Maiden explores strategic options
Maiden Holdings’ board of directors has retained BofA Merrill Lynch to assist the company in evaluating strategic alternatives to enhance the value of the enterprise.
The move comes after Bermuda-based Maiden reported a net loss of $199.1 million for the full year of 2017 compared to a net income of $15.2 million in 2016. For the fourth quarter of 2017 the reinsurer reported a net loss of $133.6 million compared to a net loss of $74.7 million in the same period of 2016.
The combined ratio of the AmTrust Reinsurance segment deteriorated to 131.1 percent in the fourth quarter of 2017 from 108.1 percent in the same period of 2016. The segment experienced adverse loss development of $139.0 million due primarily to workers' compensation and general liability lines of business and, to a lesser extent, commercial auto liability.
Overall, reserves for loss and loss adjustment expenses increased to $3.55 billion in 2017 from $2.90 billion in 2016.
Maiden CEO Art Raschbaum commented on the firm’s performance by saying that he believes that Maiden had taken “significant steps” to strengthen reserves for losses which will help to accelerate a return to profitability in 2018 and beyond. Reserve actions in the fourth quarter reflect “a more aggressive response” to observed development in the quarter and throughout the year on the AmTrust Reinsurance segment as well as the diversified segment, he noted.
In March 2018, AM Best downgraded Maiden’s rating outlook due to “a decline in balance sheet strength and the potential that continuation of recent underwriting and operating trends could lead to negative action on the rating”.
AM Best views Maiden’s new announcement to retain BofA Merrill Lynch as a step in the process of reviewing strategic options, but the rating agency added that should management determine that specific action will be taken, it will evaluate the ratings impact of that decision.
Maiden Holdings focuses on providing non-catastrophic, customized reinsurance products and services to small and mid-size insurance companies in the US and Europe.
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