cumulatively invested $176.4 million in 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. 62 As of September 30, 2024, Maiden Reinsurance owns 30.9% of the Company's total outstanding common shares which is eliminated for accounting and financial reporting purposes on our condensed consolidated financial statements. The voting power of Maiden Reinsurance, with respect to its common shares, is capped at 9.5% pursuant to the bye-laws of the Company. Treasury shares include 44,367,323 common shares owned by Maiden Reinsurance consisting of 41,439,348 shares issued as part of the Exchange in 2022 and 2,927,975 common shares that were directly purchased on the open market by Maiden Reinsurance under the Company's authorized share repurchase plan to date. The market value of our common shares held by Maiden Reinsurance due to the Exchange and common share repurchases was $78.5 million at September 30, 2024. Cash & Cash Equivalents At September 30, 2024, we consider the levels of cash and cash equivalents held to be within our targeted ranges. During periods when interest rates experience greater volatility, we have periodically maintained more cash and cash equivalents to better assess current market conditions and opportunities within our defined risk appetite, and may do so in future periods. Fixed Maturity Investments The average yield and average duration of our fixed maturities, by asset class, and our cash and cash equivalents (restricted and unrestricted) are as follows at September 30, 2024 and December 31, 2023: September 30, 2024 Original or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Average yield (1) Average duration (2) ($ in thousands) U.S. treasury bonds $ 48,676 $ 17 $ — $ 48,693 5.2 % 0.1 U.S. agency bonds – mortgage-backed 27,493 — (2,535) 24,958 4.6 % 6.0 Non-U.S. government bonds 48,997 37 (292) 48,742 3.0 % 0.7 Collateralized loan obligations 65,973 4 (140) 65,837 4.7 % 0.3 Corporate bonds 38,620 — (1,094) 37,526 1.2 % 1.4 Total fixed maturities 229,759 58 (4,061) 225,756 3.8 % 1.2 Cash and cash equivalents 127,788 — — 127,788 — % 0.0 Total $ 357,547 $ 58 $ (4,061) $ 353,544 2.5 % 0.8 December 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 $ 55,046 $ 8 $ (2) $ 55,052 5.4 % 0.1 U.S. agency bonds – mortgage-backed 29,918 — (3,267) 26,651 4.6 % 6.1 Non-U.S. government bonds 21,219 — (468) 20,751 1.9 % 1.1 Collateralized loan obligations 80,591 — (1,788) 78,803 4.9 % 0.3 Corporate bonds 71,762 — (2,418) 69,344 1.6 % 1.7 Total fixed maturities 258,536 8 (7,943) 250,601 3.8 % 1.3 Cash and cash equivalents 42,678 — — 42,678 2.5 % 0.0 Total $ 301,214 $ 8 $ (7,943) $ 293,279 3.6 % 1.2 (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 nine months ended September 30, 2024, the yield on the 10-year U.S. Treasury bond decreased by 7 basis points to 3.81%. 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. Driven by a decrease in risk-free rates during the nine months ended September 30, 2024, our fixed maturity investment portfolio generated net unrealized gains of $3.9 million which increased our book value per common share by $0.04 during the period, largely the result of tightening spreads on collateralized loan obligations. Current outlooks for global monetary policy indicate that quantitative tightening by central banks in the U.S. and globally appear likely to moderate in the near to intermediate term, although central banks have indicated that they maintain the option to either adopt a neutral stance or apply further tightening should data dictate such actions, particularly inflation and labor market data. Recent data suggest that delays in the anticipated moderation of global monetary policy may be ending in 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 63 strategy designed to emphasize the preservation of our invested assets and provide sufficient liquidity for the prompt payment of claims and contract liabilities. Because we collateralize a significant portion of our insurance liabilities, unanticipated or large increases in interest rates could require us to utilize significant amounts of unrestricted cash and fixed maturity securities to provide additional collateral, which could impact our asset and capital management strategy described herein. We also monitor the duration and structure of our investment portfolio as discussed below. As of September 30, 2024, 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 $4.3 million. Actual shifts in interest rates may not change by the same magnitude across the maturity spectrum or on an individual security and, as a result, the impact on the fair value of our fixed maturity securities may be materially different from the resulting change in value described above. To limit our exposure to unexpected interest rate increases which would reduce the value of our fixed income securities and reduce our shareholders' equity, we attempt to maintain the duration of our fixed maturity investment portfolio combined with our cash and cash equivalents, both restricted and unrestricted, within a reasonable range of the duration of our loss reserves. At September 30, 2024 and December 31, 2023, these respective durations in years were as follows: September 30, 2024 December 31, 2023 Fixed maturities and cash and cash equivalents 0.8 1.2 Reserve for loss and LAE - gross of LPT/ADC Agreement reserves 6.0 5.8 Reserve for loss and LAE - net of LPT/ADC Agreement reserves 2.5 1.6 During the nine months ended September 30, 2024, the weighted average duration of our fixed maturity investment portfolio decreased by 0.4 years to 0.8 years while the duration for the gross reserve for loss and LAE increased by 0.2 years to 6.0 years. The differential in duration between these assets and liabilities may fluctuate over time and in the case of fixed maturities, historically has been affected by factors such as market conditions, changes in asset mix and prepayment speeds in the case of both our U.S. agency mortgage-backed securities ("Agency MBS") and commercial mortgage-backed securities held. At September 30, 2024, the duration of our loss reserves net of the LPT/ADC Agreement was higher than the duration of our fixed maturity investment portfolio. To limit our exposure to unexpected interest rate increases that could reduce the value of our fixed maturity securities and reduce our shareholders' equity, the Company holds floating rate securities whose fair values are less sensitive to interest rates. At September 30, 2024 and December 31, 2023, 43.6% and 40.8%, respectively, of our fixed income investments were comprised of floating rate securities which are detailed in the table below: September 30, 2024 December 31, 2023 ($ in thousands) Fair Value % of Total Fair Value % of Total Floating rate securities Collateralized loan obligations $ 65,837 12.3 % $ 78,803 13.0 % Total floating rate AFS fixed maturities at fair value 65,837 12.3 % 78,803 13.0 % Loan to related party 167,975 31.3 % 167,975 27.8 % Total floating rate securities $ 233,812 43.6 % $ 246,778 40.8 % Total fixed income investments at fair value (1) $ 536,334 $ 605,239 (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 September 30, 2024 and December 31, 2023, 100.0% of the Company’s U.S. agency bond holdings are mortgage-backed. Total U.S. agency MBS comprise 11.1% of our fixed maturity investment portfolio at September 30, 2024. 