Maiden Holdings, Ltd. has disclosed its financial performance for the fourth quarter of 2024, unveiling a net loss of $158.0 million. This represents a significant increase from the $20.8 million net loss recorded during the same period in 2023.
The marked rise in losses can be primarily attributed to an elevated underwriting loss of $161.3 million in Q4 2024, in contrast to $21.1 million in Q4 2023. This spike is largely driven by adverse prior year loss development (PPD) of $129.4 million, a notable increase from $22.2 million in the corresponding quarter of the prior year.
- The AmTrust Reinsurance segment encountered adverse PPD of $123.3 million.
- The Diversified Reinsurance segment reported $6.0 million in adverse PPD.
In January, Maiden indicated that it anticipated reserve charges of up to $150 million in the fourth quarter of 2024.
Net premiums written for the quarter showed a slight uptick, reaching $7.6 million, spurred by growth in the Diversified Reinsurance segment, notably within its Credit Life programs in Sweden. However, net premiums written in the AmTrust Reinsurance segment declined by $0.9 million, following the termination of reinsurance agreements with AmTrust.
Other critical factors contributing to the loss include $24.3 million in charges linked to resolving disputed uncollected ceded premium balances with AmTrust. Maiden also recorded an adjusted non-GAAP operating loss of $151.9 million in Q4 2024, adjusted to incorporate net realized and unrealized investment losses and interest in loss of equity method investments, which are recurring components of investment results with the Company’s underwriting activities in run-off.
Other Key Highlights for Q4 2024:
- Loss Portfolio Transfer and Adverse Development Cover Agreement (LPT/ADC Agreement): A portion of the adverse PPD, approximately $42.0 million, is recoverable under the LPT/ADC Agreement with Cavello Bay Reinsurance Limited. The deferred gain on this agreement increased to $105.0 million.
- AmTrust Liabilities: Maiden is actively pursuing strategies to address AmTrust liabilities not covered by the LPT/ADC Agreement, including exploring options with third parties.
- Upcoming Combination with Kestrel: Maiden updated on its planned combination with Kestrel, aiming to transition to a fee-based insurance platform. The company also announced the divestiture of its IIS platform.
- Strategic Moves: On December 2024, Maiden entered a combination agreement with the Kestrel Group to create a new, publicly listed specialty program group. Additionally, Maiden is reducing its alternative investment portfolio, achieving an internal rate of return of 8.7%. The company also repurchased 383,355 common shares prior to the Kestrel announcement, but this program has now been suspended.
Patrick J. Haveron, Maiden’s CEO, acknowledged the challenging year and the effects of the fourth-quarter charges. He emphasized the company’s efforts to stabilize its balance sheet and expressed confidence in the impending partnership with Kestrel.
“As 2024 concluded, Maiden took decisive steps to chart a new course forward while completing a comprehensive review of our reserves and taking additional measures to bolster confidence in our balance sheet as we look forward to our combination with Kestrel,” Haveron asserted.
He further elaborated: “We believe that Kestrel’s balance sheet light, fee revenue model will enable Maiden to realize our vision of delivering a robust fee-based insurance platform while selectively deploying underwriting capacity to optimize returns for shareholders. Along with our earlier announcement to divest our IIS platform, this transaction provides additional support to the strategic pivot we communicated to our shareholders and the market in 2024.”
Haveron also underscored the anticipated recovery of a portion of the PPD via the LPT/ADC Agreement, which will contribute positively to future GAAP income.
