Noah Fields - VP Investor Relations Art Raschbaum - Chief Executive Officer John Marshalek - Chief Financial Officer.

Bijan Moazami - Guggenheim Randy Binner - FBR Ken Billingsley - Compass Point Bob Farnam - KBW.

Good day ladies and gentlemen and welcome to the Maiden Holdings First Quarter 2014 Earnings Conference Call. At this time all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will be given at that time. (Operator Instructions). As a reminder this conference call is being recorded.

I will now like to turn the call over to Noah Fields. Sir, you may begin..

Good morning and thank you for joining us today for Maiden’s first quarter 2014 earnings conference call. Presenting on the call today we have Art Raschbaum, Maiden's Chief Executive Officer, along with John Marshalek, our Chief Financial Officer. Also in attendance is Pat Haveron, President of Madian Re Bermuda.

Before we begin I would like to note that the information presented here today contains projections or other forward-looking statements regarding future events or the future financial performance of the company.

These statements are based on current expectations and future events that are subject to a number of risks and uncertainties that could cause actual results to differ materially from these expectations.

We refer you to the documents the company filed from time-to-time with the Securities and Exchange Commission, specifically with the company's annual report on Form 10-K and our quarterly reports on Form 10-Q.

Some of our discussions about the company's performance today will include reference to both non-GAAP financial measures and information that reconciles those measures to GAAP as well as certain operating metrics that may be found in our filings with the SEC and in our news release located on Maiden's investor relations website.

Please also note that unless otherwise stated, all references to common share data in today's discussions are on a diluted share basis and comparative comments will refer to Maiden's results in 2014 relative to the corresponding period in 2013. I will now turn the call over to Art..

Thank you, Noah. Good morning and welcome to our first quarter earnings call.

Over the past few quarters, we discussed a number of key drivers strengthening earnings and operating ROE, among those have been our reduced cost of capital following the first quarter repayment of our 14% coupon trust preferred securities, our growing investment portfolio that continued solid growth in our core underwriting portfolio and the impact of the U.S.

pricing environment in particular for AmTrust reinsurance segment. I'm very pleased to report that our first quarter results reflect the favorable impact of each of these drivers, for the quarter.

Maiden realized operating earnings attributable to common shareholders of $25.6 million or $0.34 per diluted common share, while annualized operating return on equity was 12.6%, which compares favorably to the first quarter of 2013 earnings levels of $21.1 million and then annualized operating return on equity of 9.8%.

Our first quarter 2014 results reflect the highest level of operating earnings per share and operating return on equity since early 2009 and we believe that we're position to continue to strengthen both going forward. As you may now Maiden’s business model is focused on lower volatility, non-cat reinsurance support of regional and specialty insurers.

As a result of that focus our performance is typically more stable than severity oriented companies and we see much, much less variability results.

The first quarter reflects that relative consistency in addition to strong operating earnings and strengthening operating return on equity, our book value in the quarter grew from $11.14 per share to $11.47 per share or 3%.

While John will provide more detail on our financial highlights and the balance sheet I’d like to focus on business development and underwriting in my discussion.

Maiden’s net premium written in the quarter totaled $709 million, it’s a 3% increase from $689.1 million in the first quarter of 2013, while on the surface the growth rate was relatively modest, it’s important to note that in the first quarter of 2013 Maiden was still generating $76.6 million from the [Technical Difficulty] A more relevant way to look at growth is to focus on our two core active business segments that will be the Diversified Reinsurance segment and the AmTrust Quota Share Reinsurance segment.

In combination, both of these segments increased by 16% from the prior year or from $612.4 million to $710.6 million. While the second quarter will reflect the similar comparative anomaly; in the final two quarters of 2014, the growth rate will no longer be influenced by the prior year NGHC segment.

More importantly, the run rate growth potential for the two active core segments is strong. [Technical Difficulty] including our expense efficiency, our unique collateralized trust and our client centric business platform. While the environment will likely remain competitive, we see many opportunities to continue to build our portfolio.

Two of our properties for this year have been the expansion of products for our core clients, as well as the continued development of our higher margin facultative segment, both of these initiatives are well underway. We are also in discussions with a number of prospects who are looking for capital to support the growing businesses.