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 September 30, 2024 and December 31, 2023 were as follows: September 30, 2024 December 31, 2023 ($ in thousands) Fair Value % of Total Fair Value % of Total FNMA – fixed rate $ 14,133 56.6 % $ 15,164 56.9 % FHLMC – fixed rate 8,563 34.3 % 9,099 34.1 % GNMA – variable rate 2,262 9.1 % 2,388 9.0 % Total U.S. Agency MBS $ 24,958 100.0 % $ 26,651 100.0 % At September 30, 2024 and December 31, 2023, 100.0% and 97.8%, respectively, of our fixed maturity investments consisted of investment grade securities. We define a security as being below investment grade if it has an S&P credit rating of BB+ or equivalent, or less. Please see " Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) Note 4. Investments " for additional information on the credit rating of our fixed income investment portfolio. 64 The security holdings by sector and financial strength rating of our corporate bond holdings at September 30, 2024 and December 31, 2023 were as follows: Ratings (1) September 30, 2024 AAA A+, A, A- BBB+, BBB, BBB- BB+ or lower Fair Value % of Corporate bonds portfolio Corporate bonds ($ in thousands) Basic Materials — % — % 14.5 % — % $ 5,432 14.5 % Consumer — % 7.3 % 33.1 % — % 15,179 40.4 % Financial Institutions 4.2 % 39.6 % 1.3 % — % 16,915 45.1 % Total 4.2 % 46.9 % 48.9 % — % $ 37,526 100.0 % Ratings (1) December 31, 2023 AAA A+, A, A- BBB+, BBB, BBB- BB+ or lower Fair Value % of Corporate bonds portfolio Corporate bonds ($ in thousands) Basic Materials — % — % 7.6 % — % $ 5,273 7.6 % Communications — % 7.9 % 4.2 % — % 8,392 12.1 % Consumer — % 15.8 % 29.2 % — % 31,186 45.0 % Energy — % 1.2 % 2.6 % — % 2,639 3.8 % Financial Institutions 2.2 % 20.9 % 0.6 % 7.8 % 21,854 31.5 % Total 2.2 % 45.8 % 44.2 % 7.8 % $ 69,344 100.0 % (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 September 30, 2024. The Company's ten largest corporate holdings are 95.6% euro denominated, with 42.2% in the Consumer Sector and 42.7% in the Financial Institutions sector. September 30, 2024 Fair Value % of Holdings Rating (1) ($ in thousands) Chubb Ina Holdings Inc., 1.55%, Due 3/15/2028 $ 6,921 3.1 % A Utah Acquisition Sub Inc., 2.25%, Due 11/22/2024 5,556 2.5 % BBB- PPG Industries Inc., 0.875%, Due 11/3/2025 5,432 2.4 % BBB+ Kellanova, 1.25%, Due 3/10/2025 4,410 1.9 % BBB BNP Paribas SA, 1.25%, Due 3/19/2025 3,618 1.6 % A- McKesson Corp., 1.5% Due 11/17/2025 2,738 1.2 % A- Baxter International Inc., 1.3%, Due 5/30/2025 2,475 1.1 % BBB Morgan Stanley, 1.875%, Due 4/27/2027 2,171 0.9 % A+ Aareal Bank AG, 0.625%, Due 2/14/2025 1,573 0.7 % AAA Natwest Group PLC, 1.75%, Due 3/2/2026 1,106 0.5 % A- Total $ 36,000 15.9 % (1) Ratings as assigned by S&P, or equivalent At September 30, 2024 and December 31, 2023, we held the following non-U.S. dollar denominated securities: September 30, 2024 December 31, 2023 ($ in thousands) Fair Value % of Total Fair Value % of Total Non-USD denominated collateralized loan obligations $ 64,841 43.4 % $ 77,816 46.8 % Non-USD denominated corporate bonds 35,953 24.0 % 67,822 40.7 % Non-U.S. government bonds 48,742 32.6 % 20,751 12.5 % Total non-U.S. dollar denominated securities $ 149,536 100.0 % $ 166,389 100.0 % 65 At September 30, 2024 and December 31, 2023, respectively, 100.0% of non-U.S. dollar denominated securities were invested in euro denominated bonds. The net decrease in non-USD denominated fixed maturities is largely due to sales and maturities of euro denominated corporate bonds during the nine months ended September 30, 2024. At September 30, 2024 and December 31, 2023, the Company's non-U.S. government issuers have a rating of AA- or higher by Fitch Ratings. The Company does not employ any credit default protection against any of the fixed maturities held in non-U.S. dollar denominated currencies at September 30, 2024 and December 31, 2023, respectively. 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 September 30, 2024 and December 31, 2023: Ratings (1) September 30, 2024 December 31, 2023 ($ in thousands) Fair Value % of Total Fair Value % of Total A+, A, A- $ 17,610 49.0 % $ 31,810 46.9 % BBB+, BBB, BBB- 18,343 51.0 % 30,630 45.2 % BB+ or lower — — % 5,382 7.9 % Total non-U.S. dollar denominated corporate bonds $ 35,953 100.0 % $ 67,822 100.0 % (1) Ratings as assigned by S&P, or equivalent 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, 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 September 30, 2024 and December 31, 2023 consisted of the following asset categories: September 30, 2024 December 31, 2023 ($ in thousands) Carrying Value % of Total Carrying Value % of Total Privately held common stocks $ 9,392 3.7 % $ 35,272 11.4 % Privately held preferred stocks 9,919 3.9 % 9,946 3.2 % Publicly traded equity investments in common stocks — — % 81 — % Total equity securities $ 19,311 7.6 % $ 45,299 14.6 % Real estate investments $ 57,323 22.6 % $ 49,897 16.1 % Other equity method investments 28,913 11.4 % 31,032 10.1 % Total equity method investments $ 86,236 34.0 % $ 80,929 26.2 % Private equity funds $ 24,750 9.8 % $ 47,383 15.4 % Private credit investments 1,954 0.8 % 27,806 9.0 % Privately held equity investments 40,151 15.8 % 38,617 12.5 % Investments in direct lending entities (at cost) 80,968 32.0 % 69,005 22.3 % Total other investments $ 147,823 58.4 % $ 182,811 59.2 % Total alternative investments $ 253,370 100.0 % $ 309,039 100.0 % Our allocation to alternative investments decreased to 41.7% of our total cash and investments as of September 30, 2024 compared to 51.3% as of December 31, 2023; and decreased to 121.7% of our total shareholders' equity as of September 30, 2024 compared to 124.0% as of December 31, 2023. Under this revised investment policy, we decreased the amount of alternative investments held at September 30, 2024 . As noted previously, as our strategic plans continue to develop, we have begun to modify our approach to this investment policy, and began to reduce our investments and commitments to alternative investments under this policy. The sales and redemptions of other investments including equity securities during the three months ended September 30, 2024 were part of a broader effort to reposition our balance sheet as part of ongoing group strategic initiatives while also strengthening overall liquidity. We expect to invest the proceeds of these sales and redemptions in cash equivalent and short-term investment grade fixed income securities. 