What changed in Maiden Holdings, Ltd.'s 10-K — 2022 vs 2023
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Paragraph-level year-over-year comparison of Maiden Holdings, Ltd.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.
+472 added−414 removedSource: 10-K (2024-03-12) vs 10-K (2023-03-15)
Top changes in Maiden Holdings, Ltd.'s 2023 10-K
472 paragraphs added · 414 removed · 326 edited across 7 sections
- Item 7. Management's Discussion & Analysis+341 / −308 · 229 edited
- Item 1. Business+65 / −49 · 46 edited
- Item 1A. Risk Factors+46 / −36 · 35 edited
- Item 5. Market for Registrant's Common Equity+9 / −14 · 9 edited
- Item 3. Legal Proceedings+9 / −5 · 5 edited
Item 1. Business
Business — how the company describes what it does
46 edited+19 added−3 removed190 unchanged
Item 1. Business
Business — how the company describes what it does
46 edited+19 added−3 removed190 unchanged
2022 filing
2023 filing
Biggest changeExamples of provisions in our bye-laws that could have such an effect include the following: • our Board may reduce the total voting power of any shareholder to avoid adverse tax, legal or regulatory consequences to us or any direct or indirect holder of our shares or its affiliates; and • our Board may, in their discretion, decline to record the transfer of any common shares on our share register, if they are not satisfied that all required regulatory approvals for such transfer have been obtained or if they determine such 24 transfer may result in a non-de minimis adverse tax, legal or regulatory consequence to us or any direct or indirect holder of shares or its affiliates.
Biggest changeEven in the absence of an attempt to effect a change in management or a takeover attempt, these provisions may adversely affect the prevailing market price of our common shares if they are viewed as discouraging changes in management and takeover attempts in the future. 25 Examples of provisions in our bye-laws that could have such an effect include the following: • our Board may reduce the total voting power of any shareholder to avoid adverse tax, legal or regulatory consequences to us or any direct or indirect holder of our shares or its affiliates; and • our Board may, in their discretion, decline to record the transfer of any common shares on our share register, if they are not satisfied that all required regulatory approvals for such transfer have been obtained or if they determine such transfer may result in a non-de minimis adverse tax, legal or regulatory consequence to us or any direct or indirect holder of shares or its affiliates.
Reinsurance is a highly competitive industry. The reinsurance industry is highly competitive. While we are not currently engaged in active reinsurance underwriting of new prospective risks, we are writing risks on a retroactive basis and compete with major U.S. and non-U.S. reinsurers, including other Bermuda-based reinsurers, on an international and regional basis.
The reinsurance industry is highly competitive. While we are not currently engaged in active reinsurance underwriting of new prospective risks, we are writing risks on a retroactive basis and compete with major U.S. and non-U.S. reinsurers, including other Bermuda-based reinsurers, on an international and regional basis.
Our profitability can also be affected significantly by: • fluctuations in interest rates, inflationary pressures and other changes in the investment environment that impact returns on invested assets; • changes in the frequency or severity of claims; 23 • volatile and unpredictable developments, including man-made, weather-related and other natural catastrophes, terrorist attacks or pandemics, such as the spread of the COVID-19 virus; • price competition; • inadequate loss and LAE reserves; • cyclical nature of the property and casualty insurance market; and • negative developments in the specialty property and casualty reinsurance sectors in which we operate.
Our profitability can also be affected significantly by: • fluctuations in interest rates, inflationary pressures and other changes in the investment environment that impact returns on invested assets; • changes in the frequency or severity of claims; • volatile and unpredictable developments, including man-made, weather-related and other natural catastrophes, terrorist attacks or pandemics, such as the spread of the COVID-19 virus; • price competition; • inadequate loss and LAE reserves; • cyclical nature of the property and casualty insurance market; and • negative developments in the specialty property and casualty reinsurance sectors in which we operate.
The active conduct percentage test will be satisfied if (1) the total costs incurred by the non-U.S. insurer with respect to its officers and employees (including officers and employees of certain related entities) for services related to core functions (other than investment activities) equal at least 50% of the total costs incurred for all such services and (2) the non-U.S. insurer's officers and employees oversee any part of the non-U.S. insurer's core functions, including investment management, that are outsourced to an unrelated party.
The 32 active conduct percentage test will be satisfied if (1) the total costs incurred by the non-U.S. insurer with respect to its officers and employees (including officers and employees of certain related entities) for services related to core functions (other than investment activities) equal at least 50% of the total costs incurred for all such services and (2) the non-U.S. insurer's officers and employees oversee any part of the non-U.S. insurer's core functions, including investment management, that are outsourced to an unrelated party.
Each 10% U.S. shareholder of a foreign corporation that is a CFC at any time during a taxable year that owns shares in the foreign corporation directly or indirectly through foreign entities on the last day of the foreign corporation's taxable year during 30 which it is a CFC must include in its gross income for U.S. federal income tax purposes its pro rata share of the CFC's "subpart F income," even if the subpart F income is not distributed.
Each 10% U.S. shareholder of a foreign corporation that is a CFC at any time during a taxable year that owns shares in the foreign corporation directly or indirectly through foreign entities on the last day of the foreign corporation's taxable year during which it is a CFC must include in its gross income for U.S. federal income tax purposes its pro rata share of the CFC's "subpart F income," even if the subpart F income is not distributed.
The inability of our subsidiaries to pay dividends in an amount 22 sufficient to enable us to meet our cash requirements at the holding company level could have a material adverse effect on our business, financial condition and results of operations. Any capital distribution of any kind out of Maiden Reinsurance requires the prior approval of the Vermont DFR.
The inability of our subsidiaries to pay dividends in an amount sufficient to enable us to meet our cash requirements at the holding company level could have a material adverse effect on our business, financial condition and results of operations. Any capital distribution of any kind out of Maiden Reinsurance requires the prior approval of the Vermont DFR.
Class actions and derivative actions generally are available to shareholders under Delaware law for, 25 among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court has discretion to permit the winning party to recover attorneys’ fees incurred in connection with such action. Indemnification of Directors.
Class actions and derivative actions generally are available to shareholders under Delaware law for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court has discretion to permit the winning party to recover attorneys’ fees incurred in connection with such action. Indemnification of Directors.
The arrangements between us and AmTrust were modified after they were originally entered into and there could be future modifications. Our non-executive Chairman of the Board currently holds the positions of Chief Executive Officer and Chairman of AmTrust. These dual positions may present, and make us vulnerable to, difficult conflicts of interest and related legal challenges.
The arrangements between us and AmTrust were modified after they were originally entered into and there could be future modifications. 28 Our non-executive Chairman of the Board currently holds the positions of Chief Executive Officer and Chairman of AmTrust. These dual positions may present, and make us vulnerable to, difficult conflicts of interest and related legal challenges.
If one or more of these financial institutions were to fail, our ability to access cash balances may be temporarily or permanently limited, which could have a material adverse effect on our results of operations, financial condition or cash flows. Item 1B. Unresolved Staff Comments. None.
If one or more of these financial institutions were to fail, our ability to access cash balances may be temporarily or permanently limited, which could have a material adverse effect on our results of operations, financial condition or cash flows. Item 1B. Unresolved Staff Comments. None. 34
We expect that dividends and other permitted distributions from Maiden Global (and its subsidiaries), Maiden LF, Maiden GF and Maiden NA (and its subsidiaries) will be our sole source of funds to pay any dividends to common shareholders and meet ongoing cash requirements, including debt service payments, if any, and other expenses.
We expect that dividends and other permitted distributions from 23 Maiden Global (and its subsidiaries), Maiden LF, Maiden GF and Maiden NA (and its subsidiaries) will be our sole source of funds to pay any dividends to common shareholders and meet ongoing cash requirements, including debt service payments, if any, and other expenses.
Consequently, we will assume a degree of credit risk associated with brokers with whom we work with respect to some of our reinsurance business. 32 We could incur substantial losses and reduced liquidity if one of the financial institutions we use in our operations fails.
Consequently, we will assume a degree of credit risk associated with brokers with whom we work with respect to some of our reinsurance business. We could incur substantial losses and reduced liquidity if one of the financial institutions we use in our operations fails.
Conflicts of interest could arise with respect to business opportunities that could be 27 advantageous to AmTrust or its subsidiaries, on the one hand, and us or our subsidiary, on the other hand. In addition, potential conflicts of interest may arise should the interests of the Company and AmTrust diverge.
Conflicts of interest could arise with respect to business opportunities that could be advantageous to AmTrust or its subsidiaries, on the one hand, and us or our subsidiary, on the other hand. In addition, potential conflicts of interest may arise should the interests of the Company and AmTrust diverge.
Furthermore, consideration would be given by the court to acts that are alleged to constitute a fraud against the minority shareholders or where an act requires the approval of a greater percentage of our shareholders than actually approved it.
Furthermore, consideration would be given by the court to acts that are alleged to constitute a fraud against the minority shareholders or where an act requires the approval of a greater 26 percentage of our shareholders than actually approved it.
These events and trends towards more punitive taxation of cross 31 border transactions could in the future materially adversely impact the insurance and reinsurance industry and our own results of operations by increasing taxation of certain activities and transactions in our industry.
These events and trends towards more punitive taxation of cross border transactions could in the future materially adversely impact the insurance and reinsurance industry and our own results of operations by increasing taxation of certain activities and transactions in our industry.
In addition, we are not currently engaged in reinsurance underwriting of new prospective risks and may not do so for the foreseeable future. This has resulted in a significant reduction in our revenues.
In addition, we are not currently engaged in reinsurance underwriting of new prospective risks and may not 24 do so for the foreseeable future. This has resulted in a significant reduction in our revenues.
To the extent that these exposures are not fully hedged or the hedges are ineffective, our results or equity may be reduced by fluctuations in foreign currency exchange rates that could materially adversely affect our financial condition and results of operations. At December 31, 2022, no such hedges or hedging strategies were in force or had been entered into.
To the extent that these exposures are not fully hedged or the hedges are ineffective, our results or equity may be reduced by fluctuations in foreign currency exchange rates that could materially adversely affect our financial condition and results of operations. At December 31, 2023, no such hedges or hedging strategies were in force or had been entered into.
International operations may be harmed by political developments in foreign countries, which may be hard to predict in advance. Regulations governing technical reserves and remittance balances in some countries may hinder remittance of profits and repatriation of assets. 26 The U.K.'s exit from the EU could adversely affect us. The UK left the EU on January 31, 2020.
International operations may be harmed by political developments in foreign countries, which 27 may be hard to predict in advance. Regulations governing technical reserves and remittance balances in some countries may hinder remittance of profits and repatriation of assets. The U.K.'s exit from the EU could adversely affect us. The UK left the EU on January 31, 2020.
In December 2021, the OECD issued Pillar Two model rules for domestic implementation of the global minimum tax and shortly thereafter the European Commission proposed a Directive to implement the Pillar Two rules into EU law, which will require EU member states to transpose the rules into their national laws by December 31, 2023 with certain measures initially coming into effect from January 1, 2024.
In December 2021, the OECD issued Pillar Two model rules for domestic implementation of the global minimum tax and shortly thereafter the European Commission proposed a Directive to implement the Pillar Two rules into EU law, which required EU member states to transpose the rules into their national laws by December 31, 2023 with certain measures initially coming into effect from January 1, 2024.
Net operating losses (" NOL") (and certain other tax attributes or tax benefits of the Maiden NA tax group) may be subject to limitation under Section 382 of the Tax Code. Maiden NA has significant tax NOL carryforwards as of December 31, 2022.
Net operating losses (" NOL") (and certain other tax attributes or tax benefits of the Maiden NA tax group) may be subject to limitation under Section 382 of the Tax Code. Maiden NA has significant tax NOL carryforwards as of December 31, 2023.
