FBR Fall Capital Markets Investor Conference. December 2, 2009

Transcription

1 FBR Fall Capital Markets Investor Conference December 2, 2009

2 Forward Looking Statements This presentation contains forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of The forward-looking statements are based on the Company s current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that actual developments will be those anticipated by the Company. Actual results may differ materially from those projected as a result of significant risks and uncertainties, including non-receipt of expected payments, changes in interest rates, effect of the performance of financial markets on investment income and fair values of investments, developments of claims and the effect on loss reserves, ability to renew GMAC RE business, accuracy in projecting loss reserves, the impact of competition and pricing environments, changes in the demand for the Company s products, the effect of general economic conditions, adverse state and federal legislation, regulations and regulatory investigations into industry practices, developments relating to existing agreements, heightened competition, changes in pricing environments, changes in asset valuations, and ability to enter into a pending quota share agreement with American Capital Acquisition Corporation ( ACAC ), which depends on ACAC s ability to complete its pending acquisition of GMAC s U.S. consumer property and casualty business. The Company undertakes no obligation to publicly update any forward-looking statements, except as may be required by law. Additional information about these risks and uncertainties, as well as others that many cause actual results to differ materially from those projected is contained in Item 1A. Risk Factors in the Company s Annual Report on Form 10-K for the year ended December 31, 2008, as updated in the Company s Quarterly Report for the quarter ended June 30, 2009.

3 Lower Volatility, Highly Efficient Operating Model Highlights Strategic Overview $1+ billion revenue non catastrophe reinsurer with established successful underwriting platform Focus on developing stable operating results targeting traditional low volatility insurance lines Emphasis on data rich working layer and pro rata reinsurance participations Long term franchise relationships with core regional and specialty insurers focused on decommoditizing business Targeted Operating Metrics ROE > 15% (at fully-invested run rate) Combined ratio < 96% G&A expense ratio < 4% Investable assets of $2 billion NWP CAGR of 10% Core regional insurer client retention rate of 85% - 90% Shareholders equity not exposed in 1 in 250 cat event 1

4 History Maiden Holdings Formed 6/07 AmTrust Quota Share 6/07 144A Public Offering 7/07 NASDAQ Listing 5/08 GMAC Re Acquisition 11/08 Formed as Bermuda domiciled (re) insurer in mid-2007 by founding shareholders of specialty insurer, AmTrust; traded on NASDAQ under ticker symbol MHLD Initiated formative multi-year 40% quota share with AmTrust Established Bermuda underwriting team at Maiden Insurance Acquired GMAC RE US based platform and underwriting portfolio in late 2008 Infrastructure and portfolio developed over 25 years; strong franchise in regional insurer / specialty insurer market Acquisition included infrastructure, renewal rights, in force liabilities and approximately $1 billion in related assets along with two US domiciled (re) insurers Significantly strengthened technical infrastructure, technology, market presence, customer focus and earnings power 2

5 Strategic Overview Highly disciplined reinsurance market specialist focused primarily on lower layer financing reinsurance for regional and specialty insurers Maiden Re Client Longevity 16% Maiden approach focused on developing customized capital solutions targeting more predictable working layer and pro rata reinsurance programs 25% 28% 31% < 3 years 3-5 years 6-9 years 10+ years Focusing on traditional less volatile lines of business while carefully deemphasizing cat exposure permits more efficient utilization of capital Customized solutions, full-relationship transparency, and value-added relationship management approach are critical success factors that strengthen longevity of client relationships and renewal retention 3

6 Maiden Strategic Differentiation Sector specialist focused on developing long-term, stable relationships with core regional and specialty clients Over 85 core regional and specialty clients Significant level of historical and prospective growth driven by expansion of existing relationships Virtually no exposure to toxic tort and other more volatile latency risks Less vulnerable to market cycle volatility than traditional reinsurers Highly efficient scalable operating platform recognizes mature market dynamics Maiden Trust provides clients with exceptional reinsurance security by collateralizing financial obligations Customized client value-added support Line of business and geographic diversity further reduces volatility 4

7 Diversified Lower Risk Portfolio Regional Treaty Auto, H.O., CMP,WC, GL Average limit & attachment < $2 MM Specialty Treaty & Facultative Commercial Auto / W.C. Average limit of $1 MM / Average attachment < $5 MM Accident & Health Medical stop loss Quota share, average limit < $1 MM E&S Property (SRS) Commercial property Average limit $5 MM / attachment varies AmTrust Group WC, CMP, Auto, Warranty Quota Share, Limit - < $1 MM Treaty $796.3 Million NWP YTD 3Q09 51% 34% AmTrust 11% 3% Accident & Health Specialty 1% SRS 5