66 In addition to the categories described above, we also evaluate our alternative investments by the following asset classes: September 30, 2024 December 31, 2023 ($ in thousands) Carrying Value % of Total Carrying Value % of Total Private Equity $ 59,977 23.7 % $ 82,230 26.6 % Private Credit 1,954 0.7 % 53,673 17.4 % Alternatives 104,330 41.2 % 95,258 30.8 % Venture Capital 23,309 9.2 % 21,220 6.9 % Real Estate 63,800 25.2 % 56,658 18.3 % Total alternative investments $ 253,370 100.0 % $ 309,039 100.0 % 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. Within these asset classes, our portfolio broadly consists of the following types of investments: • Private Equity – this asset class consists of both fund investments with leading private equity sponsors and direct equity investments in private companies, sometimes in conjunction with our private equity fund sponsors. As of September 30, 2024, $3.4 million or 5.6% of investments in the private equity asset class consisted of investments in private equity funds and $56.6 million or 94.4% consisted of direct equity investments in private companies. • Private Credit - this asset class consists of both fund investments with leading private credit sponsors and direct credit investments in private companies, sometimes in conjunction with our private credit fund sponsors. Private credit investments in both funds and on a direct basis will typically be secured lending arrangements with non-rated entities, often with additional protective provisions to enhance the security and returns of these investments. As of September 30, 2024, $2.0 million or 100.0% of the private credit asset class consisted of direct investments in debt securities of private companies. • Alternatives – this asset class consists of structured financing arrangements which typically have incentive features to enhance the Company’s returns. As part of these arrangements, the Company requires collateral or bankruptcy-remote structures to protect its investments. As of September 30, 2024, $102.6 million or 98.4% of investments in the alternatives asset class were direct investments and $1.7 million or 1.6% of the alternatives asset class were invested in funds. One investment in a collateralized direct lending entity of $81.0 million represents 77.6% of this asset class and is discussed further in "Note 4 — Investments" included in Part I Item 1. "Financial Information" in this Quarterly Report on Form 10-Q for the nine months ended September 30, 2024. • Venture Capital – this asset class consists of both fund investments with venture capital firms focused primarily on “insurtech” or “fintech” early-stage investments as well as direct investments in start-up companies in this sector, including equity investments in individual companies made in conjunction with our venture capital fund sponsors. As of September 30, 2024, $9.1 million or 39.2% of investments in the venture capital asset class consisted of investments in funds and $14.2 million or 60.8% consisted of direct equity investments in start-up companies. As of September 30, 2024, $13.4 million or 57.6% of our venture capital investments were invested in funds or companies that would be considered “insurtech” investments. • Real Estate – this asset class consists of long-term equity investments in three real estate projects. Two are multi-family residential development projects near major urban centers where workforce housing demand continues to be strong. One investment is a minority stake as a limited partner with a leading property developer with a highly successful track record, where the Company will earn returns from both operating income from rentals and future sales of properties. As of September 30, 2024, the Company has $26.3 million invested in this project and expects investment returns to commence in earnest in 2026 and beyond. The second multi-family residential investment is a majority stake with general partner rights wherein the Company is providing the capital backing to an experienced and successful developer in the subject market, while also taking minority equity stakes in individual projects. To date, this development project has secured five properties in attractive locations and is currently in the zoning and planning stages. As of September 30, 2024, the Company has $31.1 million invested in this project and has commenced earning limited amounts of fee income from this project. As part of its investment, the Company has also provided certain loan guarantees which are discussed in more detail in Note 11 — Commitments, Contingencies and Guarantees included in Part I Item 1. "Financial Information" . We expect fee and operating income and gains from future sales of properties to commence in earnest in 2027 and beyond. Finally, the Company has a minority equity stake in an iconic office building in a major city in the U.S., with an attractive and growing tenant roll. As of September 30, 2024, the Company has $6.5 million invested in this project and to date has earned preferred returns and received certain distributions. In addition to preferred returns, the Company expects to receive future distributions of operating income from this investment. 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. 67 Investment Results Our investment portfolio returns included in earnings decreased to $1.8 million and $28.8 million during the three and nine months ended September 30, 2024, respectively, compared to $11.5 million and $38.4 million for the same respective periods in 2023. This was partly due to lower interest income earned on our funds withheld balance with AmTrust as claim payments were settled through the funds held receivable in 2024. Also, it was due to net unrealized losses on our alternative investment portfolio for the three months ended September 30, 2024 as well as lower interest in income of equity method investments which decreased for the three and nine months ended September 30, 2024 compared to the same periods in 2023. In addition, our alternative investment portfolio decreased by 18.0% during 2024 due to recent sales and redemptions of equity securities, private equity investments and private credit funds. These sales produced net realized gains of $5.8 million during the third quarter of 2024 as shown in the table below and were part of a broader effort to reposition our balance sheet as part of ongoing group strategic initiatives that we are actively pursuing while also strengthening our overall liquidity. The alternative investment portfolio produced a positive net return of 4.1% in 2024 compared to 5.0% for the same period in 2023. This was partly due to $1.6 million of fees incurred related to sales and redemptions in the third quarter of 2024. The following table summarizes our investment results for the three and nine months ended September 30, 2024 and 2023: For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 Net investment income: Fixed income investments (1) $ 5,269 $ 7,902 $ 17,445 $ 25,247 Cash and restricted cash 209 96 595 514 Other investments, including equities 1,247 1,148 3,664 3,736 Investment expenses (1,847) (98) (2,173) (386) Total net investment income 4,878 9,048 19,531 29,111 Net realized gains (losses): Fixed income assets (1) (429) (301) (724) (1,087) Other investments, including equities 5,815 — 5,815 186 Total net realized gains (losses) 5,386 (301) 5,091 (901) Net unrealized gains (losses): Other investments, including equities (9,190) 545 1,312 3,295 Total net unrealized (losses) gains (9,190) 545 1,312 3,295 Interest in income of equity method investments: Interest in income of equity method investments 751 2,190 2,820 6,942 Interest in income of equity method investments 751 2,190 2,820 6,942 Total investment return included in earnings (A) $ 1,825 $ 11,482 $ 28,754 $ 38,447 Other comprehensive income: Unrealized gains on AFS fixed maturity securities and equity method investments excluding foreign exchange (B) $ 2,427 $ 335 $ 3,932 $ 3,118 Total investment return = (A) + (B) $ 4,252 $ 11,817 $ 32,686 $ 41,565 Annualized income from fixed income assets (2) $ 21,912 $ 31,992 $ 24,053 $ 34,348 Average aggregate fixed income assets, at cost (2) 502,098 750,448 576,755 842,212 Annualized investment book yield 4.4 % 4.3 % 4.2 % 4.1 % Average aggregate invested assets, at fair value (3) $ 791,955 $ 1,017,429 $ 851,991 $ 1,109,760 Investment return included in net earnings 0.2 % 1.1 % 3.4 % 3.5 % Total investment return 0.5 % 1.2 % 3.8 % 3.7 % 1. Fixed income investments include AFS securities as well as funds withheld receivable, and loan to related party. 