UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





(Mark
One)




xQUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





For the
quarterly period ended June 30, 2009





 ̈TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934





For the
transition period from ___________________ to ___________________





Commission
file no. 001-33143





Maiden
Holdings, Ltd.





(Exact
name of registrant as specified in its charter)





Bermuda
                    (State
      or other jurisdiction of
                    incorporation
      or organization)
                  04-3106389
                    (IRS
      Employer Identification No.)48 Par-la-Ville Road, Suite 1141
      HM11
                    (Address
      of principal executive offices)
                  HM11
                    (Zip
      Code)(441) 292-7090
                    (Registrant’s
      telephone number, including area
code)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes xNo  ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes  ̈    No  ̈




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer  ̈
                Accelerated filer  ̈Non-accelerated filer x(Do not check if a smaller reporting company)
                Smaller reporting company  ̈





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Securities Exchange Act). Yes  ̈No x




As of
August 14, 2009, the Registrant had one class of Common Stock ($.01 par
value),


of which
70,287,664,shares were issued and
outstanding.





INDEX





PagePART
      I
                    
                    FINANCIAL
      INFORMATIONItem
      1.
                    
                    Financial
      Statements:Condensed
      Consolidated Balance Sheets as of June 30, 2009 (unaudited) and December
      31, 2008
                    
                    3Condensed
      Consolidated Statement of Income for the three months
      ended  June 30, 2009 and 2008 (unaudited) and the six months
      ended June 30, 2009 and 2008 (unaudited)
                    
                    4Condensed
      Consolidated Statement of Cash Flows for the six months ended June 30,
      2009 and 2008 (unaudited)
                    
                    5Condensed
      Consolidated Statement of Changes in Shareholders’ Equity for the three
      months ended June 30, 2009 and 2008 (unaudited) and the six months ended
      June 30, 2009 and 2008 (unaudited)
                    
                    6Notes
      to Unaudited Condensed Consolidated Financial Statements
                    
                    7Item
      2.
                    
                    Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                    
                    24Item
      3.
                    
                    Quantitative
      and Qualitative Disclosures About Market Risk
                    
                    33Item
      4.
                    
                    Controls
      and Procedures
                    
                    33PART
      II
                    
                    OTHER
      INFORMATION
                    
                    34Item
      1.
                    
                    Legal
      Proceedings
                    
                    34Item
      1A
                    
                    Risk
      Factors
                    
                    34Item
      2.
                    
                    Unregistered
      Sales of Equity Securities and Use of Proceeds
                    
                    34Item
      4.
                    
                    Submission
      of Matters to a Vote of Security Holders
                    
                    34Item
      6.
                    
                    Exhibits
                    
                    36Signatures
                    
                    37


2


PART
1 - FINANCIAL INFORMATION




Item 1. Financial
Statements




MAIDEN HOLDINGS,
LTD.


CONDENSED
CONSOLIDATED BALANCE SHEETS


(in
thousands (000’s), except per share data)




(unaudited)June 30, 2009
                                      
                                      
                                      December 31, 2008AssetsFixed
      maturities, available-for-sale, at fair value (Amortized cost 2009:
      $1,307,221;  2008: $1,163,926)
                                      
                                      $
                                      1,294,934
                                      
                                      
                                      $
                                      1,119,955Other
      investments, at fair value (Cost 2009: $5,814 ; 2008:
      $5,819)
                                      
                                      
                                      5,392
                                      
                                      
                                      
                                      5,291Total
      investments
                                      
                                      
                                      1,300,326
                                      
                                      
                                      
                                      1,125,246Cash
      and cash equivalents
                                      
                                      
                                      150,777
                                      
                                      
                                      
                                      131,897Restricted
      cash and cash equivalents
                                      
                                      
                                      311,883
                                      
                                      
                                      
                                      409,277Accrued
      investment income
                                      
                                      
                                      10,601
                                      
                                      
                                      
                                      10,293Reinsurance
      balances receivable (includes $39,599 and $48,837 from related party in
      2009 and 2008, respectively - see note 10)
                                      
                                      
                                      230,519
                                      
                                      
                                      
                                      71,895Loan
      to related party (see note 10)
                                      
                                      
                                      167,975
                                      
                                      
                                      
                                      167,975Deferred
      acquisition costs (includes $77,518 and $80,455 from related party in 2009
      and 2008, respectively - see note 10)
                                      
                                      
                                      171,395
                                      
                                      
                                      
                                      104,470Other
      assets
                                      
                                      
                                      32,474
                                      
                                      
                                      
                                      2,617Intangible
      assets
                                      
                                      
                                      51,434
                                      
                                      
                                      
                                      55,147Goodwill
                                      
                                      
                                      49,747
                                      
                                      
                                      
                                      49,747Total
      Assets
                                      
                                      $
                                      2,477,131
                                      
                                      
                                      $
                                      2,128,564Liabilities
      and Shareholders’ EquityLiabilitiesReserve
      for losses and loss expenses (includes $157,349 and $69,646 from related
      party in 2009 and 2008, respectively- see note 10)
                                      
                                      $
                                      939,758
                                      
                                      
                                      $
                                      897,656Unearned
      premiums (includes $237,698 and $245,742 from  related parties
      in 2009 and 2008, respectively- see note 10)
                                      
                                      
                                      585,451
                                      
                                      
                                      
                                      444,479Accrued
      expenses and other liabilities
                                      
                                      
                                      22,630
                                      
                                      
                                      
                                      44,024Securities
      sold under agreements to repurchase, at contract value
                                      
                                      
                                      108,797
                                      
                                      
                                      
                                      232,646Trust
      preferred securities – related parties (see note 6)
                                      
                                      
                                      215,096
                                      
                                      
                                      
                                      -Total
      Liabilities
                                      
                                      
                                      1,871,732
                                      
                                      
                                      
                                      1,618,805Commitments and
      ContingenciesShareholders’
      Equity:Common
      shares, ($0.01 par
      value;71,250,000 and 59,550,000 shares issued in 2009 and 2008
      respectively; 70,287,664 and 58,587,664 shares outstanding in 2009 and
      2008 respectively)
                                      
                                      
                                      713
                                      
                                      
                                      
                                      596Additional
      paid-in capital
                                      
                                      
                                      575,723
                                      
                                      
                                      
                                      530,519Accumulated
      other comprehensive loss
                                      
                                      
                                      (15,097
                                      )
                                      
                                      
                                      (44,499
                                      )Retained
      earnings
                                      
                                      
                                      47,861
                                      
                                      
                                      
                                      26,944Treasury
      Shares, at cost (2009
      and 2008:962,336  shares)
                                      
                                      
                                      (3,801
                                      )
                                      
                                      
                                      (3,801
                                      )Total
      Shareholders’ Equity
                                      
                                      
                                      605,399
                                      
                                      
                                      
                                      509,759Total
      Liabilities and Shareholders’ Equity
                                      
                                      $
                                      2,477,131
                                      
                                      
                                      $
                                      2,128,564




See
accompanying notes to the unaudited condensed consolidated financial
statements.


3


MAIDEN HOLDINGS,
LTD.


CONDENSED
CONSOLIDATED STATEMENT OF INCOME


(in
thousands (000’s), except per share data)


(Unaudited)





For the Three
                                      Months Ended
                                      June 30, 2009
                                    
                                    
                                    For the Three
                                      Months Ended
                                      June 30, 2008
                                    
                                    
                                    For the Six
                                      Months Ended
                                      June 30, 2009
                                    
                                    
                                    For the Six
                                      Months Ended
                                      June 30, 2008Revenues:Premium
      income:Net
      premiums written
                                    
                                    $
                                    238,356
                                    
                                    
                                    $
                                    171,251
                                    
                                    
                                    $
                                    574,905
                                    
                                    
                                    $
                                    273,683Change
      in unearned premiums
                                    
                                    
                                    (14,515
                                    )
                                    
                                    
                                    (93,913
                                    )
                                    
                                    
                                    (140,971
                                    )
                                    
                                    
                                    (131,040
                                    )Net
      earned premium
                                    
                                    
                                    223,841
                                    
                                    
                                    
                                    77,338
                                    
                                    
                                    
                                    433,933
                                    
                                    
                                    
                                    142,643Net
      investment income
                                    
                                    
                                    15,113
                                    
                                    
                                    
                                    7,763
                                    
                                    
                                    
                                    29,372
                                    
                                    
                                    
                                    15,372Net
      realized investment gains (losses)
                                    
                                    
                                    1,534
                                    
                                    
                                    
                                    39
                                    
                                    
                                    
                                    (396
                                    )
                                    
                                    
                                    163Total
      revenues
                                    
                                    
                                    240,488
                                    
                                    
                                    
                                    85,140
                                    
                                    
                                    
                                    462,909
                                    
                                    
                                    
                                    158,178Expenses:Loss
      and loss adjustment expenses
                                    
                                    
                                    151,057
                                    
                                    
                                    
                                    43,610
                                    
                                    
                                    
                                    297,345
                                    
                                    
                                    
                                    81,446Commission
      and other acquisition expenses
                                    
                                    
                                    57,664
                                    
                                    
                                    
                                    25,498
                                    
                                    
                                    
                                    104,295
                                    
                                    
                                    
                                    46,758Other  operating
      expenses
                                    
                                    
                                    7,133
                                    
                                    
                                    
                                    2,236
                                    
                                    
                                    
                                    14,667
                                    
                                    
                                    
                                    3,662Trust
      preferred interest – related party
                                    
                                    
                                    9,112
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    16,202
                                    
                                    
                                    
                                    -Amortization
      of intangible assets
                                    
                                    
                                    1,675
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    3,239
                                    
                                    
                                    
                                    -Foreign
      exchange (gain) loss
                                    
                                    
                                    (2,404
                                    )
                                    
                                    
                                    4
                                    
                                    
                                    
                                    (2,191
                                    )
                                    
                                    
                                    4Total
      expenses
                                    
                                    
                                    224,237
                                    
                                    
                                    
                                    71,348
                                    
                                    
                                    
                                    433,557
                                    
                                    
                                    
                                    131,870Net
      income
                                    
                                    $
                                    16,251
                                    
                                    
                                    $
                                    13,792
                                    
                                    
                                    
                                    29,352
                                    
                                    
                                    $
                                    26,308Basic
      earnings per common share
                                    
                                    $
                                    0.23
                                    
                                    
                                    $
                                    0.23
                                    
                                    
                                    
                                    0.43
                                    
                                    
                                    $
                                    0.44Diluted
      earnings per common share
                                    
                                    
                                    0.23
                                    
                                    
                                    
                                    0.23
                                    
                                    
                                    
                                    0.42
                                    
                                    
                                    
                                    0.44Dividends
      declared per common share
                                    
                                    $
                                    0.06
                                    
                                    
                                    $
                                    0.05
                                    
                                    
                                    
                                    0.12
                                    
                                    
                                    $
                                    0.10




See
accompanying notes to the unaudited condensed consolidated financial
statements.


4





MAIDEN HOLDINGS,
LTD.


CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS


(in
thousands (000’s), except per share data)


(Unaudited)





For the Six
                                    Months Ended
                                    June 30, 2009
                                  
                                  
                                  For the Six
                                    Months Ended
                                    June 30, 2008Cash
      flows from operating activities:Net
      income
                                  
                                  $
                                  29,352
                                  
                                  
                                  $
                                  26,308Adjustments
      to reconcile net income to net cash provided by operating activities
      :Depreciation
      and amortization of intangibles
                                  
                                  
                                  3,502
                                  
                                  
                                  
                                  11Net
      realized loss (gain) on sales of investments
                                  
                                  
                                  396
                                  
                                  
                                  
                                  (163
                                  )Foreign
      exchange gain on revaluation
                                  
                                  
                                  (945
                                  )
                                  
                                  
                                  -Amortization
      of share-based compensation expense, bond premium and discount and trust
      preferred securities discount
                                  
                                  
                                  (2,822
                                  )
                                  
                                  
                                  (396
                                  )Changes
      in assets - (increase) decrease:Reinsurance
      balances receivable
                                  
                                  
                                  (157,679
                                  )
                                  
                                  
                                  (73,943
                                  )Accrued
      investment income
                                  
                                  
                                  (308
                                  )
                                  
                                  
                                  (1,623
                                  )Deferred
      commission and other acquisition costs
                                  
                                  
                                  (66,925
                                  )
                                  
                                  
                                  (46,796
                                  )Other
      assets
                                  
                                  
                                  (1,041
                                  )
                                  
                                  
                                  392Changes
      in liabilities – increase (decrease):Accrued
      expenses and other liabilities
                                  
                                  
                                  (24,011
                                  )
                                  
                                  
                                  (1,391
                                  )Loss
      and loss adjustment expense reserves
                                  
                                  
                                  42,102
                                  
                                  
                                  
                                  44,832Unearned
      premiums
                                  
                                  
                                  140,972
                                  
                                  
                                  
                                  131,040Net
      cash (used in) provided by operating activities
                                  
                                  
                                  (37,407
                                  )
                                  
                                  
                                  78,271Cash
      flows from investing activities:Purchases
      of investments:Purchases
      of fixed-maturity securities
                                  
                                  
                                  (415,611
                                  )
                                  
                                  
                                  (309,980
                                  )Purchases
      of other investments
                                  
                                  
                                  (138
                                  )
                                  
                                  
                                  (309
                                  )Sale
      of investments:Proceeds
      from sales of fixed-maturity securities
                                  
                                  
                                  134,384
                                  
                                  
                                  
                                  73,365Proceeds
      from maturities and calls of fixed-maturity securities
                                  
                                  
                                  116,139
                                  
                                  
                                  
                                  -Proceeds
      from redemption of other investments
                                  
                                  
                                  127
                                  
                                  
                                  
                                  -Increase
      in restricted cash
                                  
                                  
                                  97,394
                                  
                                  
                                  
                                  -Loan
      to related party
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (54,433
                                  )Purchase
      of furniture and equipment
                                  
                                  
                                  (201
                                  )
                                  
                                  
                                  (52
                                  )Net
      cash used in investing activities
                                  
                                  
                                  (67,906
                                  )
                                  
                                  
                                  (291,409
                                  )Cash
      flows from financing activities:Repurchase
      agreements, net
                                  
                                  
                                  (123,849
                                  )
                                  
                                  
                                  254,557Common
      share issuance
                                  
                                  
                                  117
                                  
                                  
                                  
                                  -Trust
      preferred securities issuance
                                  
                                  
                                  260,000
                                  
                                  
                                  
                                  -Trust
      preferred securities issuance cost
                                  
                                  
                                  (4,342
                                  )
                                  
                                  
                                  -Dividend
      paid
                                  
                                  
                                  (7,733
                                  )
                                  
                                  
                                  (2,978
                                  )Net
      cash provided by financing activities
                                  
                                  
                                  124,193
                                  
                                  
                                  
                                  251,579Net
      increase in cash and cash equivalents
                                  
                                  
                                  18,880
                                  
                                  
                                  
                                  38,441Cash
      and cash equivalents, beginning of period
                                  
                                  
                                  131,897
                                  
                                  
                                  
                                  35,729Cash
      and cash equivalents, end of period
                                  
                                  $
                                  150,777
                                  
                                  
                                  $
                                  74,170Supplemental
      information on cash flowsCash
      paid for interest
                                  
                                  $
                                  8,594
                                  
                                  
                                  $
                                  -Supplemental
      information about non-cash investing and financing
    activitiesDiscount
      on Trust Preferred Securities
                                  
                                  $
                                  (44,928
                                  )
                                  
                                  $
                                  -Additional
      paid in Capital
                                  
                                  
                                  44,928
                                  
                                  
                                  
                                  -





See accompanying notes to the
unaudited condensed consolidated financial
statements.


5





MAIDEN HOLDINGS,
LTD.


CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY


(in thousands (000’s), except per share
data)


(Unaudited)







For the six months ended June 30,
                                  2009
                                
                                Common
                                  Shares
                                
                                
                                Additional
                                  Paid-In
                                  Capital
                                
                                
                                Accumulated
                                  Other
                                  Comprehensive
                                  Loss
                                
                                
                                Retained
                                  Earnings
                                
                                
                                Treasury
                                  Shares
                                
                                
                                Total
                                  Shareholders’
                                  EquityBalance
      at December 31, 2008
                                
                                $
                                596
                                
                                
                                $
                                530,519
                                
                                
                                $
                                (44,499
                                )
                                
                                $
                                26,944
                                
                                
                                $
                                (3,801
                                )
                                
                                $
                                509,759Net
      income
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                29,352
                                
                                
                                
                                
                                
                                
                                
                                29,352Unrealized
      gains, net of deferred taxes
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                29,402
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                29,402Comprehensive
      income
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                58,754Shares
      issued, net
                                
                                
                                117
                                
                                
                                
                                44,928
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                45,045Share
      based compensation
                                
                                
                                
                                
                                
                                
                                276
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                276Dividends
      to shareholders
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                (8,435
                                )
                                
                                
                                
                                
                                
                                
                                (8,435
                                )Balance
      at June 30, 2009
                                
                                $
                                713
                                
                                
                                $
                                575,723
                                
                                
                                $
                                (15,097
                                )
                                
                                $
                                47,861
                                
                                
                                $
                                (3,801
                                )
                                
                                $
                                605,399
 
 For the six months ended June 30,
                                  2008
                                
                                Common
                                  Shares
                                
                                
                                Additional
                                  Paid-In
                                  Capital
                                
                                
                                Accumulated
                                  Other
                                  Comprehensive
                                  Loss
                                
                                
                                Retained
                                  Earnings
                                
                                
                                Treasury
                                  Shares
                                
                                
                                Total
                                  Shareholders’
                                  EquityBalance
      at December 31, 2007
                                
                                $
                                596
                                
                                
                                $
                                529,647
                                
                                
                                $
                                (13,496
                                )
                                
                                $
                                20,598
                                
                                
                                $
                                -
                                
                                
                                $
                                537,345Net
      income
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                26,308
                                
                                
                                
                                -
                                
                                
                                
                                26,308Net
      unrealized losses
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (21,349
                                )
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (21,349
                                )Comprehensive
      income
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                4,959Share
      based compensation
                                
                                
                                -
                                
                                
                                
                                391
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                391Dividends
      to shareholders
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (5,955
                                )
                                
                                
                                -
                                
                                
                                
                                (5,955
                                )Balance
      at June 30, 2008
                                
                                $
                                596
                                
                                
                                $
                                530,038
                                
                                
                                $
                                (34,845
                                )
                                
                                $
                                40,951
                                
                                
                                $
                                -
                                
                                
                                $
                                536,740


See
accompanying notes to the unaudited condensed consolidated financial
statements.


