Subsequent Events |
6 Months Ended |
|---|---|
Jun. 30, 2019 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Subsequent Events a) LPT/ADC MTA with Enstar Effective on July 31, 2019, the Company and Enstar entered into the LPT/ADC Agreement pursuant to the LPT/ADC MTA entered into on March 1, 2019. Under the LPT/ADC Agreement, Cavello, Enstar's Bermuda reinsurance affiliate, will assume liabilities for the loss reserves as of December 31, 2018 associated with the AmTrust Quota Share in excess of a $2,178,535 retention up to $600,000, in exchange for a retrocession premium of $445,000. The $2,178,535 retention will be subject to adjustment for paid losses subsequent to December 31, 2018. The LPT/ADC Agreement will provide Maiden Bermuda with $155,000 in adverse development cover over its carried AmTrust Quota Share loss reserves at December 31, 2018. The LPT/ADC Agreement meets the criteria for risk transfer and therefore will be accounted for as retroactive reinsurance. Cumulative ceded losses exceeding $445,000 would result in a deferred gain which would be recognized over the settlement period in proportion to cumulative losses collected over the estimated ultimate reinsurance recoverable. Consequently, cumulative adverse development subsequent to December 31, 2018 may result in significant losses from operations until periods when the deferred gain is recognized as a benefit to earnings. 13. Subsequent Events (continued) Under the terms of the agreement, the covered losses associated with the commutation with AmTrust, as discussed below in (c) Commutation and Release Agreement - AmTrust Quota Share, are eligible to be covered but recoverable only when such losses are paid or settled by AII or its affiliates, provided such losses and other related amounts shall not exceed $312,786. Pursuant to the terms of the LPT/ADC Agreement, Maiden Bermuda, Cavello and AmTrust and certain of its affiliated companies have entered into a Master Collateral Agreement (“MCA”) to define and enable the operation of collateral provided under the AmTrust Quota Share. Under the MCA, Cavello, on behalf of Maiden Bermuda, will provide letters of credit to AmTrust in an amount representing Cavello’s obligations under the LPT/ADC Agreement. As these letters of credit will replace other collateral currently provided directly by Maiden Bermuda to AmTrust, the MCA coordinates the collateral protection that will be provided to AmTrust to ensure that no gaps in collateral funding occur by operation of the LPT/ADC Agreement and related MCA. Settlement of funding for the LPT/ADC Agreement will occur no later than August 12, 2019 and Maiden Bermuda will pay Enstar approximately $7,261 in interest related to the LPT/ADC Agreement premium, calculated at the rate of 2.64% per annum from January 1, 2019 through August 12, 2019. b) Settlement and Commutation Agreement with Enstar Related to Maiden US Sale Maiden NA completed the sale of Maiden US to Enstar Holdings on December 27, 2018 for gross consideration of $286,375, which was subject to post-closing adjustments. In conjunction with the completion of the LPT/ADC Agreement, Maiden NA and Enstar Holdings have waived the post-closing adjustments procedures subject to that agreement and have also agreed to terminate the $25,000 excess of loss reinsurance agreement that Maiden Bermuda provided to Enstar in relation to the MRNA loss reserves acquired by Enstar. As a result of these agreements, Maiden recorded a net additional loss from discontinued operations of $16,715 for the three and six months ended June 30, 2019. c) Commutation and Release Agreement - AmTrust Quota Share The Commutation and Release Agreement entered into and effective as of July 31, 2019, by AII and Maiden Bermuda, provides for AII to assume all reserves ceded by AII to Maiden Bermuda with respect to its proportional 40% share of the ultimate net loss under the AmTrust Quota Share related to: (a) all losses incurred in Accident Year 2017 and Accident Year 2018 under California workers' compensation policies issued by AII and as defined in the AmTrust Quota Share ("Commuted California Business"); and (b) all losses incurred in Accident Year 2018 under New York workers' compensation policies issued by AII ("Commuted New York Business") and together with the Commuted California Business ("Commuted Business") in exchange for the release and full discharge of Maiden Bermuda of all of its obligations to AII with respect to the Commuted Business. The Commuted Business does not include any business classified by AII as Specialty Program or Specialty Risk business. AII and Maiden Bermuda agreed that the Commuted Business shall be discharged by Maiden Bermuda's transfer of cash and invested assets in the amount of $312,786 ("Commutation Payment") which is the sum of the net ceded reserves in the amount of $330,682 with respect to the Commuted Business as of December 31, 2018 less payments in the amount of $17,896 made by Maiden Bermuda with respect to the Commuted Business from January 1, 2019 through July 31, 2019. Settlement of the Commutation Payment will occur no later than August 12, 2019 and Maiden Bermuda will pay AII approximately $6,335 in interest related to the Commutation Payment premium, calculated at the rate of 3.30% per annum from January 1, 2019 through August 12, 2019. Maiden Bermuda received a no objection letter from the BMA regarding the Commutation and Release Agreement. AII and Maiden Bermuda also agreed that, as of July 31, 2019, the AmTrust Quota Share shall be deemed amended as applicable so that the Commuted Business is no longer included as part of the Covered Business under the AmTrust Quota Share. d) Post-Termination Endorsement - AmTrust Quota Share As a result of entering into both the LPT/ADC Agreement and the MCA, certain post-termination endorsements (“PTE”) to the AmTrust Quota Share between AII and Maiden Bermuda were required. The PTE, effective as of July 31, 2019, enables the operation of both the LPT/ADC Agreement and MCA by making provision for certain forms of collateral, including letters of credit provided by Cavello on Maiden Bermuda’s behalf. In addition, the PTE further defines the permitted use and return of collateral. The PTE also increases the required funding percentage for Maiden Bermuda’s under the collateral arrangements between the parties to 105% of its obligations, subject to a minimum excess funding requirement of $54,000, as may be mutually amended by the parties from time to time. Under certain defined conditions, Maiden Bermuda may be required to increase this funding percentage to 110%. Finally, as part of the PTE, the parties amended the existing Loss Corridor under the AmTrust Quota Share to include a maximum amount of $40,500, the amount calculated by Maiden Bermuda for the Loss Corridor coverage as of March 31, 2019. Any development over and above this maximum amount will be subject to the coverage of the LPT/ADC Agreement, subject to the terms thereof. Please see "Note 8. Related Party Transactions" for details of the existing Loss Corridor.
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