**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 **FORM
        10-Q**
 
 (Mark
        One)
 x QUARTERLY
              REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
              OF
              1934
 
 For
        the
        quarterly period ended September 30, 2008
 
 o 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
              
              04-3106389(State
                  or other jurisdiction of
                incorporation
                  or organization)
              
              (IRS
                  Employer Identification No.)
 
 48
                  Par-la-Ville Road, Suite 1141 HM11
              
              HM11(Address
                  of principal executive offices)
              
              (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 x No
o
 
 Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, or a non-accelerated filer. See definition of “accelerated
        filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
        one):
 
 Large
        accelerated filer  ̈ Accelerated
        Filer  ̈ Non-accelerated
        filer x
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Securities Exchange Act). Yes o No
x
 
 As
        of
        August 15, 2008, the Registrant had one class of Common Stock ($.01 par value),
        of which 59,550,000 shares were issued and outstanding.
  
  INDEX
 
 PagePART
                  I
              FINANCIAL
                  INFORMATIONItem
                  1.
              Consolidated
                  Financial Statements:Consolidated
                  Balance Sheets as of September 30, 2008 (Unaudited) and December
                  31,
                  2007
              3Consolidated
                  Statements of Income for the three months ended September 30, 2008
                  and
                  2007, nine months ended September 30, 2008 and period from May
                  31, 2007
                  (inception) to September 30, 2007 (Unaudited)
              4Consolidated
                  Statements of Cash Flows for the nine months ended September 30,
                  2008 and
                  period from May 31, 2007 (inception) to September 30, 2007
                  (Unaudited)
              5Consolidated
                  Statements of Changes in Shareholders’ Equity for the nine months ended
                  September 30, 2008 and period from May 31, 2007 (inception) to
                  September
                  30, 2007 (Unaudited)
              6Notes
                  to Consolidated Financial Statements (Unaudited)
              7Item
                  2.
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              18Item
                  3.
              Quantitative
                  and Qualitative Disclosures About Market Risk
              29Item
                  4.
              Controls
                  and Procedures
              30PART
                  II
              OTHER
                  INFORMATIONItem
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              31Item
                  4.
              Submission
                  of Matters to a vote of Security Holders
              31Item
                  6.
              Exhibits
              32Signatures
  2
 
 PART
        1 -
        FINANCIAL INFORMATION
 Item 1. Financial Statements
  **MAIDEN
        HOLDINGS, LTD** .
 **CONSOLIDATED
        BALANCE SHEETS**
 **(in
        thousands (000’s), except per share data)**
 
 **(Unaudited)**
                  **September 30, 2008**
                
                **December 31, 2007****Assets**Fixed
                    maturities, available-for-sale, at fair value (amortized cost
                    $749,798 ;
                    $488,765)
                
                $
                687,186
                
                $
                474,789Other
                    investments, at fair value (cost $10,315; $15,176)
                
                
                10,071
                
                
                15,656**Total
                    investments**
                
                
                697,257
                
                
                490,445Cash
                    and cash equivalents
                
                
                82,443
                
                
                35,729Accrued
                    investment income
                
                
                5,423
                
                
                3,204Reinsurance
                    balances receivable, net (primarily with related parties - see
                    note 8)
                
                
                98,779
                
                
                27,990Loan
                    to related party (see note 8)
                
                
                167,975
                
                
                113,542Prepaid
                    expenses and other assets
                
                
                420
                
                
                454Deferred
                    commission and other acquisition costs (primarily with related
                    parties -
                    see note 8)
                
                
                88,615
                
                
                44,215Furniture
                    andequipment,
                    net
                
                
                63
                
                
                29**Total
                    Assets**
                
                $
                1,140,975
                
                $
                715,608**Liabilities
                    and Shareholders’ Equity****Liabilities**Loss
                    and loss adjustment expense reserves (primarily with related
                    parties - see
                    note 8)
                
                $
                123,621
                
                $
                38,508Unearned
                    premiums (primarily with related parties - see
                    note 8)
                
                
                267,799
                
                
                137,166Accrued
                    expenses and other liabilities
                
                
                4,670
                
                
                2,589Due
                    to broker
                
                
                5,656
                
                
                -Securities
                    sold under agreements to repurchase, at contract value
                
                
                260,775
                
                
                -**Total
                    Liabilities**
                
                
                662,521
                
                
                178,263**Shareholders’
                    Equity:**Common
                    shares, $0.01 par value; 100,000,000 shares authorized, 59,550,000
                    issued
                    and outstanding
                
                
                596
                
                
                596Additional
                    paid-in capital
                
                
                530,258
                
                
                529,647Accumulated
                    other comprehensive loss
                
                
                (62,856
                )
                
