Maiden widens loss in Q3 due to AmTrust

Bermuda-based reinsurer Maiden Holdings has reported a significant increase in net losses for the third quarter of 2018 as adverse prior year loss development worsened in the AmTrust reinsurance segment.

The net loss attributable to Maiden common shareholders was $308.8 million in the third quarter compared with a net loss of $63.6 million in the third quarter of 2017. Maiden focuses on providing non-catastrophic, customized reinsurance products and services to small and mid-size insurance companies in the United States and Europe.

Net loss and loss adjustment expenses increased to $600.3 million compared to $370.8 million in the third quarter of 2017 due primarily to higher adverse prior year loss development for the AmTrust reinsurance segment.

The reinsurer experienced higher adverse prior year loss development of $210.4 million in the AmTrust reinsurance segment compared to $61.1 million in the same period in 2017.

The 2018 development was largely from workers compensation, which represented nearly half of the adverse development, and was primarily driven by accident years 2014 to 2017, and to a lesser extent, development in European hospital liability, commercial auto and general liability.

The combined ratio deteriorated to 150.7 percent compared to 115.6 percent during the period. In the third quarter of 2018, gross premiums written increased to $484.5 million from $443.0 million in the third quarter of 2017.

The loss ratio in the third quarter of 2018 was 115.0 percent compared to 80.6 percent reported in the third quarter of 2017.

The announced sale of the US reinsurance treaty operations resulted in an impairment loss of $74.2 million as the company wrote off the remaining goodwill and intangible assets.

Bermuda-based Enstar Group is acquiring Maiden Reinsurance North America from a subsidiary of Maiden Holdings.

Maiden Re North America is a diversified insurance company domiciled in Missouri that provides property and casualty treaty reinsurance, casualty facultative reinsurance and accident and health treaty reinsurance.

The net consideration payable in the transactions is $307.5 million, subject to certain closing adjustments. Enstar will assume approximately $1.3 billion of net loss and loss adjustment expense reserves and unearned premium reserves upon closing.

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