Maiden Holdings Ltd's Business Segments

We are a Bermuda-based holding company, primarily focused on serving the needs of regional and specialty insurers in the United States, Europe and select other global markets by providing innovative reinsurance solutions designed to support their capital needs. We specialize in reinsurance solutions that optimize financing and risk management by providing coverage within the more predictable and actuarially credible lower layers of coverage and/or reinsuring risks that are believed to be lower hazard, more predictable and generally not susceptible to catastrophe claims. Our tailored solutions include a variety of value added services focused on helping our clients grow and prosper. Our principal operating subsidiaries are rated "A-" (Excellent) with a positive outlook by A.M. Best Company ("A.M. Best"), which rating is the fourth highest of sixteen rating levels, and "BBB+" (Good) with a stable outlook by Standard & Poors ("S&P"), which is the eighth highest of twenty-two rating levels. Our common shares trade on the NASDAQ Global Select Market ("NASDAQ") under the symbol "MHLD".

We provide reinsurance through our wholly owned subsidiaries, Maiden Reinsurance Ltd. ("Maiden Bermuda") and Maiden Reinsurance North America, Inc. ("Maiden US"). Internationally, we provide insurance sales and distribution services through Maiden Global Holdings, Ltd. ("Maiden Global") and its subsidiaries. Maiden Global primarily focuses on providing branded auto and credit life insurance products through insurer partners to retail clients in the European Union ("EU") and other global markets. These products also produce reinsurance programs which are underwritten by Maiden Bermuda. Certain international credit life business is written on a primary basis by Maiden Life Försäkrings AB ("Maiden LF").

Since our founding in 2007, we have entered into a series of strategic transactions that have significantly transformed the scope and scale of our business while maintaining our our low volatility, non-catastrophe oriented risk profile. These transactions have increased our gross premiums written to an amount in excess of $2.6 billion. These strategic transactions include the following:

Entering into a quota share reinsurance agreement (the "Reinsurance Agreement" or "AmTrust Quota Share") with a Bermuda subsidiary of AmTrust Financial Services, Inc. ("AmTrust"), AmTrust International Insurance, Ltd. ("AII"), in 2007 and a quota share reinsurance agreement (the "European Hospital Liability Quota Share") with AmTrust Europe Limited ("AEL") and AmTrust International Underwriters Limited ("AIUL") in 2011;

Acquiring the reinsurance operations of GMAC Insurance (the "GMAC Acquisition") in 2008 and the GMAC International Insurance Services (the "IIS Acquisition") in 2010;

Entering into a quota share reinsurance agreement with a subsidiary of National General Holdings Corporation ("NGHC") in 2010 (the "NGHC Quota Share"). This agreement was terminated on a run-off basis effective August 1, 2013;

Substantially reducing our net exposure to natural hazard events by selling, on May 1, 2013, the primary insurance business written on a surplus lines basis by Maiden Specialty Insurance Company ("Maiden Specialty"), a wholly owned subsidiary of Maiden US, to Brit Insurance. Maiden Specialty provided non-catastrophe inland marine and property coverages. On November 4, 2015, Maiden US finalized the sale of Maiden Specialty to Clear Blue Financial Holdings, LLC ("Clear Blue"); and

During 2015, we acquired Regulatory Capital Limited, trading as Insurance Regulatory Capital ("IRC"), a licensed asset manager in Ireland. IRC offers solutions designed to meet the capital and risk management needs of mid-sized insurance companies.

We have also entered into a series of capital transactions that have enabled us to support our growing reinsurance operations while significantly enhancing our capital position to over $1.7 billion at December 31, 2015 and lowering our cost of capital. These capital transactions include:

Private placement of Trust Preferred Securities (the "TRUPS Offering"), the proceeds from which were used to finance the issuance of subordinated debenture (the "Junior Subordinated Debt") resulting in gross proceeds of $260.1 million in January 2009. The net proceeds of this transaction were used as working capital for Maiden US and Maiden Specialty in conjunction with the GMAC Acquisition. The outstanding Junior Subordinated Debt was fully repurchased on January 15, 2014;

Public debt offering of $107.5 million in June 2011 ("2011 Senior Notes") and repurchasing a like amount of our Junior Subordinated Debt in July 2011. The 2011 Senior Notes trade on the New York Stock Exchange ("NYSE") under the symbol "MHNA";

Public debt offering of $100.0 million in March 2012 ("2012 Senior Notes"). The 2012 Senior Notes trade on NYSE under the symbol "MHNB". The net proceeds of $96.6 million were used for working capital and general corporate purposes;

Public offering of $150.0 million Preference Shares - Series A ("Preference Shares - Series A") in August 2012. We received net proceeds of $145.0 million from the offering. The Preference Shares - Series A trade on NYSE under the symbol "MHPRA". The net proceeds from the offering were used for continued support and development of our reinsurance business and for other general corporate purposes;

Public offering of $165.0 million Mandatory Convertible Preference Shares - Series B ("Preference Shares - Series B") in October 2013. The Preference Shares - Series B trade on NASDAQ under the symbol "MHLDO". We received net proceeds of $159.7 million from the offering. The net proceeds from the offering were used for general corporate purposes, primarily to support the continuing growth of our reinsurance operations;

Public debt offering of $152.5 million in November 2013 ("2013 Senior Notes"). The 2013 Senior Notes trade on NYSE under the symbol "MHNC". The net proceeds of $147.4 million, as well as cash on hand, were used to repurchase all of the remaining portion of our outstanding Junior Subordinated Debt, with a face value of $152.5 million, on January 15, 2014, which substantially lowered our cost of capital; and

Public offering of $165.0 million Preference Shares - Series C ("Preference Shares - Series C") in November 2015. The Preference Shares - Series C trade on NYSE under the symbol "MHPRC". We received net proceeds of $159.6 million from the offering. We expect to use the net proceeds of this offering for continued support and development of our reinsurance business and for other general corporate purposes.

