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Maiden Holdings (MHLD) Incurs Loss in Q4, Revenues Rise Y/Y

Zacks Equity Research

Maiden Holdings, Ltd. MHLD reported operating loss per share of $2.56 in the fourth quarter of 2018, narrower than loss of $1.51 per share incurred in the year-ago quarter.

Operating revenues increased 1.3% year over year to $522 million, driven by higher net premiums earned, other insurance revenues and net investment income.

Maiden Holdings, Ltd. Price, Consensus and EPS Surprise

 

Maiden Holdings, Ltd. Price, Consensus and EPS Surprise | Maiden Holdings, Ltd. Quote

Quarter in Detail

In the quarter under review, gross premiums declined 9.1% to $388.5 million. This was attributable to decreases in premiums from the AmTrust Reinsurance segment.

Net investment income increased 0.3% to $34.7 million, driven by growth in average investable assets of 8.1% from the same period of 2017.

Total expenses declined nearly 14.9% year over year to $729.5 million, owing to higher net loss and loss adjustment expenses, commission costs, and other acquisition costs as well as general and administrative expenses.

Net loss and loss adjustment expenses increased 19.8% to $556.6 million, driven by higher adverse prior-year loss development for the AmTrust Reinsurance segment.

The company incurred an underwriting loss of $232.3 million, wider than year-ago quarterly net loss of $143.6 million. Combined ratio deteriorated 1810 basis points (bps) year over year to 149.8%.

Segment Result

Diversified Reinsurance: Net premiums earned increased 38.3% to $29.6 million. Underwriting loss of $2.5 million was wider than loss of $0.1 million in the prior-year quarter. Combined ratio deteriorated 360 bps to 107.8%.

AmTrust Reinsurance: Net premiums earned declined 0.8% to $455.3 million. Underwriting loss was $229.5 million, wider than loss of $142.6 million in the year-earlier quarter. Combined ratio deteriorated 1390 bps year over year to 150.4%.

Other: Underwriting loss of $1.7 million was narrower than loss of $1.8 million in the comparable period of the last year.

Financial Update

Maiden Holdings exited 2018 with total investment of $4.1 billion compared with $3.8 billion at the end of 2017. Cash and cash equivalents as of Dec 31, 2018, were $330.9 million, surging 121.5% from the end of 2017.

The company’s net senior notes totaled $254.7 million, which remained almost flat compared with the 2017 level.

Shareholders’ equity of $554.3 billion at the end of 2018 was down 55% from the level at the end of 2017.

As of Dec 31, 2018, book value per share was $1.08, down 88.3% from the 2017-end level.

Operating return on equity was negative 110.1% versus negative 18.7% in 2017.

Business Updates

On Dec 27, 2018, Maiden Holdings North America, Ltd., a subsidiary of Maiden Holdings divested Maiden US to Enstar for initial net consideration of $272.4 million.

Performance of Other P&C Insurers

Among other players from the same industry, having reported fourth-quarter earnings, Berkshire Hathaway Inc. BRK.B, Cincinnati Financial Corporation CINF and Hallmark Financial Services, Inc. HALL beat their respective Zacks Consensus Estimate. However, Third Point Reinsurance Ltd. TPRE missed estimates. Each of these companies currently sports a Zacks rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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