In the European based auto segment Maiden IIS which is underwritten by Maiden Bermuda, we are actively working with our new business development team to expand our portfolio to other auto OEMs.

In the quarter we experienced growth from strengthening rate levels from our auto reinsurance relationships and the number of marketing initiatives with our partner and insurers and manufactures. The team has a number of new programs that are under development.

With regard to AmTrust, we continue to see strong growth chiefly from the small account workers compensation portfolio. Net written premium assumed from AmTrust totaled $419 million compared to $344.8 million in the first quarter of 2013 that’s a growth rate of 21.5%.

We are very comfortable with the quality of the workers comp underwriting as AmTrust remains focused on low severity segments and maintains pricing discipline.

And while Maiden is not participating on the AmTrust assumed reinsurance of the in force Tower portfolio, as this business renews an AmTrust Maiden will assume its 40% share under the terms of the contract. We believe that overall growth in this segment will remain strong throughout the year.

Of course the NGHC segment is a runoff and we generated no written premium in the first quarter. From an underwriting perspective, our overall combined ratio was 97.7% which is slightly higher than the 97.5% registered in the first quarter of 2013. Our Diversified segment which includes our U.S.

platform Maiden Re and our Bermuda non-AmTrust underwriting business experienced a higher than anticipated combined ratio for the quarter. Our combined ratio for the quarter was 99.4% compared to 97.5% in the first quarter of 2013. This was driven significantly by higher than expected non-catastrophe property losses in our U.S. subsidiary Maiden Re.

In unusual coincidence, we saw elevated property loss activity among several different clients in entirely different areas of the country. It’s important to note that this loss activity largely emanated from standing profitable account relationships.

At this point, we do not see these losses as indicative of a trend, absent this loss activity, Maiden’s diversified loss ratio for the quarter would have been around 97.4%. In the AmTrust segment, our combined ratio improved slightly from 95.9% in the first quarter of 2013 to 95.3% in the first quarter of 2014.

The reduction is largely driven by an improvement in the business mix of the small account workers’ compensation segment earned premium continues to significantly outpace the growth of the other AmTrust segments.

Our analysis of AmTrust pricing trends in this segment continues to reflect strong pricing, which should drive continued strong underwriting performance. As we have commented in the past, the AmTrust segment is the most direct way for Maiden to enjoy the strengthening of the U.S. primary pricing environment over the last year.

Despite the slightly elevated overall combined ratio of 97.7%, the quarter-to-quarter operating return on equity improvement remains strong and it reflects the impact of a repayment of a 14% coupon trust preferred securities and growth in our invested asset portfolio.

With an operating return on equity of 12.6% in the quarter, we can see the increasingly enhanced earnings power of the platform. In the past we commented on our targeted combined ratio of 96% and operating return on equity target of 15%.

In fact given the growth in our invested asset portfolio, our earned premium levels and our reduced cost of capital today of combined ratio of 97% will produce a 15% return on equity. At a target underwriting performance of 96% combined ratio, Maiden’s return on equity would now be over 16.5%.

We are very pleased with the quarter, which reflects continued progress towards strengthening Maiden’s earnings and enhancing shareholder returns. I would now like to turn the call over to our Chief Financial Officer, John Marshalek to review the quarter in greater details.

John?.

Thanks Art and good morning. As Noah stated earlier, unless otherwise stated, all references to common share data are on a diluted share basis and comparative comments will refer to Maiden’s results in 2014 relative to the corresponding period in 2013.

Net operating earnings for the quarter of 2014, for the first quarter of 2014 were $26 million or $0.34 per diluted common share compared with $21 million or $0.29 per share diluted common share. Net income was $2 million compared to a net income of $28 million.

For the quarter, net income was adversely impacted by a total of $28 million driven by non-operating non-cash items. Specifically the redemption triggered the accelerated amortization of the value of the shares issued with the trust preferred security and original transaction costs.

The trust preferred security served the company well at the time of capital of scares. Going forward, Maiden will enjoy a substantially reduced cost of capital. The enhancement into our earnings run rate now is clearly evident in the enhanced operating earnings for the quarter.

In fact the full impact of the improved cost of capital was not evident in the first quarter as we paid 15 days of interest on these securities at a net cost of approximately $0.5 million. In the first quarter of 2014, net premiums written totaled $719 million, an increase of 3% compared to the first quarter of 2013.