                (13,496
                )Retained
                    earnings
                
                
                10,456
                
                
                20,598**Total
                    Shareholders’ Equity**
                
                
                478,454
                
                
                537,345**Total
                    Liabilities and Shareholders’ Equity**
                
                $
                1,140,975
                
                $
                715,608
  *See
        accompanying notes to the unaudited consolidated financial
        statements.*
  3
  **MAIDEN
        HOLDINGS, LTD**.
 **CONSOLIDATED
        STATEMENTS OF INCOME**
 **(in
        thousands (000’s), except per share data)**
 **(Unaudited)**
 **For the Three**
                  **Months Ended**
                  **September 30,**
                  **2008**
                
                **For the Three**
                  **Months Ended**
                  **September 30,**
                  **2007**
                
                **For the Nine**
                  **Months Ended**
                  **September 30,**
                  **2008**
                
                **Period from**
                  **May 31, 2007**
                  **(inception) to**
                  **September 30,**
                  **2007****Revenues:**Premium
                    income:Net
                    premiums written (primarily with related parties - see
                    note 8)
                
                $
                113,187
                
                $
                190,801
                
                $
                386,870
                
                $
                190,801Change
                    in unearned premiums
                
                
                408
                
                
                (127,835
                )
                
                (130,631
                )
                
                (127,835
                )**Net
                    earned premium**
                
                
                113,595
                
                
                62,966
                
                
                256,239
                
                
                62,966Net
                    investment income
                
                
                8,974
                
                
                7,503
                
                
                24,346
                
                
                7,562Net
                    realized investment gains(loss)
                
                
                (42,538
                )
                
                87
                
                
                (42,375
                )
                
                87**Total
                    revenues**
                
                
                80,031
                
                
                70,556
                
                
                238,210
                
                
                70,615**Expenses:**Loss
                    and loss adjustment expenses (primarily with related parties
                    - see
                    note 8)
                
                
                66,915
                
                
                37,667
                
                
                148,362
                
                
                37,667Commission
                    and other acquisition expenses (primarily with related parties
                    - see
                    note 8)
                
                
                38,299
                
                
                20,307
                
                
                85,057
                
                
                20,307Salaries
                    and benefits
                
                
                673
                
                
                211
                
                
                1,820
                
                
                211Foreign
                    exchange loss
                
                
                359
                
                
                1
                
                
                364
                
                
                1Other
                    operating expenses
                
                
                1,301
                
                
                1,030
                
                
                3,816
                
                
                1,166**Total
                    expenses**
                
                
                107,547
                
                
                59,216
                
                
                239,419
                
                
                59,352**Net
                    income (loss)**
                
                $
                (27,516
                )
                $
                11,340
                
                
                (1,209
                )
                $
                11,263**Basic
                    and diluted earnings (loss) per common share**
                
                $
                (0.46
                )
                $
                0.20
                
                
                (0.02
                )
                $
                0.25**Dividends
                    declared per common share**
                
                $
                0.05
                
                $
                0.025
                
                
                0.15
                
                $
                0.025
  *See
        accompanying notes to the unaudited consolidated financial
        statements.*
  4
  **MAIDEN
        HOLDINGS, LTD** .
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **(in
        thousands (000’s), except per share data)**
 **(Unaudited)**
 
 **For the Nine Months**
                **Ended**
                **September 30, 2008**
              
              **Period from**
                **May 31, 2007**
                **(inception) to**
                **September 30,**
                **2007****Cash
                  flows from operating activities:**Net
                  income (loss)
              
              **$**
              (1,209
              **)**
              **$**
              11,263Adjustments
                  to reconcile net income to net cash provided by operating activities
                  :Depreciation
              
              
              18
              
              
              1Net
                  realized gain on sales of investments
              
              
              (163
              )
              
              (87
              )Other
                  than temporary impairment on investments
              
              
              42,538
              
              
              -Foreign
                  exchange loss on revaluation
              
              
              356
              
              
              -Amortization
                  of bond premium and discount
              
              
              (2,040
              )
              
              (135
              )Amortization
                  of share-based compensation expense
              
              
              611
              
              
              137Changes
                  in assets - (increase) decrease:Reinsurance
                  balances receivable
              
              
              (71,145
              )
              
              (113,114
              )Accrued
                  investment income
              
              
              (2,219
              )
              
              (3,210
              )Deferred
                  commission and other acquisition costs
              
              
              (44,400
              )
              
              (41,227
              )Prepaid
                  expenses and other assets
              
              
              34
              
              
              (574
              )Changes
                  in liabilities - increase (decrease):Accrued
                  expenses and other liabilities
              
              
              (897
              )
              
