Company: MHLA
Filing Date: 2025-03-10
Form Type: 10-K
Source: 0001412100-25-000011
Chunk: 189

Company: Maiden Holdings, Ltd.
Filing Date: 2025-03-10
Form: 10-K
Item: Item 7
Chunk 189
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 to continue to maintain a portion of our investment portfolio in investments denominated in currencies other than the U.S. dollar. 

We may employ various strategies (including hedging) to manage our exposure to foreign currency exchange risk. To the extent that these exposures are not fully hedged or the hedges are ineffective, our results of operations or equity may be adversely effected. At December 31, 2024, no such hedges or hedging strategies were in force or had been entered into. We measure monetary assets and liabilities denominated in foreign currencies at period end exchange rates, with the resulting foreign exchange gains and losses recognized in the Consolidated Statements of Income. Revenues and expenses in foreign currencies are converted at average exchange rates during the year. The effect of the translation adjustments for foreign operations is included in AOCI.

Net foreign exchange gains were $6.8 million during the year ended December 31, 2024 compared to net foreign exchange losses of $5.7 million during the year ended December 31, 2023. The foreign exchange gains for the year ended December 31, 2024 was largely due to the appreciation of the U.S. dollar relative to the euro and the British pound. At December 31, 2024, net foreign exchange gains were primarily driven by exposures to euro, British pound and other non-USD denominated net loss reserves and insurance related liabilities in excess of foreign currency assets.

The foreign exchange losses for the year ended December 31, 2023 was due to the depreciation of the U.S. dollar relative to the euro and the British pound.

There was a decrease in foreign currency translation adjustments of $4.4 million in the year ended December 31, 2024. Our non-USD denominated liabilities at December 31, 2024 included reserves for net loss and LAE of $355.9 million. Our foreign currency asset exposures at December 31, 2024 include $123.2 million of fixed maturity securities managed by our investment managers who have the discretion to hold foreign currency exposures as part of their total return strategy, $30.0 million of equity method real estate investments denominated in Canadian dollars, as well as $12.7 million of funds withheld receivable.

Effects of Inflation

The anticipated effects of inflation are considered explicitly in the pricing of the insured exposures, which are used as the initial estimates of reserves for loss and LAE. In addition, inflation is also implicitly accounted for in subsequent estimates of loss and LAE