The Diversified Reinsurance segment’s net premiums written totaled $292 million, an increase of 9%. As Art mentioned, the growth in the Diversified Reinsurance segment’s premium was a results of expanding existing client relationships, as well as increased new business.

In the AmTrust Quota Share Reinsurance segment net premiums written increased by 22% to $419 million driven by a strong rate environment and increased payrolls for businesses such as workers’ compensation. The limited net premiums written in the NGHC Quota Share segment reflects the termination of that contract as of August 1, 2013.

Net premiums earned of $519 million increased 6% or $31 million. Earned premiums increased 2% in the Diversified Reinsurance segment to $199 million. The AmTrust Quota Share Reinsurance segment earned premiums were up $85 million or 38% to $305 million.

The NGHC Quota Share segment net premiums earned were $15 million in the first quarter of 2014, down 79%, reflecting the mutually agreed termination of the NGHC quota share reinsurance contract as of August 1, 2013.

Record net investment income of $28 million in the first quarter of 2014 increased 27% driven by growth of investable assets and lower amortization of the mortgage backed securities. The average yield on the fixed income portfolio is 3.57% with an average duration including cash of 4.5 years.

This compares to an average yield under fixed income portfolio at the end of 2013 of 3.48% with an average duration including cash of 4.3 years. New money yield on fixed maturities in the first quarter of 2014 is 3.56%.

During the first quarter of 2014, the book yield improved due to fewer mortgage backed security pay downs and the elimination of low yielding auction rate securities. The current duration of our loss reserves is 4.2 years. Our investable assets at March 31, 2014 were approximately $3.5 billion, which was the same amount as of at December 31, 2013.

This includes a cash balance of approximately $223 million and operating cash flow for the quarter was $144 million. Net loss to loss adjustment expenses of $351 million were up $16 million. The loss ratio decreased by 0.8 percentage points to 67%. The combined ratio for the first quarter of 2014 totaled 97.7% compared with 97.5%.

General and administrative expenses for the first quarter of 2014 totaled $15 million compared with $14 million. The general and administrative expense ratio dropped to 2.8% in the first quarter of 2014 versus 2.9%. Total assets increased 3.3% to $4.9 billion at March 31, 2014 compared to $4.7 billion at year-end 2013.

Shareholders' equity is $1.2 billion, up 2.3% compared to December 31, 2013. Book value per common share was $11.47 at the end of the first quarter of 2014 or 3% higher than at December 31, 2013. I’ll now turn it back over to Art for some additional comments..

Thank you John. As we typically do, I’d like to provide a brief commentary on the markets that we operate in. In the U.S. in general the rate of primary pricing increase is moderating, while that’s not true in every jurisdiction and every line of business, it is effectively a broad trend.

Specific Maiden the small account workers compensation market has undergone a significant amount of change over the last several years and in several markets the pricing environment remains relatively strong. For Maiden AmTrust strengthens these markets has been a strong asset and a driver of solid underwriting performance.

For the near-term we do not see these conditions changing dramatically. In the personal lines markets in the U.S. we believe that general pricing and loss cost trends remain for the most part favorable. And in the international markets that we serve in general the pricing environment for us is positive.

Specifically in Germany and the UK, our partners have been achieving rate level improvements.

From reinsurance perspective while the great influx of capital and the sector has for the most part been focused on severity markets such as property cat and excess casualty, we do believe that diversified global reinsurers have increased their interest in our market segment.

We continue to maintain confidence in our ability to compete affectively with our operating and balance sheet efficiencies and our client centric business platform.

As we have commented in the past, we continue to believe that at the implementation of Solvency Two to tutor us closer and need for capital solutions for small to mid-size European insurers will intensify. We are positioning ourselves to be an active solution provider in select markets in Europe.

Beyond the core opportunities in our traditional reinsurance markets our auto OEM focused IIS business development team is actively pursuing a number of opportunities throughout the customer base and reach.

We remained confident in the wisdom of our highly differentiated unique strategy and business platform and our ability to continue successful growth serving the needs of regional and specialty insurers. Before I end the discussion, I would like to take a moment to update you on several key management changes that made.