6


MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





1.  
            Basis of Presentation — Summary of
Significant Accounting Policies




The
accompanying unaudited condensed consolidated financial statements include the
accounts of Maiden Holdings, Ltd. and its subsidiaries and have been prepared in
accordance with U.S. generally accepted accounting principles (“GAAP”) for
interim financial statements and with the instructions to Form 10-Q and Article
10 of Regulation S-X as promulgated by the U.S. Securities and Exchange
Commission (“SEC”). Accordingly they do not include all of the information and
footnotes required by GAAP for complete financial statements. All significant
inter-company transactions and accounts have been eliminated in the consolidated
financial statements.




These
interim consolidated financial statements reflect all adjustments that are, in
the opinion of management, necessary for a fair presentation of the results for
the interim period and all such adjustments are of a normal recurring nature.
The results of operations for the interim period are not necessarily indicative,
if annualized, of those to be expected for the full year. The preparation
of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.





These
unaudited condensed consolidated financial statements, including these notes,
should be read in conjunction with the Company’s audited consolidated financial
statements, and related notes thereto, included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2008.





2.  
            Recent Accounting
Pronouncements




In
June 2009, the Financial Accounting Standard Board (“FASB”) issued
Statement No. 166, “Accounting for Transfers of
Financial Assets” (“SFAS166”) an amendment to FASB Statement
No. 140. SFAS166 will require more information about transfers of financial
assets, including securitization transactions, and where entities have
continuing exposure to the risks related to transferred financial assets. It
eliminates the concept of a “qualifying special-purpose entity,” changes the
requirements for derecognizing financial assets, and requires additional
disclosures. SFAS166 enhances information reported to users of financial
statements by providing greater transparency about transfers of financial assets
and an entity’s continuing involvement in transferred financial assets. SFAS166
will be effective for annual reporting periods beginning on or after January 1,
2010. Early application is not permitted. The Company is currently analyzing the
impact this will have on its financial statements.





In
June 2009, the FASB issued Statement No. 167,“Amendments to FASB Interpretation
No. 46(R)” (“SFAS 167”). SFAS 167 is a revision to FASB
Interpretation 46 (Revised December 2003), “Consolidation of Variable Interest
Entities ” and changes how a reporting entity determines when an entity
that is insufficiently capitalized or is not controlled through voting (or
similar rights) should be consolidated. The determination of whether a reporting
entity is required to consolidate another entity is based on, among other
things, the other entity’s purpose and design and the reporting entity’s ability
to direct the activities of the other entity that most significantly impact the
other entity’s economic performance. SFAS 167 will require a reporting entity to
provide additional disclosures about its involvement with variable interest
entities and any significant changes in risk exposure due to that involvement. A
reporting entity will be required to disclose how its involvement with a
variable interest entity affects the reporting entity’s financial statements.
SFAS 167 will be effective for annual reporting periods beginning on or after
January 1, 2010. Early application is not permitted. The Company is
currently analyzing the impact this will have on its financial
statements.





In
June 2009, the FASB issued Statement No. 168,“The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
Principles” (“SFAS 168”). SFAS 168 will become the single source of
authoritative nongovernmental U.S. generally accepted accounting principles
(“GAAP”), superseding existing FASB, American Institute of Certified Public
Accountants (“AICPA”), Emerging Issues Task Force (“EITF”), and related
accounting literature. SFAS 168 reorganizes the thousands of GAAP pronouncements
into roughly 90 accounting topics and displays them using a consistent
structure. Also included is relevant Securities and Exchange Commission guidance
organized using the same topical structure in separate sections. SFAS 168 will
be effective for financial statements issued for reporting periods that end
after September 15, 2009. This will have an impact on the Company’s
financial statement disclosures since all future references to authoritative
accounting literature will be referenced in accordance with SFAS
168.





In
May 2009, the FASB issued Statement No. 165,“Subsequent Events” (“SFAS
165”). SFAS 165 requires entities to disclose the date through which they have
evaluated subsequent events and whether the date corresponds with the release of
their financial statements. Effective for interim and annual periods ending
after June 15, 2009, the Company implemented SFAS 165 as of April 1,
2009 with no material impact on Company’s consolidated financial condition and
results of operations.


7


MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





2.  
            Recent Accounting Pronouncements
(continued)





In
April 2009, the FASB issued three FASB Staff Positions (“FSP”) –
(1) FSP FAS 115-2 and FAS 124-2 “Recognition and Presentation of
Other-Than-Temporary Impairments” (“FSP FAS 115-2”), (2) FSP FAS 157-4
“Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderly” (“FSP FAS 157-4”), and (3) FSP FAS 107-1 and APB 28-1 “Interim
Disclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1”). FSP
FAS 115-2 amends the other-than-temporary impairment guidance in GAAP for debt
securities to remove the requirement that a company must have the intent and
ability to hold a debt security until its anticipated recovery, but rather,
under the revised guidance, a company must recognize an other-than-temporary
impairment charge on its income statement if it intends to sell the debt
security or if it is more likely than not it will be required to sell a debt
security before the recovery of its amortized cost basis. In addition, the new
FSP FAS 115-2 also requires the recognition of an other-than-temporary
impairment charge if the present value of cash flows of a debt security expected
to be collected is less than the amortized cost basis of the debt security. FSP
FAS 115-2 is effective for interim and annual periods ending after June 15,
2009. The Company adopted FSP FAS 115-2 for the period ended June 30, 2009.
The adoption of FSP FAS 115-2 did not have a material impact on the financial
statements of the Company.





FSP FAS
157-4 provides additional guidance for estimating fair value in accordance with
Financial Accounting Standard No. 157 “Fair Value Measurements” (“SFAS
157”), when the volume and level of activity for an asset or liability has
significantly decreased. FSP FAS 157-4 provides a list of non-exhaustive factors
a company should consider in determining whether there has been a significant
decrease in the volume and level of activity for an asset or liability when
compared with normal market activity for that asset or liability (or similar
assets or liabilities). If a company determines there has been a significant
decrease in the volume and level of activity of an asset or liability, further
analysis of the transactions or quoted prices is needed, and a significant
adjustment to the transactions or quoted prices may be necessary to estimate the
fair value in accordance with SFAS 157. FSP FAS 157-4 also provides additional
guidance on identifying circumstances that indicate a transaction is not
orderly, and therefore, excluded as an observable input in the determination of
fair value. FSP FAS 157-4 is effective for interim and annual periods ending
after June 15, 2009. The Company adopted FSP FAS 157-4 for the period ended
June 30, 2009. The adoption of FSP FAS 157-4 and did not have a material impact
on the financial statements of the Company.


In
addition, in April 2009, the SEC staff issued Staff Accounting Bulletin
(“SAB”) 111 that amended Topic 5.M. “Other Than Temporary Impairment of Certain
Investments in Debt and Equity Securities”. This SAB amends Topic 5.M. solely to
include the staff’s view on equity securities and exclude debt securities from
its scope. By excluding debt securities from the scope of Topic 5.M., companies
are no longer required to assess if they have the intent and ability to hold
available-for-sale debt securities until anticipated recovery to determine if
there is an other-than-temporary impairment charge.




3.
            Investments





(a)
            Fixed
      Maturities and Other Investments





The
original or amortized cost, estimated fair value and gross unrealized gains and
losses of available-for-sale fixed maturities and other investments as of June
30, 2009 and December 31, 2008 are as follows:




June 30, 2009
                            
                            Original or
                              amortized
                              cost
                            
                            
                            Gross
                              unrealized
                              gains
                            
                            
                            Gross
                              unrealized
                              losses
                            
                            
                            Fair
                              valueFixed
      Maturities:U.S.
      – treasury bonds
                            
                            $
                            33,626
                            
                            
                            $
                            286
                            
                            
                            $
                            (233
                            )
                            
                            $
                            33,679U.S.
      Agency - mortgage backed securities
                            
                            
                            697,512
                            
                            
                            
                            20,812
                            
                            
                            
                            (2,120
                            )
                            
                            
                            716,204Corporate
      fixed maturities
                            
                            
                            552,330
                            
                            
                            
                            15,395
                            
                            
                            
                            (46,325
                            )
                            
                            
                            521,400Municipal
      bonds
                            
                            
                            23,753
                            
                            
                            
                            14
                            
                            
                            
                            (116
                            )
                            
                            
                            23,651Total
      available for sale fixed maturities
                            
                            
                            1,307,221
                            
                            
                            
                            36,507
                            
                            
                            
                            (48,794
                            )
                            
                            
                            1,294,934Other
      investments
                            
                            
                            5,814
                            
                            
                            
                            -
                            
                            
                            
                            (422
                            )
                            
                            
                            5,392Total
      investments
                            
                            $
                            1,313,035
                            
                            
                            $
                            36,507
                            
                            
                            $
                            (49,216
                            )
                            
                            $
                            1,300,326


8





MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





3.
            Investments
(continued)





(a)
            Fixed
      Maturities and Other
Investments(continued)





December 31, 2008
                                
                                Original or
                                  amortized
                                  cost
                                
                                
                                Gross
                                  unrealized
                                  gains
                                
                                
                                Gross
                                  unrealized
                                  losses
                                
                                
                                Fair
                                  ValueFixed
      Maturities:U.S.
      – treasury bonds
                                
                                $
                                37,782
                                
                                
                                $
                                775
                                
                                
                                $
                                (30
                                )
                                
                                $
                                38,527U.S.
      Agency - mortgage backed securities
                                
                                
                                756,023
                                
                                
                                
                                21,178
                                
                                
                                
                                (5,302
                                )
                                
                                
                                771,899Corporate
      fixed maturities
                                
                                
                                370,121
                                
                                
                                
                                2,320
                                
                                
                                
                                (62,912
                                )
                                
                                
                                309,529Total
      available for sale fixed maturities
                                
                                
                                1,163,926
                                
                                
                                
                                24,273
                                
                                
                                
                                (68,244
                                )
                                
                                
                                1,119,955Other
      investments
                                
                                
                                5,819
                                
                                
                                
                                -
                                
                                
                                
                                (528
                                )
                                
                                
                                5,291Total
      investments
                                
                                $
                                1,169,745
                                
                                
                                $
                                24,273
                                
                                
                                $
                                (68,772
                                )
                                
                                $
                                1,125,246




The
following tables summarize fixed maturities in an unrealized loss position and
the aggregate fair value and gross unrealized loss by length of time the
security has continuously been in an unrealized loss position:





Less than 12 months
                                  
                                  
                                  12 months or more
                                  
                                  
                                  TotalJune 30, 2009
                                  
                                  Fair
                                    value
                                  
                                  
                                  Unrealized
                                    losses
                                  
                                  
                                  Fair
                                    value
                                  
                                  
                                  Unrealized
                                    Losses
                                  
                                  
                                  Fair
                                    value
                                  
                                  
                                  Unrealized
                                    lossesAvailable-for-sale
      securities:U.S.
      – treasury bonds
                                  
                                  $
                                  4,268
                                  
                                  
                                  
                                  (233
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  4,268
                                  
                                  
                                  
                                  (233
                                  )U.S.
      Agency mortgage backed securities
                                  
                                  
                                  135,262
                                  
                                  
                                  
                                  (1,011
                                  )
                                  
                                  
                                  49,685
                                  
                                  
                                  
                                  (1,109
                                  )
                                  
                                  
                                  184,947
                                  
                                  
                                  
                                  (2,120
                                  )Corporate
      fixed maturities
                                  
                                  
                                  47,945
                                  
                                  
                                  
                                  (4,254
                                  )
                                  
                                  
                                  213,601
                                  
                                  
                                  
                                  (42,071
                                  )
                                  
                                  
                                  261,546
                                  
                                  
                                  
                                  (46,325
                                  )Municipal
      bonds
                                  
                                  
                                  10,408
                                  
                                  
                                  
                                  (116
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  10,408
                                  
                                  
                                  
                                  (116
                                  )197,833
                                  
                                  
                                  
                                  (5,614
                                  )
                                  
                                  
                                  263,286
                                  
                                  
                                  
                                  (43,180
                                  )
                                  
                                  
                                  461,169
                                  
                                  
                                  
                                  (48,794
                                  )Other
      investments
                                  
                                  $
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  4,708
                                  
                                  
                                  
                                  (422
                                  )
                                  
                                  $
                                  4,708
                                  
                                  
                                  
                                  (422
                                  )Total
      temporarily impaired  available-for-sale securities and other
      investments
                                  
                                  $
                                  197,883
                                  
                                  
                                  $
                                  (5,614
                                  )
                                  
                                  $
                                  267,994
                                  
                                  
                                  $
                                  (43,602
                                  )
                                  
                                  $
                                  465,877
                                  
                                  
                                  $
                                  (49,216
                                  )


9





MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





3.
            Investments –
(continued)





As of
June 30, 2009, there were approximately 39 securities in an unrealized loss
position with a fair value of $ 465,877. Of these securities, there were 21
securities that have been in an unrealized loss position for 12 months or more
with a value of $ 267,994.





Less than 12 months
                                    
                                    
                                    12 months or more
                                    
                                    
                                    TotalDecember 31, 2008
                                    
                                    Fair
                                      value
                                    
                                    
                                    Unrealized
                                      losses
                                    
                                    
                                    Fair
                                      value
                                    
                                    
                                    Unrealized
                                      Losses
                                    
                                    
                                    Fair
                                      value
                                    
                                    
                                    Unrealized
                                      lossesAvailable-for-sale
      securities:U.S.
      – treasury bonds
                                    
                                    $
                                    6,521
                                    
                                    
                                    $
                                    (30
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    6,521
                                    
                                    
                                    
                                    (30
                                    )U.S.
      Agency mortgage backed securities
                                    
                                    
                                    148,803
                                    
                                    
                                    
                                    (5,302
                                    )
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    148,803
                                    
                                    
                                    
                                    (5,302
                                    )Corporate
      fixed maturities
                                    
                                    
                                    104,279
                                    
                                    
                                    
                                    (13,708
                                    )
                                    
                                    
                                    153,055
                                    
                                    
                                    
                                    (49,205
                                    )
                                    
                                    
                                    257,334
                                    
                                    
                                    
                                    (62,912
                                    )259,603
                                    
                                    
                                    
                                    (19,040
                                    )
                                    
                                    
                                    153,055
                                    
                                    
                                    
                                    (49,205
                                    )
                                    
                                    
                                    412,658
                                    
                                    
                                    
                                    (68,244
                                    )Other
      investments
                                    
                                    $
                                    4,722
                                    
                                    
                                    $
                                    (528
                                    )
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    4,722
                                    
                                    
                                    
                                    (528
                                    )Total
      temporarily impaired  available-for-sale securities and other
      investments
                                    
                                    $
                                    264,325
                                    
                                    
                                    $
                                    (19,568
                                    )
                                    
                                    $
                                    153,055
                                    
                                    
                                    $
                                    (49,205
                                    )
                                    
                                    $
                                    417,380
                                    
                                    
                                    $
                                    (68,772
                                    )





As of
December 31, 2008, there were approximately 40 securities in an unrealized loss
position with a fair value of $417,380. Of these securities, there were 10
securities that have been in an unrealized loss position for 12 months or more
with a value of $153,055.





Other-than-Temporary
Impairments (“OTTI”)





We review
our investment portfolio for impairment on a quarterly basis. Impairment of
investments results in a charge to operations when a fair value decline below
cost is deemed to be other-than-temporary. As of June 30, 2009, we reviewed our
portfolio to evaluate the necessity of recording impairment losses for
other-than-temporary declines in the fair value of
investments.  During the three and six months ended June 30, 2009 and
2008, theCompany
recognized no other than temporary impairment fixed income securities and other
investments.Based on our qualitative and quantitative OTTI review of
each asset class within our fixed maturity portfolio, the unrealized losses on
fixed maturities at June 30, 2009, were primarily due to widening of credit
spreads relating to the market illiquidity, rather than credit events. Because
the Company neither intends nor will be required to sell these securities until
a recovery of fair value to amortized cost, we currently believe it is probable
that we will collect all amounts due according to their respective contractual
terms. Therefore we do not consider these fixed maturities to be
other-than-temporarily impaired at June 30, 2009.





(b)
Restricted Cash and Investments





We are
required to maintain assets on deposit to support our reinsurance operations and
to serve as collateral for our reinsurance liabilities under various reinsurance
agreements. The assets on deposit are available to settle reinsurance
liabilities. We also utilize trust accounts to collateralize business with our
reinsurance counterparties. These trust accounts generally take the place of
letter of credit requirements. The assets in trust as collateral are primarily
cash and highly rated fixed maturity securities. The fair value of our
restricted assets was as follows:




June 30,
                                  2009
                                
                                
                                December
                                  31, 2008Restricted
      cash -  third party agreements
                                
                                $
                                296,575
                                
                                
                                $
                                335,201Restricted
      cash -  related party agreements
                                
                                
                                15,308
                                
                                
                                
                                74,076Total
      restricted cash
                                
                                
                                311,883
                                
                                
                                
                                409,277Restricted
      investments - in Trust for third party agreements at fair value (Amortized
      cost: 2009 - $755,827; 2008 - $701,973)
                                
                                
                                731,432
                                
                                
                                
                                660,388Restricted
      investments - in Trust for related party agreements at fair value
      (Amortized cost: 2009 - $138,773; 2008
-  $1,200)
                                
                                
                                145,861
                                
                                
                                
                                1,203Total
      restricted investments
                                
                                
                                877,293
                                
                                
                                
                                661,591Total
      restricted cash and investments
                                
                                $
                                1,189,176
                                
                                
                                $
                                1,070,868


10


MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)


3.
            Investments –
(continued)





(c) Other





The
Company enters into repurchase agreements. The agreements are accounted for as
collateralized borrowing transactions and are recorded at contract amounts. The
Company receives cash or securities, that it invests or holds in short term or
fixed income securities. As of June 30, 2009, there were $108,797 principal
amount outstanding at interest rates between 0.4% and 0.55%. Interest expense
associated with these repurchase agreements was $10 and $783 for the three and
six months ended June 30, 2009, respectively, out of which $10 was accrued as of
June 30, 2008. The Company has approximately $108,797 of collateral pledged in
support of these agreements.





4. Fair
Value of Financial Instruments




The
Company’s estimates of fair value for financial assets and financial liabilities
are based on the framework established in SFAS 157. The framework is based on
the inputs used in valuation and gives the highest priority to quoted prices in
active markets and requires that observable inputs be used in the valuations
when available. The disclosure of fair value estimates in the SFAS 157 hierarchy
is based on whether the significant inputs into the valuation are observable. In
determining the level of the hierarchy in which the estimate is disclosed, the
highest priority is given to unadjusted quoted prices in active markets and the
lowest priority to unobservable inputs that reflect the Company’s significant
market assumptions. The three levels of the hierarchy are as
follows:





·
            Level
      1- Unadjusted quoted market prices for identical assets or
      liabilities in active markets that the Company has the ability to
      access.





·
            Level
      2- Quoted prices for similar assets or liabilities in active
      markets; quoted prices for identical or similar assets or liabilities in
      inactive markets; or valuations based on models where the significant
      inputs are observable (e.g., interest rates, yield curves, prepayment
      speeds, default rates, loss severities, etc.) or can be corroborated by
      observable market data.





·
            Level
      3- Valuations based on models where significant inputs are not
      observable. The unobservable inputs reflect the Company’s own assumptions
      about the assumptions that market participants would
  use.





In
accordance with SFAS 157, the Company determines fair value based on the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date.





SFAS 107,
“Disclosure about Fair Value of Financial Instruments” requires all entities to
disclose the fair value of its financial instruments, both assets and
liabilities recognized and not recognized in the balance sheet, for which it is
practicable to estimate fair value.





The
Company uses the following methods and assumptions in estimating its fair value
disclosure for its financial instruments.





Investments available for
sale. Investments available for sale are recorded at fair value on a
recurring basis and include fixed maturities and securities sold under
agreements to repurchase. Fair value of investments is measured based upon
quoted prices in active markets, if available. If quoted prices in active
markets are not available, fair values are measured by an independent pricing
service that utilizes valuation techniques based upon observable market data.
Level 1 investments include those traded on an active exchange, such as the
NASDAQ. Since fixed maturities other than U.S. treasury securities generally do
not trade on a daily basis, the independent pricing service prepares estimates
of fair value measurements for these securities using its proprietary pricing
applications which include available relevant market information. These
investments are classified as Level 2 investments and include obligations of
U.S. government agencies, municipals and corporate debt securities.




Other investments. Other
investments consist primarily of hedge funds where the fair value estimate is
determined by an external fund manager based on recent filings, operating
results, balance sheet stability, growth and other business and market sector
fundamentals. Due to the significant unobservable inputs in these valuations,
the Company includes other investments in the amount disclosed in Level
3.





Reinsurance balance receivable.The carrying values reported in the accompanying balance sheets for these
financial instruments approximate their fair value due to short term nature of
the assets.





Loan to related party. The
carrying values reported in the accompanying balance sheets for these financial
instruments approximate their fair value.





Trust preferred securities.The carrying values reported in the accompanying balance sheets for these
financial instruments approximate their fair value.


11


MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





4. Fair
Value of Financial Instruments (continued)





a)             
      Fair Value Hierarchy





The
following table presents the level within the fair value hierarchy at which the
Company’s financial assets and financial liabilities are measured on a recurring
basis as of June 30, 2009 and December 31, 2008:


June30,2009
                          
                          Quoted Prices in
                            Active Markets
                            for Identical
                            Assets (Level 1)
                          
                          
                          Significant
                            Other Observable
                            Inputs (Level 2)
                          
                          
                          Significant
                            Unobservable
                            Inputs
                            (Level 3)
                          
                          
                          Total Fair
                            ValueAssetsFixed
      maturities
                          
                          $
                          33,679
                          
                          
                          $
                          1,261,255
                          
                          
                          $
                          -
                          
                          
                          $
                          1,294,934Other
      investments
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          5,392
                          
                          
                          
                          5,392Total
                          
                          $
                          33,679
                          
                          
                          $
                          1,261,255
                          
                          
                          $
                          5,392
                          
                          
                          $
                          1,300,326As
      a percentage of total assets
                          
                          
                          1.4
                          %
                          
                          
                          50.9
                          %
                          
                          
                          0.2
                          %
                          
                          
                          52.5
                          %LiabilitiesSecurities
      sold under agreements to repurchase
                          
                          $
                          -
                          
                          
                          $
                          108,797
                          
                          
                          $
                          -
                          
                          
                          $
                          108,797As
      a percentage of total liabilities
                          
                          
                          -
                          
                          
                          
                          5.8
                          %
                          
                          
                          -
                          
                          
                          
                          5.8
                          %
 
 December31,2008
                              
                              Quoted Prices in
                                Active Markets
                                for Identical
                                Assets (Level 1)
                              
                              
                              Significant
                                Other Observable
                                Inputs (Level 2)
                              
                              
                              Significant
                                Unobservable
                                Inputs
                                (Level 3)
                              
                              
                              Total Fair
                                ValueAssetsFixed
      maturities
                              
                              $
                              38,527
                              
                              
                              $
                              1,081,428
                              
                              
                              $
                              -
                              
                              
                              $
                              1,119,955Other
      investments
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              5,291
                              
                              
                              
                              5,291Total
                              
                              $
                              38,527
                              
                              
                              $
                              1,081,428
                              
                              
                              $
                              5,291
                              
                              
                              $
                              1,125,246As
      a percentage of total assets
                              
                              
                              1.8
                              %
                              
                              
                              50.8
                              %
                              
                              
                              0.2
                              %
                              
                              
                              52.8
                              %LiabilitiesSecurities
      sold under agreements to repurchase
                              
                              $
                              -
                              
                              
                              $
                              232,646
                              
                              
                              $
                              -
                              
                              
                              $
                              232,646As
      a percentage of total liabilities
                              
                              
                              -
                              
                              
                              
                              14.4
                              %
                              
                              
                              -
                              
                              
                              
                              14.4
                              %




b)            Level
3 Financial Instruments





The
following table presents changes in Level 3 for our financial instruments
measured at fair value on a recurring basis for the six months ended June 30,
2009:




OtherInvestments:
                      
                      June 30, 2009Balance  –
      January 1
                      
                      $
                      5,291Change
      in net unrealized gains (losses) – included in other comprehensive
      loss
                      
                      
                      106Net
      realized gains (losses) – included in net income
                      
                      
                      (15
                      )Net
      purchases or (sales)
                      
                      
                      10Net
      transfers in (out of) of Level 3
                      
                      
                      -Balance
      at end of period
                      
                      $
                      5,392


12


MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





5.            Goodwill
and Intangible Assets





The
following table shows an analysis of goodwill and intangible
assets:





June 30, 2009
                              
                              Gross
                              
                              
                              Accumulated
                                Amortization
                              
                              
                              Net
                              
                              Useful LifeGoodwill
                              
                              $
                              49,747
                              
                              
                              $
                              -
                              
                              
                              $
                              49,747
                              
                              IndefiniteState
      licenses
                              
                              
                              4,527
                              
                              
                              
                              -
                              
                              
                              
                              4,527
                              
                              IndefiniteCustomer
      relationships
                              
                              
                              51,400
                              
                              
                              
                              (4,493
                              )
                              
                              
                              46,907
                              
                              15
      years double decliningNet
      balance
                              
                              $
                              105,674
                              
                              
                              $
                              (4,493
                              )
                              
                              $
                              101,181





December 31, 2008
                                  
                                  Gross
                                  
                                  
                                  Accumulated
                                    Amortization
                                  
                                  
                                  Net
                                  
                                  Useful LifeGoodwill
                                  
                                  $
                                  49,747
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  49,747
                                  
                                  IndefiniteState
      licenses
                                  
                                  
                                  5,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  5,000
                                  
                                  IndefiniteCustomer
      relationships
                                  
                                  
                                  51,400
                                  
                                  
                                  
                                  (1,253
                                  )
                                  
                                  
                                  50,147
                                  
                                  15
      years double decliningNet
      balance
                                  
                                  $
                                  106,147
                                  
                                  
                                  $
                                  (1,253
                                  )
                                  
                                  $
                                  104,894





On
October 31, 2008, the Company acquired the reinsurance operations of GMAC
Insurance (GMACI), including its book of assumed reinsurance business. As part
of the transaction the Company’s wholly owned subsidiary Maiden Holdings North
America, Ltd. (“Maiden NA”) acquired GMAC RE LLC, the reinsurance managing
general agent writing business on behalf of Motors Insurance Corporation and the
renewal rights for the business written by GMAC RE.  In connection
with the transaction Maiden NA also entered into an agreement to acquire two
licensed insurance companies, GMAC Direct Insurance Company (“GMAC Direct”) and
Integon Specialty Insurance Company (“Integon”). Regulatory approval for the
acquisition of Integon was received on July 27, 2009 and the acquisition is
expected to be consummated on September 1, 2009.  The acquisition of
GMAC Direct closed on December 23, 2008, and it was renamed Maiden
Reinsurance Company on February 2,
2009.





Goodwill
and intangible assets are subject to annual impairment testing. No impairment
was recorded during the three and six months ended June 30, 2009. The Company
currently estimates the amortization of the intangible assets with finite lives
for the years ended December 31, 2009, 2010, 2011, 2012 and 2013 to be
$6,590, $5,808, $5,033, $4,362 and $3,781, respectively.




6.  Trust
Preferred Securities





On
January 20, 2009, the Company completed a private placement of 260,000 units
(the “Units”), each Unit consisting of $1,000 principal amount of capital
securities (the “Trust Preferred Securities”) of Maiden Capital Financing Trust
(the “Trust”), a trust established by Maiden NA,  and 45 common
shares, $.01 par value, of the Company (the “Common Shares”), for a purchase
price of $1,000.45 per Unit.  This resulted in gross proceeds to the
Company of $260,117, before $4,342 of placement agent fees and
expenses.  As a result, the Company issued 11,700,000 of its Common
Shares.  Certain trusts established by Michael Karfunkel and George
Karfunkel, two of the Company’s founding shareholders, purchased an aggregate of
159,000 of the Units or 61%.  The remaining 101,000 Units were
purchased by existing institutional shareholders of the
Company.




The Trust
used the proceeds from the sale of the Trust Preferred Securities to purchase a
subordinated debenture (the “Debenture”) in the principal amount of $260,000
issued by Maiden NA.


13


MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





6.  Trust
Preferred Securities (continued)





The
Debenture was issued pursuant to an Indenture dated January 20, 2009 by and
between the Maiden NA and Wilmington Trust Company
(“Wilmington”).  The terms of the Debenture are substantially the same
as the terms of the Trust Preferred Securities.  The interest payments
by Maiden NA will be used by the Trust to pay the quarterly distributions to the
holders of the Trust Preferred Securities.  The Indenture permits
Maiden NA to redeem the Debenture (and thus a like amount of the Trust Preferred
Securities) at stated value plus one year’s interest together with accrued and
unpaid interest, if any, through the date of redemption at any time until
January 15, 2014.  On and after January 15, 2014, Maiden NA may redeem
any or all of the Debenture (and thus a like amount of the Trust Preferred
Securities) at stated value plus accrued and unpaid interest, if any, through
the date of redemption.  If the Company redeems any amount of its
Debenture, the Trust must redeem a like amount of the Trust Preferred
Securities.  The Indenture permits Maiden NA, as long as no event of
default has occurred and continues, to defer interest payments on the Debenture
for up to 20 consecutive quarterly periods, during which interest accrues and
compounds until paid.





Pursuant
to separate Guarantee Agreements dated as of January 20, 2009 (each a “Guarantee
Agreement”) with Wilmington, as guarantee trustee, each of the Company and
Maiden NA has agreed to guarantee the payment of distributions and payments on
liquidation or redemption of the Trust Preferred
Securities.





As a
consequence of the issuance of a majority of the Units to a related party under
FASB Interpretation 46R Consolidation of Variable Interest Entities (“FIN 46R”),
the Trust is a variable interest entity and the Company is deemed to be the
Primary beneficiary and is required to consolidate the Trust. The issuance of
common shares associated with the Trust Preferred Securities resulted in an
original issuance discount of $44,928 based on market price on January 20, 2009.
The discount is amortized over 30 years based on the effective interest method.
The Debentures and Trust Preferred Securities mature in 2039 and carry a stated
or coupon rate of 14% with an effective interest rate of 16.95%. As of June 30,
2009, the stated value of the Trust Preferred Securities was $215,096 which
comprises the principal amount of $260,000 and unamortized discount of
$44,904.





7.
             Earnings Per
Share





The
following is a summary of the elements used in calculating basic and diluted
earnings per share:





Three months
                                ended
                                June 30, 2009
                              
                              
                              Three months
                                ended
                                June 30, 2008
                              
                              
                              Six months
                                ended June 30,
                                2009
                              
                              
                              Six months
                                ended June
                                30, 2008Net
      income available to common shareholders
                              
                              $
                              16,251
                              
                              
                              $
                              13,792
                              
                              
                              $
                              29,352
                              
                              
                              $
                              26,308Weighted
      average number of common shares outstanding - basic
                              
                              
                              70,287,664
                              
                              
                              
                              59,550,000
                              
                              
                              
                              68,994,846
                              
                              
                              
                              59,550,000Potentially
      dilutive securities:Warrants
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -Share
      options
                              
                              
                              379,435
                              
                              
                              
                              -
                              
                              
                              
                              315,858
                              
                              
                              
                              -Weighted
      average number of common shares outstanding - diluted
                              
                              
                              70,667,099
                              
                              
                              
                              59,550,000
                              
                              
                              
                              69,310,704
                              
                              
                              
                              59,550,000Basic
      earnings per common share:
                              
                              $
                              0.23
                              
                              
                              $
                              0.23
                              
                              
                              $
                              0.43
                              
                              
                              $
                              0.44Diluted
      earnings per common share:
                              
                              $
                              0.23
                              
                              
                              $
                              0.23
                              
                              
                              $
                              0.42
                              
                              
                              $
                              0.44




As of
June 30, 2009, 4,050,000 (2008: 4,050,000) warrants and 645,626 (2008: 859,707)
share options were excluded from the calculation of diluted earnings per share
as they were anti-dilutive.





8.    Share Based
Compensation





Share
Options




The fair
value of each option grant is separately estimated for each vesting date. The
fair value of each option is amortized into compensation expense on a
straight-line basis between the grant date for the award and each vesting date.
The Company has estimated the fair value of all share option awards as of the
date of the grant by applying the Black-Scholes-Merton multiple-option pricing
valuation model. The application of this valuation model involves assumptions
that are judgmental and highly sensitive in the determination of compensation
expense. The adoption of SFAS No. 123R’s fair value method has resulted in
share-based expense (a component of salaries and benefits) in the amount of
approximately $117 and $276 for the three and six months ended June 30, 2009,
respectively (2008: $204 and $391, respectively).


14





MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





8.    Share Based Compensation
(continued)





The key
assumptions used in determining the fair value of options granted in the three
and six months ended June 30, 2009 and a summary of the methodology applied to
develop each assumption are as follows:




Assumptions :
                    
                    June 30,
                      2009Volatility
                    
                    
                    29.8-43.9
                    %Risk-free
      interest rate
                    
                    
                    2.36-3.30
                    %Weighted
      average expected lives in years
                    
                    5-6.1 yearsForfeiture
      rate
                    
                    
                    0
                    %Dividend
      yield rate
                    
                    
                    1-5.39
                    %




Expected Price Volatility –
This is a measure of the amount by which a price has fluctuated or is expected
to fluctuate. The common shares of Maiden Holdings, Ltd. began trading on May 6,
2008. Since the Company does not have enough history over which to calculate an
expected volatility representative of the volatility over the expected lives of
the options, the Company considered the historical and current implied
volatilities of a set of comparable companies in the industry in which the
Company operates.




Risk-Free Interest Rate –
This is the U.S. Treasury rate for the week of the grant having a term equal to
the expected life of the option. An increase in the risk-free interest rate will
increase compensation expense.





Expected Lives – This is the
period of time over which the options granted are expected to remain outstanding
giving consideration to vesting schedules, historical exercise and forfeiture
patterns. The Company uses the simplified method outlined in SEC Staff
Accounting Bulletin No. 107 to estimate expected lives for options granted
during the period as historical exercise data is not available and the options
meet the requirements set out in the Bulletin. Options granted have a maximum
term of ten years. An increase in the expected life will increase compensation
expense.





Forfeiture Rate – This is the
estimated percentage of options granted that are expected to be forfeited or
cancelled before becoming fully vested. An increase in the forfeiture rate will
decrease compensation expense.





The
following schedules shows all options granted, exercised, expired and exchanged
under the Plan for the three months ended June 30, 2009:





Three Months Ended
                                  June 30, 2009
                                
                                Number of
                                  Share Options
                                
                                
                                Weighted
                                  Average
                                  Exercise Price
                                
                                
                                Weighted Average
                                  Remaining
                                  Contractual TermOutstanding,
      March 31, 2009
                                
                                
                                1,469,834
                                
                                
                                $
                                5.55
                                
                                
                                9.31
      yearsGranted
                                
                                
                                34,000
                                
                                
                                
                                5.05
                                
                                
                                9.89
      yearsExercised
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Cancelled
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Outstanding,
      June 30, 2009
                                
                                
                                1,503,834
                                
                                
                                $
                                5.54
                                
                                
                                9.08
      years





The
following schedule shows all options granted, exercised, expired and exchanged
under the Plan for the six months ended June 30, 2009:





Six Months Ended
                              June 30, 2009
                            
                            Number of
                              Share Options
                            
                            
                            Weighted
                              Average
                              Exercise Price
                            
                            
                            Weighted Average
                              Remaining
                              Contractual TermOutstanding,
      December 31, 2008
                            
                            
                            1,519,834
                            
                            
                            $
                            5.92
                            
                            
                            9.44
      yearsGranted
                            
                            
                            184,000
                            
                            
                            
                            4.51
                            
                            
                            9.70
      yearsExercised
                            
                            
                            -
                            
                            
                            
                            -Cancelled
                            
                            
                            (200,000
                            )
                            
                            
                            7.74
                            
                            
                            
                            -Outstanding,
      June 30, 2009
                            
                            
                            1,503,834
                            
                            
                            $
                            5.54
                            
                            
                            9.08
      years


15


MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





8.    Share Based Compensation
(continued)





The
following schedules shows all options granted, exercised, expired and exchanged
under the Plan for the three months ended June 30, 2008:





Three Months Ended
                                            June 30, 2008
                                          
                                          Number of
                                            Share Options
                                          
                                          
                                          Weighted
                                            Average Exercise
                                            Price
                                          
                                          
                                          Weighted Average
                                            Remaining Contractual
                                            TermOutstanding,
      March 31, 2008
                                          
                                          
                                          883,000
                                          
                                          
                                          $
                                          10.00
                                          
                                          
                                          9.5
      yearsGranted
                                          
                                          
                                          79,000
                                          
                                          
                                          
                                          10.00
                                          
                                          
                                          9.9
      yearsExercised
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Cancelled
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Outstanding,
      June 30, 2008
                                          
                                          
                                          962,000
                                          
                                          
                                          $
                                          10.00
                                          
                                          
                                          9.3
      years





The
following schedule shows all options granted, exercised, expired and exchanged
under the Plan for the six months ended June 30, 2008:





Six Months Ended
                                    June 30, 2008
                                  
                                  Number of
                                    Share Options
                                  
                                  
                                  Weighted
                                    Average Exercise
                                    Price
                                  
                                  
                                  Weighted Average
                                    Remaining Contractual
                                    TermOutstanding,
      December 31, 2007
                                  
                                  
                                  716,000
                                  
                                  
                                  $
                                  10.00
                                  
                                  
                                  9.1
      yearsGranted
                                  
                                  
                                  246,000
                                  
                                  
                                  
                                  10.00
                                  
                                  
                                  9.7
      yearsExercised
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Cancelled
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Outstanding,
      June 30, 2008
                                  
                                  
                                  962,000
                                  
                                  
                                  $
                                  10.00
                                  
                                  
                                  9.3
      years





The
weighted average grant date fair value was $1.58 and $ 3.33 for all options
outstanding at June 30, 2009 and 2008, respectively. There was approximately
$1,478 and $2,471 of total unrecognized compensation cost related to non-vested
share-based compensation arrangements as of June 30, 2009 and 2008,
respectively.





9.Dividends
Declared





On
February 25, 2009, the Company’s Board of Directors approved a quarterly cash
dividend of $0.06 per common share. This dividend was paid on April 15, 2009 to
shareholders of record on April 1, 2009.





On May
11, 2009, the Company’s Board of Directors approved a quarterly cash dividend of
$0.06 per common share. This dividend was paid on July 15, 2009 to shareholders
of record on July 1, 2009.





10.    Related Party
Transactions





The
Founding Shareholders of Maiden, Michael Karfunkel, George Karfunkel and Barry
Zyskind, are also the principal shareholders, and, respectively, the Chairman of
the Board of Directors, a Director, and the President and Chief Executive
Officer and Director of AmTrust. The following describes transactions between
the Company and AmTrust.





Quota
Share Reinsurance Agreement





Effective
July 1, 2007, the Company and AmTrust entered into a master agreement, as
amended (the “Master Agreement”), by which they caused AmTrust’s Bermuda
reinsurance subsidiary, AmTrust International Insurance, Ltd.  (“AII”)
and Maiden Insurance Company Ltd. (“Maiden Insurance”) to enter into the
Reinsurance Agreement by which (a) AII retrocedes to Maiden Insurance an amount
equal to 40% of the premium written by  subsidiaries of AmTrust, net
of the cost of unaffiliated inuring reinsurance (and in the case of AmTrust’s
U.K. insurance subsidiary, IGI Insurance Company Limited (“IGI”), net of
commissions) and 40% of losses and (b) AII transferred to Maiden Insurance 40%
of the AmTrust subsidiaries’ unearned premium reserves, effective as of July 1,
2007, with respect to the current lines of business, excluding risks for which
the AmTrust subsidiaries’ net retention exceeds $5,000 (“Covered
Business”). AmTrust also has agreed to cause AII, subject to regulatory
requirements, to reinsure any insurance company which writes Covered Business in
which AmTrust acquires a majority interest to the extent required to enable AII
to cede to Maiden Insurance 40% of the premiums and losses related to such
Covered Business. The Agreement further provides that AII receives a ceding
commission of 31% of ceded written premiums.


16


MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)


10.    Related Party Transactions
(continued)





The
Reinsurance Agreement has an initial term of three years and will automatically
renew for successive three year terms thereafter, unless either AII or Maiden
Insurance notifies the other of its election not to renew not less than nine
months prior to the end of any such three year term. In addition, either party
is entitled to terminate on thirty days notice or less upon the occurrence of
certain early termination events, which include a default in payment,
insolvency, change in control of AII or Maiden Insurance, run-off, or a
reduction of 50% or more of the shareholders’ equity of Maiden Insurance or the
combined shareholders’ equity of AII and the AmTrust subsidiaries.





On June
11, 2008, the Company and AmTrust amended the Reinsurance Agreement to add
Retail Commercial Package Business to the Covered Business as a consequence of
AmTrust’s acquisition of Unitrin Business Insurance (UBI). Under the amendment,
AmTrust's subsidiaries cede, upon collection, to Maiden 100% of unearned premium
(net of inuring reinsurance) from the acquisition of UBI's in-force book of
business. Additionally, AmTrust cedes to Maiden 40% of net premium written,
effective as of June 1, 2008. Maiden will pay to AmTrust a ceding commission of
34.375% on the unearned premium cession and the Retail Commercial Package
Business. The $2,000 maximum liability for a single loss provided in the Quota
Share Reinsurance Agreement shall not be applicable to Retail Commercial Package
Business.





On
February 9, 2009, AII and Maiden Insurance amended the Reinsurance Agreement to
clarify that (i) AII would offer Maiden Insurance the opportunity to reinsure
Excess Retention Business, which is defined as a policy issued by an AmTrust
insurance subsidiary with respect to which the insurance subsidiary’s retention
is greater than $5 million and (ii) the deduction for the cost of inuring
reinsurance from Affiliate Subject Premium (as defined in the Reinsurance
Agreement) retroceded to Maiden Insurance is net of ceding commission. In
addition, the Reinsurance Agreement has been amended by deleting the limitation
on Maiden Insurance’s maximum liability in respect of a single loss, which,
under certain circumstances, was $2 million. Pursuant to the Reinsurance
Agreement, as amended, AII and Maiden Insurance share, proportionally, in all
premium and losses ceded thereunder.





The
Company recorded approximately $27,619 and $ 56,873 of ceding commission expense
for the three and six months ended June 30, 2009, respectively (2008: $24,090
and $43,865, respectively), as a result of this transaction.





Other
Reinsurance Agreement





Effective
January 1, 2008 the Company and AmTrust entered into an agreement to reinsure a
45% participation in the $9 million in excess of $1 million layer of AmTrust's
workers' compensation excess of loss program. This layer provides reinsurance to
AmTrust for losses per occurrence in excess of $1 million up to $10 million,
subject to an annual aggregate deductible of $1.25 million. This participation
was sourced through a reinsurance intermediary via open market placement in
which competitive bids were solicited by an independent broker. The remaining
55% participation was placed with a single carrier.





The
following is the effect on the Company’s balance sheet as of June 30, 2009 and
December 31, 2008, and the results of operations for the three and six months
ended June 30, 2009 and 2008 related to the Reinsurance Agreements with
AmTrust:





Assets and (liabilities):
                        
                        June 30,
                          2009
                        
                        
                        December 31,
                          2008Restricted
      cash and investments
                        
                        $
                        161,169
                        
                        
                        $
                        75,279Loan
      to related party
                        
                        
                        167,975
                        
                        
                        
                        167,975Reinsurance
      balances receivable, net
                        
                        
                        39,599
                        
                        
                        
                        48,837Accrued
      interest on loan to related party
                        
                        
                        1,124
                        
                        
                        
                        1,478Deferred
      acquisition costs
                        
                        
                        77,518
                        
                        
                        
                        80,455Reserve
      for losses and loss expenses
                        
                        
                        (157,349
                        )
                        
                        
                        (69,646
                        )Unearned
      premiums
                        
                        $
                        (237,698
                        )
                        
                        $
                        (245,742
                        )





Results of operations:
                        
                        Three months
                          ended
                          June 30, 2009
                        
                        
                        Three months
                          ended
                          June 30, 2008
                        
                        
                        Six months
                          ended
                          June 30, 2009
                        
                        
                        Six months
                          ended
                          June 30, 2008Net
      premium written - assumed
                        
                        $
                        82,086
                        
                        
                        $
                        171,245
                        
                        
                        $
                        175,401
                        
                        
                        $
                        258,959Change
      in unearned premium - assumed
                        
                        
                        7,371
                        
                        
                        
                        (94,602
                        )
                        
                        
                        8,042
                        
                        
                        
                        (118,020
                        )Net
      earned premium - assumed
                        
                        
                        89,457
                        
                        
                        
                        76,643
                        
                        
                        
                        183,443
                        
                        
                        
                        140,939Commission
      and other acquisition costs on premium written
                        
                        
                        26,767
                        
                        
                        
                        58,077
                        
                        
                        
                        57,324
                        
                        
                        
                        86,543Change
      in deferred acquisition costs
                        
                        
                        2,560
                        
                        
                        
                        (32,913
                        )
                        
                        
                        2,937
                        
                        
                        
                        (40,625
                        )Ceding
      commission and other acquisition cost - expensed
                        
                        
                        29,327
                        
                        
                        
                        25,164
                        
                        
                        
                        60,261
                        
                        
                        
                        45,918Loss
      and loss adjustment expense
                        
                        
                        57,494
                        
                        
                        
                        43,363
                        
                        
                        
                        115,626
                        
                        
                        
                        80,762Interest
      income on loan to related party
                        
                        
                        553
                        
                        
                        
                        933
                        
                        
                        
                        1,363
                        
                        
                        
                        2,285


17





MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





10.    Related Party Transactions
(continued)





Collateral
provided to AmTrust




In order
to provide AmTrust’s U.S. insurance subsidiaries with credit for reinsurance on
their statutory financial statements, AII, as the direct reinsurer of the
AmTrust’s insurance subsidiaries, has established trust accounts (“Trust
Accounts”) for their benefit. Maiden Insurance has agreed to provide appropriate
collateral to secure its proportional share under the Quota Share Agreement of
AII’s obligations to the AmTrust subsidiaries to which AII is required to
provide collateral. This collateral may be in the form of (a) assets loaned by
Maiden Insurance to AII, for deposit into the Trust Accounts, pursuant to a loan
agreement between those parties, (b) assets transferred by Maiden Insurance, for
deposit into the Trust Accounts, (c) a letter of credit obtained by Maiden
Insurance and delivered to an AmTrust subsidiary on AII’s behalf (a “Letter of
Credit”), or (d) premiums withheld by an AmTrust subsidiary at Maiden
Insurance’s request in lieu of remitting such premiums to AII (“Withheld
Funds”). Maiden Insurance may provide any or a combination of these forms of
collateral, provided that the aggregate value thereof equals Maiden Insurance’s
proportionate share of its obligations under the Quota Share Agreement with AII.
If collateral is required to be provided to any AmTrust subsidiary under
applicable law or regulatory requirements, Maiden Insurance will provide
collateral to the extent required, although Maiden Insurance does not expect
that such collateral will be required unless an AmTrust subsidiary is domiciled
in the United States.




Maiden
Insurance satisfied its collateral requirements under the Quota Share Agreement
with AII by lending funds in the amount of $167,975 as at June 30, 2009 and
December 31, 2008 to AII pursuant to a loan agreement entered into between those
parties. The amount of collateral Maiden Insurance is required to maintain,
which is determined quarterly, equals its proportionate share of (a) the amount
of ceded paid losses for which AII is responsible to such AmTrust subsidiaries
but has not yet paid, (b) the amount of ceded loss reserves (including ceded
reserves for claims reported but not resolved and losses incurred but not
reported) for which AII is responsible to AmTrust subsidiaries, and (c) the
amount of ceded reserves for unearned premiums ceded by AmTrust subsidiaries to
AII. Pursuant to the Master Agreement, AmTrust has agreed to cause AII not to
commingle Maiden Insurance’s assets with AII’s other assets and to cause the
AmTrust subsidiaries not to commingle Maiden Insurance’s assets with the AmTrust
subsidiaries’ other assets if an AmTrust subsidiary withdraws those assets. AII
has agreed that, if an AmTrust subsidiary returns to AII excess assets withdrawn
from a Trust Account, drawn on a Letter of Credit or maintained by such AmTrust
subsidiary as Withheld Funds, AII will immediately return to Maiden Insurance
its proportionate share of such excess assets. AII has further agreed that if
the aggregate fair market value of the amount of Maiden Insurance’s assets held
in the Trust Account exceeds Maiden Insurance’s proportionate share of AII’s
obligations, or if an AmTrust subsidiary misapplies any such collateral, AII
will immediately return to Maiden Insurance an amount equal to such excess or
misapplied collateral, less any amounts AII has paid to Maiden Insurance. In
addition, if an AmTrust subsidiary withdraws Maiden Insurance’s assets from a
Trust Account and maintains those assets on its books as withheld funds, AII has
agreed to pay to Maiden Insurance interest at the rate equivalent to the
one-month London Interbank Offered Rate (“LIBOR”) plus 90 basis points per annum
computed on the basis of a 360-day year on the loan (except to the extent Maiden
Insurance’s proportionate share of AII’s obligations to that AmTrust subsidiary
exceeds the value of the collateral Maiden Insurance has provided), and net of
unpaid fees Maiden Insurance owes to AIIM and its share of fees owed to the
trustee of the Trust Accounts. Effective December 1, 2008, the Company entered
into a Reinsurer Trust Assets Collateral agreement to provide to AII sufficient
collateral to secure its proportional share of AII’s obligations to the U.S.
AmTrust subsidiaries. The amount of the collateral in Trust, as at June 30, 2009
and December 31, 2008 was approximately $161,169 and $75,279, respectively, (See
Note 3(b)).




Reinsurance
Brokerage Agreements





Effective
July 1, 2007, the Company entered into a reinsurance brokerage agreement with
AII Reinsurance Broker Ltd., a subsidiary of AmTrust. Pursuant to the brokerage
agreement, AII Reinsurance Broker Ltd. provides brokerage services relating to
the Reinsurance Agreement for a fee equal to 1.25% of the premium reinsured from
AII. The brokerage fee is payable in consideration of AII Reinsurance Broker
Ltd’s brokerage services. AII Reinsurance Broker Ltd. is not the Company’s
exclusive broker. AII Reinsurance Broker Ltd. may, if mutually agreed, also
produce reinsurance for the Company from other ceding companies, and in such
cases the Company will negotiate a mutually acceptable commission rate. The
Company recorded approximately $1,095 and $2,250 of reinsurance brokerage
expense for the three and six months ended June 30, 2009, respectively (2008:
$953 and $1,750, respectively), and deferred reinsurance brokerage of $2,948 and
$3,009 as at June 30, 2009 and December 31, 2008, respectively, as a result of
this agreement.





Effective
April 1, 2008, the Company entered into brokerage services agreements with IGI
Intermediaries Limited and IGI Inc. (IGI), both subsidiaries of AmTrust.
Pursuant to the brokerage services agreements, IGI provides marketing services
to us which includes providing marketing material to potential policyholders,
providing us with market information on new trends and business opportunities
and referring new brokers and potential policyholders to us. A fee equal to
IGI‘s costs in providing such services plus 8% is payable in consideration of
IGI’s marketing services. The Company recorded approximately $117 and $270
expense, which is included in other operating expenses, for the three and six
months ended June 30, 2009, respectively.


18





MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





10.    Related Party Transactions
(continued)





Asset
Management Agreement





Effective
July 1, 2007, the Company entered into an asset management agreement with AII
Insurance Management Limited (“AIIM”), an AmTrust subsidiary, pursuant to which
AIIM has agreed to provide investment management services to Maiden Insurance.
Pursuant to the asset management agreement, AIIM provides investment management
services for an annual fee equal to 0.35% of average invested assets plus all
costs incurred.  Effective April 1, 2008, the investment management
services annual fee has been reduced to 0.20% if the average value of the
account is less than $1 billion and 0.15% if the average value of the account is
greater than $1 billion.  The Company recorded approximately $619 and
$1,216 of investment management fees for the three and six months ended June 30,
2009 (2008: $258 and $716), respectively, as a result of this
agreement





11.   
Segments





The
Company currently operates two business segments, Reinsurance - AmTrust Quota
Share and Reinsurance - Other. The Company evaluates segment performance based
on segment profit, which excludes investment income, realized gains and losses,
general corporate expenses, interest expenses, income taxes and any other
non-core business income or expenses. The following tables summarize business
segments as follows:





For the three months ended June 30, 2009
                                            
                                            Reinsurance -
                                              AmTrust
                                              Quota Share
                                            
                                            
                                            Reinsurance
                                              -Other
                                            
                                            
                                            TotalNet
      premiums written
                                            
                                            $
                                            89,803
                                            
                                            
                                            $
                                            148,553
                                            
                                            
                                            $
                                            238,356Net
      earned premium
                                            
                                            
                                            87,627
                                            
                                            
                                            
                                            136,214
                                            
                                            
                                            
                                            223,841Losses
      and loss adjustment expenses
                                            
                                            
                                            (56,487
                                            )
                                            
                                            
                                            (94,570
                                            )
                                            
                                            
                                            (151,057
                                            )Commissions
      and other acquisition expenses
                                            
                                            
                                            (28,714
                                            )
                                            
                                            
                                            (28,950
                                            )
                                            
                                            
                                            (57,664
                                            )General
      and administrative expenses
                                            
                                            
                                            (687
                                            )
                                            
                                            
                                            (4,088
                                            )
                                            
                                            
                                            (4,775
                                            )Underwriting
      income
                                            
                                            $
                                            1,739
                                            
                                            
                                            $
                                            8,606
                                            
                                            
                                            $
                                            10,345Reconciliation
      to net incomeNet
      investment income and realized gains (losses)
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            16,647Amortization
      of intangible assets
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (1,675
                                            )Foreign
      exchange gain
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            2,404Trust
      preferred interest
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (9,112
                                            )General
      and administrative expenses
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (2,358
                                            )Net
      Income
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            $
                                            16,251Net
      loss and loss expense ratio*
                                            
                                            
                                            64.5
                                            %
                                            
                                            
                                            69.4
                                            %
                                            
                                            
                                            67.5
                                            %Acquisition
      cost ratio**
                                            
                                            
                                            32.8
                                            %
                                            
                                            
                                            21.3
                                            %
                                            
                                            
                                            25.8
                                            %General
      and administrative expense ratio***
                                            
                                            
                                            0.8
                                            %
                                            
                                            
                                            3.0
                                            %
                                            
                                            
                                            3.2
                                            %Combined
      ratio****
                                            
                                            
                                            98.1
                                            %
                                            
                                            
                                            93.7
                                            %
                                            
                                            
                                            96.5
                                            %


19


MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





11. Segments
(continued)




For the six months ended June 30, 2009
                              
                              Reinsurance -
                                AmTrust
                                Quota Share
                              
                              
                              Reinsurance
                                -Other
                              
                              
                              TotalNet
      premiums written
                              
                              $
                              175,174
                              
                              
                              $
                              399,731
                              
                              
                              $
                              574,905Net
      earned premium
                              
                              
                              180,049
                              
                              
                              
                              253,884
                              
                              
                              
                              433,933Losses
      and loss adjustment expenses
                              
                              
                              (113,760
                              )
                              
                              
                              (183,585
                              )
                              
                              
                              (297,345
                              )Commissions
      and other acquisition expenses
                              
                              
                              (59,123
                              )
                              
                              
                              (45,172
                              )
                              
                              
                              (104.295
                              )General
      and administrative expenses
                              
                              
                              (1,061
                              )
                              
                              
                              (9,815
                              )
                              
                              
                              (10,876
                              )Underwriting
      income
                              
                              $
                              6,105
                              
                              
                              $
                              15,312
                              
                              
                              $
                              21,417Reconciliation
      to net incomeNet
      investment income and realized gain (loss)
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              28,976Amortization
      of intangibles assets
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (3,239
                              )Foreign
      exchange gain
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              2,191Trust
      preferred interest
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (16,202
                              )General
      and administrative expenses
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (3,791
                              )Net
      Income
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              $
                              29,352Net
      loss and loss expense ratio*
                              
                              
                              63.2
                              %
                              
                              
                              72.3
                              %
                              
                              
                              68.5
                              %Acquisition
      cost ratio**
                              
                              
                              32.8
                              %
                              
                              
                              17.8
                              %
                              
                              
                              24.0
                              %General
      and administrative expense ratio***
                              
                              
                              0.6
                              %
                              
                              
                              3.9
                              %
                              
                              
                              3.4
                              %Combined
      ratio****
                              
                              
                              96.6
                              %
                              
                              
                              94.0
                              %
                              
                              
                              95.9
                              %





*Calculated by dividing net
losses and loss expenses by net earned premium.


**
Calculated by dividing commission and other acquisition expenses by net earned
premium


*** Calculated
by dividing general and administrative expenses by net earned
premium.


****
Calculated by adding together net loss and loss expense ratio, acquisition cost
ratio and general and administrative expense ratio.





For the three months ended June 30,  2008
                            
                            Reinsurance -
                              AmTrust
                              Quota Share
                            
                            
                            Reinsurance
                              -Other
                            
                            
                            TotalNet
      premiums written
                            
                            $
                            168,068
                            
                            
                            $
                            3,183
                            
                            
                            $
                            171,251Net
      earned premium
                            
                            
                            76,246
                            
                            
                            
                            1,092
                            
                            
                            
                            77,338Losses
      and loss adjustment expenses
                            
                            
                            (43,213
                            )
                            
                            
                            (397
                            )
                            
                            
                            (43,610
                            )Commissions
      and other acquisition expenses
                            
                            
                            (25,043
                            )
                            
                            
                            (455
                            )
                            
                            
                            (25,498
                            )General
      and administrative expenses
                            
                            
                            (201
                            )
                            
                            
                            (480
                            )
                            
                            
                            (681
                            )Underwriting
      income
                            
                            $
                            7,789
                            
                            
                            $
                            (240
                            )
                            
                            $
                            7,549Reconciliation
      to net incomeNet
      investment income and realized gain (loss)
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            7,802General
      and administrative expenses
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            (1,559
                            )Net
      Income
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            $
                            13,792Net
      loss and loss expense ratio*
                            
                            
                            56.7
                            %
                            
                            
                            36.4
                            %
                            
                            
                            56.4
                            %Acquisition
      cost ratio**
                            
                            
                            32.9
                            %
                            
                            
                            41.7
                            %
                            
                            
                            33.0
                            %General
      and administrative expense ratio***
                            
                            
                            0.3
                            %
                            
                            
                            44.0
                            %
                            
                            
                            0.9
                            %Combined
      ratio****
                            
                            
                            89.9
                            %
                            
                            
                            122.1
                            %
                            
                            
                            90.3
                            %


20


MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





11.    Segments
(continued)





For the six months ended June 30,  2008
                                    
                                    Reinsurance -
                                      AmTrust
                                      Quota Share
                                    
                                    
                                    Reinsurance
                                      -Other
                                    
                                    
                                    TotalNet
      premiums written
                                    
                                    $
                                    251,016
                                    
                                    
                                    $
                                    22,667
                                    
                                    
                                    $
                                    273,683Net
      earned premium
                                    
                                    
                                    140,036
                                    
                                    
                                    
                                    2,607
                                    
                                    
                                    
                                    142,643Losses
      and loss adjustment expenses
                                    
                                    
                                    (80,421
                                    )
                                    
                                    
                                    (1,025
                                    )
                                    
                                    
                                    (81,446
                                    )Commissions
      and other acquisition expenses
                                    
                                    
                                    (45,614
                                    )
                                    
                                    
                                    (1,144
                                    )
                                    
                                    
                                    (46,758
                                    )General
      and administrative expenses
                                    
                                    
                                    (377
                                    )
                                    
                                    
                                    (629
                                    )
                                    
                                    
                                    (1,006
                                    )Underwriting
      income
                                    
                                    $
                                    13,624
                                    
                                    
                                    $
                                    (191
                                    )
                                    
                                    $
                                    13,433Reconciliation
      to net incomeNet
      investment income
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    15,535General
      and administrative expenses
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (2,660
                                    )Net
      Income
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    $
                                    26,308Net
      loss and loss expense ratio*
                                    
                                    
                                    57.3
                                    %
                                    
                                    
                                    39.3
                                    %
                                    
                                    
                                    57.1
                                    %Acquisition
      cost ratio**
                                    
                                    
                                    32.6
                                    %
                                    
                                    
                                    43.9
                                    %
                                    
                                    
                                    32.8
                                    %General
      and administrative expense ratio***
                                    
                                    
                                    0.3
                                    %
                                    
                                    
                                    24.1
                                    %
                                    
                                    
                                    0.7
                                    %Combined
      ratio****
                                    
                                    
                                    90.2
                                    %
                                    
                                    
                                    107.3
                                    %
                                    
                                    
                                    90.6
                                    %As of June 30, 2009Reinsurance
      balances receivable
                                    
                                    $
                                    37,374
                                    
                                    
                                    $
                                    193,145
                                    
                                    
                                    $
                                    230,519Deferred
      acquisition costs
                                    
                                    
                                    76,899
                                    
                                    
                                    
                                    94,496
                                    
                                    
                                    
                                    171,395Loan
      to related party
                                    
                                    
                                    167,975
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    167,975Goodwill
                                    
                                    
                                    -
                                    
                                    
                                    
                                    49,747
                                    
                                    
                                    
                                    49,747Intangibles
                                    
                                    
                                    -
                                    
                                    
                                    
                                    51,434
                                    
                                    
                                    
                                    51,434Restricted
      investments and cash
                                    
                                    
                                    161,168
                                    
                                    
                                    
                                    1,028,008
                                    
                                    
                                    
                                    1,189,176Corporate
      and other assets
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    616,885Total
      Assets
                                    
                                    $
                                    443,416
                                    
                                    
                                    $
                                    1,416,830
                                    
                                    
                                    $
                                    2,477,131As of June 30, 2008Reinsurance
      balances receivable
                                    
                                    $
                                    89,019
                                    
                                    
                                    $
                                    12,914
                                    
                                    
                                    $
                                    101,933Deferred
      commission and other acquisition costs
                                    
                                    
                                    82,482
                                    
                                    
                                    
                                    8,529
                                    
                                    
                                    
                                    91,011Loan
      to related party
                                    
                                    
                                    167,975
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    167,975Corporate
      and other assets
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    812,759Total
      Assets
                                    
                                    $
                                    339,476
                                    
                                    
                                    $
                                    21,443
                                    
                                    
                                    $
                                    1,173,678





*Calculated by dividing net
losses and loss expenses by net earnedpremium.


**
Calculated by dividing commission and other acquisition expenses by net earnedpremium


***
Calculated by dividing general and administrative expenses by net earned
premium.


21


MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





11.    Segments
(continued)





The
following tables set forth financial information relating to gross and net
premiums written and earned by major line of business for the three and six
months ended June 30, 2009 and 2008:





Three months ended June 302009
                                    
                                    
                                    2008Total
                                    
                                    
                                    % of Total
                                    
                                    
                                    Total
                                    
                                    
                                    % of
                                      TotalGross
      and net premiums writtenReinsurance
      - AmTrust Quota ShareSmall
      Commercial Business
                                    
                                    $
                                    45,936
                                    
                                    
                                    
                                    19.3
                                    %
                                    
                                    $
                                    116,203
                                    
                                    
                                    
                                    67.9
                                    %Specialty
      Middle Market Property & Casualty
                                    
                                    
                                    12,764
                                    
                                    
                                    
                                    5.4
                                    %
                                    
                                    
                                    14,614
                                    
                                    
                                    
                                    8.5
                                    %Specialty
      Risk and Extended Warranty
                                    
                                    
                                    31,103
                                    
                                    
                                    
                                    13.0
                                    %
                                    
                                    
                                    37,251
                                    
                                    
                                    
                                    21.7
                                    %Total
      Reinsurance - AmTrust Quota Share
                                    
                                    $
                                    89,803
                                    
                                    
                                    
                                    37.7
                                    %
                                    
                                    $
                                    168,068
                                    
                                    
                                    
                                    98.1
                                    %Reinsurance
      – OtherProperty
                                    
                                    
                                    25,510
                                    
                                    
                                    
                                    10.7
                                    %
                                    
                                    
                                    -
                                    
                                    
                                    
                                    0.00
                                    %Casualty
                                    
                                    
                                    105,233
                                    
                                    
                                    
                                    44.1
                                    %
                                    
                                    
                                    3,183
                                    
                                    
                                    
                                    1.9
                                    %Accident
      and Health
                                    
                                    
                                    17,810
                                    
                                    
                                    
                                    7.5
                                    %
                                    
                                    
                                    -
                                    
                                    
                                    
                                    0.00
                                    %Total
      Reinsurance - Other
                                    
                                    
                                    148,553
                                    
                                    
                                    
                                    62.3
                                    %
                                    
                                    
                                    3,183
                                    
                                    
                                    
                                    1.9
                                    %$
                                    238,356
                                    
                                    
                                    
                                    100.0
                                    %
                                    
                                    $
                                    171,251
                                    
                                    
                                    
                                    100.00
                                    %





Six months ended June 302009
                                  
                                  
                                  2008Total
                                  
                                  
                                  % of Total
                                  
                                  
                                  Total
                                  
                                  
                                  % of
                                    TotalGross
      and net premiums writtenReinsurance
      - AmTrust Quota ShareSmall
      Commercial Business
                                  
                                  $
                                  98,908
                                  
                                  
                                  
                                  17.2
                                  %
                                  
                                  $
                                  159,860
                                  
                                  
                                  
                                  58.41
                                  %Specialty
      Middle Market Property & Casualty
                                  
                                  
                                  21,993
                                  
                                  
                                  
                                  3.8
                                  %
                                  
                                  
                                  21,481
                                  
                                  
                                  
                                  7.84
                                  %Specialty
      Risk and Extended Warranty
                                  
                                  
                                  54,273
                                  
                                  
                                  
                                  9.5
                                  %
                                  
                                  
                                  69,675
                                  
                                  
                                  
                                  25.45
                                  %Total
      Reinsurance - AmTrust Quota Share
                                  
                                  $
                                  175,174
                                  
                                  
                                  
                                  30.5
                                  %
                                  
                                  $
                                  251,016
                                  
                                  
                                  
                                  91.70
                                  %Reinsurance
      – OtherProperty
                                  
                                  
                                  76,958
                                  
                                  
                                  
                                  13.4
                                  %
                                  
                                  
                                  -
                                  
                                  
                                  
                                  0.00
                                  %Casualty
                                  
                                  
                                  255,308
                                  
                                  
                                  
                                  44.4
                                  %
                                  
                                  
                                  22,667
                                  
                                  
                                  
                                  8.30
                                  %Accident
      and Health
                                  
                                  
                                  67,464
                                  
                                  
                                  
                                  11.7
                                  %
                                  
                                  
                                  -
                                  
                                  
                                  
                                  0.00
                                  %Total
      Reinsurance - Other
                                  
                                  
                                  399,730
                                  
                                  
                                  
                                  69.5
                                  %
                                  
                                  
                                  22,667
                                  
                                  
                                  
                                  8.30
                                  %$
                                  574,904
                                  
                                  
                                  
                                  100.0
                                  %
                                  
                                  $
                                  273,683
                                  
                                  
                                  
                                  100.00
                                  %


22


MAIDEN HOLDINGS,
LTD.




Notes
to Unaudited Condensed Consolidated Financial Statements


(in
thousands (000’s), except per share data)


(Unaudited)





11.    Segments
(continued)





Three months ended June 302009
                                
                                
                                2008Total
                                
                                
                                % of Total
                                
                                
                                Total
                                
                                
                                % of
                                  TotalGross
      and net premiums earnedReinsurance
      - AmTrust Quota ShareSmall
      Commercial Business
                                
                                $
                                52,120
                                
                                
                                
                                23.3
                                %
                                
                                $
                                45,849
                                
                                
                                
                                59.3
                                %Specialty
      Middle Market Property & Casualty
                                
                                
                                13,070
                                
                                
                                
                                5.8
                                %
                                
                                
                                8,989
                                
                                
                                
                                11.6
                                %Specialty
      Risk and Extended Warranty
                                
                                
                                22,437
                                
                                
                                
                                10.0
                                %
                                
                                
                                21,408
                                
                                
                                
                                27.7
                                %Total
      Reinsurance - AmTrust Quota Share
                                
                                $
                                87,627
                                
                                
                                
                                39.1
                                %
                                
                                $
                                76,246
                                
                                
                                
                                98.6
                                %Reinsurance
      – OtherProperty
                                
                                
                                39,578
                                
                                
                                
                                17.7
                                %
                                
                                
                                -
                                
                                
                                
                                0.0
                                %Casualty
                                
                                
                                71,339
                                
                                
                                
                                31.9
                                %
                                
                                
                                1,092
                                
                                
                                
                                1.4
                                %Accident
      and Health
                                
                                
                                25,297
                                
                                
                                
                                11.3
                                %
                                
                                
                                -
                                
                                
                                
                                0.0
                                %Total
      Reinsurance - Other
                                
                                
                                136,214
                                
                                
                                
                                60.9
                                %
                                
                                
                                1,092
                                
                                
                                
                                1.4
                                %$
                                223,841
                                
                                
                                
                                100.0
                                %
                                
                                $
                                77,338
                                
                                
                                
                                100.0
                                %





Six months ended June 302009
                                
                                
                                2008Total
                                
                                
                                % of Total
                                
                                
                                Total
                                
                                
                                % of
                                  TotalGross
      and net premiums earnedReinsurance
      - AmTrust Quota ShareSmall
      Commercial Business
                                
                                $
                                106,748
                                
                                
                                
                                24.6
                                %
                                
                                $
                                77,729
                                
                                
                                
                                54.4
                                %Specialty
      Middle Market Property & Casualty
                                
                                
                                26,418
                                
                                
                                
                                6.1
                                %
                                
                                
                                19,303
                                
                                
                                
                                13.5
                                %Specialty
      Risk and Extended Warranty
                                
                                
                                46,883
                                
                                
                                
                                10.8
                                %
                                
                                
                                43,004
                                
                                
                                
                                30.2
                                %Total
      Reinsurance - AmTrust Quota Share
                                
                                $
                                180,049
                                
                                
                                
                                41.5
                                %
                                
                                $
                                140,036
                                
                                
                                
                                98.2
                                %Reinsurance
      – OtherProperty
                                
                                
                                65,577
                                
                                
                                
                                15.1
                                %
                                
                                
                                -
                                
                                
                                
                                0.0
                                %Casualty
                                
                                
                                137,693
                                
                                
                                
                                31.8
                                %
                                
                                
                                2,607
                                
                                
                                
                                1.8
                                %Accident
      and Health
                                
                                
                                50,614
                                
                                
                                
                                11.6
                                %
                                
                                
                                -
                                
                                
                                
                                0.0
                                %Total
      Reinsurance - Other
                                
                                
                                253,884
                                
                                
                                
                                58.5
                                %
                                
                                
                                2,607
                                
                                
                                
                                1.8
                                %$
                                433,933
                                
                                
                                
                                100.0
                                %
                                
                                $
                                142,643
                                
                                
                                
                                100.0
                                %





12.    Subsequent
Events





Management
has reviewed all events occurring since the date of the financial statements to
August 14, 2009, the date at which the attached statements were issued, to
determine if any such events should be disclosed. No such events, other than
disclosed in the following paragraph, arose during the period indicated which
required disclosure.




On August
10, 2009, the Company’s Board of Directors approved a quarterly cash dividend of
$0.06 per common share payable on October 15, 2009 to shareholders of record on
October 1, 2009.


23


Item
2.MANAGEMENT’S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS




The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our condensed consolidated
financial statements and related notes included elsewhere in this Form 10-Q.
References in this Form 10-Q to the terms “we,” “us,” “our,” “the company” or
other similar terms mean the consolidated operations of Maiden Holdings, Ltd and
its subsidiaries, unless the context requires otherwise. References in this Form
10-Q to the term “Holdings” means Maiden Holdings, Ltd only.




Note
on Forward-Looking Statement




This
Form 10-Q and other publicly available documents may include, and our officers
and representatives may from time to time make, projections concerning financial
information and statements concerning future economic performance and events,
plans and objectives relating to management, operations, products and services,
and assumptions underlying these projections and statements. These projections
and statements are forward-looking statements within the meaning of The Private
Securities Litigation Reform Act of 1995 and are not historical facts but
instead represent only our belief regarding future events, many of which, by
their nature, are inherently uncertain and outside our control. These
projections and statements may address, among other things, our strategy for
growth, product development, financial results and reserves. Actual results and
financial condition may differ, possibly materially, from these projections and
statements and therefore you should not place undue reliance on them. Factors
that could cause our actual results to differ, possibly materially, from those
in the specific projections and statements are discussed throughout this
Management’s Discussion and Analysis of Financial Condition and Results of
Operations and in “Risk Factors” in Item 1A of Part I of our 2008
Annual Report on Form 10-K filed with the U.S. Securities and Exchange
Commission (“SEC”) on March 31, 2009. The projections and statements in this
report speak only as of the date of this report and those in other publicly
available documents or made by our officers and representatives from time to
time speak only as of their respective dates and we undertake no obligation to
update or revise any forward-looking statement that may be made from time to
time, whether as a result of new information, future developments or otherwise,
except as required by law.





General
Overview




We are a
Bermuda-based holding company formed in June 2007 to provide reinsurance
solutions, products and services to U.S. and European insurance companies that
specialize in products offering coverage at low limits or insuring risks that
are believed to be low hazard, predictable and generally not susceptible to
catastrophe claims. We have operations in Bermuda and the U.S.  We
provide innovative reinsurance business solutions for such insurance companies
to enable them to improve their capacity and ability to deliver and market their
products and services.





On
October 31, 2008, we acquired the reinsurance operations of GMAC Insurance from
GMACI Holdings, LLC (“GMACI”), including a book of assumed reinsurance business.
As part of the transaction, the Company’s wholly owned subsidiary, Maiden
Holdings North America, Ltd. (“Maiden NA”), acquired GMAC RE LLC (“GMAC RE”), a
reinsurance managing general agent writing business on behalf of Motors
Insurance Corporation (“Motors”) and the renewal rights for the business written
through GMAC RE.  GMAC RE was subsequently renamed Maiden Re Insurance
Services, LLC (“Maiden Re”).  In connection with the transaction,
Maiden NA also entered into stock purchase agreements to acquire insurance
companies, GMAC Direct Insurance Company (“GMAC Direct”) and Integon Specialty
Insurance Company (“Integon”). The acquisition of GMAC Direct was consummated on
December 23, 2008 and it was renamed “Maiden Reinsurance Company” on February 2,
2009.  Regulatory approval for the acquisition of Integon was received
on July 27, 2009 and the acquisition is expected to be consummated on September
1, 2009.  In conjunction with the GMAC Acquisition, on October 31,
2008, Maiden Insurance and Motors entered into a Portfolio Transfer and Quota
Share Reinsurance Agreement under which Maiden Insurance reinsured (i) all of
the existing contracts written by GMAC RE pursuant to a loss portfolio transfer,
and (ii) contracts written pursuant to a fronting arrangement with
Motors.  The acquisition of GMAC RE, GMAC Direct and Integon and the
renewal rights to GMACI’s reinsurance business and the loss portfolio and quota
share reinsurance transaction with Motors is referred to as the “GMAC
Acquisition”.





To
support the businesses acquired in the GMAC Acquisition and the North American
operations of Maiden NA, on January 20, 2009, we completed a private placement
of 260,000 units (the “Units”), each Unit consisting of $1,000 principal amount
of capital securities (the “Trust Preferred Securities”) of Maiden Capital
Financing Trust, a trust established by Maiden NA, and 45 common shares, $.01
par value, of the Company for a purchase price of $1,000.45 per
Unit.  This resulted in gross proceeds to the Company of approximately
$260.1 million before approximately $4.3 million of placement agent fees and
expenses.  As part of the transaction, the Company issued 11,700,000
common shares to the purchasers of the Units. The Trust Preferred
Securities mature in 2039 and carry an interest rate of 14% and an
effective rate of interest of 16.95%. Approximately 61% of these securities were
placed privately with the Founding Shareholders and the remainder with several
existing institutional shareholders of the Company.


24





Relevant
Factors





Revenues




We derive
our revenues primarily from premiums on our insurance policies and reinsurance
contracts, net of any reinsurance or retrocessional coverage purchased.
Insurance and reinsurance premiums are a function of the amounts and types of
policies and contracts we write, as well as prevailing market prices. Our prices
are determined before our ultimate costs, which may extend far into the future,
are known. In addition, our revenues include income generated from our
investment portfolio, consisting of net investment income and net realized
investment gains or losses. Investment income is principally derived from
interest and dividends earned on investments, partially offset by investment
management fees and fees paid to our custodian bank. Net realized investment
gains or losses include (1) net realized investment gains or losses from
the sale of investments and (2) write-downs related to declines in the
market value of securities on our available for sale portfolio that were
considered to be other than temporary.




Expenses




Our
expenses consist largely of net losses and loss adjustment expenses, commissions
and other acquisition costs, general and administrative expenses, amortization
of intangible assets and foreign exchange gains or losses. Net losses and loss
adjustment expenses incurred are comprised of three main
components:




•
            losses
      paid, which are actual cash payments to insureds, net of recoveries from
      reinsurers;





•
            outstanding
      loss or case reserves, which represent management’s best estimate of the
      likely settlement amount for known claims, less the portion that can be
      recovered from reinsurers; and





•
            IBNR,
      which are reserves established by us for changes in the values of claims
      that have been reported to us but are not yet settled, as well as claims
      that have occurred but have not yet been reported. The portion recoverable
      from reinsurers is deducted from the gross estimated
  loss.




Commissions
and other acquisition expenses are comprised of commissions, brokerage fees and
insurance taxes. Commissions and brokerage fees are usually calculated as a
percentage of premiums and depend on the market and line of business.
Commissions and other acquisition costs are reported after (1) deducting
commissions received on ceded reinsurance, (2) deducting the part of
acquisition costs relating to unearned premiums and (3) including the
amortization of previously deferred acquisition costs.




General
and administrative expenses include personnel expenses, including share-based
compensation charges, rent expense, professional fees, information technology
costs and other general operating expenses. We are experiencing increases in
general and administrative expenses resulting from additional staff, increased
rent expense for our offices and increased professional fees. We believe
this trend will continue in 2009 as we continue to hire additional staff and
build our infrastructure, including additional expenses related to the GMAC RE
business for the full year 2009.




Ratios




Management
measures results for each segment on the basis of the “loss and loss adjustment
expense ratio,” “acquisition cost ratio,” “general and administrative expense
ratio,” “expense ratio” and the “combined ratio.” Because we do not manage our
assets by segment, investment income, interest expense and total assets are not
allocated to individual reportable segments. General and administrative expenses
are allocated to segments based on various factors, including staff count and
each segment’s proportional share of gross premiums written. The “loss and loss
adjustment expenses ratio” is derived by dividing net losses and loss adjustment
expenses by net earned premium. The “acquisition cost ratio” is derived by
dividing Commissions and other acquisition expenses by net earned premium. The
“general and administrative expense ratio” is derived by dividing general and
administrative expenses by net earned premium. The “expense ratio” is the sum of
the acquisition cost ratio and the general and administrative expense ratio. The
“combined ratio” is the sum of the loss and loss adjustment expense ratio, the
acquisition cost ratio and the general and administrative expense
ratio.


25


Critical
Accounting Policies





It
is important to understand our accounting policies in order to understand our
financial position and results of operations. Our unaudited condensed
consolidated financial statements reflect determinations that are inherently
subjective in nature and require management to make assumptions and best
estimates to determine the reported values. If events or other factors cause
actual results to differ materially from management’s underlying assumptions or
estimates, there could be a material adverse effect on our financial condition
or results of operations. We believe that some of the more critical judgments in
the areas of accounting estimates and assumptions that affect our financial
condition and results of operations are related to reserves for losses and loss
adjustment expenses, reinsurance recoverables, premiums and acquisition costs,
valuation of financial instruments and other-than-temporary-impairment of
investments. For a detailed discussion of our critical accounting policies
please refer to our Annual Report on Form 10-K for the year ended
December 31, 2008 filed with the SEC. There were no material changes in the
application of our critical accounting estimates subsequent to that
report.





Summary
of Results of Operations





The
following table sets forth our selected consolidated statement of operations
data for each of the periods indicated.




For the Three
                                Months Ended
                                June 30, 2009
                              
                              
                              For the Three
                                Months Ended
                                June 30, 2008
                              
                              
                              For the Six
                                Months
                                Ended June
                                30, 2009
                              
                              
                              For the Six
                                Months Ended
                                June 30, 2008Gross
      and net premiums written
                              
                              $
                              238,356
                              
                              
                              $
                              171,251
                              
                              
                              $
                              574,905
                              
                              
                              $
                              273,683Change
      in unearned premiums
                              
                              
                              (14,515
                              )
                              
                              
                              (93,913
                              )
                              
                              
                              (140,971
                              )
                              
                              
                              (131,040
                              )Net
      earned premium
                              
                              
                              223,841
                              
                              
                              
                              77,338
                              
                              
                              
                              433,933
                              
                              
                              
                              142,643Net
      investment income
                              
                              
                              15,113
                              
                              
                              
                              7,763
                              
                              
                              
                              29,372
                              
                              
                              
                              15,372Net
      realized investment gains (losses)
                              
                              
                              1,534
                              
                              
                              
                              39
                              
                              
                              
                              (396
                              )
                              
                              
                              163Total
      revenue
                              
                              
                              240,488
                              
                              
                              
                              85,140
                              
                              
                              
                              462,909
                              
                              
                              
                              158,178Loss
      and loss adjustment expenses
                              
                              
                              151,057
                              
                              
                              
                              43,610
                              
                              
                              
                              297,345
                              
                              
                              
                              81,446Commission
      and other acquisition expenses
                              
                              
                              57,664
                              
                              
                              
                              25,498
                              
                              
                              
                              104,295
                              
                              
                              
                              46,758General
      and administrative expenses
                              
                              
                              7,133
                              
                              
                              
                              2,236
                              
                              
                              
                              14,667
                              
                              
                              
                              3,662Amortization
      of intangibles
                              
                              
                              9,112
                              
                              
                              
                              -
                              
                              
                              
                              16,202
                              
                              
                              
                              -Interest
      expense – related party
                              
                              
                              1,675
                              
                              
                              
                              -
                              
                              
                              
                              3,239
                              
                              
                              
                              -Foreign
      exchange gain
                              
                              
                              (2,404
                              )
                              
                              
                              4
                              
                              
                              
                              (2,191
                              )
                              
                              
                              4Total
      expenses
                              
                              
                              224,237
                              
                              
                              
                              71,348
                              
                              
                              
                              433,557
                              
                              
                              
                              131,870Net
      income
                              
                              $
                              16,251
                              
                              
                              $
                              13,792
                              
                              
                              $
                              29,352
                              
                              
                              $
                              26,308Selected
      Consolidated Ratios:Net
      loss ratio
                              
                              
                              67.5
                              %
                              
                              
                              56.4
                              %
                              
                              
                              68.5
                              %
                              
                              
                              57.1
                              %Acquisition
      cost ratio
                              
                              
                              25.8
                              %
                              
                              
                              33.0
                              %
                              
                              
                              24.0
                              %
                              
                              
                              32.8
                              %General
      and administrative expense ratio
                              
                              
                              3.2
                              %
                              
                              
                              2.9
                              %
                              
                              
                              3.4
                              %
                              
                              
                              2.6
                              %Expense
      Ratio
                              
                              
                              29.0
                              %
                              
                              
                              35.9
                              %
                              
                              
                              27.4
                              %
                              
                              
                              35.4
                              %Combined
      ratio
                              
                              
                              96.5
                              %
                              
                              
                              92.3
                              %
                              
                              
                              95.9
                              %
                              
                              
                              92.5
                              %





Comparison
of Three and Six Months Ended June 30, 2009 and 2008





Premiums.  Net
premium written increased by $67.1 million, or 39.2%, and $301.2 million, or
110.1%, respectively for the three and six months ended June 30, 2009
compared to the three and six months ended June 30, 2008.  This
increase was primarily due to the GMAC Acquisition in the fourth quarter of
2008. The lower percentage increase in the second quarter of 2009 reflects
 non-recurrence of  premium written relating to the AmTrust Quota
Share of approximately $82 million relating to a one-time unearned premium
portfolio transfer in the second quarter of 2008 as a result of AmTrust’s
acquisition of Unitrin Business Insurance (“UBI”) .





Net
premium earned increased by $146.5 million, or 189.4%, and $291.3 million, or
204.2%, respectively for the three and six months ended June 30, 2009
compared to the three and six months ended June 30, 2008. Approximately
$133.7 million and $246.0 million, respectively, of the increase was due to the
GMAC Acquisition in the fourth quarter of 2008 with the balance relating to
increases across all lines of the AmTrust Quota Share.





Net
Investment Income. Net investment income increased by $7.4 million, or
94.7%, and $14.0 million, or 91.1%, respectively for the three and six months
ended June 30, 2009 compared to the three and six months ended
June 30, 2008. Average invested assets for the period were approximately
$1,846 million and $1.765 million, respectively compared to $660 million and
$667 million, respectively, and yields were approximately 3.3% and 2.6%,
respectively, compared to 4.7% and 4.6%, respectively, for the three and six
months ended June 30, 2009 and 2008, respectively. We also carried a
substantial amount of cash and cash equivalents in the three and six months
ended June 30, 2009 as we continue to deploy the cash obtained through the GMAC
Acquisition and also from the proceeds from the Trust Preferred issuance. We
expect investment income and the yield achieved to increase over time as cash is
more fully deployed.


26


Net
Realized Investment Gains (Losses). Net realized gains (losses) on
investments were $1.5 million and $(0.4) million, respectively for the three and
six months ended June 30, 2009 compared to gains of $0.04 million and
$0.2 million, respectively for the three and six months ended June 30,
2008.





Loss
and Loss Adjustment Expenses. Loss and loss adjustment expenses increased
by $107.4 million, or 246.4%, and $215.9 million, or 265.1%, respectively for
the three and six months ended June 30, 2009 compared to the three and six
months ended June 30, 2008. The Company’s loss ratio for the three and six
months ended June 30, 2009 increased to 67.5% and 68.5% , respectively,
from 56.4% and 57.1%, respectively, for the three and six months ended
June 30, 2008.   The increase in the loss ratio was
primarily due to the GMAC Acquisition in the fourth quarter of 2008 and the
addition of UBI premiums, which carry a higher loss ratio, to the AmTrust Quota
Share in the second quarter of 2008.





Commission
and Other Acquisition Expenses. Commission and other acquisition expenses
increased by $32.2 million, or 126.2%, and $57.5 million, or 123.1%,
respectively, for the three and six months ended June 30, 2009 compared to
the three and six months ended June 30, 2008. This increase was primarily
due to the GMAC Acquisition in the fourth quarter of 2008 and the addition of
UBI premiums to the AmTrust Quota Share in the second quarter of
2008.





General
and Administrative Expenses.General and administrative
expensesincreased by $4.9 million, or 219%, and $11.0 million, or
300.5%, respectively, for the three and six months ended June 30, 2009
compared to the three and six months ended June 30, 2008. This increase was
primarily due to due to the GMAC Acquisition in the fourth quarter of 2008 and
the continued build out of our infrastructure.





Interest
expense.  Interest expense for the for the three and six months
ended June 30, 2009 of $9.1 million and $16.2 million,
respectively,  relates to the issuance of $260 million of 14% Trust
Preferred Securities on January 20, 2009. There was no interest paid in the
three and six months ended June 30, 2008.





Foreign
Exchange Gain.The foreignexchange gainthe
for the three and six months ended June 30, 2009 arose primarily because of
the strengthening of Sterling versus the US dollar and our assets in Sterling
exceed our liabilities.





Underwriting
Results by Segment


The
Company currently operates two business segments Reinsurance - Other and
Reinsurance – AmTrust Quota Share. The following tables summarize the
underwriting results and associated ratios by segments:





Reinsurance
– Other Segment





The
following table summarizes the underwriting results and associated ratios for
the Reinsurance - Other segment. The comparisons with the prior year are not
particularly meaningful due to the GMAC Acquisition in the fourth quarter of
2008:




Three months ended June 30,
                              
                              
                              Six months ended June 30,2009
                              
                              
                              2008
                              
                              
                              2009
                              
                              
                              2008($ in thousands)
                              
                              
                              ($ in thousands)Net
      premiums written
                              
                              $
                              148,553
                              
                              
                              $
                              3,183
                              
                              
                              $
                              399,731
                              
                              
                              $
                              22,667Net
      earned premium
                              
                              
                              136,214
                              
                              
                              
                              1,092
                              
                              
                              
                              253,884
                              
                              
                              
                              2,607Losses
      and loss adjustment expenses
                              
                              
                              (94,570
                              )
                              
                              
                              (397
                              )
                              
                              
                              (183,585
                              )
                              
                              
                              (1,025
                              )Commissions
      and other acquisition expenses
                              
                              
                              (28,950
                              )
                              
                              
                              (455
                              )
                              
                              
                              (45,172
                              )
                              
                              
                              (1,144
                              )General
      and administrative expenses
                              
                              
                              (4,088
                              )
                              
                              
                              (480
                              )
                              
                              
                              (9,815
                              )
                              
                              
                              (629
                              )Underwriting
      income
                              
                              $
                              8,606
                              
                              
                              $
                              (240
                              )
                              
                              $
                              15,312
                              
                              
                              $
                              (191
                              )Net
      loss ratio
                              
                              
                              69.4
                              %
                              
                              
                              36.4
                              %
                              
                              
                              72.3
                              %
                              
                              
                              39.3
                              %Acquisition
      cost ratio
                              
                              
                              21.3
                              %
                              
                              
                              41.7
                              %
                              
                              
                              17.8
                              %
                              
                              
                              43.9
                              %General
      and administrative expense ratio
                              
                              
                              3.0
                              %
                              
                              
                              44.0
                              %
                              
                              
                              3.9
                              %
                              
                              
                              24.1
                              %Combined
      ratio
                              
                              
                              93.7
                              %
                              
                              
                              122.1
                              %
                              
                              
                              94.0
                              %
                              
                              
                              107.3
                              %


27


Comparison
of Three and Six Months Ended June 30, 2009 and 2008





Premiums.
Net premium written increased by $145.4 million, or 4,568% , and $377.1 million,
or 1,663.7%, respectively, for the three and six months ended June 30, 2009
compared to the three and six months ended June 30, 2008.  These
increases were principally due to the GMAC Acquisition in the fourth
quarter of 2008.





Net
premium earned increased by $135.1 million, or 12,371.8%,  and $251.3
million, or 9,639.4%, respectively, for the three and six months ended
June 30, 2009 compared to the three and six months ended June 30,
2008. These increases were principally due to GMAC Acquisition in the
fourth quarter of 2008.





Loss
and Loss Adjustment Expenses. Loss and loss adjustment expenses increased
by $94.2 million, or 23,728.0%, and $182.6 million, or 17,814.6%,
respectively, for the three and six months ended June 30, 2009 and
2008, respectively. These increases were principally due to the GMAC
Acquisition in the fourth quarter of 2008. The Company’s net loss ratio for
the three and six months ended June 30, 2009 increased to 69.4 % and
72.3%, respectively, from 36.4% and 39.3%, respectively, for the three and
six months ended June 30, 2008 due to the GMAC acquisition.





Commission
and Other Acquisition Expenses. Commission and other acquisition expenses
increased by $28.5 million, or 6,263.7%, and $44.0 million, or 3,846.2%,
respectively, for the three and six months ended June 30, 2009 compared to
the three and six months ended June 30, 2008. These increases
were principally due to the GMAC Acquisition in the fourth quarter of
2008.





General
and Administrative Expenses.General and administrative
expensesincreased by $3.6 million, or 750.0%, $9.2 million, or 1,462.6%,
respectively, for the three and six months ended June 30, 2009 compared to
the three and six months ended June 30, 2008. These increases
were principally due to the GMAC Acquisition in the fourth quarter of
2008.





Reinsurance
– AmTrust Quota Share





The
following table summarizes the underwriting results and associated ratios for
the Reinsurance – AmTrust Quota Share segment:





Three months ended June 30,
                          
                          
                          Six months ended June 30,2009
                          
                          
                          2008
                          
                          
                          2009
                          
                          
                          2008($
      in thousands)
                          
                          
                          ($
      in thousands)Net
      premiums written
                          
                          $
                          89,803
                          
                          
                          $
                          168,068
                          
                          
                          $
                          175,174
                          
                          
                          $
                          251,016Net
      earned premium
                          
                          
                          87,627
                          
                          
                          
                          76,246
                          
                          
                          
                          180,049
                          
                          
                          
                          140,036Net
      losses and loss adjustment expenses
                          
                          
                          (56,487
                          )
                          
                          
                          (43,213
                          )
                          
                          
                          (113,760
                          )
                          
                          
                          (80,421
                          )Commissions
      and other acquisition expenses
                          
                          
                          (28,714
                          )
                          
                          
                          (25,043
                          )
                          
                          
                          (59,123
                          )
                          
                          
                          (45,614
                          )General
      and administrative expenses
                          
                          
                          (687
                          )
                          
                          
                          (201
                          )
                          
                          
                          (1,061
                          )
                          
                          
                          (377
                          )Underwriting
      income
                          
                          $
                          1,739
                          
                          
                          $
                          7,789
                          
                          
                          $
                          6,105
                          
                          
                          $
                          13,624Net
      loss ratio
                          
                          
                          64.5
                          %
                          
                          
                          56.7
                          %
                          
                          
                          63.2
                          %
                          
                          
                          57.3
                          %Acquisition
      cost ratio
                          
                          
                          32.8
                          %
                          
                          
                          32.9
                          %
                          
                          
                          32.8
                          %
                          
                          
                          32.6
                          %General
      and administrative expense ratio
                          
                          
                          0.8
                          %
                          
                          
                          0.3
                          %
                          
                          
                          0.6
                          %
                          
                          
                          0.3
                          %Combined
      ratio
                          
                          
                          98.1
                          %
                          
                          
                          89.9
                          
                          
                          
                          96.6
                          %
                          
                          
                          90.2
                          %





Comparison
of Three and Six Months Ended June 30, 2009 and 2008





Premiums.
Net premium written decreased by $78.3 million, or 46.6%, and $75.8 million, or
30.2%, respectively, for the three and six months ended June 30, 2009
compared to the three and six months ended June 30, 2008.  For
the three months ended June 30, 2009 the decrease is primarily due to the
one-time unearned premium portfolio of $82 million relating to Unitrin, lower
Specialty Risk and Extended Warranty and Specialty Middle Market Property and
Casualty lines partially offset by higher Small Commercial Business premium. For
the six months ended June 30, 2009 the decrease is primarily due to the
non-recurrence of  premium written of approximately $82 million
relating to a one-time unearned premium portfolio transfer in the second quarter
of 2008 as a result of AmTrust’s acquisition of UBI , lower Specialty Risk and
Extended Warranty offset by higher Small Commercial Business
premium..





Net
earned premium increased by $11.4 million, or 15%, and $40.0 million, or 28.6%,
respectively, for the three and six months ended June 30, 2009 compared to
the three and six months ended June 30, 2008. For the three months ended
June 30, 2009 the increase is primarily due to higher cessions from AmTrust’s
Small Commercial Business premium and Specialty Middle Market Property and
Casualty lines. For the six months ended June 30, 2009 the increase is primarily
due to the addition of the UBI premium to the AmTrust Quota Share in the second
quarter of 2008 and increased cessions across all lines of the AmTrust Quota
share.





Loss
and Loss Adjustment Expenses. Loss and loss adjustment expenses increased
by $13.3 million, or 30.8%, and $33.3 million, or 41.4%, respectively, for the
three and six months ended June 30, 2009 compared to the three and six
months ended June 30, 2008.  The Company’s net loss ratio for the
three and six months ended June 30, 2009 increased to 64.5 % and
63.2%, respectively, from 56.7 % and 57.4%, respectively, for the
three and six months ended June 30, 2008. The increase in the net loss
ratio resulted, primarily, from the addition of UBI premiums, which carries a
higher loss ratio, to the AmTrust Quota Share in the second quarter of
2008.


28


Commission
and Other Acquisition Expenses. Commission and other acquisition expenses
increased by $3.7 million, or 14.8%, and $13.5 million, or 29.6%, respectively,
for the three and six months ended June 30, 2009 compared to the three and
six months ended June 30, 2008. The increase in commissions and other
acquisition expenses is consistent with the increase in earned premiums except
that the commission rate on the UBI premium ceded is slightly higher.





General
and Administrative Expenses.General and administrative
expensesincreased by $0.5 million, or 241.8%, and $0.7 million, or
181.4%, respectively, for the three and six months ended June 30, 2009
compared to the three and six months ended June 30, 2008.





Liquidity
and Capital Resources





Sources
and Uses of Funds




Our
sources of funds primarily consist of premium receipts net of paid losses and
commissions, investment income, net proceeds from capital raising activities,
which may include the issuance of common shares, and proceeds from sales and
redemption of investments. Cash is used primarily to pay losses and loss
expenses, general and administrative expenses and dividends, with the remainder
made available to our investment managers for investment in accordance with our
investment policy.




The
following table is a summary of our statement of cash flows:





Six months ended June 30,2009
                      
                      
                      2008($
      in thousands)Cash
      and cash equivalents provided by (used in):Operating
      activities
                      
                      $
                      (37,407
                      )
                      
                      $
                      78,271Investing
      activities
                      
                      
                      (67,906
                      )
                      
                      
                      (291,409
                      )Financing
      activities
                      
                      
                      124,193
                      
                      
                      
                      251,579Change
      in cash and cash equivalents
                      
                      $
                      18,880
                      
                      
                      $
                      38,411





Cash
flows from operations for the six months ended June 30, 2009 were
$(37.4) million compared to $78.2 million for the six months ended
June 30, 2008. This increase in the cash used in operating activities was
primarily due to the increase in the reinsurance receivables and acquisitions
costs. This is primarily due to GMAC Acquisition.





Investing
cash flows consist primarily of proceeds on the sale of investments and payments
for investments acquired. We used $67.9 million in net cash for investing
activities during the six months ended June 30, 2009 compared to
$291.4 million for the six months ended June 30,
2008.





Cash
flows provided by financing activities were $124.2 million for the six
months ended June 30, 2009 compared to $251.6 million for the six
months ended June 30, 2008. Included in cash flows provided by financing
activities for the six months ended June 30, 2009 were the Trust
Preferred issuance (net of expenses) of $255.8 million, dividends paid of
$7.7 million and the repayment of $232.6 million of the proceeds from
the securities sold under agreements to repurchase, at contract
value.





Our funds
are primarily invested in liquid, high-grade fixed income securities. As of June
30, 2009, 99.7% of our fixed income portfolio consisted of investment grade
securities. The maturity distribution of our fixed income portfolio (on a market
value basis) as of June 30, 2009 was as follows:




June
      30,2009($
      in thousands)Due
      in one year or less
                          
                          $
                          26,392Due
      after one year through five years
                          
                          
                          194,699Due
      after five years through ten years
                          
                          
                          285,506Due
      after ten years
                          
                          
                          72,133Mortgage
      and asset -backed
                          
                          
                          716,204Total
                          
                          $
                          1,294,934





We do not
believe that inflation has had a material effect on our consolidated results of
operations. The effects of inflation are considered implicitly in pricing. Loss
reserves are established to recognize likely loss settlements at the date
payment is made. Those reserves inherently recognize the effects of inflation.
The actual effects of inflation on our results cannot be accurately known,
however, until claims are ultimately resolved.


29





The
following summarizes the credit ratings of our fixed maturities:





Rating* as of June 30, 2009
                      
                      Amortized cost
                      
                      
                      Fair
                        value
                      
                      
                      % of total fair
                        valueU.S.
      treasury bonds
                      
                      $
                      33,626
                      
                      
                      $
                      33,679
                      
                      
                      
                      2.6
                      %AAA
      U.S. Agency - mortgage-backed securities
                      
                      
                      708,035
                      
                      
                      
                      726,611
                      
                      
                      
                      56.1
                      %AAA
                      
                      
                      39,805
                      
                      
                      
                      41,958
                      
                      
                      
                      3.2
                      %AA+,
      AA, AA-
                      
                      
                      41,579
                      
                      
                      
                      43,415
                      
                      
                      
                      3.4
                      %A+,
      A, A-
                      
                      
                      297,996
                      
                      
                      
                      266,405
                      
                      
                      
                      20.6
                      %BBB+,
      BBB, BBB-
                      
                      
                      181,926
                      
                      
                      
                      179,164
                      
                      
                      
                      13.8
                      %B-  or
      lower
                      
                      
                      4,254
                      
                      
                      
                      3,702
                      
                      
                      
                      0.3
                      %$
                      1,307,221
                      
                      
                      $
                      1,294,934
                      
                      
                      
                      100.0
                      %





Rating* as of December 31, 2008
                        
                        Amortized cost
                        
                        
                        Fair
                          value
                        
                        
                        % of total fair
                          valueU.S.
      treasury bonds
                        
                        $
                        37,782
                        
                        
                        $
                        38,527
                        
                        
                        
                        3.4
                        %AAA
      U.S. Agency - mortgage-backed securities
                        
                        
                        756,023
                        
                        
                        
                        771,899
                        
                        
                        
                        68.9
                        %AAA,
                        
                        
                        15,693
                        
                        
                        
                        15,748
                        
                        
                        
                        1.4
                        %AA,
      AA-
                        
                        
                        40,954
                        
                        
                        
                        29,087
                        
                        
                        
                        2.6
                        %A+,
      A, A-
                        
                        
                        265,170
                        
                        
                        
                        222,704
                        
                        
                        
                        19.9
                        %BBB+,
      BBB-
                        
                        
                        36,921
                        
                        
                        
                        30,607
                        
                        
                        
                        2.7
                        %B-
      or lower
                        
                        
                        11,384
                        
                        
                        
                        11,383
                        
                        
                        
                        1.1
                        %$
                        1,163,927
                        
                        
                        $
                        1,119,955
                        
                        
                        
                        100.0
                        %





* Ratings
as assigned by Standard & Poor’s (“S&P”)





Trust
Preferred





On
January 20, 2009, the Company completed a private placement of 260,000 units
(the “Units”), each Unit consisting of $1,000 principal amount of capital
securities (the “Trust Preferred Securities”) of Maiden Capital Financing Trust
(the “Trust”) (an indirect wholly owned subsidiary of the Company) and 45 common
shares, $.01 par value, of the Company (the “Common Shares”), for a purchase
price of $1,000.45 per Unit.  This resulted in gross proceeds to the
Company of $260.1 million before $4.3 million of placement agent fees and
expenses.  11,700,000 Common Shares in the aggregate were issued by
the Company.  Certain trusts established by Michael Karfunkel and
George Karfunkel, two of the Company’s founding shareholders, purchased an
aggregate of 159,000 of the Units or 61%.  The remaining 101,000 Units
were purchased by existing institutional shareholders of the
Company.




The Trust
used the proceeds from the sale of the Trust Preferred Securities to purchase a
subordinated debenture (the “Debenture”) in the principal amount of $260 million
issued by the Company’s wholly owned subsidiary, Maiden Holdings North America,
Ltd. (“Maiden NA”).





As a
consequence of the issuance of a majority of the Units to a related party under
FASB Interpretation 46R Consolidation of Variable Interest Entities (“FIN 46R”),
the Trust is a variable interest entity and the Company is deemed to be the
Primary beneficiary and is required to consolidate the Trust. The issuance of
common shares associated with the Trust Preferred Securities resulted in an
original issuance discount of $44.9 million based on market price on January 20,
2009. The discount is amortized over 30 years based on the effective interest
method. The Debentures and Trust Preferred Securities mature in 2039 and carry a
stated or coupon rate of 14% with an effective interest rate of 16.95%. As of
June 30, 2009, the stated value of the Trust Preferred Securities was $215.1
million which comprises the principal amount of $260 million and unamortized
discount of $44.9 million


30


Securities Sold
Under Agreements to Repurchase, at Contract Value





The
Company enters into repurchase agreements. The agreements are accounted for as
collateralized borrowing transactions and are recorded at contract amounts. The
Company receives cash or securities, that it invests or hold in short term or
fixed income securities. In March 2009 the Company chose to end all of its
agreements and repaid all amounts then outstanding from existing cash resources.
On June 23, 2009, the Company entered into new repurchase agreements totaling
$108.8 million, we expect to repay these agreements from existing cash resources
prior to September 30, 2009.  Interest expense associated with
repurchase agreements for the three and six months ended June 30, 2009 and 2008
was $0.01 million and $0.8 million, respectively, compared to the three and
six months ended June 30, 2008 interest expense of $1.1million and
$1.5 million, respectively.





Restrictions,
Collateral and Specific Requirements





The
jurisdictions in which our operating subsidiaries are licensed to write business
impose regulations requiring companies to maintain or meet various defined
statutory ratios, including solvency and liquidity requirements. Some
jurisdictions also place restrictions on the declaration and payment of
dividends and other distributions.





The
payment of dividends from Maiden Holdings’ Bermuda domiciled operating
subsidiary is, under certain circumstances, limited under Bermuda law, which
requires our Bermuda operating subsidiary to maintain certain measures of
solvency and liquidity. Maiden Holdings’ U.S. domiciled operating
subsidiaries are subject to significant regulatory restrictions limiting their
ability to declare and pay dividends. The inability of the subsidiaries of
Maiden Holdings to pay dividends and other permitted distributions could have a
material adverse effect on Maiden Holdings’ cash requirements and ability to
make dividend payments on its common shares.





Maiden
Holdings’ operating subsidiary in Bermuda, Maiden Insurance, is neither licensed
nor admitted as an insurer, nor is it accredited as a reinsurer, in any
jurisdiction in the United States. As a result, it is generally required to post
collateral security with respect to any reinsurance liabilities it assumes from
ceding insurers domiciled in the United States in order for U.S. ceding
companies to obtain credit on their U.S. statutory financial statements
with respect to insurance liabilities ceded to them. Under applicable statutory
provisions, the security arrangements may be in the form of letters of credit,
reinsurance trusts maintained by trustees or funds-withheld arrangements where
assets are held by the ceding company.





At this
time, Maiden Insurance uses trust accounts primarily to meet collateral
requirements - cash equivalents and investments pledged in favor of ceding
companies in order to comply with relevant insurance regulations. As of
June 30, 2009, total trust account deposits were $1.19 billion compared to
$0 as of June 30, 2008. For the Quota Share Agreement with AII, Maiden Insurance
has also loaned funds totaling $168 million as of June 30, 2009 and 2008 to
AmTrust’s Bermuda reinsurance subsidiary to satisfy collateral
requirements.





In
addition, Maiden Insurance has outstanding letters of credit totaling
$17.3 million and $0 as of June 30, 2009 and 2008,
respectively.





Collateral
arrangements with ceding insurers may subject our assets to security interests
or require that a portion of our assets be pledged to, or otherwise held by,
third parties. Both our trust accounts and letter of credit are fully
collateralized by assets held in custodial accounts. Although the investment
income derived from our assets while held in trust accrues to our benefit, the
investment of these assets is governed by the terms of the letter of credit
facilities or the investment regulations of the state or territory of domicile
of the ceding insurer, which may be more restrictive than the investment
regulations applicable to us under Bermuda law. The restrictions may result in
lower investment yields on these assets, which may adversely affect our
profitability.





In
addition, the terms of the Debentures would limit, in the event of certain
circumstances, Maiden NA’s ability to pay dividends to the Company.





We do not
currently anticipate that the restrictions on liquidity resulting from
restrictions on the payments of dividends by our subsidiary companies or from
assets committed in trust accounts or to collateralize the letter of credit
facilities will have a material impact on our ability to carry out our normal
business activities, including, our ability to make dividend payments on our
common shares.


31


Investment
Portfolio





Our
investment portfolio, including cash and cash equivalents and restricted cash,
increased by $96.6 million, or 5.8% to $1,763 million at June 30, 2009 from
$1,666 million as of December 31, 2008. Our fixed maturities are classified as
available for sale (99.6%) as of June 30, 2009, as defined by SFAS No. 115,
“Accounting for Certain Investments in Debt and Equity Securities.” As such, the
reported value of those securities is equal to their fair value. Our fixed
maturity securities, gross, as of this date had a fair value of $1,294.9 million
and an amortized cost of $1,307.2 million.  Our investment portfolio is
summarized in the table below by type of investment:





(Unaudited)
                            June 30, 2009
                          
                          
                          December 31, 2008Fair value
                          
                          
                          Percentage
                            of portfolio
                          
                          
                          Fair value
                          
                          
                          Percentage
                            of portfolio($ in thousands)
                          
                          
                          
                          
                          
                          ($ in thousands)U.S.
      – treasury bonds
                          
                          $
                          33,679
                          
                          
                          
                          2.6
                          %
                          
                          $
                          38,527
                          
                          
                          
                          3.4
                          %U.S.
      Agency - mortgage backed securities
                          
                          
                          716,204
                          
                          
                          
                          55.1
                          %
                          
                          
                          771,899
                          
                          
                          
                          68.6
                          %Corporate
      fixed maturities
                          
                          
                          521,400
                          
                          
                          
                          40.1
                          %
                          
                          
                          309,529
                          
                          
                          
                          27.5
                          %Municipalities
                          
                          
                          23,651
                          
                          
                          
                          1.8
                          %
                          
                          
                          -
                          
                          
                          
                          0.0
                          %Other
      investments
                          
                          
                          5,392
                          
                          
                          
                          0.4
                          %
                          
                          
                          5,291
                          
                          
                          
                          0.5
                          %Total
      available for sale investments
                          
                          $
                          1,300,326
                          
                          
                          
                          100.0
                          %
                          
                          $
                          1,125,246
                          
                          
                          
                          100.0
                          %





Quarterly,
the Company evaluates for other-than-temporary-impairment, whereby it evaluates
each security which has an unrealized loss as of the end of the subject
reporting period. We use a set of quantitative and qualitative criteria to
review our investment portfolio to evaluate the necessity of recording
impairment losses for other-than-temporary declines in the fair value of our
investments. Some of the criteria we consider include:





·
            how
      long and by how much the fair value of the security has been below its
      amortized cost;


·
              the
      financial condition and near-term prospects of the issuer of the security,
      including any specific events that may affect its operations or
      earnings;


·
            our
      intent and ability to keep the security for a sufficient time period for
      it to recover its value;


·
            any
      nonpayment of scheduled interest payments;
and


·
              the
      occurrence of any discrete credit event resulting in the issuer defaulting
      on material outstanding obligation or seeking protection under bankruptcy
      law.





Impairment
of investment securities results in a charge to operations when a market decline
below cost is deemed to be other-than-temporary. During the three and six months
ended June 30, 2009 and 2008, based on the criteria above, we determined that no
securities were other-than-temporarily-impaired.





At June
30, 2009, the Company had $48.8 million of gross unrealized losses related to
available-for-sale fixed income securities. Corporate bonds represent 40% of the
fair value of our fixed maturities and 95% of the total unrealized losses of our
fixed maturities. The Company owns 78 corporate bonds in the industrial, bank
and financial and other sectors, which have a fair value of approximately 12%,
25% and 3%, respectively, and 10%, 85% and 0% of gross unrealized losses,
respectively, of our fixed maturities. The Company believes that the unrealized
losses in these securities are the result, primarily, of general economic
conditions and not the condition of the issuers, which we believe are solvent
and have the ability to meet their obligations. Therefore, the Company expects
that the market price for these securities should recover within a reasonable
time.


32





Item
3. Exposures to Market Risk





Quantitative
and Qualitative Disclosures about Market Risk


Market
risk is the risk that we will incur losses in our investments due to adverse
changes in market rates and prices. Market risk is directly influenced by the
volatility and liquidity in the market in which the related underlying assets
are invested. We believe that we are principally exposed to two types of market
risk: changes in interest rates and changes in credit quality of issuers of
investment securities and reinsurers.





Interest
Rate Risk


Interest
rate risk is the risk that we may incur economic losses due to adverse changes
in interest rates. The primary market risk to the investment portfolio is
interest rate risk associated with investments in fixed maturity securities.
Fluctuations in interest rates have a direct impact on the market valuation of
these securities. At June 30, 2009, we had fixed maturity securities with a fair
value of $1,294.9 million that are subject to interest rate risk.





The table
below summarizes the interest rate risk associated with our fixed maturity
securities by illustrating the sensitivity of the fair value and carrying value
of our fixed maturity securities as of June 30, 2009 to selected hypothetical
changes in interest rates, and the associated impact on our stockholders’
equity. Temporary changes in the fair value of our fixed maturity securities
that are held as available-for-sale do impact the carrying value of these
securities and are reported in our shareholders’ equity as a component of other
comprehensive income. The selected scenarios in the table below are not
predictions of future events, but rather are intended to illustrate the effect
such events may have on the fair value and carrying value of our fixed maturity
securities and on our shareholders’ equity, as of June 30,
2009.





Hypothetical Change in Interest Rates
                                  
                                  Fair
                                    Value
                                  
                                  
                                  Estimated
                                    Change in
                                    Fair Value
                                  
                                  
                                  Hypothetical Percentage
                                    Increase (Decrease) in
                                    Shareholders’ Equity200
      basis point increase
                                  
                                  $
                                  1,224,879
                                  
                                  
                                  $
                                  (70,055
                                  )
                                  
                                  
                                  (12
                                  )%100
      basis point increase
                                  
                                  
                                  1,256,441
                                  
                                  
                                  
                                  (38,493
                                  )
                                  
                                  
                                  (6
                                  )%No
      change
                                  
                                  
                                  1,294,934
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  0
                                  %100
      basis point decrease
                                  
                                  
                                  1,325,622
                                  
                                  
                                  
                                  30,688
                                  
                                  
                                  
                                  5
                                  %200
      basis point decrease
                                  
                                  $
                                  1,362,210
                                  
                                  
                                  $
                                  67,276
                                  
                                  
                                  
                                  11
                                  %





The
interest rate sensitivity on the $168 million loan to related party, which
carries an interest rate of one month LIBOR plus 90 basis points, is that a
fluctuation of 100 and 200 basis points in LIBOR would affect our earnings and
cash flows by $1.7 million and $3.4 million, respectively, on an annual basis,
but would not affect the carrying value of the loan.





Credit
Risk


In
providing reinsurance, we have premiums receivable subject to credit risk of the
ceding company. Our credit risk results from our insureds’ potential inability
to meet their premium obligations. We also are exposed to credit risk on our
investment portfolio. Our credit risk is the potential loss in market value
resulting from adverse change in the borrower’s ability to repay its
obligations. Our investment objectives are to preserve capital, generate
investment income and maintain adequate liquidity for the payment of claims and
debt service, if any. We seek to achieve these goals by investing in a
diversified portfolio of securities. We manage credit risk through regular
review and analysis of the creditworthiness of all investments and potential
investments. If we retrocede business to other reinsurers, we will have
reinsurance recoverables subject to credit risk. To mitigate the risk of these
counterparties’ nonpayment of amounts due, we will establish business and
financial standards for reinsurer approval, incorporating ratings and outlook by
major rating agencies and considering then-current market information. Further,
we are subject to the credit risk that AII and/or AmTrust will fail to perform
their obligations to pay interest on and repay principal of amounts loaned to
AII pursuant to its loan agreement with Maiden Insurance, and to reimburse
Maiden Insurance for any assets or other collateral of Maiden that AmTrust’s
U.S. insurance company subsidiaries apply or retain, and income on those
assets.





Off-Balance
Sheet Transactions


We have
no off-balance sheet arrangements or transactions with unconsolidated, special
purpose entities.





Item
4. Controls and Procedures





Our
management, with the participation and under the supervision of
our  principal executive officer and principal financial
officer, has evaluated the Company’s disclosure controls and procedures (as
defined in Rules 13a-15e and 15d – 15e of the Securities Exchange Act of 1934,
as amended (“the Exchange Act”)) and have concluded that, as of the end of the
period covered by this report, such disclosure controls and procedures were
effective. During the most recent fiscal quarter, there have been no changes in
the Company’s internal controls over financial reporting (as defined in Exchange
Act Rule 13a - 15f and 15d – 15e) that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.


33





PART II -
OTHER INFORMATION





Item
1. Legal Proceedings.





In April
2009, the Company learned that Bentzion S. Turin, our and Maiden Insurance's
former Chief Operating Officer, General Counsel and Secretary, sent a letter to
the U.S. Department of Labor claiming that his employment with us was terminated
in retaliation for corporate whistleblowing in violation of the whistleblower
protection provisions of the Sarbanes-Oxley Act of 2002.  Mr. Turin
alleged concerns regarding corporate governance with respect to negotiation of
the terms of our January 2009 Trust Preferred offering and seeks reinstatement
as our and Maiden Insurance's Chief Operating Officer, General Counsel and
Secretary, back pay and legal fees incurred.  The Company believes
that it had ample reason for terminating such employment for good and sufficient
legal cause, and the Company believes that the claim is without merit and is
vigorously defending this claim.





Item
1A . Risk Factors.





Information
regarding risk factors appears in Item 1A.Risk Factors in our 2008 Annual report
on Form 10K filed with the SEC on March 31, 2009. The risk factors described
below updates and should be read in conjunction with the risk factors described
in our 2008 Annual Report on Form 10K.





The
recent ratings downgrade of Motors Insurance Corporation could adversely affect
our ability to retain GMAC RE customers.





As we
transition the existing relationships with Motors Insurance Corporation
(“Motors”) to Maiden Reinsurance in the U.S., Motors will continue to write our
client contracts for a period as long as through October 31,
2010.  Motors will in turn cede 100% of the business written to Maiden
Insurance during this period.  Once our U.S. insurance subsidiaries
are fully licensed, the business will be transitioned from Motors.  In
June 2009, Motors was downgraded to B++ under review by A.M. Best.  As
a result, ceding companies may be reluctant to do business with Motors and thus
the successful transition of all of the GMAC RE clients to Maiden cannot be
assured.





While
best efforts will be undertaken to transition all of the GMAC RE active client
accounts from Motors to Maiden Reinsurance, there can be no certainty that all
business underwritten by GMAC RE will effectively transition





Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds





On May
11, 2009 6,000 options with an exercise price of $5.02 were issued to each of
the following directors, Simcha Lyons, Raymond M. Neff, Yehuda L. Neuberger and
Steven H. Nigro. In addition we issued on June 1, 2009, 10,000 options with an
exercise price of $5.11 to an officer of the Company.





The
issuance of such options were not registered under the Securities Act of 1933,
as amended, in reliance on the exemption from federal registration under Section
4(2) of the Securities Act, based on the Company’s belief that the offer and
sale of said securities did not involve any public offering as each investor was
“accredited” and no general solicitation has been involved in the
offering.





Item
4.  Submission of Matters to a Vote of Security Holders.





The
Company held its 2009 Annual General Meeting on April 30, 2009. Matters voted on
at the meeting and the number of votes cast:





1.
            To
      elect five directors to the Board of Directors to serve until the 2010
      Annual General Meeting of Shareholders or until their successors have been
      duly elected or appointed and
qualified:





Name
                
                Votes For
                
                Votes AgainstSimcha
      Lyons
                
                64,682,618
                
                232,133Raymond
      M. Neff
                
                64,722,068
                
                192,683Yehuda
      L. Neuberger
                
                49,795,891
                
                15,118,860Steven
      H. Nigro
                
                64,682,618
                
                232,133Barry
      D. Zyskind
                
                63,856,123
                
                1,058,628





2.
            To elect three directors to the
      Board of Directors of Maiden Insurance Company, Ltd. to serve until the2010 Annual General
      Meeting of Shareholdersor until their successors have
      been duly elected or appointed and
  qualified:





Name
                
                Votes For
                
                Votes AgainstMax
      Caviet
                
                64,617,582
                
                297,169John
      Marshaleck
                
                64,794,953
                
                192,683Arturo
      Raschbaum
                
                49,
      794,953
                
                119,798


34





3.
            To
      increase the authorized share capital of the Company from US$1,000,000
      divided into 100,000,000 shares of par value US$0.01 each, to US$1,500,000
      divided into 150,000,000 shares of par value US$0.01
  each:





Voted For
                  
                  Voted Against
                  
                  Abstain
                  
                  Broker Non-Votes50,499,594
                  
                  418,552
                  
                  7,370
                  
                  13,989,235





4.
            To
      ratify the selections of BDO Seidman, LLP to serve as the Company’s
      independent registered public accounting firm for the year
      ending  December 31, 2009, and Arthur Morris and Company as
      Maiden Insurance Company, Ltd.’s independent registered public accounting
      firm for the year ending December 31,
2009:





Voted For
                  
                  Voted Against
                  
                  Abstain
                  
                  Broker Non-Votes64,858,538
                  
                  55,758
                  
                  455
                  
                  0


35


Item
6. Exhibits.





Exhibit
                    Number
                  
                  Description31.1
                  
                  Certification
      of the Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a),
      for the quarter ended June 30, 2009.31.2
                  
                  Certification
      of the Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a),
      for the quarter ended June 30, 2009.32.1
                  
                  Certification
      of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, for
      the quarter ended June 30, 2009.32.2
                  
                  Certification
      of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, for
      the quarter ended June 30,
2009.


36


SIGNATURES





Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.





Maiden
      Holdings, Ltd.
                      
                      (Registrant)Date:
      August 13, 2009
                    
                    /s/  ARTURO M.RASCHBAUMArturo
      M. Raschbaum
                      President
      and Chief Executive Officer/s/  JOHN M.
      MARSHALECKJohn
      M. Marshaleck
                      Chief
      Financial
Officer




37