10-Q 1 q2201710q.htm 10-Q Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File No. 001-34042

MAIDEN HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)

Bermuda
(State or other jurisdiction of
incorporation or organization)
98-0570192
(IRS Employer
Identification No.)
 
 
131 Front Street, Hamilton, Bermuda
(Address of principal executive offices)
HM12
(Zip Code)

(441) 298-4900
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
 
Accelerated filer o
Non-accelerated filer o
 
(Do not check if a smaller reporting company)
 
 
Smaller reporting company o
 
 
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).
Yes o No x

As of August 2, 2017, the number of the Registrant's Common Stock ($.01 par value) outstanding was 86,620,529.





INDEX
 
 
Page
PART I - Financial Information
 
 
 

 
 
Condensed Consolidated Balance Sheets as of June 30, 2017 (unaudited) and December 31, 2016 (audited)
 
 
 
 
Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2017 and 2016 (unaudited)
 
 
 
 
Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2017 and 2016 (unaudited)
 
 
 
 
Condensed Consolidated Statements of Changes in Shareholders' Equity for the Six Months Ended June 30, 2017 and 2016 (unaudited)
 
 
 
 
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2017 and 2016 (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PART II - Other Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


2


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MAIDEN HOLDINGS, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars, except share and per share data)
 
 
June 30,
2017
 
December 31,
2016
 
 
(Unaudited)
 
(Audited)
ASSETS
 
 
 
 
Investments:
 
 
 
 
Fixed maturities, available-for-sale, at fair value (amortized cost 2017: $3,692,950; 2016: $4,005,642)
 
$
3,704,761

 
$
3,971,666

Fixed maturities, held to maturity, at amortized cost (fair value 2017: $1,160,694; 2016: $766,135)
 
1,132,916

 
752,212

Other investments, at fair value (cost 2017: $10,041; 2016: $10,057)
 
15,553

 
13,060

Total investments
 
4,853,230

 
4,736,938

Cash and cash equivalents
 
246,826

 
45,747

Restricted cash and cash equivalents
 
190,470

 
103,788

Accrued investment income
 
35,773

 
36,517

Reinsurance balances receivable, net (includes $193,664 and $132,056 from related parties in 2017 and 2016, respectively)
 
499,756

 
410,166

Reinsurance recoverable on unpaid losses (includes $2,377 and $5,085 from related parties in 2017 and 2016, respectively)
 
87,681

 
99,936

Loan to related party
 
167,975

 
167,975

Deferred commission and other acquisition expenses (includes $408,052 and $339,172 from related parties in 2017 and 2016, respectively)
 
475,655

 
424,605

Goodwill and intangible assets, net
 
76,649

 
77,715

Other assets
 
157,214

 
148,912

Total assets
 
$
6,791,229

 
$
6,252,299

LIABILITIES
 
 
 
 
Reserve for loss and loss adjustment expenses (includes $1,968,754 and $1,776,784 from related parties in 2017 and 2016, respectively)
 
$
3,110,208

 
$
2,896,496

Unearned premiums (includes $1,269,372 and $1,152,484 from related parties in 2017 and 2016, respectively)
 
1,644,704

 
1,475,506

Accrued expenses and other liabilities
 
152,684

 
161,334

Liability for investments purchased
 
128,504

 
6,402

Senior notes - principal amount
 
262,500

 
362,500

Less unamortized issuance costs
 
8,123

 
11,091

Senior notes, net
 
254,377

 
351,409

Total liabilities
 
5,290,477

 
4,891,147

Commitments and Contingencies
 


 


EQUITY
 
 
 
 
Preference shares
 
465,000

 
315,000

Common shares ($0.01 par value; 87,708,549 and 87,321,012 shares issued in 2017 and 2016, respectively; 86,620,524 and 86,271,109 shares outstanding in 2017 and 2016, respectively)
 
877

 
873

Additional paid-in capital
 
746,707

 
749,256

Accumulated other comprehensive income
 
35,575

 
14,997

Retained earnings
 
257,806

 
285,662

Treasury shares, at cost (1,088,025 and 1,049,903 shares in 2017 and 2016, respectively)
 
(5,566
)
 
(4,991
)
Total Maiden shareholders’ equity
 
1,500,399

 
1,360,797

Noncontrolling interests in subsidiaries
 
353

 
355

Total equity
 
1,500,752

 
1,361,152

Total liabilities and equity
 
$
6,791,229

 
$
6,252,299

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

3


MAIDEN HOLDINGS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands of U.S. dollars, except per share data)
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Revenues
 
 
 
 
 
 
 
 
Gross premiums written
 
$
705,198

 
$
688,322

 
$
1,628,625

 
$
1,552,436

Net premiums written
 
$
684,072

 
$
650,427

 
$
1,584,620

 
$
1,443,258

Change in unearned premiums
 
27,053

 
(12,863
)
 
(164,011
)
 