While we do not presently engage in active reinsurance underwriting of prospective risks, we actively underwrite retroactive risks and source certain of those opportunities from brokers and other producers, thus our failure to further develop or maintain relationships with brokers and other producers, including third party administrators and financial institutions, from whom we expect to receive our business could have a material adverse effect on our business, financial condition and results of operations.
While we do not presently engage in active reinsurance underwriting of prospective risks, we have recently underwritten retroactive risks and source certain of those opportunities from brokers and other producers, thus our failure to further develop or maintain relationships with brokers and other producers, including third party administrators and financial institutions, from whom we expect to receive our business could have a material adverse effect on our business, financial condition and results of operations.
Maiden Reinsurance owns 29% of our total outstanding common shares and thus has a significant ownership and voting stake in our common shares.
Maiden Reinsurance owns approximately 29.9% of our total outstanding common shares and thus has a significant ownership and voting stake in our common shares.
A company which is not resident in the U.K. for U.K. corporation tax purposes can nevertheless be subject to U.K. corporation tax at the rate of 19% (rising to 25% from April 2023) if it carries on a trade in the U.K. through a permanent establishment in the U.K., but the charge to U.K. corporation tax is limited to profits (both income profits and chargeable gains) attributable directly or indirectly to such permanent establishment.
A company which is not resident in the U.K. for U.K. corporation tax purposes can nevertheless be subject to U.K. corporation tax at the rate of 25% if it carries on a trade in the U.K. through a permanent establishment in the U.K., but the charge to U.K. corporation tax is limited to profits (both income profits and chargeable gains) attributable directly or indirectly to such permanent establishment.
Employee Issues We are dependent on our key executives. We may not be able to attract and retain key employees or successfully implement our business strategy. Our success depends largely on our senior management, which includes, among others, Lawrence F. Metz, our President and Co-Chief Executive Officer, and Patrick J. Haveron, our Co-Chief Executive Officer and Chief Financial Officer (Messrs.
Employee Issues We are dependent on our key executives. We may not be able to attract and retain key employees or successfully implement our business strategy. Our success depends largely on our senior management, which includes, among others, Patrick J. Haveron, our Chief Executive Officer and Chief Financial Officer, and Lawrence F. Metz, our Executive Vice Chairman and Group President.
For example, if legislators in our larger markets were to enact legislation to increase the scope or amount of benefits for employees under U.S. workers’ compensation insurance policies without related loss control measures, or if regulators made other changes to the regulatory system governing U.S. workers’ compensation insurance, this could negatively affect the U.S. workers’ compensation insurance industry in the affected markets.
For example, if legislators in our larger markets were to enact legislation to increase the scope or amount of benefits for employees under U.S. workers’ compensation insurance policies without related loss control measures, or if regulators made other changes to the regulatory system governing U.S. workers’ compensation insurance, this could negatively affect the U.S. workers’ compensation insurance industry in the affected markets. 29 Reinsurance is a highly competitive industry.
Negative developments in the U.S. workers’ compensation insurance industry could adversely affect our financial condition and results of operations. Approximately 37.1% of our AmTrust Reinsurance segment's reserve for loss and LAE at December 31, 2022 was related to the reinsurance of U.S. workers' compensation risks which is our largest exposure to a particular line of business.
Negative developments in the U.S. workers’ compensation insurance industry could adversely affect our financial condition and results of operations. Approximately 40.2% of our AmTrust Reinsurance segment's reserve for loss and LAE at December 31, 2023 was related to the reinsurance of U.S. workers' compensation risks which is our largest exposure to a particular line of business.
If further collateral is required to be provided to any other AmTrust subsidiaries under applicable law or regulatory requirements, Maiden Reinsurance will provide collateral to the extent required. At December 31, 2022, we provided $820.4 million of collateral to AmTrust, AII and AEL in the form of trusts, letters of credit, funds withheld and a loan.
If further collateral is required to be provided to any other AmTrust subsidiaries under applicable law or regulatory requirements, Maiden Reinsurance will provide collateral to the extent required. At December 31, 2023, we provided $449.1 million of collateral to AmTrust, AII and AEL in the form of trusts, letters of credit, funds withheld and a loan.
A significant percentage of our outstanding common shares are held by affiliates, including Maiden Reinsurance, and as a result, your common shares may not have sufficient liquidity in the trading markets. In addition, we have reserved 7,681,477 common shares for issuance under our 2019 Omnibus Incentive Plan.
A significant percentage of our outstanding common shares are held by affiliates, including Maiden Reinsurance, and as a result, your common shares may not have sufficient liquidity in the trading markets. In addition, we have reserved 5,668,408 common shares remaining for issuance under our 2019 Omnibus Incentive Plan.
This collateral includes $416.8 million transferred to AmTrust from existing trust accounts used for collateral on the AmTrust Quota Share to a funds withheld arrangement in January 2019, which currently has an annual interest rate of 2.1%, subject to annual adjustment. The annual interest rate was 1.8% for the duration of 2021.
This collateral includes $128.5 million transferred to AmTrust from existing trust accounts used for collateral on the AmTrust Quota Share to a funds withheld arrangement in January 2019, which currently has an annual interest rate of 3.5%, subject to annual adjustment. The annual interest rate was 2.1% for the duration of 2022.
As a result of the exchange of our previously outstanding preference shares for our common shares on December 27, 2022, Maiden Reinsurance owns 29% of our total outstanding common shares and subject to our bye-laws, has the ability to vote up to 9.5% of these shares.
As a result of the common shares issued as part of the Exchange on December 27, 2022, Maiden Reinsurance owns approximately 29.9% of our total outstanding common shares and subject to our bye-laws, has the ability to vote up to 9.5% of these shares.
Currently, Maiden Holdings employs seven non-Bermudians who are work permit holders in our Bermuda office including our Co-CEOs. Under Bermuda law, non-Bermudians (other than spouses of Bermudians and holders of permanent residents’ certificates) may not engage in any gainful occupation in Bermuda without a valid government work permit.
Currently, Maiden Holdings employs six non-Bermudians who are work permit holders in our Bermuda office including Messrs. Haveron and Metz. Under Bermuda law, non-Bermudians (other than spouses of Bermudians and holders of permanent residents’ certificates) may not engage in any gainful occupation in Bermuda without a valid government work permit.
As a result, we do not have, and will not have, any significant operations or assets other than our ownership of the shares of our subsidiaries.
Maiden Holdings is a holding company. As a result, we do not have, and will not have, any significant operations or assets other than our ownership of the shares of our subsidiaries.
The risks associated with the potential consequences that may follow Brexit, including volatility in financial markets, exchange rates and interest rates, remain uncertain. These uncertainties could increase the volatility of, or adversely affect, our investment results in particular periods or over time.
As a result, our regulatory compliance oversight and reporting requirements have increased. The risks associated with the potential consequences that may follow Brexit, including volatility in financial markets, exchange rates and interest rates, remain uncertain. These uncertainties could increase the volatility of, or adversely affect, our investment results in particular periods or over time.
Maiden LF and Maiden GF have established UK branches to enable us to continue underwriting in the UK post-Brexit. Maiden LF, UK Branch and Maiden GF, UK Branch were authorized by the Prudential Regulatory Authority and Financial Conduct Authority on May 30, 2022 and May 12, 2022 respectively. As a result, our regulatory compliance oversight and reporting requirements have increased.
Maiden LF and Maiden GF have subsequently established UK branches to enable us to continue underwriting in the UK post-Brexit. Maiden LF, UK Branch and Maiden GF, UK Branch were authorized by the Prudential Regulatory Authority and Financial Conduct Authority on May 30, 2022 and May 12, 2022 respectively.
DPT is charged at 25% (rising to 31% from April 2023) of the profits representing the contribution of the U.K. activities to the group’s results.
DPT is charged at 31% of the profits representing the contribution of the U.K. activities to the group’s results.
Treasury Department has authority to impose, among other things, additional reporting requirements with respect to RPII. Accordingly, the meaning of the RPII provisions and the application thereof to Maiden Holdings and its non-U.S. insurance subsidiary's is uncertain. U.S.
Treasury Department has authority to impose, among other things, additional reporting requirements with respect to RPII. Accordingly, the meaning of the RPII provisions and the application thereof to Maiden Holdings and its non-U.S. insurance subsidiary's is uncertain. Prospective investors are urged to consult their tax advisors with respect to these rules. 31 U.S.
Clients, Brokers and Financial Institutions Our retroactive underwriting utilizes reinsurance brokers and other producers, including third party administrators and financial institutions, and the failure to develop or maintain these relationships could materially adversely affect our ability to market our products and services should we begin to pursue active reinsurance underwriting.
As a result, our approach to transfer pricing may become subject to greater scrutiny from the U.K. tax authorities. 33 Clients, Brokers and Financial Institutions Our retroactive underwriting utilizes reinsurance brokers and other producers, including third party administrators and financial institutions, and the failure to develop or maintain these relationships could materially adversely affect our ability to market our products and services should we begin to pursue active reinsurance underwriting.
Historically, periods of increased capacity levels in our industry have led to increased competition which puts pressure on reinsurance pricing. 28 In recent years, significant increases in the use of risk-linked securities and derivative and other non-traditional risk transfer mechanisms and vehicles are being developed and offered by other parties, including entities other than insurance and reinsurance companies.
In recent years, significant increases in the use of risk-linked securities and derivative and other non-traditional risk transfer mechanisms and vehicles are being developed and offered by other parties, including entities other than insurance and reinsurance companies.
As of March 8, 2023, 101,532,151 common shares were outstanding as the 41,439,348 common shares issued to Maiden Reinsurance in the Exchange are reflected as treasury shares on the Consolidated Balance Sheet and are not treated as outstanding shares in the computation of consolidated book value and earnings per common share on December 31, 2022.
These shares are reflected as treasury shares on the Consolidated Balance Sheet and not treated as outstanding shares in the computation of consolidated book value and earnings per common share on December 31, 2023.
Best and the lack of such ratings will likely limit the opportunities we have to write new reinsurance business if we resume active underwriting of new prospective risks.
Best and the lack of such ratings will likely limit the opportunities we have to write new reinsurance business if we resume active underwriting of new prospective risks. Historically, periods of increased capacity levels in our industry have led to increased competition which puts pressure on reinsurance pricing.
Maiden Reinsurance is currently subject to U.S. taxation as a domestic corporation from the effective date of its re-domestication to the State of Vermont on March 16, 2020. 29 However, there is considerable uncertainty as to which activities constitute being engaged in a trade or business within the U.S., so we cannot be certain that the IRS will not contend successfully that we are engaged in a trade or business in the U.S.
However, there is considerable uncertainty as to which activities constitute being engaged in a trade or business within the U.S., so we cannot be certain that the IRS will not contend successfully that Maiden Holdings and/or any of its non-U.S. subsidiaries are engaged in a trade or business in the U.S.
We have a significantly smaller staff and given our current business circumstances, and it may be difficult for us to retain staff and recruit competent new executives and staff.
We have entered into employment agreements with these executive officers. In addition to the officers listed above, we require key staff with actuarial, legal, reinsurance, accounting and administrative skills. We have a significantly smaller staff and given our current business circumstances, it may be difficult for us to retain staff and recruit competent new executives and staff.
Corporate Governance and Risks Related to an Investment in our Securities Our holding company structure and certain regulatory and other constraints affect our ability to pay dividends and make other payments. Maiden Holdings is a holding company.
We are considering the CIT Act and will evaluate the impact of the CIT Act on our operations as further information and guidance becomes available. Corporate Governance and Risks Related to an Investment in our Securities Our holding company structure and certain regulatory and other constraints affect our ability to pay dividends and make other payments.
We may be subject to U.S. federal income tax, which would have an adverse effect on our financial condition and results of operations and on an investment in our shares.
The proposals, in particular in relation to Pillar Two, are broad in scope and include a number of exemptions which may be available to us, however we are unable to determine at this time the extent to which the proposals will impact our operations and results. 30 We may be subject to U.S. federal income tax, which would have an adverse effect on our financial condition and results of operations and on an investment in our shares.