              1,646Loss
                  and loss adjustment expense reserves
              
              
              85,113
              
              
              21,514Unearned
                  premiums
              
              
              130,633
              
              
              127,835**Net
                  cash provided by operating activities**
              
              
              137,230
              
              
              4,049**Cash
                  flows from investing activities:**Purchases
                  of investments:Purchases
                  of fixed-maturity securities
              
              
              (379,010
              )
              
              (414,152
              )Purchases
                  of other investments
              
              
              (340
              )
              
              -Sale
                  of investments:Proceeds
                  from sales of fixed-maturity securities
              
              
              -
              
              
              49,377Proceeds
                  from maturities and calls on fixed maturity investments
              
              
              88,499
              
              
              861Purchase
                  of furniture and equipment
              
              
              (52
              )
              
              (25
              )Loan
                  to related party
              
              
              (54,433
              )
              
              -**Net
                  cash used in investing activities**
              
              
              (345,336
              )
              
              (363,939
              )**Cash
                  flows from financing activities:**Repurchase
                  agreements, net
              
              
              260,775
              
              
              -Common
                  shares issuance
              
              
              -
              
              
              529,919Dividend
                  paid
              
              
              (5,955
              )
              
              -**Net
                  cash provided by financing activities**
              
              
              254,820
              
              
              529,919**Net
                  increase in cash and cash equivalents**
              
              
              46,714
              
              
              170,029**Cash
                  and cash equivalents, beginning of period**
              
              
              35,729
              
              
              -**Cash
                  and cash equivalents, end of period**
              
              **$**
              82,443
              
              $
              170,029
 
 *See
        accompanying notes to the unaudited consolidated financial
        statements.*
  5
  **MAIDEN
        HOLDINGS, LTD** .
 **CONSOLIDATED
        STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY**
 **** **(** **in
        thousands** **(000’s)** **,
        except** **per** **share data** **)**
 **(Unaudited)**
 
 **For
                  the Period**
                **from May 31, 2007 (inception)**
                **to September 30, 2007**
              
              **Common**
                **Shares**
              
              **Additional**
                **Paid-In**
                **Capital**
              
              **Accumulated**
                **Other**
                **Comprehensive**
                **Loss**
              
              **Retained**
                **Earnings**
              
              **Total**
                **Shareholders’**
                **Equity****Balance
                  at May 31, 2007**
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Shares
                  issued, net
              
              
              596
              
              
              529,323
              
              
              
              
              
              
              
              
              529,919Net
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              11,263
              
              
              11,263Net
                  unrealized losses
              
              
              -
              
              
              -
              
              
              (4,700
              )
              
              -
              
              
              (4,700
              )**Comprehensive
                  Income**
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              6,563Share
                  based compensation
              
              
              -
              
              
              137
              
              
              -
              
              
              -
              
              
              137Dividends
                  to shareholders
              
              
              -
              
              
              -
              
              
              -
              
              
              (1,489
              )
              
              (1,489
              )**Balance
                  at September 30, 2007**
              
              $
              596
              
              $
              529,460
              
              $
              (4,700
              )
              $
              9,774
              
              $
              535,130
 
 **For
                    the Nine Months Ended**
                  **September 30, 2008******
                
                **Common Shares**
                
                **Additional**
                  **Paid-In**
                  **Capital**
                
                **Accumulated**
                  **Other**
                  **Comprehensive**
                  **Loss**
                
                **Retained**
                  **Earnings**
                
                **Total**
                  **Shareholders’**
                  **Equity****Balance at December 31, 2007**
                
                $
                596
                
                $
                529,647
                
                $
                (13,496
                )
                $
                20,598
                
                $
                537,345Net
                    loss
                
                
                -
                
                
                
                
                
                
                
                
                (1,209
                )
                
                (1,209
                )Net
                    unrealized losses
                
                
                -
                
                
                
                
                
                (49,360
                )
                
                -
                
                
                (49,360
                )**Comprehensive
                    Income**
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (50,569
                )Share
                    based compensation
                
                
                -
                
                
                611
                
                
                
                
                
                
                
                
                611Dividends
                    to shareholders
                
                
                -
                
                
                
                
                
                
                
                
                (8,933
                )
                
                (8,933
                )**Balance
                    at September 30, 2008**
                
                $
                596
                
                $
                530,258
                
                $
                (62,856
                )
                $
                10,456
                
                $
                478,454
 
 *See
        accompanying notes to the unaudited consolidated financial statements.*
  6
  **Notes
        to Consolidated Financial Statements**
 **(in
        thousands (000’s), except per share data)**
 **(Unaudited)**
 
 **1.**
              **Basis
                  of Presentation — Summary of Significant Accounting
                  Policies**
  The
        accompanying unaudited interim consolidated financial statements 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 and, therefore, do not include all of the
        information and footnotes required by GAAP for complete financial statements.
        These interim statements should be read in conjunction with the financial
        statements and notes thereto included in the Maiden Holdings, Ltd. (“Maiden” or
        the “Company”) Annual Report to Security Holders for the year ended December 31,
        2007, previously filed with the Securities and Exchange Commission (“SEC”) on
        May 15, 2008. The balance sheet at December 31, 2007 has been derived from
        the
        audited consolidated financial statements at that date but does not include
        all
        of the information and footnotes required by GAAP for complete 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.
 