68 2. Average aggregate fixed income assets 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. The following table details total investment returns for our fixed income investments for the three and nine months ended September 30, 2024 and 2023: Fixed Income Investments (1) For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 Gross investment income $ 5,478 $ 7,998 $ 18,040 $ 25,761 Net realized losses (429) (301) (724) (1,087) Change in AOCI (3) 2,427 335 3,932 3,118 Gross investment returns $ 7,476 $ 8,032 $ 21,248 $ 27,792 Average invested assets, at fair value (4) $ 496,881 $ 737,486 $ 570,787 $ 827,859 Gross Investment Returns 1.5 % 1.1 % 3.7 % 3.4 % Less: Investment expenses $ 50 $ 61 $ 102 $ 206 Net investment returns $ 7,426 $ 7,971 $ 21,146 $ 27,586 Net Investment Returns 1.5 % 1.1 % 3.7 % 3.3 % Our net investment returns increased to 1.5% and 3.7% for the three and nine months ended September 30, 2024, respectively, compared to 1.1% and 3.3% for the respective periods in 2023. This was largely due to floating rate investments that comprised 43.6% of our fixed income investments at September 30, 2024 which enabled the portfolio to respond to the higher interest rate environment more quickly. The loan to related party carried a higher weighted average interest rate on a balance of $168.0 million which increased to 7.3% for the three and nine months ended September 30, 2024, respectively, compared to 7.3% and 6.9% for the same respective periods in 2023. This was partly offset by lower interest income on the funds withheld receivable from AmTrust which decreased due to much lower average ending balances of $8.9 million and $51.8 million during the three and nine months ended September 30, 2024 compared to average ending balances of $250.0 million and $317.1 million for the respective periods in 2023. This was driven by using the funds withheld receivable for claim payments to AmTrust as the runoff of existing loss reserves continues in the terminated AmTrust Quota Share and the European Hospital Liability Quota Share agreements, with the balance of funds withheld now fully exhausted at September 30, 2024. Please refer to " Notes to Condensed Consolidated Financial Statements - Note 4 — Investments " included under Part I, Item 1 " Financial Information" of this Quarterly Report on Form 10-Q for further detail on investment returns from fixed income investments held by the Company at September 30, 2024 and 2023. 69 The following table details total investment returns for our alternative investments for the three and nine months ended September 30, 2024 and 2023, respectively: Alternative Investments (2) For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 Gross investment income $ 1,998 $ 3,338 $ 6,484 $ 10,678 Net realized gains 5,815 — 5,815 186 Net unrealized (losses) gains (9,190) 545 1,312 3,295 Gross investment returns $ (1,377) $ 3,883 $ 13,611 $ 14,159 Average invested assets, at fair value (4) $ 295,073 $ 279,941 $ 281,205 $ 281,901 Gross Investment Returns (0.5) % 1.4 % 4.8 % 5.0 % Less: Investment expenses $ 1,797 $ 37 $ 2,071 $ 180 Net investment returns $ (3,174) $ 3,846 $ 11,540 $ 13,979 Net Investment Returns (1.1) % 1.4 % 4.1 % 5.0 % 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. The following table details total investment returns for alternative investments by asset class for the nine months ended September 30, 2024: September 30, 2024 Private Equity Private Credit Alternative Assets Venture Capital Real Estate Total ($ in thousands) Gross investment income $ 1,417 $ 2,747 $ 1,457 $ 6 $ 857 $ 6,484 Net realized and unrealized gains (losses) 8,995 (1,365) (81) 500 (922) 7,127 Total Investment Return $ 10,412 $ 1,382 $ 1,376 $ 506 $ (65) $ 13,611 Average Investments $ 71,104 $ 27,814 $ 99,794 $ 22,264 $ 60,229 $ 281,205 Gross Investment Returns 14.6 % 5.0 % 1.4 % 2.3 % (0.1) % 4.8 % Annualized Gross Returns 19.5 % 6.6 % 1.8 % 3.0 % (0.1) % 6.5 % 70 The following table details total investment returns for alternative investments by asset class for the nine months ended September 30, 2023: September 30, 2023 Private Equity Private Credit Hedge Funds Alternative Assets Venture Capital Real Estate Total ($ in thousands) Gross investment income $ 2,291 $ 2,457 $ 83 $ 5,476 $ — $ 371 $ 10,678 Net realized and unrealized gains (losses) 2,539 945 — (22) 457 (438) 3,481 Total Investment Return $ 4,830 $ 3,402 $ 83 $ 5,454 $ 457 $ (67) $ 14,159 Average Investments $ 66,694 $ 50,047 $ 2,688 $ 88,466 $ 22,280 $ 51,726 $ 281,901 Gross Investment Returns 7.2 % 6.8 % 3.1 % 6.2 % 2.1 % (0.1) % 5.0 % Annualized Gross Returns 9.7 % 9.1 % 4.1 % 8.2 % 2.7 % (0.2) % 6.7 % During the nine months ended September 30, 2024, on an inception to date basis through September 30, 2024, our active alternative investments have now produced an internal rate of return of 4.0% and a multiple on invested capital of 1.10. This includes investments, primarily in the Alternatives and Real Estate asset classes where we anticipate future returns to emerge but have not as yet recognized either returns or gains based on the development stage of certain investments, which constitute 54.6% of our total alternative assets as of September 30, 2024. Excluding the investments still carried at cost, the internal rate of return was 9.6% with a multiple on invested capital of 1.22. Total returns on active alternative investments by asset class from inception are discussed in detail as of September 30, 2024 in the table below: Asset Class September 30, 2024 Total Direct Fund ($ in thousands) Carrying Value IRR MOIC (x) IRR MOIC (x) IRR MOIC (x) Private Equity $ 59,977 10.5 % 1.33 10.2 % 1.37 11.0 % 1.26 Private Credit 1,954 5.2 % 1.10 12.1 % 1.18 4.9 % 1.10 Hedge Funds — 5.2 % 1.12 5.2 % 1.12 — % — Alternatives 104,330 4.7 % 1.12 4.8 % 1.12 (7.9) % 0.92 Venture Capital 23,309 7.6 % 1.19 13.1 % 1.46 (10.1) % 0.82 Real Estate 63,800 (2.1) % 0.96 (2.1) % 0.96 — % — Total $ 253,370 4.0 % 1.10 5.2 % 1.13 6.0 % 1.12 • Private Equity – investment returns in this asset class reflect both dividends and distributions received as well as unrealized gains or losses from adjustments to net asset values in the case of fund investments and market value adjustments in the case of direct equity investments. During the nine months ended September 30, 2024, private equity investments produced a total investment return of $10.4 million with fund investments earning $0.9 million while direct investments produced a total investment return of $9.6 million. Inception to date, private equity investments have produced an internal rate of return of 10.5% and a multiple on invested capital of 1.33; fund investments produced an internal rate of return of 11.0% and a multiple on invested capital of 1.26, and direct investments have produced an internal rate of return of 10.2% and a multiple on invested capital of 1.37. Net realized gains of $9.0 million on private