Changes in U.S. GAAP and financial reporting requirements, or in the interpretation of U.S. GAAP or those requirements, could result in material changes to our reported results and financial condition. Legislation enacted in Bermuda in response to the EU’s review of harmful tax competition could adversely affect our operations.
Changes in U.S. GAAP and financial reporting requirements, or in the interpretation of U.S. GAAP or those requirements, could result in material changes to our reported results and financial condition. Moreover, our insurance subsidiaries are required to comply with statutory accounting principles ("SAP").
As of March 8, 2023, there were 141,000 stock options outstanding and 492,463 restricted shares outstanding.
As of March 7, 2024, there were 121,500 stock options outstanding and 975,027 restricted shares outstanding.
The U.K. has implemented the BEPS recommendation for "country-by-country" reporting. As a result, our approach to transfer pricing may become subject to greater scrutiny from the U.K. tax authorities.
The U.K. has implemented the BEPS recommendation for "country-by-country" reporting.
Removed
Even in the absence of an attempt to effect a change in management or a takeover attempt, these provisions may adversely affect the prevailing market price of our common shares if they are viewed as discouraging changes in management and takeover attempts in the future.
Added
Our risk management policies and procedures may prove to be ineffective and leave us exposed to unidentified or unanticipated risk. We have developed and continue to develop enterprise-wide risk management policies and procedures to mitigate risk and loss to which we are exposed.
Removed
Metz and Haveron are referred to as the "Co-CEOs"). We have entered into employment agreements with these executive officers. In addition to the officers listed above, we require key staff with actuarial, legal, reinsurance, accounting and administrative skills.
Added
There are inherent limitations to risk management strategies because there may exist, or develop in the future, risks that we have not anticipated, identified or accurately assessed. If our risk management policies and procedures are ineffective, we may suffer unexpected losses and could be materially adversely affected.
Removed
The proposals, in particular in relation to Pillar Two, are broad in scope and we are unable to determine at this time whether they would have a material adverse impact on our operations and results.
Added
As our business changes and the markets in which we operate evolve, our risk management framework may not adapt at the same pace as those changes. As a result, there is a risk that new products or new business strategies may present risks that are not adequately identified, monitored or managed.
Added
In times of market stress, unanticipated market movements or unanticipated claims experience, the effectiveness of our risk management strategies may be insufficient, resulting in losses to us.
Added
In addition, we may be unable to effectively review and monitor all risks and our employees may not follow our risk management policies and procedures. 22 In addition, the NAIC and state legislatures and regulators have increased their focus on risks within an insurer’s holding company system that may pose enterprise risk to insurers.
Added
Our insurance company subsidiaries are subject to regulation in Vermont. Vermont has adopted regulations for insurance holding companies to adopt a formal ERM function and to file an annual enterprise risk report. The regulations also require most domestic insurers to conduct an ORSA and to submit an ORSA summary report prepared in accordance with the NAIC’s ORSA Guidance Manual.
Added
While we operate within an ERM framework designed to assess and monitor our risks, we may not be able to effectively review and monitor all risks, our employees may not all operate within the ERM framework and our ERM framework may not result in our accurately identifying all risks and limiting our exposures based on our assessments.
Added
SAP and various components of SAP are subject to constant review by the NAIC and its task forces and committees, as well as state insurance departments, in an effort to address emerging issues and otherwise improve financial reporting.
Added
Various proposals are pending before committees and task forces of the NAIC, some of which, if enacted and adopted on a state level, could have negative effects on insurance industry participants. The NAIC continuously examines existing laws and regulations.
Added
We cannot predict whether or in what form such reforms will be enacted and, if so, whether the enacted reforms will positively or negatively affect us. Legislation enacted in Bermuda in response to the EU’s review of harmful tax competition could adversely affect our operations.
Added
Legislation enacted in Bermuda as to Corporate Income Tax may affect our operations. Bermuda recently enacted the CIT Act. Entities subject to tax under the CIT Act are the Bermuda constituent entities of multi-national groups.
Added
A multi-national group is defined under the CIT Act as a group with entities in more than one jurisdiction with consolidated revenues of at least €750 million for two of the four previous fiscal years.
Added
If Bermuda constituent entities of a multi-national group are subject to tax under the CIT Act, such tax is charged at a rate of 15% of the net income of such constituent entities (as determined in accordance with the CIT Act, including after adjusting for any relevant foreign tax credits applicable to the Bermuda constituent entities).
Added
No tax is chargeable under the CIT Act until tax years starting on or after January 1, 2025. The Company's consolidated revenues do not presently meet the minimum amounts for taxation under the CIT Act, however it is possible that the CIT Act may have an adverse effect on our results of operations going forward.
Added
As of March 7, 2024, 100,472,120 common shares were outstanding when the ownership by our affiliate Maiden Reinsurance of 42,878,923 common shares were excluded, which consists of 41,439,348 common shares issued to Maiden Reinsurance in the Exchange and 1,439,575 shares directly purchased on the open market.
Added
In 2023, a number of jurisdictions (including Sweden and the UK) passed legislation to implement the OECD/G20's model rules into domestic law with effect from January 1, 2024.
Added
Maiden Reinsurance is currently subject to U.S. taxation as a domestic corporation from the effective date of its re-domestication to the State of Vermont on March 16, 2020.
Added
Further, recently proposed regulations could, if finalized in their current form, substantially expand the definition of RPII to include insurance income of our non-U.S. subsidiaries with respect to certain affiliate reinsurance transactions.
Added
If these proposed regulations are finalized in their current form, it could limit the Company’s ability to execute affiliate reinsurance transactions that would otherwise be undertaken for non-tax business reasons in the future and could increase the risk that potential exceptions to the RPII rules would not be available in a particular taxable year, which could result in RPII being taxable to certain U.S. persons holding our shares.
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
35 edited+11 added−1 removed152 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
35 edited+11 added−1 removed152 unchanged
2022 filing
2023 filing
Biggest changeWe believe the formation of GLS is highly complementary to our overall longer-term strategy. However, it may take some time for GLS to gain sufficient scale to achieve its objectives, and its results may not reach the objectives we expect to establish for it over time. Since 2020, our revised strategy includes expanded investment activities.
Biggest changeWe believed the formation of GLS was highly complementary to our overall longer-term strategy. However, a combination of factors, including market conditions in the sector GLS focuses on, resulted in an inability for GLS to gain sufficient scale to achieve its objectives or earn a profit, and its results did not reach the objectives we expected it to over time.
We may from time to time be subject to litigation or other legal or regulatory actions in the ordinary course of business relating to our current and past business operations, including, but not limited to, disputes over coverage or claims adjudication, 15 including claims alleging that we have acted in bad faith in the administration of claims by our policyholders, disputes with our agents, producers and termination of contracts and related claims and disputes with former employees.
We may from time to time be subject to litigation or other legal or regulatory actions in the ordinary course of business relating to our current and past business operations, including, but not limited to, disputes over coverage or claims adjudication, including claims alleging that we have acted in bad faith in the administration of claims by our policyholders, disputes with our agents, producers and termination of contracts and related claims and disputes with former employees.
We also have very limited property catastrophe exposures which could cause an immediate need for cash. However, if we do not structure our investment portfolio so that it is appropriately matched with our reinsurance liabilities or our operating cash flow declines, we may be forced to liquidate investments prior to maturity at a significant loss to cover such liabilities.
We also 19 have very limited property catastrophe exposures which could cause an immediate need for cash. However, if we do not structure our investment portfolio so that it is appropriately matched with our reinsurance liabilities or our operating cash flow declines, we may be forced to liquidate investments prior to maturity at a significant loss to cover such liabilities.
It is not possible to predict the future impact of changes in laws and regulations on our operations. The cost of complying with any new legal requirements affecting our subsidiaries could have a material adverse effect on our business. In addition, our subsidiaries may not always be able to obtain or maintain necessary licenses, permits, authorizations or accreditations.
It is not possible to predict the future impact of 21 changes in laws and regulations on our operations. The cost of complying with any new legal requirements affecting our subsidiaries could have a material adverse effect on our business. In addition, our subsidiaries may not always be able to obtain or maintain necessary licenses, permits, authorizations or accreditations.
As such, we may be forced to delay raising capital, issue shorter maturity securities than we prefer, or bear an unattractive cost of capital which could decrease our profitability and significantly reduce our financial flexibility. If we cannot obtain adequate capital, our business prospects, results of operations and financial condition could be adversely affected.
As such, we may be forced to delay raising capital, issue shorter maturity securities than we prefer, or bear an unattractive cost of 20 capital which could decrease our profitability and significantly reduce our financial flexibility. If we cannot obtain adequate capital, our business prospects, results of operations and financial condition could be adversely affected.
A substantial portion of our investment portfolio consists of interest rate-sensitive instruments, such as bonds, which may be adversely affected by changes in interest rates. Interest rates are highly sensitive to many factors, including governmental 18 monetary policies and domestic and international economic and political conditions and other factors beyond our control.
A substantial portion of our investment portfolio consists of interest rate-sensitive instruments, such as bonds, which may be adversely affected by changes in interest rates. Interest rates are highly sensitive to many factors, including governmental monetary policies and domestic and international economic and political conditions and other factors beyond our control.
In some instances, these changes may not become apparent until sometime after we have issued insurance or reinsurance contracts that are affected by the changes. As a result, the full extent of liability under our reinsurance contracts may not be known for many years after a contract is issued.
In some instances, these changes may not become apparent until sometime after we have issued insurance or reinsurance contracts that are affected by the changes. As a result, the full 15 extent of liability under our reinsurance contracts may not be known for many years after a contract is issued.
Further, as part of its re-domestication to the State of Vermont in the U.S., Maiden Reinsurance is required to closely consult with the Vermont DFR before it considers resuming active reinsurance underwriting of new prospective risks and on any matters related to capital management and business strategy.
As part of its re-domestication to the State of Vermont in the U.S., Maiden Reinsurance is required to closely consult with the Vermont DFR before it considers resuming active reinsurance underwriting of new prospective risks and on any matters related to capital management and business strategy.
We cannot predict the impact laws and 21 regulations adopted in the EU or other non-U.S. jurisdictions may have on the financial markets generally or on our businesses, results of operations or cash flows. It is possible that changes in such laws and regulations may alter our business practices.
We cannot predict the impact laws and regulations adopted in the EU or other non-U.S. jurisdictions may have on the financial markets generally or on our businesses, results of operations or cash flows. It is possible that changes in such laws and regulations may alter our business practices.
Changing plans and strategies requires significant management of time and effort and may divert management’s attention from our core operations and competencies, and our efforts to improve 14 our capital position and solvency. Moreover, modifications we undertake to our operations may not immediately result in improved financial performance.
Changing plans and strategies requires significant management of time and effort and may divert management’s attention from our core operations and competencies, and our efforts to improve our capital position and solvency. Moreover, modifications we undertake to our operations may not immediately result in improved financial performance.
Our future business needs are uncertain and we may need to raise additional funds to further capitalize Maiden Reinsurance or our IIS business. We anticipate that any such additional funds would be raised through equity, debt, hybrid financings or entering into reinsurance agreements.
Our future business needs are uncertain and we may need to raise additional funds to further capitalize Maiden Reinsurance. We anticipate that any such additional funds would be raised through equity, debt, hybrid financings or entering into reinsurance agreements.
However, our controls and monitoring efforts may have been ineffective, permitting one or more underwriters to exceed underwriting 16 authority and causing us to (re)insure risks outside the agreed upon guidelines.
However, our controls and monitoring efforts may have been ineffective, permitting one or more underwriters to exceed underwriting authority and causing us to (re)insure risks outside the agreed upon guidelines.
Although we consider the potential effects of claims inflation when setting premium rates, our premiums may not fully offset the effects of inflation and 20 essentially result in our underpricing the risks we insure and reinsure.