 A
        detailed description of the Company’s significant accounting policies and
        management judgments is located in the audited consolidated financial statements
        for the year ended December 31, 2007, included in the Company’s Form ARS filed
        with the SEC.
 
 All
        significant inter-company transactions and accounts have been eliminated
        in the
        consolidated financial statements.
  **2.**
              **Recent
                  Accounting Pronouncements**
 
 In
        October 2008, the Financial Accounting Standards Board (“FASB”) issued FASB
        Staff Position (“FSP”) 157-3, Determining the Fair Value of a Financial Asset
        When the Market For That Asset Is Not Active (FSP 157-3), with an immediate
        effective date, including prior periods for which financial statements have
        not
        been issued.  FSP 157-3 amends FASB 157 to clarify the application of fair
        value in inactive markets and allows for the use of management’s internal
        assumptions about future cash flows with appropriately risk-adjusted discount
        rates when relevant observable market data does not exist.  The objective
        of FASB 157 has not changed and continues to be the determination of the
        price
        that would be received in an orderly transaction that is not a forced
        liquidation or distressed sale at the measurement date.  The adoption of
        FSP 157-3 in the third quarter did not have a material effect on the Company’s
        results of operations, financial position or liquidity.
 
 In
        June
        2008, the FASB issued FSP No. 03-6-1, “Determining Whether Instruments Granted
        in Share-Based Payment Transactions are Participating Securities” (“FSP
        03-6-1”).  FSP 03-6-1 clarifies that unvested share-based payment awards
        that contain nonforfeitable rights to dividends or dividend equivalents (whether
        paid or unpaid) are participating securities and are to be included in the
        computation of earnings per share under the two-class method described in
        Statement of Financial Accounting Standards No. 128 (“SFAS No. 128”),
“Earnings Per Share.” This FSP is effective for financial statements issued for
        fiscal years beginning after December 15, 2008 and requires all presented
        prior-period earnings per share data to be adjusted retrospectively.  We
        are currently evaluating the impact, if any, that FSP 03-6-1 will have on
        our
        consolidated financial statements.
 
 In
        May
        2008, the FASB issued FASB Statement No. 163 (“SFAS 163”), “Accounting
        for Financial Guarantee Insurance Contracts”, an interpretation of SFAS
        Statement No. 60. SFAS 163 requires that an insurance enterprise recognize
        a claim liability prior to an event of default (insured event) when there
        is
        evidence that credit deterioration has occurred in an insured financial
        obligation. SFAS 163 also clarifies how Statement 60 applies to financial
        guarantee insurance contracts, including the recognition and measurement
        to be
        used to account for premium revenue and claim liabilities. Those clarifications
        will increase comparability in financial reporting of financial guarantee
        insurance contracts by insurance enterprises. SFAS 163 also requires
        expanded disclosures about financial guarantee insurance contracts.
        SFAS 163 is effective for financial statements issued for fiscal years and
        interim periods beginning after December 15, 2008. We are currently
        evaluating the impact, if any, that SFAS 163 will have on our consolidated
        financial statements.
 
 In
        May
        2008, the FASB issued FASB Statement No. 162 (“SFAS 162”), “The
        hierarchy of Generally Accepted Accounting Principles”. SFAS 162 identifies
        the sources of accounting principles and the framework for selecting the
        principles used in the preparation of financial statements of nongovernmental
        entities that are presented in conformity with generally accepted accounting
        principles) in the United States. This Statement shall be effective 60 days
        following the SEC’s approval of the Public Company Accounting Oversight Board
        (PCAOB) amendments to AU Section 411, The Meaning of Present Fairly in
        Conformity With Generally Accepted Accounting Principles. The Company does
        not
        believe the adoption will have a material impact on its financial condition
        or
        results of operations.
 