8 2009 Operating Highlights Continued consistent trend of stable and profitable underwriting performance Actively managing capital position in a difficult market to reduce risk and optimize shareholder value Completed TRUPs financing in difficult capital markets environment with ongoing exploration of more efficient alternatives Increased dividend in 4Q09 reflecting strengthened earnings power High quality, short duration investment portfolio of government issued / backed and investment grade corporate bonds driving significant increase in shareholders equity Steadily increasing operating performance reflecting GMAC RE integration, more efficient utilization of balance sheet, growth in investable assets, and continued deployment of excess cash Expanding existing and select new client relationships despite challenging market dynamics, largely driven by surplus relief demand 6

9 Income Statement Highlights $s in millions except per share data Net Premium Written YTD 3Q09 YTD 3Q $796.3 $386.9 $727.4 $247.4 Net Earned Premium Net Investment Income Income From Operations 72.2 (0.8) Trust Preferred Interest Expense Net Income $ 44.3 $( 1.2) $ 18.8 $ 22.1 Operating Earnings* $ 47.3 $ 41.5 $ 59.0 $ 21.9 Operating EPS* $ 0.68 $ 0.70 $ 0.98 $ 0.43 Operating ROE* 10.8% 10.9% 11.1% 14.0% Net Loss Ratio 68.9% 57.9% 62.8% 59.0% Net Expense Ratio 27.2% 35.4% 32.1% 34.9% Net Combined Ratio 96.1% 93.3% 94.9% 93.9% *Operating earnings, EPS and ROE reflect net income before net realized investment gains (losses), foreign exchange and other gains (losses) and amortization of intangibles. See slide 13 for additional important information. 7

10 Summary Balance Sheet $s in millions except per share data 3Q Investments $1,547.2 $1,125.2 $490.4 Cash and Cash Equivalents Net Reinsurance Receivable Deferred Commission and Other Acquisition Costs Other Total Assets Loss and LAE Reserve Trust Preferred Securities Other Shareholders Equity Liabilities and Shareholders Equity $2,565.5 $ $715.6 $ 38.5 Unearned Premiums Total Liabilities $1,900.9 $1,618.8 $178.3 $2, $2,128.6 $ $2, $715.6 Book Value Per Basic Share $9.45 $8.70 $9.02 8

11 Investment Profile $1.9 Billion Investable Asset Portfolio as of 9/30/ % Cash & Cash Equivalents Bonds 82.9% Other 65% of bonds are AAA, US Government and Agencies 87% of bonds are A rated or better 26% floating rate securities Average duration of 2.7 years 9

12 Portfolio Update Continued focus on careful deployment of excess cash from GMAC RE acquisition/trust preferred issuance Approximately $100 million of remaining excess cash expected to be deployed by YE 2009 Continued focus on maintaining high quality balance sheet Continued focus on investing in GSE and diversified investment grade corporate bonds Incremental contribution to earnings and ROE from fully deployed investable assets will increase quarterly earnings in future quarters 10

13 Well-positioned Despite Market Headwinds Marketplace Reality Competitive phase of reinsurance cycle continues - improving securities valuations and strong earnings reflect the benefit of a low severity catastrophe season Maiden Differentiation Competitive advantages Maiden well despite market dynamics Maiden collateral trust Low G&A expense levels Historical client longevity Disciplined underwriting approach Long-term strategic relationships enhance revenue/profit outlook Pending ACAC multi-year 25% quota share agreement expected to add over $200 million GWP annually with stable underwriting performance AmTrust 40% quota share agreement extended through

14 Maiden Holdings Story Vision to become premier global preferred provider of customized reinsurance products and services to regional / specialty insurance companies Product and customer segment specialization Differentiated product and service offerings Emphasis on predictable, low severity risks; minimal cat exposure Anticipate continued strengthening of quarterly earnings as cash is fully deployed A.M. Best A- rating; longer term focus will be on growing shareholder s equity and maintaining strong rating Differentiated strategy versus majority of public Bermuda reinsurance companies Target ROE > 15% with low volatility Effective dividend yield > 3.5%* along with a strong focus on delivering significant shareholder value through profitable disciplined growth * Based on 12/1/09 trailing five day average share price of $

15 Non-GAAP Reconciliation Reconciliation of net income to net operating earnings $s in millions except per share data YTD 3Q09 YTD 3Q08 Full Year 2008 Full Year 2007 Net income $ 44.3 $ (1.2) $ 18.8 $ 22.1 Add (subtract) Net realized investment losses Foreign exchange and other (gains) losses (2.4) (0.2) Amortization of intangibles Net operating earnings (1) $ 47.3 $ 41.5 $ 59.0 $ 21.9 Operating earnings per diluted common share $0.68 $0.70 $1.02 $0.43 (1) Net operating earnings is a non-gaap financial measure defined by the Company as net income excluding net realized investment gains and losses, foreign exchange and other gains and losses and amortization of intangible assets and should not be considered as an alternative to net income. The Company's management believes that net operating earnings is a useful indicator of trends in the Company's underlying operations. The Company's measure of net operating earnings may not be comparable to similarly titled measures used by other companies. 13

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