Although we consider the potential effects of claims inflation when setting premium rates, our premiums may not fully offset the effects of inflation and essentially result in our underpricing the risks we insure and reinsure.
Dividends and other permitted payments from our operating subsidiaries are expected to be our sole source of funds to meet ongoing cash requirements at Maiden Holdings, including debt service payments and other expenses. As of December 31, 2022 and as of the date hereof, our insurance subsidiaries' ability to make distributions require the prior approvals of their respective domestic regulators.
Dividends and other permitted payments from our operating subsidiaries are expected to be our sole source of funds to meet ongoing cash requirements at Maiden Holdings, including debt service payments and other expenses. As of December 31, 2023 and as of the date hereof, our insurance subsidiaries' ability to make distributions require the prior approvals of their respective domestic regulators.
While we have established our reserves to a level we believe to be sufficient to cover losses assumed by us when we recognize prior period development, there can be no assurance that losses will not deviate from our reserves, possibly by material amounts. We have experienced significant adverse development of our loss reserves in prior years, including in 2022.
While we have established our reserves to a level we believe to be sufficient to cover losses assumed by us when we recognize prior period development, there can be no assurance that losses will not deviate from our reserves, possibly by material amounts. We have experienced significant adverse development of our loss reserves in prior years, including in 2023.
Defending against these actions may require us to utilize significant resources in our defense as well as result in a significant amount of time by our senior management. An adverse resolution of one or more lawsuits or arbitration could have a material adverse effect on our results of operations in a particular fiscal quarter or year.
Defending against these actions may require us to utilize significant resources in our defense as well as result in a significant amount of time by our senior management. An adverse resolution of one or more lawsuits or arbitrations could have a material adverse effect on our results of operations in a particular fiscal quarter or year.
We also assume risk on a primary basis through Maiden LF & Maiden GF. As we write these risks, we similarly seek to manage our loss exposure by maintaining a disciplined underwriting process throughout our (re)insurance operations.
We also assume risk on a primary basis through Maiden LF and Maiden GF. As we write these risks, we similarly seek to manage our loss exposure by maintaining a disciplined 16 underwriting process throughout our (re)insurance operations.
While we have purchased additional reinsurance protection to eliminate potential volatility of loss reserves from this legacy business, the accounting for this reinsurance protection precludes us from recognizing recoveries until paid losses reach certain contractual retention limits in the agreement and thus our GAAP results reported herein will not reflect this reinsurance until those limits are exceeded, which we presently expect to occur in 2025.
While we have purchased additional reinsurance protection to eliminate potential volatility of loss reserves from this legacy business, the accounting for this reinsurance protection precludes us from recognizing recoveries until paid losses reach certain contractual retention limits in the agreement and thus our GAAP results reported herein will not reflect this reinsurance until those limits are exceeded, which we presently expect to occur before the end of 2024.
Based on our current estimate of 2023 financial projections, we believe we will have sufficient liquidity to meet and fulfill our obligations including payments due under our outstanding publicly-traded senior notes which were issued in 2013 (the "2013 Senior Notes") by Maiden NA in the principal amount of $152.5 million, all of which is currently outstanding and is subject to a guarantee by Maiden Holdings, and our outstanding publicly-traded senior notes which were issued in 2016 (the "2016 Senior Notes") in the principal amount of $110.0 million, all of which is currently outstanding (the 2016 Senior Notes collectively with the 2013 Senior Notes, the "Senior Notes").
Based on our current estimate of 2024 financial projections, we believe we will have sufficient liquidity to meet and fulfill our obligations including payments due under our outstanding publicly-traded senior notes which were issued in 2013 (the "2013 Senior Notes") by Maiden NA in the principal amount of $152.4 million, all of which is currently outstanding and is 18 subject to a guarantee by Maiden Holdings, and our outstanding publicly-traded senior notes which were issued in 2016 (the "2016 Senior Notes") in the principal amount of $110.0 million, all of which is currently outstanding (the 2016 Senior Notes collectively with the 2013 Senior Notes, the "Senior Notes").
At December 31, 2022 and 2021, these respective durations in years were as follows: At December 31, 2022 2021 Fixed maturities and cash and cash equivalents 1.3 1.5 Reserve for loss and LAE - gross of LPT/ADC Agreement reserves 5.3 4.4 Reserve for loss and LAE - net of LPT/ADC Agreement reserves 1.1 1.4 The differential in duration between these assets and liabilities may fluctuate over time and in the case of fixed maturities, is affected by factors such as market conditions, asset allocations and prepayment speeds in the case of Agency MBS.
At December 31, 2023 and 2022, these respective durations in years were as follows: At December 31, 2023 2022 Fixed maturities and cash and cash equivalents 1.2 1.3 Reserve for loss and LAE - gross of LPT/ADC Agreement reserves 5.8 5.3 Reserve for loss and LAE - net of LPT/ADC Agreement reserves 1.6 1.1 The differential in duration between these assets and liabilities may fluctuate over time and in the case of fixed maturities, is affected by factors such as market conditions, asset allocations and prepayment speeds in the case of Agency MBS.
In November 2020, we formed GLS which specializes 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.
For example, in 2020 we formed GLS which specialized 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.
Our agency mortgage-backed securities ("Agency MBS") constitute 10.9% of fixed maturity investments at December 31, 2022. As with other fixed income investments, the fair value of these securities fluctuates depending on market and other 17 general economic conditions and the interest rate environment. Changes in interest rates can expose us to changes in the prepayment rate on these investments.
Our agency mortgage-backed securities ("Agency MBS") constitute 10.6% of fixed maturity investments at December 31, 2023. As with other fixed income investments, the fair value of these securities fluctuates depending on market and other general economic conditions and the interest rate environment. Changes in interest rates can expose us to changes in the prepayment rate on these investments.
While we continue to reduce our operating expenses, make additional investments which we believe will produce enhanced investment returns, and now write new legacy retroactive risks, there can be no assurance that these measures will overcome the expected decline in investment income.
While we continue to reduce our operating expenses, make additional investments which we believe will produce enhanced investment returns, and have written legacy retroactive risks, there can be no assurance that these measures will overcome the expected decline in investment income.
There can be no assurance that we will maintain operating profitability or return to active underwriting of new prospective reinsurance risks. We produced a net loss of $60.0 million in 2022, compared to net income of $26.6 million during 2021, largely the result of loss development from the run-off of our legacy reinsurance obligations.
There can be no assurance that we will maintain operating profitability or return to active underwriting of new prospective reinsurance risks. We produced a net loss of $38.6 million in 2023, compared to net loss of $60.0 million during 2022, largely the result of adverse reserve development from the run-off of our legacy reinsurance obligations.
As of December 31, 2022, the amount of collateral required was $461.6 million. We may or may not use retrocessional and reinsurance coverage to limit our exposure to risks.
As of December 31, 2023, the amount of collateral required was $490.1 million. We may or may not use retrocessional and reinsurance coverage to limit our exposure to risks.
During 2022, we increased the amount allocated to such investments, and at December 31, 2022, 43.0% of our total cash and investments were categorized as equities, other investments and equity method Investments on our consolidated balance sheets compared to 25.4% as of December 31, 2021.
During 2023, we increased the amount allocated to such investments, and at December 31, 2023, 51.3% of our total cash and investments were categorized as equity securities, other investments and equity method investments on our consolidated balance sheets compared to 43.0% as of December 31, 2022.
This has included changes to our approaches to asset and capital management and we may or may not resume active reinsurance underwriting of new prospective risks in the future.
Since 2020, our revised strategy includes expanded investment activities. This has included changes to our approaches to asset and capital management and we may or may not resume active reinsurance underwriting of new prospective risks in the future.
These and other similar investments may be illiquid due to restrictions on sales, transfers and redemption terms, may have different, more significant risk characteristics than our investments in fixed maturity securities and may also have more volatile values and returns, all of which could negatively affect our investment income and overall portfolio liquidity. 19 We have also invested, and from time to time may continue to make investments in joint ventures and in other entities that we do not control.
These and other similar investments may be illiquid due to restrictions on sales, transfers and redemption terms, may have different, more significant risk characteristics than our investments in fixed maturity securities and may also have more volatile values and returns, all of which could negatively affect our investment income and overall portfolio liquidity.
Although we have experienced no known material or threatened cases involving unauthorized access to our information technology systems and data or unauthorized appropriation of such data to date, we have no assurance that such technology breaches will not occur in the future. Ongoing economic uncertainty could materially and adversely affect our business, our liquidity and financial condition.
Although we have experienced no known material or threatened cases involving unauthorized access to our information technology systems and data or unauthorized appropriation of such data to date, we have no assurance that such technology breaches will not occur in the future.
We expect to continue to increase this allocation over future periods and have committed $113.0 million to future investments as of December 31, 2022.
We expect to continue to increase this allocation over future periods and have committed $100.8 million to future alternative investments as of December 31, 2023.
At December 31, 2022, total investments of $587.1 million represented 92.6% of our total cash and investments. Total investments included other investments of $148.8 million, or 25.3% of our total investment portfolio, comprised of a combination of private credit funds, private equity funds, other privately held investments and investments in direct lending activities.
At December 31, 2023, total investments of $559.6 million represented 92.9% of our total cash and investments. Total investments included other investments of $182.8 million, or 32.7% of our total investment portfolio, comprised of a combination of private credit funds, private equity funds, other privately held investments and investments in direct lending activities.
At December 31, 2022, restricted cash and cash equivalents and fixed maturity investments used as collateral were $296.8 million and represents 82.2% of the fair value of our total fixed maturity investments and cash and cash equivalents (including restricted cash and cash equivalents) at that date.
At December 31, 2023, restricted cash and cash equivalents and fixed maturity investments used as collateral were $219.9 million and represents 75.0% of the fair value of our total fixed maturity investments and cash and cash equivalents (including restricted cash and cash equivalents) at that date.
At December 31, 2022, we had $550.5 million due to us from one reinsurer, Cavello, consisting of losses recoverable from Cavello under the retrocession agreement of $60.1 million and reinsurance recoverable on unpaid losses under the retroactive reinsurance agreement of $490.4 million.
At December 31, 2023, we had $558.6 million due to us from one reinsurer, Cavello, consisting of losses recoverable from Cavello under the retrocession agreement of $43.2 million and reinsurance recoverable on unpaid losses under the retroactive reinsurance agreement of $515.5 million.
At December 31, 2022, Maiden Reinsurance had $20.5 million in unrestricted cash and cash equivalents and fixed maturity investments. On a consolidated basis, the Company had $64.3 million in unrestricted cash and cash equivalents and fixed maturity investments at December 31, 2022.
At December 31, 2023, Maiden Reinsurance had $40.6 million in unrestricted cash and cash equivalents and fixed maturity investments. On a consolidated basis, the Company had $73.4 million in unrestricted cash and cash equivalents and fixed maturity investments at December 31, 2023.
Additionally, the re-domestication of Maiden Reinsurance to the U.S. may limit our ability to reinsure risk outside of the U.S. and may have an adverse effect on our capital and ability to write new business.
Having completed the capital commitment we made to GLS in 2020, we have determined to not commit any additional capital to new opportunities and to run-off the existing accounts GLS underwrote. 14 Additionally, the re-domestication of Maiden Reinsurance to the U.S. may limit our ability to reinsure risk outside of the U.S. and may have an adverse effect on our capital and ability to write new business.
Removed
The continuing presence of the COVID-19 virus globally continues to inject significant economic uncertainty which may have a material effect on the global economy and financial markets.
Added
We now expect to extend our strategy by expanding our activities in insurance distribution, particularly managing general agencies, which may selectively be supported by active reinsurance underwriting of new prospective risks.
Added
Additionally, some of our subsidiaries collect, use, store, transmit, retrieve, retain and otherwise process confidential and personally identifiable information in their information systems in and across multiple jurisdictions, and they are subject to a variety of confidentiality obligations and privacy, data protection and information security laws, regulations, orders and industry standards in the jurisdictions in which they do business.
