Maiden Holdings' Q1 2018: The Upside Potential Remains For This 7% Yielder

Executive Summary Last week, Maiden Holdings (MHLD) reported a net income of $26.5 million or a $4.2 million decline compared to Q1 2017. The net income was affected by an underwriting loss caused by the deterioration in the margins of the AmTrust (AFSI) reinsurance segment. In spite of the lower net income, I remain long on the stock as I consider that the company has a potential of upside. Nevertheless, I will scrutinize the Q2 2018 results to see if the company will have succeeded to restore its underwriting margins.
A Lower Underwriting Profit The investors should not be blind; the underwriting profit of the company declined slightly, affected by the drop in the premiums. The earned premiums fell by more than 4% to $685 million.

Source: Maiden Holdings' Q1 2018 Report
The premium decline was caused by the lower premiums earned from AmTrust (-$16 million to $491 million) and also by the drop in the earned premiums from the diversified segments (-$7 million to 194 million).

Source: Maiden Holdings' Q1 2018 Report
The decline in the premiums from the diversified segment was the result of non-renewals and re-underwriting of certain contracts in 2017 and during the first quarter of 2018. A $17.5 million account was terminated and impacted the level of premiums accordingly. The net earned premiums in AmTrust's segment was mainly due to the decline in the net written premiums, which was caused by a reduction in the retrocessional capacity in... Read more

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