 In
        March
        2008, the FASB issued FASB Statement No. 161 (“SFAS 161”),
“Disclosures about Derivative Instruments and Hedging Activities ”.
        SFAS 161 requires companies with derivative instruments to disclose
        information that should enable financial-statement users to understand how
        and
        why a company uses derivative instruments, how derivative instruments and
        related hedged items are accounted for under FASB Statement No. 133
“Accounting for Derivative Instruments and Hedging Activities” and how
        derivative instruments and related hedged items affect a company's financial
        position, financial performance and cash flows. SFAS 161 is effective for
        financial statements issued for fiscal years and interim periods beginning
        after
        November 15, 2008. We are currently evaluating the impact, if any, that
        SFAS 161 will have on our consolidated financial
        statements.
  7
  **3.**
              **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
        September 30, 2008 and December 31, 2007, are as follows:
  *(a)* *Available-for-Sale
        Fixed Maturities and Other Investments*
 
 September
                  30, 2008****
              
              Original or amortized
                cost
              
              Gross unrealized
                gains
              
              Gross unrealized
                losses
              
              Fair
                valueFixed
                  Maturities:U.S.
                  Agency - mortgage backed securities
              
              $
              410,399
              
              $
              3,983
              
              $
              (3,417
              )
              $
              410,965Corporate
                  fixed maturities****
              
              
              339,399
              
              
              196
              
              
              (63,374
              )
              
              276,221Total
                  available for sale fixed maturities
              
              
              749,798
              
              
              4,179
              
              
              (66,791
              )
              
              687,186Other
                  investments
              
              
              10,315
              
              
              -
              
              
              (244
              )
              
              10,071****Total
                  investments****
              
              $
              760,113
              
              $
              4,179
              
              $
              (67,035
              )
              $
              697,257
 
 December
                  31, 2007
              
              Original or
                amortized
                cost
              
              Gross unrealized
                gains
              
              Gross unrealized
                losses
              
              Fair
                valueFixed
                  Maturities:U.S.
                  Agency - mortgage backed securities
              
              $
              204,363
              
              $
              660
              
              $
              -
              
              $
              205,023Corporate
                  fixed maturities
              
              
              284,402
              
              
              445
              
              
              (15,081
              )
              
              269,766Total
                  available for sale fixed maturities
              
              
              488,765
              
              
              1,105
              
              
              (15,081
              )
              
              474,789Other
                  investments
              
              
              15,176
              
              
              480
              
              
              -
              
              
              15,656Total
                  investments
              
              $
              503,941
              
              $
              1,585
              
              $
              (15,081
              )
              $
              490,445
 
 *(b)
        Investment Income*
  Net
        investment income was derived from the following sources:
 
 For the Three Months
                Ended September 30,
                2008
              
              For the Three
                Months Ended
                September 30,
                2007
              
              For the Nine
                Months Ended
                September 30,
                2008
              
              Period from May
                31, 2007
                (inception) to
                September 30,
                2007Fixed
                  maturities
              
              **$**
              9,394
              
              **$**
              3,822
              
              **$**
              23,362
              
              **$**
              3,822Cash
                  and cash equivalents
              
              
              441
              
              
              4,169
              
              
              1,824
              
              
              4,228Loan
                  to related party
              
              
              1,481
              
              
              **-**
              
              
              3,766
              
              
              **-**11,316
              
              
              7,991
              
              
              28,952
              
              
              8,050Less:Investment
                  expenses
              
              
              (290
              )
              
              (488
              )
              
              (1,103
              )
              
              (488
              )Interest
                  expense on securities sold under agreements to repurchase
              
              
              (2,052
              )
              
              -
              
              
              (3,503
              )
              
              -**$**
              8,974
              
              $
              7,503
              
              $
              24,346
              
              $
              7,562
  8
 *(c)
          Other-Than-Temporary Impairment*
  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 September 30, 2008, 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
          months and nine months ended September 30, 2008, the Company
          recognized other than temporary impairment on Lehman Brothers Inc. and
          Washington Mutual, Inc. fixed income securities and other investments of
          $17,376, $19,961 and $5,201, respectively. Other than those mentioned above,
          there were
          no
          other-than-temporary declines in the fair values of investments held in
          our
          investment portfolio.
  The
          tables below summarize the gross unrealized losses of our available-for-sale
          securities and other investments as of September 30, 2008:
 
 Less than 12 months
                
                12 months or more
                
                TotalFair
                  value
                
                Unrealized
                  losses
                
                Fair
                  value
                
                Unrealized
                  Losses
                
                Fair
                  value
                
                Unrealized
                  lossesAvailable-for-sale securities:U.S.
                    Agency mortgage backed securities
                
                $
                115,819
                
                
                (2,371
                )
                $
                58,645
                
                
                (1,045
                )
                $
                174,464
                
                
                (3,417
                )Corporate
                    fixed maturities
                
                
                103,922
                
                
                (19,856
                )
                
                158,025
                
                
                (43,518
                )
                
                261,947
                
                
                (63,374
                )219,741
                
                
                (22,227
                )
                
                216,670
                
                
                (44,564
                )
                