Added
The regulatory environment surrounding information security, data privacy and cybersecurity is evolving and increasingly demanding. A number of our subsidiaries are subject to numerous U.S. federal and state laws and non-U.S. regulations governing the protection of personally identifiable and confidential 17 information of their customers and employees.
Added
On October 24, 2017, the NAIC adopted an Insurance Data Security Model Law, which requires licensed insurance entities to comply with detailed information security requirements.
Added
The NAIC model law has been adopted by certain states, including Vermont, which may raise compliance costs or increase the risk of noncompliance, and noncompliance could subject our insurance subsidiaries to regulatory enforcement actions and penalties, as well as reputational harm.
Added
Any such events could potentially have an adverse impact on our insurance subsidiaries’ business, results of operations, financial condition and cash flows.
Added
Because the interpretation and application of many privacy and data protection laws along with contractually imposed industry standards are uncertain, it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our insurance subsidiaries’ existing data management practices or the features of their services and platform capabilities.
Added
Any failure or perceived failure by our insurance subsidiaries, or any third parties with which they do business, to comply with their posted privacy policies, changing consumer expectations, evolving laws, rules and regulations, industry standards, or contractual obligations to which they or such third parties are or may become subject, may result in actions or other claims against our insurance subsidiaries by governmental entities or private actors, the expenditure of substantial costs, time and other resources or the incurrence of significant fines, penalties or other liabilities.
Added
In addition, any such action, particularly to the extent our insurance subsidiaries were found to be guilty of violations or otherwise liable for damages, would damage their reputation and adversely affect their business, financial condition and results of operations. Ongoing economic uncertainty could materially and adversely affect our business, our liquidity and financial condition.
Added
The Company also has total unfunded commitments on alternative investments of $100.8 million at December 31, 2023 which included commitments for other investments, private equity securities and equity method investments.
Added
We have also invested, and from time to time may continue to make investments in joint ventures and in other entities that we do not control.
Item 2. Properties
Properties — owned and leased real estate
1 edited+0 added−0 removed1 unchanged
Item 2. Properties
Properties — owned and leased real estate
1 edited+0 added−0 removed1 unchanged
2022 filing
2023 filing
Biggest changeWe believe that the office space from these leased properties is sufficient for us to conduct our operations for the foreseeable future. To date, the cost of acquiring and maintaining our office space has not been material to us as a whole. 33
Biggest changeWe believe that the office space from these leased properties is sufficient for us to conduct our operations for the foreseeable future. To date, the cost of acquiring and maintaining our office space has not been material to us as a whole. 36
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
5 edited+4 added−0 removed12 unchanged
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
5 edited+4 added−0 removed12 unchanged
2022 filing
2023 filing
Biggest changeA putative class action complaint was filed against Maiden Holdings, Arturo M. Raschbaum, Karen L. Schmitt, and John M. Marshaleck in the United States District Court for the District of New Jersey on February 11, 2019.
Biggest changeThe Secretary of Labor is the respondent before the Second Circuit and the Court granted the Company's petition to intervene in order to present its position to the Court. The parties are awaiting a briefing order. A putative class action complaint was filed against Maiden Holdings, Arturo M. Raschbaum, Karen L. Schmitt, and John M.
Mine Safety Disclosures. Not applicable. 34 PART II
Mine Safety Disclosures. Not applicable. 37 PART II
On February 19, 2020, the Court appointed lead plaintiffs, and on May 1, 2020, lead plaintiffs filed an amended class action complaint (the “Amended Complaint”).
Marshaleck in the United States District Court for the District of New Jersey on February 11, 2019. On February 19, 2020, the Court appointed lead plaintiffs, and on May 1, 2020, lead plaintiffs filed an amended class action complaint (the “Amended Complaint”).
On February 7, 2023, the District Court denied Plaintiffs’ motion for reconsideration of the District Court’s decision denying Plaintiffs’ objection to the Magistrate Judge’s December 2021 ruling on discovery. The Company expects to file a dispositive motion in the near future. We believe the claims are without merit and we intend to vigorously defend ourselves.
On February 7, 2023, the District Court denied Plaintiffs’ motion for reconsideration of the District Court’s decision denying Plaintiffs’ objection to the Magistrate Judge’s December 2021 ruling on discovery. On May 26, 2023, the Company filed a Renewed Motion to Dismiss the Second Amended Complaint or, in the Alternative, for Summary Judgment, which has been fully briefed.
Turin filed a petition for review of the Administrative Law Judge's decision with the Administrative Review Board in the U.S. Department of Labor. We believe that we had good and sufficient reasons for terminating Mr. Turin's employment and that the claim is without merit. We will continue to vigorously defend ourself against this claim.
Turin filed a petition for review of the Administrative Law Judge's decision with the Administrative Review Board in the U.S. Department of Labor. On June 29, 2023, the Administrative Review Board issued a decision and order which summarily affirmed the September 2, 2021 decision and order of the Administrative Law Judge.
Added
The decision and order of the Administrative Review Board became the final order of the Secretary of Labor on July 27, 2023. On July 28, 2023, Mr. Turin filed a petition for review of the final order of the Secretary of Labor in the United States Court of Appeals for the Second Circuit.
Added
On December 19, 2023, the U.S. District Court for the District of New Jersey granted summary judgment on plaintiffs’ claim for securities fraud under Section 10(b) of the Securities Exchange Act to Maiden Holdings, Ltd. and individual defendants Arturo Raschbaum, Karen Schmitt, and John Marshalek.
Added
The Court held that the factual record failed to support, as a matter of law, plaintiffs’ allegations that the defendants had made false statements regarding the Company’s loss reserves. The Court also dismissed plaintiffs’ claims that the individual defendants were liable as control persons under Section 20(a) of the Securities Exchange Act for any such alleged false statements.
Added
Plaintiffs have appealed to the United States Court of Appeals for the Third Circuit. We believe the claims are without merit and we intend to vigorously defend ourselves.
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
1 edited+0 added−0 removed0 unchanged
Item 4. Mine Safety Disclosures
Mine Safety Disclosures — required of mining issuers
1 edited+0 added−0 removed0 unchanged
2022 filing
2023 filing
Biggest changeItem 4. Mine Safety Disclosures 34 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 35 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation 36 Item 8. Financial Statements and Supplementary Data 75
Biggest changeItem 4. Mine Safety Disclosures 37 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 38 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation 39 Item 8. Financial Statements and Supplementary Data 80
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
9 edited+0 added−5 removed6 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
9 edited+0 added−5 removed6 unchanged
2022 filing
2023 filing
Biggest changeAs a result of the Exchange, the Preference Shares were delisted from and no longer trade on the New York Stock Exchange as of the Exchange Date. No Preference Shares are issued or outstanding, and the Preference Shares were deregistered under the Securities Exchange Act of 1934, as amended.
Biggest changeAs a result of the Exchange, the Preference Shares were delisted and no longer trade on the New York Stock Exchange, and there are no remaining issued and outstanding Preference Shares as at December 31, 2023. All rights of the former holders related to ownership of the Preference Shares terminated upon completion of the Exchange.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common shares began publicly trading on NASDAQ Stock Market LLC ("NASDAQ") under the symbol "MHLD" on May 6, 2008 and currently trades on the NASDAQ Capital Market.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common shares began publicly trading on NASDAQ Stock Market LLC ("NASDAQ") under the symbol "MHLD" on May 6, 2008 and currently trades on the NASDA Q Capital Market.
Therefore, 41,439,348 common shares were issued to Maiden Reinsurance in exchange for the Preference Shares held which are reflected as treasury shares on the Consolidated Balance Sheet and are not treated as outstanding shares on December 31, 2022.
Therefore, 41,439,348 common shares were issued to Maiden Reinsurance in exchange for the Preference Shares held which are reflected as treasury shares on the Consolidated Balance Sheet and are not treated as outstanding shares on December 31, 2023.
During the year ended December 31, 2022, we repurchased a total of 403,716 (2021 - 834,851) common shares at an average price of $2.50 per share (2021 - $2.97) from employees, which represent tax withholding in respect of tax obligations on the vesting of both non-performance-based and discretionary performance-based restricted shares.
During the year ended December 31, 2023, we repurchased a total of 128,731 (2022 - 403,716) common shares at an average price of $2.25 per share (2022 - $2.50) from employees, which represent tax withholding in respect of tax obligations on the vesting of both non-performance-based and discretionary performance-based restricted shares.
Share Compensation and Pension Plans" included under Item 8 " Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for a discussion about the Company's equity compensation plans. 35
Equity Compensation Plans Please see " Notes to Consolidated Financial Statements - Note 14. Share Compensation and Pension Plans" included under Item 8 " Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for a discussion about the Company's equity compensation plans. 38
At December 31, 2022, we have a remaining authorization of $74.2 million for share repurchases. No repurchases of common shares were made subsequent to December 31, 2022 and through the period ended March 15, 2023 under its share repurchase authorization.
The Company's remaining authorization for common share repurchases was $71.6 million at December 31, 2023 (December 31, 2022 - $74.2 million). No repurchases of common shares were made subsequent to December 31, 2023 and through the period ended March 12, 2024 under the Company's share repurchase authorization plan.
The number of the Company's Series A, C and D Preference Shares held by Maiden Reinsurance pursuant to the 2020 Tender Offer and the 2021 Preference Share Repurchase Program was 13,813,116 at the Exchange Date.
The number of the Company's Series A, C and D Preference Shares held by Maiden Reinsurance pursuant to the tender offer in 2020 to repurchase Preference Shares and the Board authorizations to repurchase Preference Shares approved on March 3, 2021 and May 6, 2021 ("2021 Preference Share Repurchase Program") was 13,813,116 as at December 27, 2022.
At March 10, 2023, the closing sale price of our common share was $2.57 per share and there wer e 20 holders of record of our common shares.
At March 7, 2024, the closing sale price of our common share was $1.41 per share and there were 20 holders of record of our common shares.
On February 21, 2017, our Board approved the repurchase of up to $100.0 million of our common shares from time to time at market prices. During the years ended December 31, 2022 and 2021, the Company did not repurchase any common shares under its share repurchase authorization.
On February 21, 2017, our Board approved the repurchase of up to $100.0 million of our common shares from time to time at market prices. During the year ended December 31, 2023, Maiden Reinsurance repurchased 1,439,575 common shares at an average price per share of $1.83 under our authorized share repurchase plan (2022 - none).
Removed
In addition, all rights of the former holders related to ownership of the Preference Shares have terminated.
Removed
Preference Shares Repurchases On March 3, 2021, our Board approved the repurchase, including the repurchase by Maiden Reinsurance in accordance with its investment guidelines, of up to $100.0 million of our Preference Shares from time to time at market prices in open market purchases or as may be privately negotiated.
Removed
On May 6, 2021, our Board approved the additional repurchase, including the repurchase by Maiden Reinsurance in accordance with its investment guidelines (as may be amended), of up to $50.0 million of our Preference Shares from time to time at market prices in open market purchases or as may be privately negotiated.
Removed
The authorizations that were approved on March 3, 2021 and May 6, 2021 as described above are collectively referred to as the "2021 Preference Share Repurchase Program". For further information and a summary of the Company's preference shares repurchases made during the years ended December 31, 2022 and 2021, please see " Notes to Consolidated Financial Statements - Note 6.