equity investments have been recognized through September 30, 2024. • Private Credit – investment returns in this asset class reflect both distributions received as well as unrealized gains or losses from adjustments to net asset values in the case of fund investments and market value adjustments in the case of direct equity investments. During the nine months ended September 30, 2024, private credit investments produced a total investment return of $1.4 million with fund investments earning $1.0 million while direct investments produced a total investment return of $0.4 million. Inception to date, private credit investments have produced an internal rate of return of 5.2% and a multiple on invested capital of 1.10, with fund investments producing an internal rate of return of 4.9% and a multiple on invested capital of 1.10, while direct investments have produced an internal rate of return of 12.1% and a multiple on invested capital of 1.18. • Alternative Assets – investment returns in this asset class largely relate to equity method recognition of income from structured financing arrangements in real assets which utilize bankruptcy-remote structures to protect these investments. During the nine months ended September 30, 2024, alternative investments produced a total investment return of $1.4 million. Inception to date, alternative direct investments have produced an internal rate of return of 4.8% and a multiple on invested capital of 1.12; in total, alternative fund investments have produced an internal rate of return of (7.9)% and a multiple on invested capital of 0.92. We have not recognized any returns (including contractual preferred returns) on other alternative investments as the underlying collateralized investment supporting this direct lending initiative continues to develop; these investments represent 77.6% of the alternative investment class at September 30, 2024. We expect to recognize our preferred returns and contingency gains as these 71 investment develops further or if other collateral we have secured as part of our investment responds sooner, subject to certain conditions. • Venture Capital – investment returns in this asset class primarily reflect unrealized gains or losses from adjustments to net asset values in the case of fund investments and market value adjustments in the case of direct equity investments. During the nine months ended September 30, 2024, our venture capital investments produced a total return of $0.5 million entirely from our fund investments. Inception to date, venture capital investments have produced an internal rate of return of 7.6% and a multiple on invested capital of 1.19; venture capital fund investments have produced an internal rate of return of (10.1)% and a multiple on invested capital of 0.82, while direct venture capital investments have produced an internal rate of return of 13.1% and a multiple on invested capital of 1.46. Through September 30, 2024, we realized total gains of $4.8 million on the sale of the Company’s stake in Betterview Marketplace, Inc. ("Betterview") in a cash and stock transaction with Nearmap US, Inc. ("Nearmap"). We now continue to hold shares in Nearmap after completion of this transaction. To date our investment in Betterview has produced an internal rate of return of 26.4% and a multiple on invested capital of 1.74. • Real Estate – investment returns in this asset class include preferred returns and distributions (if any) from plan developers along with limited unrealized gains or losses to date as two of the projects remain in the development phase. As noted earlier, the Company does not expect significant investment returns from these attractive projects for the next several years. To date these investments have produced an internal rate of return of (2.1)% and a multiple on invested capital of 0.96. On an inception to date basis through September 30, 2024, the Company completed various alternative investments that had total contributions of $152.1 million which produced an internal rate of return of 8.3% and a multiple on invested capital of 1.18. The total returns on these inactive alternative investments by asset class from inception are shown in detail as of September 30, 2024 in the table below: Asset Class September 30, 2024 Total Completed Investments ($ in thousands) Contributions IRR MOIC (x) Private Equity $ 42,813 6.6 % 1.16 Private Credit 68,990 5.0 % 1.10 Hedge Funds 25,000 5.2 % 1.12 Alternatives 11,358 48.9 % 1.55 Venture Capital 3,925 14.3 % 2.22 Total $ 152,086 8.3 % 1.18 As our returns in alternative investments continues to increase, 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 September 30, 2024 and December 31, 2023: ($ in thousands) September 30, 2024 December 31, 2023 Change in $ Change % Deferred commission and other acquisition expenses $ 9,226 $ 17,566 $ (8,340) (47.5) % Funds withheld receivable 14,815 143,985 (129,170) (89.7) % Reserve for loss and LAE 721,436 867,433 (145,997) (16.8) % Unearned premiums 33,883 46,260 (12,377) (26.8) % Deferred gain on retroactive reinsurance 90,321 73,240 17,081 23.3 % Liability for investments purchased 10,980 — 10,980 NM Accrued expenses and other liabilities 73,994 28,244 45,750 162.0 % The Company's deferred commission and other acquisition expenses decreased by 47.5% and unearned premiums decreased by 26.8% 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. Also, deferred commission and other acquisition expenses decreased due to accelerated amortization upon the recognition of a premium deficiency of $3.7 million in the AmTrust Reinsurance segment. Funds withheld receivable decreased by 89.7% primarily due to settlement of reinsurance losses payable under the AmTrust Quota Share as well as $15.3 million of excess collateral released by AmTrust during the nine months ended September 30, 2024. The funds withheld receivable balance with AmTrust has been fully exhausted in the third quarter of 2024. The Company's reserve for loss and LAE decreased by 16.8% primarily due to continued settlement of loss reserves for AmTrust Reinsurance contracts. The deferred gain on retroactive reinsurance increased by $17.1 million or 23.3% compared to December 31, 2023 driven by net adverse reserve development of $21.9 million reported for policies under the AmTrust Quota Share as these losses are largely covered by the LPT/ADC Agreement with Cavello. 