The 2011 Senior Notes, 2012 Senior Notes and 2013 Senior Notes may also collectively be referred to as the "Senior Note Offerings". These transactions, along with other unusual or non-recurring events, should be considered when evaluating year-to-year comparability or when comparing our performance with other companies considered our peers and with whom we compete on a regular basis.

Our goal is to leverage the competitive strengths of our organization and capital structure to generate stable long term operating returns on common equity in excess of 15%. We seek to accomplish this by becoming a premier global preferred provider of customized reinsurance and capital products and services to regional and specialty insurance companies. To achieve this goal, we have adopted the following strategies:


Dedication to Predictable and Stable Results — we execute this strategy in two ways: (1) focusing on traditional, lower volatility lines of business that are more predictable and thus, produce more stable long-term operating results and require less capital to achieve those results; and (2) placing emphasis on working layer and pro rata reinsurance participations where data is more abundant and results are more predictable;

Targeted Customer Focus — we execute this strategy by developing significant and long term reinsurance relationships with targeted regional and specialty insurance companies for which reinsurance plays a critical element of their capital structure and supporting the long term needs of these companies by providing differentiated products as well as an array of support services; and

Efficient Operating Platform — recognizing the mature nature of the reinsurance market, we are focused on maintaining operating expense ratios within the top quartile of the industry. Efficiency is a critical component of maintaining a disciplined underwriting approach.

To date, despite achieving operating returns on common equity generally in excess of our industry peers, we have not yet attained our targeted returns. We believe our efficient balance sheet and low volatility business are the primary reasons our returns have generally exceeded industry averages, despite a declining investment yield environment since our founding. Our ability to achieve our targeted returns were initially impacted by a significantly higher cost of capital. Our capital management strategy in recent years has appreciably lowered our cost of capital and improved our returns on common equity. More recently, higher than targeted combined ratios have affected our underwriting profitability and limited our progress toward our objective. We believe however, that the underwriting initiatives we have implemented will enable us to make progress toward our long term operating return on common equity target during the next 12 to 24 months.

Maiden Holdings Ltd is a key player in the global reinsurance industry, structured into two primary reportable segments: Diversified Reinsurance and AmTrust Reinsurance. Each segment encapsulates a range of products and services catered towards diverse market needs and client profiles.

1. Diversified Reinsurance

The Diversified Reinsurance segment focuses on property and casualty reinsurance, targeting regional and specialty insurance companies primarily situated in the United States and Europe. This segment emphasizes a strategic approach to partnering with various distribution channels including third-party intermediaries, while also engaging in direct marketing strategies.

- Products and Treaty Structures:
- Treaty Reinsurance: Maiden US writes treaties typically structured on quota share or excess of loss bases. This means that risks are shared and losses are mitigated through predetermined agreements.
- Facultative Reinsurance: This allows Maiden to write coverage for individual risks outside of standard treaties, offering tailored solutions to unique situations.
- Intercompany Reinsurance Arrangements: Maiden Bermuda supports the Diversified Reinsurance segment, providing quota share reinsurance through internal collaborations, which enhances the capital efficiency and risk distribution practices of the company.

AmTrust Reinsurance

The AmTrust Reinsurance segment is chiefly comprised of business ceded from AmTrust Financial Services, Inc. which is Maidens largest client. AmTrust operates as a multinational specialty property and casualty insurance holding company with established footholds in the U.S. Europe, and Bermuda.

- Ceded Lines of Business: The reinsurance agreements with AmTrust cover several prominent business segments:
- Small Commercial Business Insurance: This includes offerings such as U.S. workers compensation insurance and commercial package policies that encompass multiple lines of coverage.
- Specialty Risk and Extended Warranty Coverage: Maiden provides coverage for consumer and commercial goods as well as custom-designed coverages, including accidental damage plans and payment protection plans, particularly across the U.S. U.K. and select European nations.
- Specialty Program Coverages: This includes a comprehensive suite of products such as general liability, commercial auto liability, excess and surplus lines programs, designed for a targeted group of small and medium-sized enterprises.

Risk Management

At the heart of Maiden Holdings Ltds operational philosophy is an emphasis on robust risk management practices, essential for the stability and profitability of their reinsurance portfolio.

- Risk Management Framework:
- Quantitative Risk Assessment: This involves a deep dive into numerical evaluations of risk parameters, aimed at stabilizing returns and optimizing capital allocation towards less volatile lines of business.
- Qualitative Risk Management: A sophisticated qualitative framework is in place to identify and evaluate potential risks, enabling Maiden to pro-actively take measures to mitigate these risks before they impact business objectives.

- Enterprise Risk Management (ERM) Committee: This dedicated committee plays a vital role in scrutinizing and managing the risk landscape of the organization. They are responsible for initiating a culture of improvement around strategic risk management by:
- Establishing risk parameters and tolerances.
- Conducting comprehensive risk assessments.
- Implementing actionable strategies and plans to address key risk areas, thereby safeguarding the company’s operational goals.

In summary, Maiden Holdings Ltd operates two distinct reinsurance segments, with a focus on diversified risk solutions and specialized coverage products aimed primarily at the U.S. and European markets. Through a disciplined risk management approach, Maiden strives to ensure sustainable growth and to solidify its position in the reinsurance sector.