Removed
Shareholders' Equity " included under Item 8 " Financial Statements and Supplementary Data" of this Annual Report on Form 10-K. Please also see " Notes to Consolidated Financial Statements - Note 14.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
229 edited+112 added−79 removed159 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
229 edited+112 added−79 removed159 unchanged
2022 filing
2023 filing
Biggest changeThe security holdings by sector and financial strength rating of our corporate bond holdings at December 31, 2022 and 2021 were as follows: Ratings (1) December 31, 2022 AAA A+, A, A- BBB+, BBB, BBB- BB+ or lower Fair Value % of Corporate bonds Corporate bonds ($ in thousands) Basic Materials — % — % 5.3 % — % $ 4,912 5.3 % Communications — % 5.7 % 5.2 % — % 10,004 10.9 % Consumer — % 6.3 % 39.1 % — % 41,767 45.4 % Energy — % 0.9 % 7.7 % — % 7,860 8.6 % Financial Institutions 1.6 % 20.3 % 0.4 % 5.2 % 25,272 27.5 % Industrials — % 2.3 % — % — % 2,138 2.3 % Total Corporate bonds 1.6 % 35.5 % 57.7 % 5.2 % $ 91,953 100.0 % Ratings (1) December 31, 2021 AAA A+, A, A- BBB+, BBB, BBB- BB+ or lower Fair Value % of Corporate bonds Corporate bonds ($ in thousands) Basic Materials — % 2.4 % 1.7 % — % $ 9,995 4.1 % Communications — % 2.4 % 3.2 % — % 13,480 5.6 % Consumer — % 2.4 % 31.3 % 2.8 % 87,753 36.5 % Energy — % 9.4 % 4.8 % — % 34,068 14.2 % Financial Institutions 0.6 % 18.8 % 12.9 % 2.6 % 84,025 34.9 % Industrials — % 1.0 % — % — % 2,393 1.0 % Technology — % 3.7 % — % — % 8,928 3.7 % Total Corporate bonds 0.6 % 40.1 % 53.9 % 5.4 % $ 240,642 100.0 % (1) Ratings as assigned by S&P, or equivalent 62 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 December 31, 2022, of which 100.0% are Euro denominated, with 54.7% invested in the Consumer Sector and 19.3% invested in the Financial Institutions sector: December 31, 2022 Fair Value % of Total Fixed Income Holdings Rating (1) ($ in thousands) Anheuser-Busch INBEV NV, 2.875%, Due 9/25/2024 $ 10,638 3.4 % BBB+ Chubb Ina Holdings Inc., 1.55%, Due 3/15/2028 6,139 1.9 % A Kraft Heinz Foods Co., 1.5%, Due 5/24/2024 6,118 1.9 % BBB- Glencore Finance (Europe) LTD, 1.875%, Due 9/13/2023 5,299 1.7 % BBB+ Santander Consumer Finance SA, 1.125%, Due 10/9/2023 5,281 1.7 % A Volkswagen International Finance NV, 1.125%, Due 10/2/2023 5,277 1.7 % A- America Movil SAB DE CV, 1.5%, Due 3/10/2024 5,221 1.7 % A- Utah Acquisition Sub Inc., 2.25%, Due 11/22/2024 5,165 1.6 % BBB- Molson Coors Beverage Co., 1.25%, Due 7/15/2024 5,164 1.6 % BBB- PPG Industries Inc., 0.875%, Due 11/3/2025 4,912 1.6 % BBB+ Total $ 59,214 18.8 % (1) Ratings as assigned by S&P, or equivalent At December 31, 2022 and 2021, respectively, we held the following non-U.S. dollar denominated securities: December 31, 2022 2021 ($ in thousands) Fair Value % of Total Fair Value % of Total Non-U.S. dollar denominated collateralized loan obligations $ 102,812 50.1 % $ 113,399 42.9 % Non-U.S. dollar denominated corporate bonds 90,491 44.1 % 147,740 55.9 % Non-U.S. government bonds 11,818 5.8 % 3,275 1.2 % Total non-U.S. dollar denominated securities $ 205,121 100.0 % $ 264,414 100.0 % At December 31, 2022 and 2021, respectively, 100.0% of our non-U.S. dollar denominated securities above were invested in euro.
Biggest changeThe Company's ten largest corporate holdings are 100.0% euro denominated, with 47.1% in the Consumer Sector and 28.3% in the Financial Institutions sector: December 31, 2023 Fair Value % of Total Fixed Income Holdings Rating (1) ($ in thousands) Anheuser-Busch INBEV SA, 2.875%, Due 9/25/2024 $ 10,957 4.4 % A- Chubb Ina Holdings Inc., 1.55%, Due 3/15/2028 6,764 2.7 % A America Movil SAB DE CV, 1.5%, Due 3/10/2024 5,490 2.2 % A- Molson Coors Beverage Co., 1.25%, Due 7/15/2024 5,433 2.2 % BBB Utah Acquisition Sub Inc., 2.25%, Due 11/22/2024 5,423 2.2 % BBB- FBD Insurance PLC, 5.0%, Due 10/9/2028 5,382 2.1 % NA PPG Industries Inc., 0.875%, Due 11/3/2025 5,273 2.1 % BBB+ Kellanova, 1.25%, Due 3/10/2025 4,302 1.7 % BBB BNP Paribas SA, 1.25%, Due 3/19/2025 3,523 1.4 % A- Vodafone Group PLC, 1.875%, Due 9/11/2025 2,903 1.1 % BBB Total $ 55,450 22.1 % (1) Ratings as assigned by S&P, or equivalent At December 31, 2023 and December 31, 2022, respectively, 100.0% of our non-U.S. dollar denominated securities were invested in euro denominated bonds.
As part of our expanded asset management activities, we have 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.
Asset Management As part of our expanded asset management activities, we have 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.
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.
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.
Other Insurance Revenue (Expense), Net All other insurance revenue (expense), net is produced by our Diversified Reinsurance segment. Please refer to the analysis of our Diversified Reinsurance segment for further discussion regarding the sources of other insurance revenue (expense), net.
Please refer to the analysis of our Diversified Reinsurance segment for further discussion. Other Insurance Revenue (Expense), Net All other insurance revenue (expense), net is produced by our Diversified Reinsurance segment. Please refer to the analysis of our Diversified Reinsurance segment for further discussion regarding the sources of other insurance revenue (expense), net.
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. 60 Interest rate risk is the price sensitivity of a security to changes in interest rates.
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.
These factors are combined with the actuarial judgment exercised by our reserving actuaries. While there can be no assurance that any of the above assumptions will prove to be correct, we believe that this process represents a realistic and appropriate basis for estimating the reserve for loss and LAE.
These factors are combined with the actuarial judgment exercised by our reserving actuaries. While there can be no assurance that any of the above assumptions will 47 prove to be correct, we believe that this process represents a realistic and appropriate basis for estimating the reserve for loss and LAE.
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 Consolidated Statements of Income. Revenues and expenses in foreign currencies are converted at quarterly average exchange rates during the year. The effect of the translation adjustments for foreign operations is included in AOCI.
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 Consolidated Statements of Income. Revenues and expenses in foreign currencies are converted at average exchange rates during the year. The effect of the translation adjustments for foreign operations is included in AOCI.
As a result of these transactions, we are not 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.
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.
The five assumptions above significantly influence the Company’s determination of initial expected loss ratios and expected loss reporting and payment patterns that are the key inputs which impact potential variability in the estimate of the 44 reserve for loss and LAE and are applicable to each of the Company’s business segments.
The five assumptions above significantly influence the Company’s determination of initial expected loss ratios and expected loss reporting and payment patterns that are the key inputs which impact potential variability in the estimate of the reserve for loss and LAE and are applicable to each of the Company’s business segments.
The Company’s management believes its current sources of liquidity are adequate to meet its cash requirements for the next twelve months as we generally expect negative operating cash flows to be sufficiently offset by positive investing cash flows.
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 negative operating cash flows to be sufficiently offset by positive investing cash flows.
"Financial Statements and Supplementary Data" of this Form 10-K for further details. The Company creates a statistical distribution around the estimate of reserve for loss and LAE based on an assumption of the volatility inherent in the estimate.
"Financial Statements and Supplementary Data" of this Form 10-K for further details. 48 The Company creates a statistical distribution around the estimate of reserve for loss and LAE based on an assumption of the volatility inherent in the estimate.
We excluded net realized and unrealized gains (losses) on investment, 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 excluded net realized and 44 unrealized gains (losses) on investment, 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.
(2) Underwriting income (loss) is a non-GAAP measure and is calculated as net premiums earned plus other insurance revenue (expense), less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities.
(2) Underwriting loss is a non-GAAP measure and is calculated as net premiums earned plus other insurance revenue (expense), less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities.
We believe the inclusion of this unamortized deferred gain under 72 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.
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.
The Company no longer presents certain non-GAAP measures such as combined ratio and its related components in this Annual Report on Form 10-K for the year ended December 31, 2022, 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.
The Company no longer presents certain non-GAAP measures such as combined ratio and its related components in this Annual Report on Form 10-K for the year ended December 31, 2023, 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.
Factors that may affect payments to holders of the 2013 Senior 69 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.
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.
At December 31, 2022, the Company was not involved in any material claims litigation or arbitration proceedings. Due to the large volume of potential transactions that must be recorded in the insurance and reinsurance industry, backlogs in the recording of the Company’s business activities can also impair the accuracy of its loss and LAE reserve estimates.
At December 31, 2023, the Company was not involved in any material claims litigation or arbitration proceedings. Due to the large volume of potential transactions that must be recorded in the insurance and reinsurance industry, backlogs in the recording of the Company’s business activities can also impair the accuracy of its loss and LAE reserve estimates.
Significant Accounting Policies" included under Item 8 " Financial Statement and Supplementary Data" , of this Annual Report on Form 10-K for a discussion on recently issued accounting pronouncements not yet adopted. 74 Item 8. Financial Statements and Supplementary Data. See our Consolidated Financial Statements and Notes thereto commencing on pages F- 1 through F-60 below. Item 9.
Significant Accounting Policies" included under Item 8 " Financial Statement and Supplementary Data" , of this Annual Report on Form 10-K for a discussion on recently issued accounting pronouncements adopted and not yet adopted. 79 Item 8. Financial Statements and Supplementary Data. See our Consolidated Financial Statements and Notes thereto commencing on pages F- 1 through F-60 below. Item 9.
Therefore, no liability has been accrued under ASC 450-20. 70 Non-GAAP Financial 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.
Therefore, no liability has been accrued under ASC 450-20. 75 Non-GAAP Financial 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.
Trends in recent years have increased our confidence in our recorded ultimate losses for our insurance liabilities in run-off, however a prudent assessment dictates that the run-off portfolio still requires additional maturity to fully emerge, as evidenced by the adverse loss development we experienced in 2022.
Trends in recent years have increased our confidence in our recorded ultimate losses for our insurance liabilities in run-off, however a prudent assessment dictates that the run-off portfolio still requires additional maturity to fully emerge, as evidenced by the adverse loss development we experienced in 2022 and 2023.
Factors Creating Uncertainty in the Estimation of the Reserve for Loss and Loss Adjustment Expenses: While management does not include an explicit or implicit provision for uncertainty in its reserve for loss and LAE, certain of the Company’s business lines are by their nature subject to additional uncertainties, which are discussed in detail below.
Factors Creating Uncertainty in the Estimation of the Reserve for Loss and LAE: While management does not include an explicit or implicit provision for uncertainty in its reserve for loss and LAE, certain of the Company’s business lines are by their nature subject to additional uncertainties, which are discussed in detail below.
Reinsurance recoverable on unpaid losses covered by the ADC portion of the LPT/ADC Agreement are recorded as part of the deferred gain on retroactive reinsurance shown on the Consolidated Balance Sheets which represents the cumulative adverse loss development under the AmTrust Quota Share covered by the LPT/ADC Agreement at December 31, 2022.
Reinsurance recoverable on unpaid losses covered by the ADC portion of the LPT/ADC Agreement are recorded as part of the deferred gain on retroactive reinsurance shown on the Consolidated Balance Sheets which represents the cumulative adverse loss development under the AmTrust Quota Share covered by the LPT/ADC Agreement at December 31, 2023.
Fair Value of Financial Instruments " included under Item 8 " Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for a discussion on the fair value methodology and valuation techniques used by the Company to determine the fair value of the financial instruments held at December 31, 2022 and 2021.