72 The adverse development was offset by the impact of favorable loss development on certain Workers Compensation losses that were commuted to AmTrust in 2019 that inure to the benefit of Cavello under the terms of the LPT/ADC Agreement and reduced the deferred gain liability on retroactive reinsurance by $5.2 million for the nine months ended September 30, 2024. Accrued expenses and other liabilities increased by $45.8 million for the nine months ended September 30, 2024 primarily due to accrual of reinsurance losses payable due to AmTrust, and the liability for investments purchased increased by $11.0 million due to trades occurring on or before September 30, 2024 that will be settled subsequent to that date. Capital Resources During the nine months ended September 30, 2024, book value per common share decreased by 15.7% to $2.09 and diluted book value per common share decreased by 16.7% to $2.05, compared to December 31, 2023. This was largely due to the net loss of $43.0 million reported by the Company, which produced substantially all of the $41.0 million decline in shareholders' equity for the nine months ended September 30, 2024. Capital resources consist of funds deployed in support of our operations. The following table shows the movement in our capital resources at September 30, 2024 and December 31, 2023: September 30, 2024 December 31, 2023 Change in $ Change (%) ($ in thousands) Common shares at par value $ 1,503 $ 1,497 $ 6 0.4 % Additional paid-in capital 887,520 886,072 1,448 0.2 % Accumulated other comprehensive loss (27,788) (31,469) 3,681 (11.7) % Accumulated deficit (529,925) (486,945) (42,980) 8.8 % Treasury shares, at cost (123,128) (119,995) (3,133) 2.6 % Total Maiden shareholders' equity 208,182 249,160 (40,978) (16.4) % Senior Notes - principal amount 262,361 262,361 — — % Total capital resources $ 470,543 $ 511,521 $ (40,978) (8.0) % Total capital resources decreased by $41.0 million compared to December 31, 2023 due to the following items: • accumulated deficit increased by $43.0 million due to the net loss reported for the nine months ended September 30, 2024; • net increase in additional paid-in capital of $1.4 million largely due to share-based compensation of $1.5 million; • net increase in AOCI of $3.7 million which arose due to: (1) net unrealized gains on investment of $3.9 million mainly from our AFS bond portfolio relating to market price movements in the nine months ended September 30, 2024, offset by (2) a decrease in foreign currency translation adjustment of $0.2 million in the nine months ended September 30, 2024 due to the impact of the U.S. dollar depreciation on the re-measurement of net assets denominated in British pound and euro; and • treasury shares increased by $3.1 million due to $2.9 million of shares repurchased under our authorized common share repurchase plan and $0.2 million of common share repurchases due to tax withholding on vested shares. Please refer to " Notes to Consolidated Financial Statements Note 6. Shareholders' Equity " included under Part II Item 8. " Financial Statements and Supplementary Data" of our Annual Report on Form 10-K for a discussion of the equity instruments issued by the Company as at December 31, 2023. Book value and diluted book value per common share at September 30, 2024 and December 31, 2023 were as follows: ($ in thousands except share and per share data) September 30, 2024 December 31, 2023 Ending common shareholders’ equity $ 208,182 $ 249,160 Proceeds from assumed conversion of dilutive options — — Numerator for diluted book value per common share calculation $ 208,182 $ 249,160 Common shares outstanding 99,422,608 100,472,120 Shares issued from assumed conversion of dilutive options and restricted shares 2,035,634 975,027 Denominator for diluted book value per common share calculation 101,458,242 101,447,147 Book value per common share $ 2.09 $ 2.48 Diluted book value per common share 2.05 2.46 73 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. The Company adopted a Rule 10b5-1(c)(1) trading arrangement as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934, as amended. On March 20, 2024, an amendment was made to the agreement initially signed on September 29, 2023 between Maiden Holdings and a financial intermediary authorizing the intermediary to purchase common shares from October 30, 2023 until the close of business on September 29, 2024, subject to certain conditions set forth in the agreement. The Company has fulfilled the repurchases under its current Rule 10b5-1(c)(1) trading arrangement. During the three and nine months ended September 30, 2024, Maiden Reinsurance repurchased 388,728 and 1,488,400 common shares from the open market at an average price per share of $1.65 and $1.95, respectively, under the Company's share repurchase plan. During the three and nine months ended September 30, 2023, Maiden Reinsurance repurchased 520,475 and 820,105 common shares, respectively, at an average price per share of $1.86 and $1.93, respectively, under the share repurchase plan. The Company's remaining authorization for common share repurchases is $68.7 million at September 30, 2024. Senior Notes There were no changes in the Company’s Senior Notes at September 30, 2024 compared to December 31, 2023. The Company did not enter into any short-term borrowing arrangements during the nine months ended September 30, 2024. 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 7. Long-Term Debt " 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 $100.0 million of the Company's Senior Notes from time to time at market prices in open market purchases or as may be privately negotiated. The Company has a remaining authorization of $99.9 million for such repurchases at September 30, 2024. 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. In 2023 and 2024, the Vermont DFR approved an annual dividend program from Maiden Reinsurance to Maiden NA, with notification to the Vermont DFR as dividends are paid. Subsequent to those approvals, Maiden Reinsurance paid total dividends of $62.5 million to Maiden NA as of September 30, 2024. The summarized financial information below has been presented on a combined basis for the issuer Maiden NA and the guarantor Maiden Holdings, excluding all other subsidiaries. Intercompany balances and transactions between Maiden NA and Maiden Holdings, whose information is presented above on a combined basis, were eliminated. Any investment by Maiden NA or Maiden Holdings in subsidiaries that are not issuers or guarantors is not presented in the financial information below. Intercompany balances with subsidiaries that are not issuers or guarantors and any related party transactions were separately disclosed below and are not included in the total assets and total liabilities presented for Maiden NA and Maiden Holdings. The net loss for Maiden NA and Maiden Holdings was due to interest and amortization expenses on the Senior Notes as well as general and administrative expenses. The net loss in Maiden NA also reflects income tax expense incurred for the respective period. Summarized financial information of Maiden NA and Maiden Holdings as of September 30, 2024 and for the three and nine months ended September 30, 2024 were as follows: Maiden NA Maiden Holdings ($ in thousands) Total assets $ 11,048 $ 5,318 Total liabilities 151,337 110,205 Amounts due from subsidiaries (not included in total assets above) 5 3,052 Amounts due to subsidiaries (not included in total liabilities above) 12,685 3,331 Related party loan payable (not included in total liabilities above) — 306,304 Total revenue for the quarter-to-date period 808 8 Net loss for the quarter-to-date period (2,305) (11,499) Total revenue for year-to-date period 1,482 17 Net loss for year-to-date period (7,795) (30,698) 74 The ratio of Debt to Total Capital Resources at September 30, 2024 and December 31, 2023 was computed as follows: ($ in thousands) September 30, 2024 December 31, 2023 Senior notes - principal amount $ 262,361 $ 262,361 Maiden shareholders’ equity 208,182 249,160 Total capital resources $ 470,543 $ 511,521 Ratio of debt to total capital resources 55.8 % 51.3 % Off-Balance Sheet Arrangements C ertain of the Company's investments in limited partnerships are related to real