(189,685
)
Net premiums earned
 
711,125

 
637,564

 
1,420,609

 
1,253,573

Other insurance revenue
 
1,547

 
1,525

 
5,328

 
6,351

Net investment income
 
40,512

 
35,323

 
82,669

 
71,625

Net realized gains on investment
 
1,572

 
334

 
2,457

 
2,611

Total revenues
 
754,756

 
674,746

 
1,511,063

 
1,334,160

Expenses
 
 
 
 
 
 
 
 
Net loss and loss adjustment expenses
 
528,620

 
426,989

 
1,009,189

 
830,610

Commission and other acquisition expenses
 
210,039

 
185,727

 
432,068

 
380,795

General and administrative expenses
 
15,346

 
17,290

 
32,760

 
32,786

Interest and amortization expenses
 
6,745

 
7,193

 
13,601

 
14,458

Accelerated amortization of senior note issuance cost
 
2,809

 
2,345

 
2,809

 
2,345

Amortization of intangible assets
 
533

 
615

 
1,066

 
1,230

Foreign exchange losses (gains)
 
6,722

 
(5,520
)
 
8,643

 
(5,787
)
Total expenses
 
770,814

 
634,639

 
1,500,136

 
1,256,437

(Loss) income before income taxes
 
(16,058
)
 
40,107

 
10,927

 
77,723

Less: income tax expense
 
277

 
220

 
761

 
1,007

Net (loss) income
 
(16,335
)
 
39,887

 
10,166

 
76,716

Add: net loss attributable to noncontrolling interests
 
9

 
46

 
31

 
110

Net (loss) income attributable to Maiden
 
(16,326
)
 
39,933

 
10,197

 
76,826

Dividends on preference shares
 
(6,033
)
 
(9,023
)
 
(12,066
)
 
(18,700
)
Net (loss) income attributable to Maiden common shareholders
 
$
(22,359
)
 
$
30,910

 
$
(1,869
)
 
$
58,126

Basic (loss) earnings per share attributable to Maiden common shareholders
 
$
(0.26
)
 
$
0.42

 
$
(0.02
)
 
$
0.79

Diluted (loss) earnings per share attributable to Maiden common shareholders
 
$
(0.26
)
 
$
0.39

 
$
(0.02
)
 
$
0.75

Dividends declared per common share
 
$
0.15

 
$
0.14

 
$
0.30

 
$
0.28

Weighted average number of common shares - basic
 
86,564,794

 
73,997,759

 
86,458,413

 
73,934,518

Adjusted weighted average number of common shares and assumed conversions - diluted
 
86,564,794

 
85,926,626

 
86,458,413

 
85,894,062


See accompanying notes to the unaudited Condensed Consolidated Financial Statements.


4


MAIDEN HOLDINGS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(in thousands of U.S. dollars)
 
 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
 
2017
 
2016
 
2017
 
2016
Net (loss) income
 
$
(16,335
)
 
$
39,887

 
$
10,166

 
$
76,716

Other comprehensive income
 
 
 
 
 
 
 
 
Net unrealized holdings gains on available-for-sale fixed maturities arising during the period
 
41,995

 
44,356

 
47,656

 
147,744

Adjustment for reclassification of net realized (gains) losses recognized in net income
 
(199
)
 
(448
)
 
896

 
200

Foreign currency translation adjustment
 
(21,777
)
 
5,537

 
(27,975
)
 
(5,197
)
Other comprehensive income, before tax
 
20,019

 
49,445

 
20,577

 
142,747

Income tax (expense) benefit related to components of other comprehensive income
 
(11
)
 
(3
)
 
30

 
(39
)
Other comprehensive income, after tax
 
20,008

 
49,442

 
20,607

 
142,708

Comprehensive income
 
3,673

 
89,329

 
30,773

 
219,424

Net loss attributable to noncontrolling interests
 
9

 
46

 
31

 
110

Other comprehensive (income) loss attributable to noncontrolling interests
 
(24
)
 
14

 
(29
)
 
(15
)
Comprehensive (income) loss attributable to noncontrolling interests
 
(15
)
 
60

 
2

 
95

Comprehensive income attributable to Maiden
 
$
3,658

 
$
89,389

 
$
30,775

 
$
219,519


See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

5


MAIDEN HOLDINGS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
(in thousands of U.S. dollars)
For the Six Months Ended June 30,

2017

2016
Preference shares
 
 
 
 
Beginning balance
 
$
315,000

 
$
480,000

Issuance of preference shares – Series D
 
150,000

 

Ending balance
 
465,000

 
480,000

Common shares
 
 
 
 
Beginning balance
 
873

 
747

Exercise of options and issuance of shares
 
4

 
4

Ending balance
 
877

 
751

Additional paid-in capital
 
 
 
 
Beginning balance
 
749,256

 
579,178

Exercise of options and issuance of common shares
 
1,006

 
438

Share-based compensation expense
 
1,470

 
1,836

Issuance costs of preference shares - Series D
 
(5,025
)
 