The first is somewhat better sweet from me and actually for the entire Maiden team, John Marshaleck has announced his intension of retire at the end of 2014 and for Maiden and its predecessor companies at GMAC, John has been a vital part of the development and the success of the business.

For over 30 years John has guided meant toward the entire team, for me personally I have relied on his and valued his thoughtful leadership over that entire time.

Fortunately John has more than contributed and laid the foundation for our continued success, in his remaining time at Maiden, John will become our Chief Operating Officer providing support and mentoring to his successor and the broader organization and consistent with our succession plan and with the full support of me, John and the Board.

His successor is Karen Schmitt, President of our U.S. Subsidiary Median Re. Karen has a strong diverse professional and educational background, she has been with Maiden and GMAC Re for 15 years and our contributions have been considerable over that time.

I know that Karen will do an outstanding job as our CFO and continue to provide strong leadership throughout the organization. As Karen moves on to the CFO role and again consistent with our succession planning, Tom Highet who is currently Head of our U.S. Treaty operations will become President of Maiden Re in the U.S.

Like Karen, Tom has a strong technical background and a successful track record developing and building business units at Maiden and GMAC Re. We’re very fortunate to have a deep leadership team at Maiden and I am confident that our new CFO and President of Maiden Re will help to maintain our success. Thank you for listening..

This concludes our prepared remarks.

Operator, could you please open the lines for Q&A?.

(Operator Instructions). Bijan Moazami of Guggenheim. Your line is open..

Good morning everyone. Congrats Karen and John, we’re going to miss you. I guess my first question is a long one if you bear with me. I am looking at your AmTrust contract.

And if we look at AmTrust, the share of the small commercialized business for them is expanding quite dramatically which has a lot of workers comp that has a lot of the investment income and also it traditionally has a lowest loss ratio at AmTrust.

And there is a little bit of a diversion between both your loss ratio which you are decreasing it delightfully so and AmTrust which is increasing yet building reserve cushion at least.

So I guess the question is that when the ceding commission contract comes for renewal, how do you base your ceding commission, is it based on your loss ratio or their loss ratio? And based on 97 combined ratio where you are going to be generating your return on equity target, AmTrust at 95.3 are already above that.

So should we be expecting a lower ceding commission from AmTrust at some point? Thank you..

Yes. Bijan, I'd say it's premature to sort of speculate on what our negotiating position will be on the renewal of the contract. Obviously, we look at our performance, our combined ratio. And certainly we’ve been generating we believe strong returns on the AmTrust relationship over the several years.

And we are benefiting as they are from their efforts in a strong primary market. You mentioned earlier the loss ratio differential, and I think some of that loss -- the biggest part of that loss ratio differential I think is driven by the in force portfolio or assumption that AmTrust is currently taking on from the Tower transaction.

So we do not participate in that which I think actually they alluded to on their call a higher level loss ratio for them. So, I hate to be evasive about it, but I think it's a little early to necessarily kind of define our negotiating posture.

I will tell you that from our perspective, our focus is on ensuring that we maintain strong returns in our business. I think our focus is also on lowering our diversified combined ratio.

The first quarter is a bit of a anomaly and that has not been our run rate the last couple of quarters but a little bit of elevated loss activity on the property side. And we thought prudently we raised the loss ratio for the quarter..

Great. And my next question is actually a number question, which I can’t figure out.

Operating income of 25.6 and share count of 84.6, wouldn’t that come up to $0.30 a share in operating income?.

Bijan, this is John. There is one adjustment that has to be made and when you convert these shares, we have a convertible preferred issuance and fully diluted computation assumes that they're converted to common stock obviously. And then you have to add back to the operating number the dividends on the preferred.

So, that's the adjustment that you’re probably not seeing there. Take your operating earnings and add back the dividends on the convertible preferred. And then you obviously increase the number of shares on a fully diluted basis. So, you're just trying to get them to equal.

Without that adjustment, you would be double counting the reduction in the operating earnings for the preferred shares..

Okay, perfect. Thank you..

Thank you..

Thank you. Our next question comes from Randy Binner from FBR. Your line is open..

Hi, good morning, thanks. I have a couple of top-line questions and just a follow up on what Bijan was alluding to on Tower. So AmTrust is kind of better defined for us what they are going to be writing on the Tower book. And I just want to clarify Maiden is not participating in the unearned premium reserve transfer.