                436,411
                
                
                (66,791
                )Other
                    investments
                
                $
                4,756
                
                
                (244
                )
                $
                -
                
                
                -
                
                $
                4,756
                
                
                (244
                )Total
                    temporarily impaired available-for-sale securities and other
                    investments
                
                $
                224,497
                
                
                (22,471
                )
                $
                216,670
                
                
                (44,564
                ))
                $
                441,167
                
                
                (67,035
                )
 
 As
          of
          September 30, 2008, there were approximately 35 securities in an unrealized
          loss
          position with a fair value of $441.2 million. Of these securities, there
          are 23
          securities that have been in an unrealized loss position for 12 months or
          greater with a fair value of $216.7 million.
 
 The
          tables below summarize the gross unrealized losses of our available-for-sale
          securities and other investments as of December 31, 2007:
  Less than 12 months
                
                12 months or more
                
                TotalFair
                  value
                
                Unrealized
                  losses
                
                Fair
                  value
                
                Unrealized
                  Losses
                
                Fair
                  value
                
                Unrealized
                  lossesAvailable-for-sale securities:U.S.
                    Agency mortgage backed securities
                
                $
                -
                
                
                -
                
                $
                -
                
                
                -
                
                $
                -
                
                
                -Corporate
                    fixed maturities
                
                
                249,233
                
                
                (15,081
                )
                
                -
                
                
                -
                
                
                249,233
                
                
                (15,081
                )249,233
                
                
                (15,081
                )
                
                -
                
                
                -
                
                
                249,233
                
                
                (15,081
                )Other
                    investments
                
                $
                -
                
                
                -
                
                $
                -
                
                
                -
                
                $
                -
                
                
                -Total
                    temporarily impaired available-for-sale securities and other
                    investments
                
                $
                249,233
                
                
                (15,081
                )
                $
                -
                
                
                -
                
                $
                249,233
                
                
                (15,081
                )
 
 
 As
          of
          September 30, 2007, there were approximately 18 securities in an unrealized
          loss
          position with a fair value of $249.2 million. None of these securities
          have been
          in an unrealized loss position for 12 months or greater.
 
 *(d)
          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 September 30, 2008, there were $260,775
          principal
          amount outstanding at interest rates between 2.5% and 3.8%. Interest expense
          associated with these repurchase agreements was $2,052 and $3,503 for the
          three
          and nine months ended September 30, 2008, respectively; out of which $259
          was
          accrued as of September 30, 2008. The Company has approximately $260,775
          of
          collateral pledged in support of these agreements.
  9
  **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.
 
 For investments that have quoted market prices in active markets, the Company
          uses the quoted market prices as fair value and includes these prices in
          the
          amounts disclosed in the Level 1 hierarchy.   The Company receives the
          quoted market prices from third party, nationally, recognized pricing services
          (“pricing service”).  When quoted market prices are unavailable, the
          Company utilizes a pricing service to determine an estimate of fair value.
           The fair value estimates are included in the Level 2 hierarchy
          (approximately 98.6% of total investment portfolio).  The Company will
          challenge any prices for its investments which are considered to not represent
          fair value.    If quoted market prices and an estimate from a
          pricing service is unavailable, the Company produces an estimate of fair
          value
          based on dealer quotations for recent activity in positions with the same
          or
          similar characteristics to that being valued or through consensus pricing
          of a
          pricing service.  Depending on the level of observable inputs, the Company
          will then determine if the estimate is Level 2 or Level 3 hierarchy.  The
          Company bases its estimates of fair values for assets on the bid price
          as it
          represents what a third party market participant would be willing to pay
          in an
          arm’s length transaction.
 
 *Fixed
          Maturities (Available for Sale).* The Company utilizes a pricing service to estimate fair value measurements
          for
          approximately 89% of its fixed maturities.  The pricing service utilizes
          market quotations for fixed maturity securities that have quoted market
          prices
          in active markets.  Since fixed maturities other than U.S. treasury
          securities generally do not trade on a daily basis, the pricing service
          prepares
          estimates of fair value measurements using relevant market data, benchmark
          curves, sector groupings and matrix pricing.  The pricing service utilized
          by the Company has indicated they will only produce an estimate of fair
          value if
          there is verifiable information to produce a valuation.  As the fair value
          estimates of most fixed maturity investments are based on observable market
          information rather than market quotes, the estimates of fair value other
          than
          U.S. Treasury securities are included in Level 2 of the hierarchy.  
The Company’s Level 2 investments include obligations of U.S. government
          agencies and, corporate debt securities.  Additionally, for approximately
          11% of the Company’s fixed maturities the Company utilized dealer quotes based
          on recent activity, consensus pricing through a pricing services’ proprietary
          methodology or a methodology using yield spreads of comparable fixed maturities
          with similar yield spreads of comparable bonds of the same issuer.
 