Ending balance
 
746,707

 
581,452

Accumulated other comprehensive income
 
 
 
 
Beginning balance
 
14,997

 
(23,767
)
Change in net unrealized gains on investment
 
48,582

 
147,905

Foreign currency translation adjustment
 
(28,004
)
 
(5,212
)
Ending balance
 
35,575

 
118,926

Retained earnings
 
 
 
 
Beginning balance
 
285,662

 
316,184

Net income attributable to Maiden
 
10,197

 
76,826

Dividends on preference shares
 
(12,066
)
 
(18,700
)
Dividends on common shares
 
(25,987
)
 
(20,734
)
Ending balance
 
257,806

 
353,576

Treasury shares
 
 
 
 
Beginning balance
 
(4,991
)
 
(4,521
)
Shares repurchased
 
(575
)
 
(470
)
Ending balance
 
(5,566
)
 
(4,991
)
Noncontrolling interests in subsidiaries
 
 
 
 
Beginning balance
 
355

 
1,278

Acquisition of subsidiary
 

 
14

Dividend paid to noncontrolling interest
 

 
(24
)
Net loss attributable to noncontrolling interests
 
(31
)
 
(110
)
Foreign currency translation adjustment
 
29

 
15

Ending balance
 
353

 
1,173

Total equity
 
$
1,500,752

 
$
1,530,887

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

6


MAIDEN HOLDINGS, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands of U.S. dollars)
For the Six Months Ended June 30,
 
2017
 
2016
Cash flows from operating activities
 
 
 
 
Net income
 
$
10,166

 
$
76,716

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation, amortization and share-based compensation
 
7,480

 
11,838

Net realized gains on investment
 
(2,457
)
 
(2,611
)
Foreign exchange losses (gains)
 
8,643

 
(5,787
)
Changes in assets  (increase) decrease:
 
 
 
 
Reinsurance balances receivable, net
 
(84,743
)
 
(173,947
)
Reinsurance recoverable on unpaid losses
 
12,441

 
(19,931
)
Accrued investment income
 
1,132

 
(233
)
Deferred commission and other acquisition expenses
 
(49,773
)
 
(53,800
)
Other assets
 
(14,669
)
 
(41,288
)
Changes in liabilities  increase (decrease):
 
 
 
 
Reserve for loss and loss adjustment expenses
 
180,462

 
129,615

Unearned premiums
 
163,689

 
217,596

Accrued expenses and other liabilities
 
(8,859
)
 
26,869

Net cash provided by operating activities
 
223,512

 
165,037

Cash flows from investing activities:
 
 
 
 
Purchases of investments:
 
 
 
 
Purchases of fixed-maturities – available-for-sale
 
(260,963
)
 
(363,083
)
Purchases of other investments
 
(147
)
 
(92
)
Sale of investments:
 
 
 
 
Proceeds from sales of fixed-maturities – available-for-sale
 
102,394

 
86,663

Proceeds from maturities and calls of fixed maturities – available-for-sale
 
205,606

 
322,342

Proceeds from maturities and calls of fixed maturities – held to maturity
 
7,856

 

Proceeds from sale and redemption of other investments
 
388

 
527

Increase in restricted cash and cash equivalents
 
(85,946
)
 
(135,417
)
Other, net
 
(864
)
 
(333
)
Net cash used in investing activities
 
(31,676
)
 
(89,393
)
Cash flows from financing activities:
 
 
 
 
Senior notes, net of issuance costs
 

 
106,535

Redemption of 2012 senior notes
 
(100,000
)
 

Redemption of 2011 senior notes
 

 
(107,500
)
Preference shares, net of issuance costs
 
145,120

 

Issuance of common shares
 
1,010

 
442

Repurchase of common shares
 
(575
)
 
(470
)
Dividends paid – Maiden common shareholders
 
(25,936
)
 
(20,693
)
Dividends paid – preference shares
 
(12,066
)
 
(18,700
)
Net cash provided by (used in) financing activities
 
7,553

 
(40,386
)
Effect of exchange rate changes on foreign currency cash
 
1,690

 
2,560

Net increase in cash and cash equivalents
 
201,079

 
37,818

Cash and cash equivalents, beginning of period
 
45,747

 
89,641

Cash and cash equivalents, end of period
 
$
246,826

 
$
127,459

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

7

MAIDEN HOLDINGS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands of U.S. dollars, except share and per share data)


1. Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Maiden Holdings, Ltd. ("Maiden Holdings") and its subsidiaries (the "Company" or "Maiden"). They have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP" or "U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. All significant inter-company transactions and accounts have been eliminated.
These interim unaudited Condensed Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim period and all such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative, if annualized, of those to be expected for the full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
These unaudited Condensed Consolidated Financial Statements, including these notes, should be read in conjunction with the Company's audited Consolidated Financial Statements, and related notes thereto, included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016. Certain reclassifications have been made for 2016 to conform to the 2017 presentation and have no impact on consolidated net income and total equity previously reported.
2. Significant Accounting Policies
There have been no material changes to our significant accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2016 except for the following:
Recently Adopted Accounting Standards Updates
Improvements to Employee Share-Based Payment Accounting
In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-09 guidance that outlines changes for certain aspects of share-based payments to employees, such as accounting for forfeitures, which applies to the Company. Under the new guidance, the entities can elect to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The guidance is effective for public business entities for fiscal year beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted for all entities, in any annual or interim period for which financial statements haven't been issued or made available for issuance, but all of the guidance must be adopted in the same period. Based on the Company's history, forfeitures have never been material. The Company will account for forfeitures as they occur. The adoption of this guidance did not have a material impact on the Company's Condensed Consolidated Financial Statements. There were no forfeitures for the three and six months ended June 30, 2017.
Recently Issued Accounting Standards Not Yet Adopted
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the FASB issued ASU 2017-08 to amend the amortization period for certain purchased callable debt securities held at a premium. Current GAAP excludes certain callable debt securities from consideration of early repayment of principal even if the holder is certain that the call will be exercised. As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings.
The amendments in ASU 2017-08 affect all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date. The amendments shorten the amortization period for certain callable debt securities held at a premium and require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public business entities, the amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle.
The Company holds a number of securities with callable features on the Condensed Consolidated Balance Sheet and this includes certain securities that have been purchased at a premium that is being amortized to the associated security's maturity date. The Company is currently evaluating the impact of this guidance on the Company's results of operations, financial position or liquidity at the date of adoption.

8

MAIDEN HOLDINGS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands of U.S. dollars, except share and per share data)

2. Significant Accounting Policies (continued)
Scope of Modification Accounting
In May 2017, the FASB issued ASU 2017-09 to amend the guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following are met:
1.The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification.
2.The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified.
3.The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified.
The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in this Update.
The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this Update should be applied prospectively to an award modified on or after the adoption date.
The Company currently has a number of share based payment awards as disclosed in the Annual Report on Form 10-K for the year ended December 31, 2016, however, we do not anticipate any modifications to the terms or conditions at this time. The impact of this guidance on the Company's Condensed Consolidated Financial Statements will be evaluated once ASU-2017-09 is adopted and when the Company makes any modification to any of its current shared based payment awards.

9

MAIDEN HOLDINGS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands of U.S. dollars, except share and per share data)

3. Segment Information
The Company currently has 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 the U.S. and Europe. Our AmTrust Reinsurance segment includes all business ceded to our wholly owned subsidiary, Maiden Reinsurance Ltd. ("Maiden Bermuda") from AmTrust Financial Services, Inc. ("AmTrust"), primarily the AmTrust Quota Share and the European Hospital Liability Quota Share. In addition to our reportable segments, the results of operations of the former NGHC Quota Share segment and the remnants of the U.S. excess and surplus business have been included in the "Other" category. Please refer to "Note 8. Related Party Transactions" for additional information.
The Company evaluates segment performance based on segment profit separately from the results of our investment portfolio. General and administrative expenses are allocated to the segments on an actual basis except salaries and benefits where management’s judgment is applied. The Company does not allocate general corporate expenses to the segments. In determining total assets by reportable segment, the Company identifies those assets that are attributable to a particular segment such as reinsurance balances receivable, reinsurance recoverable on unpaid losses, deferred commission and other acquisition expenses, loans, goodwill and intangible assets, restricted cash and cash equivalents and investments and unearned reinsurance premiums ceded, funds withheld receivable and reinsurance recoverable on paid losses (presented as part of other assets in the Condensed Consolidated Balance Sheet). All remaining assets are allocated to Corporate.
The following tables summarize our reporting segment's underwriting results and the reconciliation of our reportable segments and Other category's underwriting results to our consolidated net income:
For the Three Months Ended June 30, 2017
 
Diversified Reinsurance
 
AmTrust Reinsurance
 
Other
 
Total
Gross premiums written
 
$
140,841

 
$
564,276

 
$
81

 
$
705,198

Net premiums written
 
$
137,247

 
$
546,735

 
$
90

 
$
684,072

Net premiums earned
 
$
204,219

 
$
506,816

 
$
90

 
$
711,125

Other insurance revenue
 
1,547

 

 

 
1,547

Net loss and loss adjustment expense ("loss and LAE")
 
(176,837
)
 
(350,561
)
 
(1,222
)
 
(528,620
)
Commission and other acquisition expenses
 
(46,989
)
 
(163,055
)
 
5

 
(210,039
)
General and administrative expenses
 
(8,494
)
 
(664
)
 

 
(9,158
)
Underwriting loss
 
$
(26,554
)
 
$
(7,464
)
 
$
(1,127
)
 
(35,145
)
Reconciliation to net loss
 
 
 
 
 
 
 
 
Net investment income and realized gains on investment
 
 
 
 
 
 
 
42,084

Interest and amortization expenses
 
 
 
 
 
 
 
(6,745
)
Accelerated amortization of senior note issuance cost
 
 
 