But shouldn't assume all things being equal that you would take 40% of what they’re on-boarding with Tower now that they have kind of better defined for us what that's going to run, it’s going to run about 360 million a year for them in gross premium. Just wanted kind of get a better feel for how we should approach that in the model..

Sure, Randy. I think I did mention in the call that we do expect that as that business converts to AmTrust that we will take on that business. So if that is effectively the run rate going forward, we would expect to see our 40% share of that incremental growth..

Okay, perfect. They got lost in the comps….

I’m sorry..

No that's perfect. And then on diversified re, so I think we were kind of thinking more mid single-digits for growth there and it was 9% which is a good result, you said deal flow is going to be so competition is high as well.

And so can we still think of mid single-digits as a kind of the right way to model top-line growth there?.

It’s obviously not a perfect process kind of predicting forward and that’s why we generally don’t give kind of revenue guidance. I will tell you that in the quarter as we saw in terms of trend in 2013, we’re seeing good organic growth from core relationships. So the extent that our clients are growing, we grow along with them.

So we’re optimistic that organic growth will continue. We’re also actually in discussion with clients that are having us look at maybe new layers or new segments of their programs, and we did see some new client growth.

So, I mean from our -- in terms of our target and expectations, I’d love to see the current growth rate be a year long run rate, we’ll just have to see how business development comes in over the next quarter. We are in active discussion with a number of potential new clients right now and again we’ll see how we fair.

But I wouldn’t necessarily say that we can’t repeat the current quarter but we’ll just see what occurs in the next quarter..

Okay. That’s great. I’ll stick with the top-line too just for one more before I drop back. But so it is more U.S. where you see the opportunity or more internationally? You mentioned kind of you’re euro and UK initiatives move on. Pricing there has been good.

I think you’re kind of getting pricing from if that’s that you didn’t take losses on in Germany and UK in particular, I think you had looked at little farther Eastern Germany and so that’s probably slowing down. I mean can you just give us a feel for kind of how we can expect that piece international versus U.S.

to help move that top-line higher for diversified re?.

Yes. We actually had pretty good growth in our international business and some of that again was driven by that growth rate or by the points that you referenced just from the price standpoint but also so the program expansion. And we have a number of programs that we think will come on this year in the international sorts of business.

So for the quarter, I think our growth rate was about 15%, somewhere in that range on that [ISS] piece of it. So hopefully we will see that trend to continue there.

The other area that we still, I think it’s a slower kind of trajectory for us but nonetheless something that we are committing resource and focused on is really our expansion into European market, in select markets and with the kind of small to mid-sized companies that might be capital constrained.

And we think we have some effective solutions that can help a number of the companies in that space. So I think that’s another area where we will see continued opportunity to grow. And as we commented in the U.S. Diversified segment orienting ourselves on strengthening the things that are the most profitable for us.

And our efforts have been very focused on building additional products for our regional clients including Umbrella which we are rolling out to a number of clients and we think opportunities to expand exist there. And secondly our facultative casualty business which has been a great business for us, team has done wonderful job.

We have added a number of customer relationships that should generate incremental revenue this year in that segment as well. So when you look at the various pieces, we see a lot of positive development work going on that should be bear fruit.

The unknown is what the competitive market looks like for the rest of the year in terms of our existing customer base, but we are certainly focused on maintaining our relationship..

All right, that’s perfect. Thank you..

Thank you, Randy..

Thank you, our next question comes from Ken Billingsley of Compass Point. Your line is open..

Good morning..

Good morning, Ken..

I wanted to ask a question on sort of the top four net earned premium fee.

So premiums written were in line with our expectations and little bit stronger but the way the earned pattern is working out was a little bit slower, can you just talk about maybe some of the mix of the business where maybe this earned pattern maybe a little bit longer and stretched out?.

Yes Ken, this is John Marshalek. The first quarter of the year we do book on especially the Diversified Reinsurance book in the U.S., we do book some excessive loss contracts. We booked the year the written premium upfront and then they are earned off over the year.

The closed shares are pretty much evenly earned throughout the year; they’re booked and earned as they report into us. So you do get a little bit of a change in the earned premium pattern when you just look at the first quarter. But there is really no -- it’s just, it’s an annual thing, there is nothing unusual about that.