 *Other investments.* The
          Company has $10,071 or approximately 1.4% of its investment portfolio in
          limited
          partnerships or hedge funds where the fair value estimate is determined
          by a
          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
          the
          estimate in the amount disclosed in Level 3.  The Company has determined
          that its investments in Level 3 securities are not material to its financial
          position or results of operations.
 
 *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 September 30, 2008:
 
 Total
                
                Level
                    1
                
                Level
                    2
                
                Level
                    3Assets:Available-for-sale
                    fixed maturities
                
                $
                687,186
                
                $
                -
                
                $
                687,186
                
                $
                -Other
                    investments
                
                
                10,071
                
                
                -
                
                
                -
                
                
                10,071$
                697,257
                
                $
                -
                
                $
                687,186
                
                $
                10,071Liabilities:Securities
                    sold under agreements to repurchase, at contract value
                
                
                (260,775
                )
                
                -
                
                
                (260,775
                )
                
                -$
                436,482
                
                $
                -
                
                $
                426,411
                
                $
                10,071
   10
  The
          following table provides a summary of changes in fair value of the Company’s
          Level 3 financial assets as of September 30, 2008:
 
 Three Months
                  Ended
                  September 30,
                  2008
                
                Nine Months
                  EndedSeptember
                  30, 2008Beginning
                    balance
                
                $
                12,134
                
                $
                15,656Total
                    net losses for the period included in:Net
                    loss
                
                
                (5,201
                )
                
                (5,201
                )Other
                    comprehensive income (loss)
                
                
                3,107
                
                
                (724
                )Purchases,
                    sales, issuances and settlements, net
                
                
                31
                
                
                340Net
                    transfers into (out of) Level 3
                
                
                -
                
                
                -Ending
                    balance as of September 30, 2008
                
                $
                10,071
                
                $
                10,071
 
 
 **5.**
                **Earnings
                    Per Share**
 
 The
          following is a summary of the elements used in calculating basic and diluted
          earnings per share:
  Three Months
                  Ended
                  September 30,
                  2008
                
                Three Months
                  Ended
                  September 30,
                  2007
                
                Nine Months
                  Ended
                  September
                  30, 2008
                
                Period from may
                  31, 2007 (inception)
                  to September 30,
                  2007Net
                    income available to common shareholders
                
                **$**
                (27,516
                )
                **$**
                11,340
                
                **$**
                (1,209
                )
                **$**
                11,263Weighted
                    average number of common shares outstanding - basic
                
                
                59,550,000
                
                
                57,716,859
                
                
                59,550,000
                
                
                44,184,968Potentially
                    dilutive securities:Warrants
                
                
                -
                
                
                -
                
                
                -
                
                
                -Share
                    options
                
                
                -
                
                
                -
                
                
                -
                
                
                -Weighted
                    average number of common shares outstanding - diluted
                
                
                59,550,000
                
                
                57,716,859
                
                
                59,550,000
                
                
                44,184,968Basic
                    and diluted earnings per common share:
                
                $
                (0.46
                )
                $
                0.20
                
                $
                (0.02
                )
                $
                0.25
  As
          of
          September 30, 2008, the total weighted-average of 4,050,000 warrants and
          893,529
          share options were excluded from diluted earnings per share as they were
          anti-dilutive.
  **6.**
                **Share
                    Based Compensation**
  
 The
          Company’s 2007 Share Incentive Plan (the “Plan”) provides for grants of options
          and restricted shares. The total number of shares currently reserved for
          issuance under the Plan is 2,800,000 common shares. The Plan is administered
          by
          the Compensation Committee of the Board of Directors. Exercise prices of
          options
          will be established at or above the fair market value of the Company’s common
          shares at the date of grant. Under the 2007 Share Incentive Plan, unless
          otherwise determined by the compensation committee and provided in an award
          agreement, 25% of the options will become exercisable on the first anniversary
          of the grant date, with an additional 6.25% of the options vesting each
          quarter
          thereafter based on the grantee’s continued employment over a four-year period,
          and will expire ten years after grant date.
 