Fair Value of Financial Instruments " included under Item 8 " Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for a discussion on the fair value methodology and valuation techniques used by the Company to determine the fair value of the financial instruments held at December 31, 2023 and 2022.
To the extent that these exposures are not fully hedged or the hedges are ineffective, our results of operations or equity may be adversely effected. At December 31, 2022, no such hedges or hedging strategies were in force or had been entered into.
To the extent that these exposures are not fully hedged or the hedges are ineffective, our results of operations or equity may be adversely effected. At December 31, 2023, no such hedges or hedging strategies were in force or had been entered into.
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 Consolidated Balance Sheets. 42 Critical Accounting Policies and Estimates It is important to understand our accounting policies in order to understand our financial position and results of operations.
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 Consolidated Balance Sheets. 45 Critical Accounting Policies and Estimates It is important to understand our accounting policies in order to understand our financial position and results of operations.
Maiden LF and Maiden GF are subject to statutory and regulatory restrictions under the Swedish FSA that limit the maximum amount of annual dividends or distributions paid by Maiden LF and Maiden GF to Maiden Holdings. At December 31, 2022, Maiden LF and Maiden GF are not allowed to pay dividends or distributions without the permission of the Swedish FSA.
Maiden LF and Maiden GF are subject to statutory and regulatory restrictions under the Swedish FSA that limit the maximum amount of annual dividends or distributions paid by Maiden LF and Maiden GF to Maiden Holdings. At December 31, 2023, Maiden LF and Maiden GF are not allowed to pay dividends or distributions without the permission of the Swedish FSA.
Significant Assumptions Employed in the Estimation of Reserve for Loss and Loss Adjustment Expenses: The most significant assumptions used at December 31, 2022 to estimate the reserve for loss and LAE within our reporting segments are as follows: • the information developed from internal and independent external sources can be used to develop meaningful estimates of the likely future performance of business bound by the Company; • the loss and exposure information provided by ceding companies, insureds and brokers in support of their reinsurance submissions have been used by the Company's pricing actuaries to derive meaningful estimates of the likely future performance of business bound with respect to each contract and policy; • historic loss development and trend experience may be used to predict future loss development and trends; • no significant emergence of losses or types of losses that are not represented in the information supplied to the Company by its brokers, ceding companies and insureds will occur; and • the Company is able to identify and properly adjust for changes to case reserving and claims settlement rates in the underlying data.
Significant Assumptions Employed in the Estimation of Reserve for Loss and LAE: The most significant assumptions used at December 31, 2023 to estimate the reserve for loss and LAE within our reporting segments are as follows: • the information developed from internal and independent external sources can be used to develop meaningful estimates of the likely future performance of business bound by the Company; • the loss and exposure information provided by ceding companies, insureds and brokers in support of their reinsurance submissions have been used by the Company's pricing actuaries to derive meaningful estimates of the likely future performance of business bound with respect to each contract and policy; • historic loss development and trend experience may be used to predict future loss development and trends; • no significant emergence of losses or types of losses that are not represented in the information supplied to the Company by its brokers, ceding companies and insureds will occur; and • the Company is able to identify and properly adjust for changes to case reserving, claims settlement rates, and the impact of claims inflation in the underlying data.
To limit our exposure to unexpected interest rate increases that could reduce the value of our fixed maturity securities and our shareholders' equity, the Company holds floating rate securities whose fair values are less sensitive to changes in interest rates.
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.
The effective tax rate on the Company's net income differs from the statutory rate of zero percent under Bermuda law due to tax on foreign operations, primarily the U.S. and Sweden.
The effective tax rate on the Company's net loss differs from the statutory rate of zero percent under Bermuda law due to tax on foreign operations, primarily the U.S. and Sweden.
However, as interest rates have increased and moved towards historically observed levels, risk-adjusted returns for active reinsurance underwriting of new prospective risks may become more attractive and while we have no immediate plans to resume such underwriting, we continue to evaluate if such a strategy would produce suitable value for shareholders.
However, as interest rates have increased and moved towards historically observed levels, risk-adjusted returns for active reinsurance underwriting of new prospective risks may become more attractive and while we have no immediate plans to resume such underwriting, we continue to evaluate if such a strategy, even on a limited basis, would produce suitable value for shareholders.
At December 31, 2022, there were no significant backlogs related to the processing of policy or contract information in any of our reporting segments.
At December 31, 2023, there were no significant backlogs related to the processing of policy or contract information in any of our reporting segments.
In recent years, we have invested approximately $272.5 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.
In recent years, we have invested approximately $309.0 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.
Business Strategy We continued to implement our revised operating strategy during 2022, which leverages the significant assets and capital we retain. 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.
Business Strategy We continued to deploy our revised operating strategy during 2023 which leverages the significant assets and capital we retain. 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 addition, we have a LPT/ADC Agreement with 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 Consolidated Financial Statements included in Part II Item 8. "Financial Statements and Supplementary Data" .
In addition, we have an LPT/ADC Agreement with 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 " included in Part II Item 8. "Financial Statements and Supplementary Data" .
The differential in duration between these assets and liabilities may fluctuate over time and, in the case of our 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 bonds ("Agency MBS") and commercial mortgage-backed securities.
The differential in duration between these assets and liabilities may fluctuate over time and, in the case of our fixed maturities, historically has been affected by factors such as market conditions, changes in asset mix and prepayment speeds in the case of both Agency MBS and commercial mortgage-backed securities held.
Non-GAAP operating earnings and Non-GAAP diluted operating earnings per share attributable to common shareholders Non-GAAP operating earnings and Non-GAAP diluted operating earnings per share attributable to common shareholders can be reconciled to the nearest U.S.
Non-GAAP operating (loss) earnings and Non-GAAP diluted operating (loss) earnings per common share (attributable) available to common shareholders Non-GAAP operating (loss) earnings and Non-GAAP diluted operating (loss) earnings per common share (attributable) available to common shareholders can be reconciled to the nearest U.S.
As our insurance liabilities continue to run-off and the required capital to operate our business for regulatory purposes decreases, we have modified Maiden Reinsurance’s investment policy (which has been approved by the Vermont DFR as noted) and have expanded the range of asset classes we invest in to enhance the income and total returns our investment portfolio produces.
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.
At December 31, 2022 and 2021, these respective durations in years were as follows: December 31, 2022 2021 Fixed maturities and cash and cash equivalents 1.3 1.5 Reserve for loss and LAE - gross of LPT/ADC Agreement reserves 5.3 4.4 Reserve for loss and LAE - net of LPT/ADC Agreement reserves 1.1 1.4 During the year ended December 31, 2022, the weighted average duration of our fixed maturity investment portfolio decreased by 0.2 years to 1.3 years while the duration for reserve for loss and LAE increased by 0.9 years to 5.3 years.
At December 31, 2023 and 2022, these respective durations in years were as follows: December 31, 2023 2022 Fixed maturities and cash and cash equivalents 1.2 1.3 Reserve for loss and LAE - gross of LPT/ADC Agreement reserves 5.8 5.3 Reserve for loss and LAE - net of LPT/ADC Agreement reserves 1.6 1.1 During the year ended December 31, 2023, the weighted average duration of our fixed maturity investment portfolio decreased by 0.1 years to 1.2 years while the duration for reserve for loss and LAE increased by 0.5 years to 5.8 years.
We also have various historic reinsurance programs underwritten by Maiden Reinsurance which are in run-off, including the liabilities associated with AmTrust which we terminated in 2019 as discussed in " Note 10 — Related Party Transactions" of the Notes to Consolidated Financial Statements included in Part II Item 8. "Financial Statements and Supplementary Data" .
We have various historic reinsurance programs underwritten by Maiden Reinsurance which are in run-off, including the liabilities associated with AmTrust which we terminated in 2019 as discussed in " Note 10 — Related Party Transactions" included in Part II Item 8. "Financial Statements and Supplementary Data" .
Amortization of the deferred gain will not occur until paid losses have exceeded the minimum retention under the LPT/ADC Agreement, which is estimated to be in 2025. Loss reserves do not represent an exact calculation of liability. Rather, loss reserves are estimates of what we reasonably expect the ultimate resolution and administration of claims will cost.
Amortization of the deferred gain will not occur until paid losses have exceeded the minimum retention under the LPT/ADC Agreement, which is presently estimated to be before the end of 2024. Loss reserves do not represent an exact calculation of liability. Rather, loss reserves are estimates of what we reasonably expect the ultimate resolution and administration of claims will cost.
During the years ended December 31, 2022 and 2021, Maiden LF and Maiden GF did not pay any dividends to Maiden Holdings. Maiden Holdings’ wholly owned U.K. subsidiary, Maiden Global, operates as a reinsurance services and holding company. Maiden Global is subject to regulation by the U.K. Financial Conduct Authority (the "FCA").
During the years ended December 31, 2023 and 2022, Maiden LF and Maiden GF did not pay any dividends to Maiden Holdings. Maiden Holdings’ wholly owned U.K. subsidiary, Maiden Global, operates as a reinsurance services and holding company. Maiden Global is subject to regulation by the U.K. FCA.
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. We experienced such conditions during 2022.
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.
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.
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.
European Hospital Liability was due in part to higher than expected loss emergence in Italian Hospital Liability policies as well as the agreed exit cost of $3.7 million (€3.4 million) for the commutation of French Hospital Liability policies as described in "Note 10. Related Party Transactions".
Net adverse PPD in 2022 for European Hospital Liability was due to higher than expected loss emergence in Italian Hospital Liability policies as well as the agreed exit cost of $3.7 million (€3.4 million) for the commutation of French Hospital Liability policies as described in "Note 10. Related Party Transactions".
The net loss for Maiden NA and Maiden Holdings was largely due to interest and amortization expenses on the Senior Notes as well as general and administrative expenses. The net loss in Maiden NA was also due to income tax expense incurred.
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 periods.
On January 11, 2019, a portion of the existing trust accounts used for collateral on the AmTrust Quota Share were converted to a funds withheld arrangement. The Company transferred $575.0 million to AmTrust as a funds withheld receivable which bears an annual interest rate of 2.1%, subject to annual adjustment.
On January 11, 2019, a portion of the existing trust accounts used for collateral on the AmTrust Quota Share were converted to a funds withheld arrangement under which the Company transferred $575.0 million to AmTrust as a funds withheld receivable which bears an annual interest rate of 3.5%, subject to annual adjustment. The annual interest rate was 2.1% during 2022.
Net foreign exchange gains were $8.9 million during the year ended December 31, 2022 compared to net foreign exchange gains of $7.5 million during the year ended December 31, 2021.
Net foreign exchange losses were $5.7 million during the year ended December 31, 2023 compared to net foreign exchange gains of $8.9 million during the year ended December 31, 2022.
The prior year development is discussed in greater detail in the individual segment discussion and analysis and is primarily associated with the run-off of terminated reinsurance contracts in the AmTrust Reinsurance and Diversified Reinsurance segments.
The segment net loss development is discussed in greater detail in the individual segment discussion and analysis and is primarily associated with the run-off of terminated reinsurance contracts in the AmTrust Reinsurance and Diversified Reinsurance segments.
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 decreased by $5.1 million or 14.1% for the year ended December 31, 2022, compared to 2021 primarily due to lower corporate-related administrative expenses.
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 decreased by $0.2 million or 0.5% for the year ended December 31, 2023, compared to 2022 primarily due to lower corporate-related administrative expenses.
As of December 31, 2022, 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 $9.1 million.
As of December 31, 2023, 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 $5.6 million.
(7) Diluted book value per common share is calculated by dividing common shareholders' equity, adjusted for assumed proceeds from the exercise of dilutive options, divided 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. (7) Diluted book value per common share is calculated by dividing common shareholders' equity, adjusted for assumed proceeds from the exercise of dilutive options, divided by the number of outstanding common shares plus dilutive options and restricted shares (assuming exercise of all dilutive share based awards).