 
 
 
 
(2,809
)
Amortization of intangible assets
 
 
 
 
 
 
 
(533
)
Foreign exchange losses
 
 
 
 
 
 
 
(6,722
)
Other general and administrative expenses
 
 
 
 
 
 
 
(6,188
)
Income tax expense
 
 
 
 
 
 
 
(277
)
Net loss
 
 
 
 
 
 
 
$
(16,335
)
 
 
 
 
 
 
 
 
 
Net loss and LAE ratio(1)
 
86.0
%
 
69.2
%
 
 
 
74.1
%
Commission and other acquisition expense ratio(2)
 
22.8
%
 
32.2
%
 
 
 
29.5
%
General and administrative expense ratio(3)
 
4.1
%
 
0.1
%
 
 
 
2.2
%
Expense ratio(4)
 
26.9
%
 
32.3
%
 
 
 
31.7
%
Combined ratio(5)
 
112.9
%
 
101.5
%
 
 
 
105.8
%

10

MAIDEN HOLDINGS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands of U.S. dollars, except share and per share data)

3. Segment Information (continued)
For the Three Months Ended June 30, 2016
 
Diversified Reinsurance
 
AmTrust Reinsurance
 
Other
 
Total
Gross premiums written
 
$
164,834

 
$
523,488

 
$

 
$
688,322

Net premiums written
 
$
161,294

 
$
489,133

 
$

 
$
650,427

Net premiums earned
 
$
190,755

 
$
446,809

 
$

 
$
637,564

Other insurance revenue
 
1,525

 

 

 
1,525

Net loss and LAE
 
(144,246
)
 
(282,619
)
 
(124
)
 
(426,989
)
Commission and other acquisition expenses
 
(45,496
)
 
(140,230
)
 
(1
)
 
(185,727
)
General and administrative expenses
 
(9,079
)
 
(963
)
 

 
(10,042
)
Underwriting (loss) income
 
$
(6,541
)
 
$
22,997

 
$
(125
)
 
16,331

Reconciliation to net income
 
 
 
 
 
 
 
 
Net investment income and realized gains on investment
 
 
 
 
 
 
 
35,657

Interest and amortization expenses
 
 
 
 
 
 
 
(7,193
)
Accelerated amortization of senior note issuance cost
 
 
 
 
 
 
 
(2,345
)
Amortization of intangible assets
 
 
 
 
 
 
 
(615
)
Foreign exchange gains
 
 
 
 
 
 
 
5,520

Other general and administrative expenses
 
 
 
 
 
 
 
(7,248
)
Income tax expense
 
 
 
 
 
 
 
(220
)
Net income
 
 
 
 
 
 
 
$
39,887

 
 
 
 
 
 
 
 
 
Net loss and LAE ratio(1)
 
75.0
%
 
63.3
%
 
 
 
66.8
%
Commission and other acquisition expense ratio(2)
 
23.7
%
 
31.4
%
 
 
 
29.1
%
General and administrative expense ratio(3)
 
4.7
%
 
0.2
%
 
 
 
2.7
%
Expense ratio(4)
 
28.4
%
 
31.6
%
 
 
 
31.8
%
Combined ratio(5)
 
103.4
%
 
94.9
%
 
 
 
98.6
%


11

MAIDEN HOLDINGS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands of U.S. dollars, except share and per share data)

3. Segment Information (continued)
For the Six Months Ended June 30, 2017
 
Diversified Reinsurance
 
AmTrust Reinsurance
 
Other
 
Total
Gross premiums written
 
$
472,886

 
$
1,155,658

 
$
81

 
$
1,628,625

Net premiums written
 
$
464,743

 
$
1,119,787

 
$
90

 
$
1,584,620

Net premiums earned
 
$
406,061

 
$
1,014,458

 
$
90

 
$
1,420,609

Other insurance revenue
 
5,328

 

 

 
5,328

Net loss and LAE
 
(315,486
)
 
(692,192
)
 
(1,511
)
 
(1,009,189
)
Commission and other acquisition expenses
 
(104,934
)
 
(327,139
)
 
5

 
(432,068
)
General and administrative expenses
 
(17,224
)
 
(1,469
)
 

 
(18,693
)
Underwriting loss
 
$
(26,255
)
 
$
(6,342
)
 
$
(1,416
)
 
(34,013
)
Reconciliation to net income
 
 
 
 
 
 
 
 
Net investment income and realized gains on investment
 
 
 
 
 
 
 
85,126

Interest and amortization expenses
 
 
 
 
 
 
 
(13,601
)
Accelerated amortization of senior note issuance cost
 
 
 
 
 
 
 
(2,809
)
Amortization of intangible assets
 
 
 
 
 
 
 
(1,066
)
Foreign exchange losses
 
 
 
 
 
 
 
(8,643
)
Other general and administrative expenses
 
 
 
 
 
 
 
(14,067
)
Income tax expense
 
 
 
 
 
 
 
