Business Context and Reporting Period
This Form 8-K was filed by Maiden Holdings, Ltd. on March 4, 2019, to disclose information provided to reporters regarding the Company's financial condition and solvency ratios as of December 31, 2018. The filing addresses a pending article in "The Insurance Insider" and clarifies the Company's capital position ahead of its Annual Report on Form 10-K.
Key Financial Metrics
- Consolidated Shareholders' Equity: Expected to be at least $525 million as of December 31, 2018.
- Principal Subsidiary Equity: Maiden Reinsurance Ltd. ("Maiden Bermuda") is expected to have at least $850 million in GAAP shareholder's equity as of December 31, 2018.
- Liquidity: Maiden Holdings North America, Ltd. made its scheduled interest payment due March 1, 2019.
- Dividends: The Board of Directors elected not to declare preferred dividends due in the first quarter of 2019.
Material Changes and Remediation Measures
The Company has executed several measures to reduce required capital and improve solvency ratios:
- Sale of US treaty reinsurance business to Transatlantic and Enstar.
- Termination of contracts with AmTrust and other counterparties.
- Implementation of a Loss Portfolio Transfer (LPT) with Asset-Backed Capital (ADC) protection from Enstar.
- Revision of the loss reserve transaction structure with Enstar to a smaller deal with ADC protection, deemed more appropriate given improved capital positions.
These actions have cured the breach of Maiden Bermuda's Excess Capital Ratio (ECR). The Company expects both the subsidiary and Group ratios to continue improving in 2019.
Outlook and Management Commentary
Management expects the revised loss reserve transaction to be accounted for under reinsurance accounting rules with risk transfer. This structure is intended to provide more investable assets and reserve protection, supporting future profitability and solvency. The Board will review the decision regarding preferred dividends each quarter. The Company expects to file its Form 10-K for the year ended December 31, 2018, no later than March 18, 2019.
Investor Verification Checklist
- Verify the final audited consolidated shareholders' equity and Maiden Bermuda's GAAP equity in the upcoming Form 10-K.
- Confirm the accounting treatment of the revised loss reserve transaction with Enstar (risk transfer status).
- Monitor the status of preferred dividend declarations in subsequent quarterly reviews.
- Review the final Excess Capital Ratio (ECR) figures to confirm the breach has been fully cured.