And we did have a fairly large quarter for AmTrust in the first quarter and there was large unearned premium balance that came along with that. They may experience similar thing when they book the earned premium on their contracts, on their policies as well. So, I think that’s what’s causing that maybe that difference that you are seeing there.

But it’s pretty much a normal earning pattern..

Thank you. On the AFSI quota share loss of 55.4%, the lowest since 2011, I know you talked about strength in rate improvements there.

Are you seeing anything that has a trend that you can extrapolate either it’s going to end into the future quarters or anything that’s causing you to set those ticks kind of again at the lowest level since 2011?.

What’s interesting about it, I mean it’s less the things have lowered than it is the change in the mix because if you look at the percentage of small account workers’ comp now versus three years ago, it’s much more significant. So that component of the AmTrust business on a relative basis generates a lower loss ratio.

So when you blend it together, that’s predominantly what’s pulling down the combined..

Yes, that's correct. It is a business mix question there..

And just adding on to the Tower Group business as you bring it in, I would assume that you would be setting the slightly higher picks for that business as well or would you be running at the same picks for the current AFSI business?.

Well, our expectation is that when that business migrates to AmTrust that it will be underwritten, priced, evaluated much like all of their small account workers’ comp business. So, I think what makes the ratio higher in the assumption that AmTrust is taking on has largely been that they didn’t, underwriting price in the initial business.

So that probably is running at a little higher rate than they would expect that business to run once it comes on to their portfolio. So no, I don't, I would think that the new business as it converts to AmTrust will behave much like the existing AmTrust portfolio..

On the investment portfolio, I know you talked about the slower amortization [E&S] portfolio.

Any shift in your investment mix or philosophy going forward given obviously you may have slight change in rate expectations over the next 24 months?.

We will change that all Ken just as same as before mix, we're not changing that as well. We expect it to continue on as it is..

Okay.

Last question is, were there any reserve releases during the quarter?.

Very minor, not reserve, but a minor deterioration in one of the underwriting years less than $2 million but no, nothing significant..

So it's less than $2 million?.

Yes..

And that was less than that number?.

Yes, that number. Yes..

Okay. Well, congratulations to Karen and Tom and I know it's a little early, but I want to wish you the best John and congratulations on the quarter..

Thank you, Ken..

(Operator Instructions). Our next question comes from Bob Farnam of KBW. Your line is open..

Hey there, thanks and good morning.

Actually just a couple of clarifications; so, am I hearing right that you are kind of officially changing your target combined ratio to 97%?.

No, I was like here when I….

Yes..

All I'm trying to reflect is that the earnings power has grown to a level that as we do hopefully get to that 96% level where we originally thought that would produce a 15% return, it looks that our -- given our current mix of business, the productivity of the investment portfolio, the continued growth in the asset portfolio and our cost of capital and that will actually produce a bigger return at target than we originally contemplated..

Got you.

I just wanted to make sure that was clarified?.

No, we don't. The goal is still the goal. There are always challenges to getting there and business mix affects that, but we remain focused on that 96% target..

Okay. And the second one is just more of a new launch I think, so taking out the non-cat property losses you had 97.4 rather than the 99.4 in diversified.

I'm just curious, if that's taking out all the non-cat property losses or if you have some sort of assumption in there for a normalized level of non-cat property losses?.

There is an assumption in there for normalized property losses in all aspects, but that would include, the original aspect would include some normalized property losses..

And when you take out, did you take out like 100% of the non-cat property losses or do you keep in there some sort of normalized level to get to the 97.4%?.

No, we kept in the normalized level..

And then the logic for that particularly on the excess property is you don't have land excess losses that are going to in, right. But when they come in early, we think it's prudent to kind of reflect sort of a higher impact in the quarter and then we’ll see what next quarter looks like and the following in terms of how that adjust.

It’s not unusual for us to see other accounts which performed better than target as well. So, it’s pretty mature on all of that losses are going to effective..

Okay, thanks. That’s it from me..

Thank you very much. I appreciate it..

Thank you. And I am not showing any further questions at this time. I’d like to turn it back over to Nick Fields for closing remarks..

Thank you very much. Thanks all for joining us today. We look forward to speaking with you soon. Have a great day..

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program. And you may all disconnect. Everyone have a great day..