(761
)
Net income
 
 
 
 
 
 
 
$
10,166

 
 
 
 
 
 
 
 
 
Net loss and LAE ratio(1)
 
76.7
%
 
68.3
%
 
 
 
70.8
%
Commission and other acquisition expense ratio(2)
 
25.5
%
 
32.2
%
 
 
 
30.3
%
General and administrative expense ratio(3)
 
4.2
%
 
0.1
%
 
 
 
2.3
%
Expense ratio(4)
 
29.7
%
 
32.3
%
 
 
 
32.6
%
Combined ratio(5)
 
106.4
%
 
100.6
%
 
 
 
103.4
%

12

MAIDEN HOLDINGS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands of U.S. dollars, except share and per share data)

3. Segment Information (continued)
For the Six Months Ended June 30, 2016
 
Diversified Reinsurance
 
AmTrust Reinsurance
 
Other
 
Total
Gross premiums written
 
$
480,638

 
$
1,071,798

 
$

 
$
1,552,436

Net premiums written
 
$
447,430

 
$
995,828

 
$

 
$
1,443,258

Net premiums earned
 
$
363,011

 
$
890,562

 
$

 
$
1,253,573

Other insurance revenue
 
6,351

 

 

 
6,351

Net loss and LAE
 
(263,322
)
 
(564,393
)
 
(2,895
)
 
(830,610
)
Commission and other acquisition expenses
 
(100,027
)
 
(280,768
)
 

 
(380,795
)
General and administrative expenses
 
(17,679
)
 
(1,549
)
 

 
(19,228
)
Underwriting (loss) income
 
$
(11,666
)
 
$
43,852

 
$
(2,895
)
 
29,291

Reconciliation to net income
 
 
 
 
 
 
 
 
Net investment income and realized gains on investment
 
 
 
 
 
 
 
74,236

Interest and amortization expenses
 
 
 
 
 
 
 
(14,458
)
Accelerated amortization of senior note issuance cost
 
 
 
 
 
 
 
(2,345
)
Amortization of intangible assets
 
 
 
 
 
 
 
(1,230
)
Foreign exchange gains
 
 
 
 
 
 
 
5,787

Other general and administrative expenses
 
 
 
 
 
 
 
(13,558
)
Income tax expense
 
 
 
 
 
 
 
(1,007
)
Net income
 
 
 
 
 
 
 
$
76,716

 
 
 
 
 
 
 
 
 
Net loss and LAE ratio(1)
 
71.3
%
 
63.4
%
 
 
 
65.9
%
Commission and other acquisition expense ratio(2)
 
27.1
%
 
31.5
%
 
 
 
30.2
%
General and administrative expense ratio(3)
 
4.8
%
 
0.2
%
 
 
 
2.6
%
Expense ratio(4)
 
31.9
%
 
31.7
%
 
 
 
32.8
%
Combined ratio(5)
 
103.2
%
 
95.1
%
 
 
 
98.7
%
(1)
Calculated by dividing net loss and LAE by the sum of net premiums earned and other insurance revenue.
(2)
Calculated by dividing commission and other acquisition expenses by the sum of net premiums earned and other insurance revenue.
(3)
Calculated by dividing general and administrative expenses by the sum of net premiums earned and other insurance revenue.
(4)
Calculated by adding together the commission and other acquisition expense ratio and general and administrative expense ratio.
(5)
Calculated by adding together net loss and LAE ratio and the expense ratio.
The following tables summarize the financial position of our reportable segments including the reconciliation to our consolidated assets at June 30, 2017 and December 31, 2016:
June 30, 2017
 
Diversified Reinsurance
 
AmTrust Reinsurance
 
Total
Total assets - reportable segments
 
$
1,802,591

 
$
4,260,900

 
$
6,063,491

Corporate assets
 

 

 
727,738

Total Assets
 
$
1,802,591

 
$
4,260,900

 
$
6,791,229

 
 
 
 
 
 
 
December 31, 2016
 
Diversified Reinsurance
 
AmTrust Reinsurance
 
Total
Total assets - reportable segments
 
$
1,787,320

 
$
3,900,067

 
$
5,687,387

Corporate assets
 

 

 
564,912

Total Assets
 
$
1,787,320

 
$
3,900,067

 
$
6,252,299


13

MAIDEN HOLDINGS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands of U.S. dollars, except share and per share data)

3. Segment Information (continued)
The following table sets forth financial information relating to net premiums written by major line of business and reportable segment for the three and six months ended June 30, 2017 and 2016:
For the Three Months Ended June 30,
 
2017
 
2016
 
 
Total
 
% of Total
 
Total
 
% of Total
Net premiums written
 
 
 
 
 
 
 
 
Diversified Reinsurance
 
 
 
 
 
 
 
