Company: MHLA
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001412100-25-000043
Chunk: 328

Company: Maiden Holdings, Ltd.
Filing Date: 2025-05-12
Form: 10-Q
Item: Item 2
Chunk 328
---
 in the unaudited Condensed Consolidated Statements of Income. Revenues and expenses in foreign currencies are converted at average exchange rates during the period. The effect of the translation adjustments for foreign operations is included in AOCI.

Net foreign exchange losses of $7.9 million were generated during the three months ended March 31, 2025, compared to net foreign exchange gains of $2.1 million for the three months ended March 31, 2024. The foreign exchange losses for the three months ended March 31, 2025  was due to significant depreciation in the value of the U.S. dollar relative to the euro and the British pound. These losses were primarily unrealized and resulted from the effects of revaluation of our net insurance liabilities that are required to be settled in foreign currencies at each balance sheet date. The net foreign exchange gains of $2.1 million in the first quarter of 2024 were driven by modest strengthening of the U.S. dollar on the re-measurement of net loss reserves and insurance related liabilities denominated in British pound and euro during the period.

At March 31, 2025, the increase in foreign currency translation adjustments of $0.1 million for the three months ended March 31, 2025 was 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. Our non-USD denominated liabilities at March 31, 2025 included reserve for net loss and LAE of $344.5 million. Our foreign currency asset exposures at March 31, 2025 include $126.6 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, $30.6 million of equity method real estate investments denominated in Canadian dollars, as well as $12.6 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 reserves, as the expected rate of emergence is in part predicated upon the historical levels of inflation that impact ultimate claim costs. To the extent inflation causes these costs, particularly medical treatments and litigation costs, to vary from the assumptions made in the pricing or reserving estimates, the Company will be required to change the reserve for loss