estate joint ventures with interests in multi-property projects with varying strategies ranging from the development of properties to the ownership of income-producing properties. In certain of these joint ventures, the Company has provided certain indemnities, guarantees and commitments to ce rtain parties such that it may be required to make payments now or in the future as further described in the " Notes to Condensed Consolidated Financial Statements (unaudited) Note 11. Commitments, Contingencies and Guarantees " included under Part I Item 1 " Financial Information" of this Form 10-Q. Any loss for which the Company could be liable would be contingent on the default of a loan by the real estate joint venture entity for which the Company provided a financial guarantee to a lender. While the Company has committed to aggregate limits as to the amount of guarantees it will provide as part of its limited partnerships, guarantees are only provided on an individual transaction basis and are subject to the terms and conditions of each transaction mutually agreed by the parties involved. The Company is not bound to such guarantees without its express authorization. As discussed above, at September 30, 2024, guarantees of $69.8 million have been provided to lenders by the Company on behalf of the real estate joint venture, however, the likelihood of the Company incurring any losses pertaining to project level financing guarantees was determined to be remote. Therefore, no liability has been accrued under ASC 450-20. 75 Non-GAAP Measures As defined and described in the Key Financial Measures section , m anagement uses certain key financial measures, some of which are non-GAAP measures, to evaluate the Company's financial performance and the overall growth in value generated for the Company’s common shareholders. Management believes that these measures, which may be defined differently by other companies, explain the Company’s results to investors in a manner that allows for a more complete understanding of the underlying trends in the Company’s business. The calculation, reconciliation to nearest GAAP measure and discussion of relevant non-GAAP measures used by management are as follows: Non-GAAP operating loss and Non-GAAP diluted operating loss per share attributable to common shareholders Non-GAAP operating loss and Non-GAAP diluted operating loss per share attributable to common shareholders can be reconciled to the nearest U.S. GAAP financial measure as follows: For the Three Months Ended September 30, 2024 2023 ($ in thousands except per share data) Net loss $ (34,468) $ (3,527) Add (subtract): Net realized and unrealized investment losses (gains) 3,804 (244) Foreign exchange and other losses (gains) 5,915 (4,594) Interest in income of equity method investments (751) (2,190) Change in deferred gain on retroactive reinsurance under the LPT/ADC Agreement 9,818 (1,192) Non-GAAP operating loss $ (15,682) $ (11,747) Diluted loss per share attributable to common shareholders $ (0.35) $ (0.03) Add (subtract): Net realized and unrealized investment losses (gains) 0.04 (0.01) Foreign exchange and other losses (gains) 0.06 (0.05) Interest in income of equity method investments (0.01) (0.02) Change in deferred gain on retroactive reinsurance under the LPT/ADC Agreement 0.10 (0.01) Non-GAAP diluted operating loss per share attributable to common shareholders $ (0.16) $ (0.12) For the Nine Months Ended September 30, 2024 2023 ($ in thousands except per share data) Net loss attributable to Maiden common shareholders $ (42,980) $ (17,788) Add (subtract): Net realized and unrealized investment gains (6,403) (2,394) Foreign exchange and other losses 3,862 843 Interest in income of equity method investments (2,820) (6,942) Change in deferred gain on retroactive reinsurance under the LPT/ADC Agreement 17,105 11,108 Non-GAAP operating loss $ (31,236) $ (15,173) Diluted loss per share attributable to common shareholders $ (0.43) $ (0.18) Add (subtract): Net realized and unrealized investment gains (0.06) (0.02) Foreign exchange and other losses 0.04 0.01 Interest in income of equity method investments (0.03) (0.07) Change in deferred gain on retroactive reinsurance under the LPT/ADC Agreement 0.17 0.11 Non-GAAP diluted operating loss per share attributable to common shareholders $ (0.31) $ (0.15) Non-GAAP operating loss was $15.7 million for the three months ended September 30, 2024 compared to a non-GAAP operating loss of $11.7 million for the same period in 2023. The non-GAAP operating results were primarily driven by weak non-GAAP underwriting results in the AmTrust Reinsurance segment as discussed further below. 76 Non-GAAP operating loss was $31.2 million for the nine months ended September 30, 2024, compared to a non-GAAP operating loss of $15.2 million for the same period in 2023. The non-GAAP operating loss in both respective years were primarily driven by weak non-GAAP underwriting results in the AmTrust Reinsurance segment as discussed further below. Non-GAAP Underwriting Results The non-GAAP underwriting results for the three and nine months ended September 30, 2024 and 2023 are as follows: For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 Gross premiums written $ 8,861 $ 8,660 $ 25,633 $ 16,371 Net premiums written $ 8,843 $ 8,625 $ 25,496 $ 16,260 Net premiums earned $ 13,403 $ 12,479 $ 37,888 $ 32,520 Other insurance (expense) revenue , net — (16) 46 3 Non-GAAP net loss and LAE (1) (10,039) (16,348) (28,348) (25,395) Commission and other acquisition expenses (9,068) (5,340) (19,474) (14,520) General and administrative expenses (3,229) (2,877) (9,047) (9,925) Non-GAAP underwriting loss (1) $ (8,933) $ (12,102) $ (18,935) $ (17,317) (1) Non-GAAP underwriting loss and non-GAAP net loss and LAE for the three and nine months ended September 30, 2024 and 2023 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 above are summarized by segment for the three and nine months ended September 30, 2024 and 2023 in the table below: For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 Diversified Reinsurance underwriting loss $ (947) $ (2,541) $ (3,996) $ (7,648) AmTrust Reinsurance underwriting loss (17,804) (8,369) (32,044) (20,777) Plus: adverse (favorable) prior year loss development covered under the LPT/ADC Agreement 9,818 (1,192) 17,105 11,108 Non-GAAP AmTrust Reinsurance underwriting loss (7,986) (9,561) (14,939) (9,669) Non-GAAP underwriting loss $ (8,933) $ (12,102) $ (18,935) $ (17,317) The non-GAAP underwriting results have been adjusted for 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 $9.8 million and $17.1 million during the three and nine months ended September 30, 2024, respectively, the non-GAAP underwriting loss was $8.9 million and $18.9 million, respectively. These results compared to non-GAAP underwriting loss of $12.1 million and underwriting loss of $17.3 million when adjusted for the decrease in the deferred gain under the LPT/ADC Agreement of $1.2 million and increase of $11.1 million in the three and nine months ended September 30, 2023, respectively. The non-GAAP underwriting loss of $8.9 million and $18.9 million for the three and nine months ended September 30, 2024, respectively, was primarily 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; • adverse loss development of $— million and $2.6 million for the three and nine months ended September 30, 2024 in the European Hospital Liability Quota Share, which is not covered by the LPT/ADC Agreement; • favorable loss development on commuted Workers Compensation losses which are contractually covered by the LPT/ADC Agreement reduced the deferred gain liability on retroactive reinsurance by $2.0 million and $5.2 million for the three and nine months ended September 30, 2024; and • underwriting loss of $0.9 million and $4.0 million in the Diversified Reinsurance segment for the three and nine months ended September 30, 2024, respectively. Please refer to the respective segment results for AmTrust Reinsurance and Diversified Reinsurance under Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Quarterly Report on Form 10-Q for further details of these underwriting results. 