 
Property
 
$
21,059

 
3.1
%
 
$
31,516

 
4.8
%
Casualty
 
84,219

 
12.3
%
 
94,692

 
14.6
%
Accident and Health
 
8,909

 
1.3
%
 
13,723

 
2.1
%
International
 
23,060

 
3.4
%
 
21,363

 
3.3
%
Total Diversified Reinsurance
 
137,247

 
20.1
%
 
161,294

 
24.8
%
AmTrust Reinsurance
 
 
 
 
 
 
 
 
Small Commercial Business
 
340,840

 
49.8
%
 
306,425

 
47.1
%
Specialty Program
 
100,082

 
14.6
%
 
92,507

 
14.2
%
Specialty Risk and Extended Warranty
 
105,813

 
15.5
%
 
90,201

 
13.9
%
Total AmTrust Reinsurance
 
546,735

 
79.9
%
 
489,133

 
75.2
%
Other
 
90

 
%
 

 
%
Total Net Premiums Written
 
$
684,072

 
100.0
%
 
$
650,427

 
100.0
%
For the Six Months Ended June 30,
 
2017
 
2016
 
 
Total
 
% of Total
 
Total
 
% of Total
Net premiums written
 
 
 
 
 
 
 
 
Diversified Reinsurance
 
 
 
 
 
 
 
 
Property
 
$
94,436

 
6.0
%
 
$
93,385

 
6.5
%
Casualty
 
261,777

 
16.5
%
 
249,972

 
17.3
%
Accident and Health
 
57,558

 
3.6
%
 
53,295

 
3.7
%
International
 
50,972

 
3.2
%
 
50,778

 
3.5
%
Total Diversified Reinsurance
 
464,743

 
29.3
%
 
447,430

 
31.0
%
AmTrust Reinsurance
 
 
 
 
 
 
 
 
Small Commercial Business
 
733,406

 
46.3
%
 
668,924

 
46.4
%
Specialty Program
 
191,951

 
12.1
%
 
169,298

 
11.7
%
Specialty Risk and Extended Warranty
 
194,430

 
12.3
%
 
157,606

 
10.9
%
Total AmTrust Reinsurance
 
1,119,787

 
70.7
%
 
995,828

 
69.0
%
Other
 
90

 
%
 

 
%
Total Net Premiums Written
 
$
1,584,620

 
100.0
%
 
$
1,443,258

 
100.0
%

14

MAIDEN HOLDINGS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands of U.S. dollars, except share and per share data)

3. Segment Information (continued)
The following table sets forth financial information relating to net premiums earned by major line of business and reportable segment for the three and six months ended June 30, 2017 and 2016:
For the Three Months Ended June 30,
 
2017
 
2016
 
 
Total
 
% of Total
 
Total
 
% of Total
Net premiums earned
 
 
 
 
 
 
 
 
Diversified Reinsurance
 
 
 
 
 
 
 
 
Property
 
$
39,632

 
5.5
%
 
$
40,392

 
6.3
%
Casualty
 
121,563

 
17.1
%
 
107,677

 
16.9
%
Accident and Health
 
20,409

 
2.9
%
 
19,548

 
3.1
%
International
 
22,615

 
3.2
%
 
23,138

 
3.6
%
Total Diversified Reinsurance
 
204,219

 
28.7
%
 
190,755

 
29.9
%
AmTrust Reinsurance
 
 
 
 
 
 
 
 
Small Commercial Business
 
315,100

 
44.3
%
 
279,612

 
43.9
%
Specialty Program
 
92,262

 
13.0
%
 
77,488

 
12.2
%
Specialty Risk and Extended Warranty
 
99,454

 
14.0
%
 
89,709

 
14.0
%
Total AmTrust Reinsurance
 
506,816

 
71.3
%
 
446,809

 
70.1
%
Other
 
90

 
%
 

 
%
Total Net Premiums Earned
 
$
711,125

 
100.0
%
 
$
637,564

 
100.0
%
For the Six Months Ended June 30,
 
2017
 
2016
 
 
Total
 
% of Total
 
Total
 
% of Total
Net premiums earned
 
 
 
 
 
 
 
 
Diversified Reinsurance
 
 
 
 
 
 
 
 
Property
 
$
79,526

 
5.6
%
 
$
73,102

 
5.8
%
Casualty
 
244,713

 
17.2
%
 
207,843

 
16.6
%
Accident and Health
 
41,098

 
2.9
%
 
37,352

 
3.0
%
International
 
40,724

 
2.9
%
 
44,714

 
3.6
%
Total Diversified Reinsurance
 
406,061

 
28.6
%
 
363,011

 
29.0
%
AmTrust Reinsurance
 
 
 
 
 
 
 
 
Small Commercial Business
 
632,009

 
44.5
%
 
544,103

 
43.4
%
Specialty Program
 
192,010

 
13.5
%
 
161,687

 
12.9
%
Specialty Risk and Extended Warranty
 
190,439

 
13.4
%
 
184,772

 
14.7
%
Total AmTrust Reinsurance
 
1,014,458

 
71.4
%
 
890,562

 
71.0
%
Other
 
90

 
%
 

 
%
Total Net Premiums Earned
 
$
1,420,609

 
100.0
%
 
$
1,253,573

 
100.0
%


15

MAIDEN HOLDINGS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands of U.S. dollars, except share and per share data)