The Senior Notes are unsecured and unsubordinated obligations of the Company. Maiden Holdings does not have any significant operations or assets other than our 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.
Maiden Holdings does not have any significant operations or assets other than our 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.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 75
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 80
For the year ended December 31, 2022, the proceeds from the sales, maturities and calls exceeded the purchases of fixed maturity securities by $233.4 million compared to net proceeds of $575.4 million during 2021.
For the year ended December 31, 2023, the proceeds from the sales, maturities and calls exceeded the purchases of fixed maturity securities by $77.0 million compared to net proceeds of $233.4 million during 2022.
Consequently, cash and cash equivalents and investments are pledged in favor of ceding companies to comply with relevant insurance regulations or contractual requirements. At December 31, 2022, the Company had letters of credit outstanding of $40.3 million for collateral purposes which are secured by cash and fixed maturities with a fair value of $47.1 million.
Consequently, cash and cash equivalents and investments are pledged in favor of ceding companies to comply with relevant insurance regulations or contractual requirements. At December 31, 2023, the Company had letters of credit outstanding of $40.5 million for collateral purposes which are secured by cash and fixed maturities with a fair value of $46.9 million.
The Company is not bound to such guarantees without its express authorization. As discussed above, at December 31, 2022, guarantees of $42.1 million have been provided to lenders by the Company on behalf of real estate joint ventures, however, the likelihood of the Company incurring any losses pertaining to project level financing guarantees was determined to be remote.
The Company is not bound to such guarantees without its express authorization. As discussed above, at December 31, 2023, guarantees of $62.5 million have been provided to lenders by the Company on behalf of the real estate joint venture, however, the likelihood of the Company incurring any losses pertaining to project level financing guarantees was determined to be remote.
The following table details our average aggregate fixed income assets (at cost) and investment book yield for the years ended December 31, 2022 and 2021: For the Year Ended December 31, 2022 2021 ($ in thousands) Average aggregate fixed income assets, at cost (1) $ 1,226,134 $ 1,794,173 Annualized investment book yield 2.2 % 1.9 % (1) Fixed income assets include AFS securities, cash and restricted cash, funds held receivable, and loan to related party.
The following table details our average aggregate fixed income assets (at cost) and investment book yield for the years ended December 31, 2023 and 2022: For the Year Ended December 31, 2023 2022 ($ in thousands) Average aggregate fixed income assets, at cost (1) $ 799,812 $ 1,226,134 Annualized investment book yield 4.1 % 2.2 % (1) Fixed income assets include AFS securities, cash and restricted cash, funds held receivable, and loan to related party.
The run-off of our historic reinsurance programs significantly underperformed during 2022, and we experienced adverse prior year reserve development of $32.6 million which offset much of the positive progress made in our capital and asset management strategies.
The run-off of our historic reinsurance programs significantly underperformed during 2023, and we experienced adverse prior year reserve development of $38.2 million which offset much of the positive progress made in our capital and asset management strategies.
Total other insurance (expense) revenue, net decreased by $5.6 million for the year ended December 31, 2022 compared to 2021 largely due to fair value changes on non-hedged underwriting-related derivatives in GLS.
Total other insurance revenue (expense), net increased by $4.6 million for the year ended December 31, 2023 compared to 2022 largely due to fair value changes on non-hedged underwriting-related derivatives in GLS.
The non-GAAP underwriting loss above was 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 $13.2 million in the European Hospital Liability Quota Share, which is not covered by the LPT/ADC Agreement; • favorable development on commuted Workers Compensation losses which are contractually covered by the LPT/ADC Agreement that reduced the deferred gain liability on retroactive reinsurance for the year ended December 31, 2022; and • underwriting loss of $12.1 million in the Diversified Reinsurance segment which included an underwriting loss of $8.9 million from GLS operations during the year ended December 31, 2022.
The non-GAAP underwriting loss of $24.0 million for the year ended December 31, 2023 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 $10.3 million 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 $3.8 million for the year ended December 31, 2023; and • underwriting loss of $9.1 million in the Diversified Reinsurance segment, which included an underwriting loss of $4.6 million from GLS operations during the year ended December 31, 2023.
The effective rate of income tax was 0.9% for the year ended December 31, 2022 compared to an income tax rate of 0.1% for the year ended December 31, 2021.
The effective rate of income tax was (0.5)% for the year ended December 31, 2023 compared to an income tax rate of 0.9% for the year ended December 31, 2022.
Net premiums earned increased by $0.3 million or 1.1% during the year ended December 31, 2022 compared to 2021.
Net premiums earned increased by $1.1 million or 3.8% during the year ended December 31, 2023 compared to 2022.
(3) Underwriting (loss) income is a non-GAAP measure and is calculated as net premiums earned plus other insurance (expense) revenue, less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities.
(3) Underwriting (loss) income is a non-GAAP measure and is calculated as net premiums earned plus other insurance (expense) 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.
At December 31, 2022, net foreign exchange gains were 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 December 31, 2022 included reserves for net loss and LAE of $333.9 million.
At December 31, 2023, net foreign exchange losses were 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 December 31, 2023 included reserves for net loss and LAE of $287.0 million.
During the years ended December 31, 2022 and 2021, Maiden NA did not pay any dividends to Maiden Holdings during both periods. Maiden Holdings has two Swedish domiciled operating subsidiaries, Maiden LF and Maiden GF, which are both regulated by the Swedish FSA.
During the years ended December 31, 2023 and 2022, Maiden NA did not pay any dividends to Maiden Holdings. Maiden Holdings has two Swedish domiciled operating subsidiaries, Maiden LF and Maiden GF, which are both subject to regulation and supervision by the Swedish FSA.
Other Insurance (Expense) Revenue, Net - Other insurance (expense) revenue, net for the year ended December 31, 2022 includes fee income earned from our GLS business, fair value changes in 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 by the Company as specified in the table below.
Other Insurance Revenue, Net - Total other insurance revenue (expense), 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 by the Company as specified in the table below.
Intercompany balances with subsidiaries that are not issuers or guarantors and any related party transactions were separately disclosed above and are not included in the total assets and total liabilities presented for Maiden NA and Maiden Holdings.
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 and are not included in the total assets and total liabilities presented for Maiden NA and Maiden Holdings.
At December 31, 2022, net foreign exchange gains were 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 December 31, 2022 included net loss reserves of $333.9 million.
At December 31, 2023, net foreign exchange losses were 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 December 31, 2023 included net loss reserves of $287.0 million.
(2) Average duration in years. During the year ended December 31, 2022, the yield on the 10-year U.S. Treasury bond increased by 236 basis points to 3.88%. The 10-year U.S. Treasury rate is the key risk-free determinant in the fair value of many of the fixed income securities in our portfolio. The U.S.
(2) Average duration in years. During the year ended December 31, 2023, the yield on the 10-year U.S. Treasury bond remained at 3.88% compared to December 31, 2022. The 10-year U.S. Treasury rate is the key risk-free determinant in the fair value of many of the fixed income securities in our portfolio.
The table below details prior year loss development by line of business for the years ended December 31, 2022 and 2021: For the Year Ended December 31, 2022 2021 Prior Year Loss Development adverse (favorable) ($ in thousands) IIS business $ (1,683) $ (2,044) GLS 1,825 — Other run-off lines 4,410 (1,517) Total Diversified Reinsurance Prior Year Development $ 4,552 $ (3,561) 53 Commission and Other Acquisition Expenses - Commission and other acquisition expenses decreased by $0.9 million or 6.2% for the year ended December 31, 2022 compared to 2021.
The table below details prior year loss development by line of business for the years ended December 31, 2023 and 2022: For the Year Ended December 31, 2023 2022 Prior Year Loss Development adverse (favorable) ($ in thousands) IIS business $ 2,504 $ (1,683) GLS 954 1,825 Other run-off lines 982 4,410 Total Diversified Reinsurance Prior Year Development $ 4,440 $ 4,552 Commission and Other Acquisition Expenses - Commission and other acquisition expenses decreased by $0.3 million or 2.0% for the year ended December 31, 2023 compared to 2022.
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. These products also produced reinsurance programs which were underwritten by our wholly owned subsidiary Maiden Reinsurance. Our business currently consists of two reportable segments: Diversified Reinsurance and AmTrust Reinsurance.
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. These products also produced reinsurance programs which were underwritten by our wholly owned subsidiary Maiden Reinsurance.
As of December 31, 2022, the Company had investable assets of $1.2 billion compared to $1.7 billion as of December 31, 2021. Investable assets are the combined total of our investments, cash and cash equivalents (including restricted cash), loan to a related party and funds withheld receivable.
As of December 31, 2023, the Company had investable assets of $914.3 million compared to $1.2 billion as of December 31, 2022. 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.
Despite 56 the initial inflow of new business from GLS, the run-off of our prior reinsurance business has continued to cause significant negative operating cash flows as we run off the AmTrust Reinsurance segment reserves as shown in the cash flows table below.
The run-off of our prior reinsurance business has continued to cause significant negative operating cash flows as we run off the AmTrust Reinsurance segment reserves as shown in the cash flows table below.
Net Income Net income available to Maiden common shareholders for the year ended December 31, 2022 was $55.4 million compared to net income available to Maiden common shareholders of $117.6 million in 2021.
Net (loss) income (attributable) available to Maiden common shareholders Net loss attributable to Maiden common shareholders for the year ended December 31, 2023 was $38.6 million compared to net income available to Maiden common shareholders of $55.4 million in 2022.
At December 31, 2022, Maiden LF and Maiden GF each had a statutory capital and surplus of $7.8 million and $8.5 million, respectively, exceeding the amounts required to be maintained of $4.3 million and $5.6 million, respectively, at December 31, 2022.
At December 31, 2023, Maiden LF and Maiden GF had statutory capital and surplus of $7.8 million and $8.5 million, respectively, exceeding the amounts required to be maintained of $4.5 million and $5.0 million, respectively, at December 31, 2023.
Income Tax Benefit (Expense) The Company recognized an income tax benefit of $0.6 million for the year ended December 31, 2022 compared to an income tax expense of $15.0 thousand recognized for 2021. The income tax expense for 2021 was largely generated on the operating losses of our international subsidiaries.
Income Tax Expense (Benefit) The Company recognized an income tax expense of $0.2 million for the year ended December 31, 2023 compared to an income tax benefit of $0.6 million recognized for 2022. The income tax expense (benefit) for 2023 and 2022 was largely generated on the operating results of our international subsidiaries.
As shown in the table above, adjusted for the decrease in the deferred gain under the LPT/ADC Agreement of $0.5 million during the year ended December 31, 2022, the non-GAAP underwriting loss was $55.4 million.
As shown in the table above, adjusted for the increase in the deferred gain under the LPT/ADC Agreement of $25.5 million during the year ended December 31, 2023, the non-GAAP underwriting loss was $24.0 million.
This compared to a non-GAAP underwriting loss of $17.5 million for 2021 when adjusted for the decrease in the deferred gain under the LPT/ADC Agreement of $29.1 million during the year ended December 31, 2021.
This compared to a non-GAAP underwriting loss of $55.4 million for 2022 when adjusted for the decrease in the deferred gain under the LPT/ADC Agreement of $0.5 million during the year ended December 31, 2022.
Currently, salaries and incentive compensation costs comprise more than one-half of our total general and administrative expenses and thereby could have a material impact our net operating results. Recent Accounting Pronouncements Refer to "Notes to Consolidated Financial Statements - Note 2.
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. Recent Accounting Pronouncements Refer to "Notes to Consolidated Financial Statements - Note 2.
During the second quarter of 2022, 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. Subsequent to that approval, Maiden Reinsurance paid $18.8 million in dividends to Maiden NA during the year ended December 31, 2022.
In 2022 and 2023, 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 year ended December 31, 2023, Maiden Reinsurance paid dividends of $25.0 million to Maiden NA (2022 - $18.8 million).
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