77 Non-GAAP Net Loss and LAE Adjusted for prior year reserve development under the AmTrust Quota Share which is fully recoverable from Cavello under the LPT/ADC Agreement, the non-GAAP net loss and LAE decreased by $9.8 million and $17.1 million for the three and nine months ended September 30, 2024, respectively. Adjusted for prior year reserve development under the AmTrust Quota Share which is fully recoverable from Cavello under the LPT/ADC Agreement, the non-GAAP net loss and LAE increased by $1.2 million and decreased by $11.1 million for the three and nine months ended September 30, 2023, respectively. These adjustments for PPD under the AmTrust Quota Share which is fully recoverable from Cavello under the LPT/ADC Agreement are reflected in the calculation of non-GAAP Loss and LAE below: For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 Net loss and LAE $ 19,857 $ 15,156 $ 45,453 $ 36,503 Less: adverse (favorable) prior year loss development covered under the LPT/ADC Agreement 9,818 (1,192) 17,105 11,108 Non-GAAP net loss and LAE $ 10,039 $ 16,348 $ 28,348 $ 25,395 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 September 30, 2024 and December 31, 2023 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 $88.0 million at September 30, 2024 compared to $70.9 million at December 31, 2023; this increase is attributable to $17.1 million in net loss and LAE recognized as adverse reserve development in the Company's GAAP income statement for AmTrust Quota Share policies covered by the LPT/ADC Agreement. Net adverse development of $21.9 million was reported for policies under the AmTrust Quota Share for the nine months ended September 30, 2024. These losses are largely recoverable under the LPT/ADC Agreement and are expected to be recognized as future GAAP income over time as recoveries are received subject to the provisions of both the LPT/ADC Agreement and the applicable GAAP accounting rules. We believe the inclusion of this unamortized deferred gain under these metrics better reflects the ultimate economic benefit of the LPT/ADC Agreement, which will improve the Company's shareholders' equity over the settlement period under the terms of the agreement. Reconciliation of shareholders' equity to Adjusted shareholders' equity and Adjusted Total Capital Resources The following table computes adjusted shareholders' equity and adjusted total capital resources by recognizing the unamortized deferred gain under the LPT/ADC Agreement at September 30, 2024 and December 31, 2023: ($ in thousands) September 30, 2024 December 31, 2023 Change in $ Change % Total shareholders' equity $ 208,182 $ 249,160 $ (40,978) (16.4) % Unamortized deferred gain on LPT/ADC Agreement 88,021 70,916 17,105 24.1 % Adjusted shareholders' equity 296,203 320,076 (23,873) (7.5) % Senior Notes - principal amount 262,361 262,361 — — % Adjusted total capital resources $ 558,564 $ 582,437 $ (23,873) (4.1) % Non-GAAP Operating ROACE Non-GAAP Operating ROACE for the three and nine months ended September 30, 2024 and 2023 was as follows: For the Three Months Ended September 30, For the Nine Months Ended September 30, ($ in thousands) 2024 2023 2024 2023 Non-GAAP operating loss $ (15,682) $ (11,747) $ (31,236) $ (15,173) Opening adjusted shareholders’ equity 316,249 326,998 320,076 329,987 Ending adjusted shareholders’ equity 296,203 319,753 296,203 319,753 Average adjusted shareholders’ equity 306,226 323,376 308,140 324,870 Non-GAAP Operating ROACE (20.4) % (14.4) % (13.5) % (6.2) % 78 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 September 30, 2024 and December 31, 2023 was computed as follows: September 30, 2024 December 31, 2023 Book value per common share $ 2.09 $ 2.48 Unamortized deferred gain on LPT/ADC Agreement 0.89 0.71 Adjusted book value per common share $ 2.98 $ 3.19 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 September 30, 2024 and December 31, 2023 was computed as follows: ($ in thousands) September 30, 2024 December 31, 2023 Senior notes - principal amount $ 262,361 $ 262,361 Adjusted shareholders’ equity 296,203 320,076 Adjusted total capital resources $ 558,564 $ 582,437 Ratio of debt to adjusted total capital resources 47.0 % 45.0 % 79 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 September 30, 2024, 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 $5.9 million and $3.9 million were generated during the three and nine months ended September 30, 2024, respectively, compared to net foreign exchange gains of $4.6 million and losses of $0.1 million for the three and nine months ended September 30, 2023. The foreign exchange losses for the three and nine months ended September 30, 2024 and the nine months ended September 30, 2023 was largely due to a depreciation in the value of the U.S. dollar relative to the euro and the British pound. The net foreign exchange gains of $4.6 million in the third quarter of 2023 were driven by modest strengthening of the U.S. dollar on the re-measurement of net loss reserves and insurance related liabilities denominated in British pound and euro during the period. At September 30, 2024, the decrease in foreign currency translation adjustments of $0.2 million for the nine months ended September 30, 2024 was 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 September 30, 2024 included reserve for net loss and LAE of $258.4 million. Our foreign currency asset exposures at September 30, 2024 include $149.5 million of fixed maturity securities managed by our investment managers who have the discretion to hold foreign currency exposures as part of their total return strategy, $31.1 million of equity method real estate investments denominated in Canadian dollars, as well as $14.8 million of funds withheld receivable. 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 business. 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. While general economic inflation has eased in recent quarters, there remains uncertainty around the rate and direction of inflation and interest rates 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 2. " 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. Currently, while salaries and incentive compensation costs comprise less than one-half of our total general and administrative expenses, continuing inflation and tight labor conditions could have a material impact on our net operating results. Off-Balance Sheet Arrangements At September 30, 2024, 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 adopted accounting pronouncements. 80