4. Investments
a)
Fixed Maturities and Other Investments
During the second quarter of 2017, we designated additional fixed maturities with a fair value of $391,934 as held-to-maturity ("HTM") and during 2016 we designated fixed maturities with a total fair value of $155,538 as HTM reflecting our intent to hold these securities to maturity. The net unrealized holding gain of $4,313 and $15,770, respectively, as at each designation date continues to be reported in the carrying value of the HTM securities and is amortized through other comprehensive income over the remaining life of the securities using the effective yield method in a manner consistent with the amortization of any premium or discount.
The original or amortized cost, estimated fair value and gross unrealized gains and losses of fixed maturities and other investments at June 30, 2017 and December 31, 2016, are as follows:
June 30, 2017
 
Original or amortized cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Fair value
Available-for-sale ("AFS") fixed maturities :
 
 
 
 
 
 
 
 
U.S. treasury bonds
 
$
5,191

 
$
178

 
$
(8
)
 
$
5,361

U.S. agency bonds – mortgage-backed
 
1,797,606

 
11,984

 
(13,978
)
 
1,795,612

U.S. agency bonds – other
 
18,083

 
17

 

 
18,100

Non-U.S. government and supranational bonds
 
30,284

 
162

 
(2,743
)
 
27,703

Asset-backed securities
 
255,487

 
4,349

 
(158
)
 
259,678

Corporate bonds
 
1,583,799

 
41,322

 
(29,418
)
 
1,595,703

Municipal bonds
 
2,500

 
104

 

 
2,604

Total AFS fixed maturities
 
3,692,950

 
58,116

 
(46,305
)
 
3,704,761

Held-to-maturity ("HTM") fixed maturities:
 
 
 
 
 
 
 
 
Corporate bonds
 
1,070,289

 
28,705

 
(1,046
)
 
1,097,948

Municipal bonds
 
62,627

 
366

 
(247
)
 
62,746

Total HTM fixed maturities
 
1,132,916

 
29,071

 
(1,293
)
 
1,160,694

Other investments
 
10,041

 
5,512

 

 
15,553

Total investments
 
$
4,835,907

 
$
92,699

 
$
(47,598
)
 
$
4,881,008

December 31, 2016
 
Original or amortized cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Fair value
AFS fixed maturities:
 
 
 
 
 
 
 
 
U.S. treasury bonds
 
$
5,186

 
$
238

 
$
(11
)
 
$
5,413

U.S. agency bonds – mortgage-backed
 
1,720,436

 
12,867

 
(17,265
)
 
1,716,038

U.S. agency bonds – other
 
18,082

 
20

 

 
18,102

Non-U.S. government and supranational bonds
 
35,158

 
73

 
(5,297
)
 
29,934

Asset-backed securities
 
217,232

 
3,713

 
(69
)
 
220,876

Corporate bonds
 
1,947,347

 
30,951

 
(62,093
)
 
1,916,205

Municipal bonds
 
62,201

 
2,897

 

 
65,098

Total AFS fixed maturities
 
4,005,642

 
50,759

 
(84,735
)
 
3,971,666

HTM fixed maturities:
 
 
 
 
 
 
 
 
Corporate bonds
 
752,212

 
16,370

 
(2,447
)
 
766,135

Total HTM fixed maturities
 
752,212

 
16,370

 
(2,447
)
 
766,135

Other investments
 
10,057

 
3,003

 

 
13,060

Total investments
 
$
4,767,911

 
$
70,132

 
$
(87,182
)
 
$
4,750,861


16

MAIDEN HOLDINGS, LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands of U.S. dollars, except share and per share data)

4. Investments (continued)
The contractual maturities of our fixed maturities are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
 
AFS fixed maturities
 
HTM fixed maturities
June 30, 2017
 
Amortized cost
 
Fair value
 
Amortized cost
 
Fair value
Maturity
 
 
 
 
 
 
 
 
Due in one year or less
 
$
31,694

 
$
29,616

 
$
44,589

 
$
44,572

Due after one year through five years
 
593,384

 
588,064

 
325,150

 
333,463

Due after five years through ten years
 
1,009,611

 
1,026,649

 
749,494

 
768,886

Due after ten years
 
5,168

 
5,142

 
13,683

 
13,773

 
 
1,639,857

 
1,649,471

 
1,132,916

 
1,160,694

U.S. agency bonds – mortgage-backed
 
1,797,606

 
1,795,612

 

 

Asset-backed securities
 
255,487

 
259,678

 

 

Total fixed maturities
 
$
3,692,950

 
$
3,704,761

 
$
1,132,916

 
$
1,160,694

The following tables summarize fixed maturities in an unrealized loss position and the aggregate fair value and gross unrealized loss by length of time the security has continuously been in an unrealized loss position: