Company: MHLA
Filing Date: 2025-03-26
Form Type: DEFM14A
Source: 0001104659-25-028254
Chunk: 65

Company: Maiden Holdings, Ltd.
Filing Date: 2025-03-26
Form: DEFM14A
Chunk 65
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 with general agents and domestic and foreign insurers that want to access specific U.S. property and casualty insurance business in states in which

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such capacity providers are not licensed or are not authorized to write particular lines of insurance. The capacity providers or the general agents administer the business, settle all claims and reinsure a substantial portion of the risks. The combined company will receive ceding fees but generally will not share in the profits or losses of the business it writes for the capacity providers unless Maiden Re participates on a quota share basis to a limited extent in certain programs. Some state insurance regulators may object to such fronting arrangements. In certain states, insurance regulators have the authority to prohibit an authorized insurer from acting as an issuing carrier for an unauthorized insurer. In addition, insurance departments in states without such prohibition could still deem the assuming insurer as transacting insurance business without a license and the issuing carrier as aiding and abetting the unauthorized sale of insurance.

If regulators in any of the states where the combined company conducts its fronting business were to prohibit or limit the arrangement, the combined company would be prevented or limited from conducting the business for which a capacity provider is not authorized in those states, unless and until such capacity provider is able to obtain the necessary licenses. This could have a material and adverse effect on the combined company’s business, financial condition, results of operations and prospects.

While it is expected that the fronting business will be ceded to a number of unaffiliated reinsurers, Maiden Re may be ceded a small percentage of the reinsurance, subject to prior approval from the Vermont Department of Financial Regulation of the combined company’s ability to reinsure the business that it expects to underwrite. If the Vermont Department of Financial Regulation fails to provide this approval, or places certain limitations on such approval, the combined company may not be able to operate its fronting business efficiently, which could reduce the combined company’s effectiveness in the marketplace. In addition, the Vermont Department of Financial Regulation may place certain restrictions on the combined company’s fronting business, such as requiring Maiden Re to no longer be licensed as a captive or affiliated reinsurer. Such limitations could further impact the combined company’s ability to operate its fronting business, which could have a material and adverse effect on the combined company’s business, financial condition, results of operations and prospects.

Notwithstanding these state law restrictions on ceding insurers, the Nonadmitted and Reinsurance Reform Act (“NRRA”) contained in the Dodd-Frank