Maiden Holdings' (MHLD) Q1 Earnings & Revenues Down Y/Y

Maiden Holdings, Ltd. (NASDAQ:MHLD) reported earnings per share of 20 cents in the first quarter of 2018, which declined 23% year over year.

Operating revenues declined 3.1% year over year to $728 million. The company’s revenues were affected by a persistent moderation of premium from AmTrust, the biggest client of Maiden Holdings. Plus, the termination of several accounts of the Diversified Segment over the past year contributed to this downside.

Behind the Headlines

In the quarter under review, gross premiums declined 7.7% to $852.6 million. This is attributable to non-renewals as well as re-underwriting of some Diversified contracts conducted in 2017 and earlier this year.

Net investment income inched up 1.7% to $42.9 million in the reported quarter.

Total revenues came in at $732.02 million, declining 3.09% year over year due to net premiums and other insurance revenues.

Total expenses reduced nearly 2.5% year over year to $701 million owing to lower net loss and loss adjustment expenses, commission costs and other acquisition costs.

The company incurred an underwriting loss of $3.8 million against the year-ago quarterly net income of $1.1 million. Combined ratio deteriorated 90 bases points (bps) year over year to 101.8%.

Segment Result

Diversified Reinsurance: Net premiums earned decreased 3.8% to $194.14 million in the quarter under review. The reasons include underwriting actions taken as well as non-renewals.

The segment’s underwriting income skyrocketed 178% to $831 million compared with $299 million in the prior-year quarter. Combined ratio improved 30 bps to 99.6% driven by lower adverse prior-year loss development and higher initial current-year loss ratios for premiums earned during the period.

AmTrust Reinsurance: Net premiums earned for this segment declined 3.2% to $491.3 million mainly because of the decline in net premiums written in the AmTrust quota share.

Underwriting loss came in at $4.2 million versus underwriting income of $1.1 million in the year-earlier quarter. Combined ratio deteriorated 110 bps year over year to 100.9% attributable to higher initial current-year loss ratios for premiums earned during the period slightly. It was partially offset by a comparatively smaller amount of adverse prior period loss development.

Other: Underwriting loss of $0.4 million was wider than the same of $0.3 million in the comparable period last year.

Financial Update

Maiden Holdings exited the first quarter with total investment of $5.1 billion against $5.1 billion at year-end 2017. Cash and cash equivalents as of Mar 31, 2018 were $73.3 million up 7.9% from year-end 2017.

The company’s net senior notes totaled $254.5 million which remains almost flat compared with 2017 end level.

Shareholders’ equity of $1.2 billion at the end of the first quarter was down 5.7% from the level at 2017 end.

As of Mar 31, 2018, book value per share was $8.34, down 9.8% from 2017-end level.

Operating return on equity was 7.6%, contracting 30 basis points year over year.

Zacks Rank

Maiden Holdings currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other P&C Insurers

Among other players from the same industry having reported first-quarter earnings, Alleghany Corp. (NYSE:Y) , Axis Capital Holdings Ltd. (NYSE:AXS) and American Financial Group, Inc. (NYSE:AFG) beat the Zacks Consensus Estimate.

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