 *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 $219 and $611 for the three and nine months ended September
          30,
          2008, respectively. The share-based expense was $137 for
          the
          three months ended September 30, 2007 and for the period from May 31, 2007
          (inception) to September 30, 2007.
  11
  The
          key
          assumptions used in determining the fair value of options granted in 2008
          and a
          summary of the methodology applied to develop each assumption are as
          follows:
 Assumptions
                        :
                    
                    2008Volatility
                    
                    
                    29.8
                    %Risk-free
                        interest rate
                    
                    
                    3.30
                    %Weighted
                        average expected lives in years
                    
                    
                    6.1
                        yearsForfeiture
                        rate
                    
                    
                    0
                    %Dividend
                        yield rate
                    
                    
                    1
                    %
  *Expected
          Price Volatility* - This
          is a measure of the amount by which a price has fluctuated or is expected
          to
          fluctuate. At the times the Company granted options, there was no external
          market for the Company’s common shares. Thus, it was not possible to use actual
          experience to estimate the expected volatility of the price of the common
          shares
          in estimating the value of the options granted. As a substitute for such
          estimate, the Company used the historical volatility of 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 schedule shows all options granted, exercised, expired and exchanged
          under the Plan for the three months ended September 30, 2008:
 
 Number of
                  Share Options
                
                Weighted
                  Average Exercise
                  Price
                
                Weighted Average
                  Remaining Contractual
                  TermOutstanding, June 30, 2008
                
                
                962,000
                
                $
                10.00
                
                
                9.3
                    yearsGranted
                
                
                **-**
                
                
                **-**
                
                
                -Exercised
                
                
                **-**
                
                
                -
                
                
                -Cancelled
                
                
                **-**
                
                
                **-**
                
                
                -Outstanding,
                    September 30, 2008
                
                
                962,000
                
                $
                10.00
                
                
                9.01
                    years
  The
          following schedule shows all options granted, exercised, expired and exchanged
          under the Plan for the nine months ended September 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
                
                
                9.46
                    yearsExercised
                
                
                **-**
                
                
                -Cancelled
                
                
                **-**
                
                
                **-**Outstanding,
                    September 30, 2008
                
                
                962,000
                
                $
                10.00
                
                
                9.01
                    years
 
 The
          weighted average grant date fair value was $3.30 for all options outstanding
          at
          September 30, 2008. There was approximately $2,252 of total unrecognized
          compensation cost related to non-vested share-based compensation arrangements
          as
          of September 30, 2008.
  **7.**  **Dividend
          Declared**
  A
          dividend was declared o n
          June 4,
          2008. The Company’s Board of Directors approved a quarterly cash dividend of
          $0.05 per common share payable to shareholders of record as of July 1,
          2008. The
          dividend was paid on July 15, 2008.
 
 On
          July
          31, 2008, the Company’s Board of Directors approved a quarterly cash dividend of
          $0.05 per common share. This dividend was paid on October 13, 2008 to
          shareholders of record on October 2, 2008.
  12
  **8.**  **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 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, 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 the
          AmTrust
          Ceding Insurers, 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 Ceding Insurers’ unearned premium reserves,
          effective as of July 1, 2007, with respect to the current lines of business,
          excluding risks for which the AmTrust Ceding Insurers’ 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. 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 Ceding Insurers.
  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 $82.2 million
          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
          Company recorded approximately $36,908 and $82,524 of ceding commission
          expense
          for the three and nine months ended September 30, 2008, 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 September 30, 2008
          and December 31, 2007 and the results of operations for the three and nine
          months ended September 30, 2008 related to the Reinsurance Agreements with
          AmTrust:
  Assets
                    and (liabilities):
                
                September 30,
                  2008
                
                December 31,
                  2007Loan
                    to related party
                
                $
                167,975
                
                $
                113,542Reinsurance
                    balances receivable, net
                
                
                84,197
                
                
                27,891Accrued
                    interest on loan to related party
                
                
                1,481
                
                
                240Deferred
                    commission and other acquisition costs
                
                
                81,223
                
                
                42,501Loss
                    and loss adjustment expense reserves
                
                
                (121,475
                )
                
                (38,485
                )Unearned
                    premiums
                
                
                (246,465
                )
                
                (137,099
                )
 
 Results
                    of operations:
                
                Three Months
                  Ended
                  September 30,
                  2008
                
                Three Months
                  Ended
                  September 30,
                  2007
                
                Nine Months
                  Ended
                  September 30,
                  2008
                
                Period from May
                  31, 2007
                  (inception) to
                  September 30,
                  2007Net
                    premium written - assumed
                
                $
                102,674
                
                $
                190,801
                
                $
                361,632
                
                $
                190,801Change
                    in unearned premium - assumed
                
                
                8,654
                
                
                (127,835
                )
                
                (109,365
                )
                
                (127,835
                )Net
                    earned premium - assumed
                
                
                111,328
                
                
                62,966
                
                
                252,267
                
                
                62,966Commission
                    and other acquisition costs on premium written
                
                
                33,570
                
                
                61,534
                
                
                120,113
                
                
                61,534Commission
                    and other acquisition costs- deferred
                
                
                3,617
                
                
                (41,227
                )
                
                (37,008
                )
                
                (41,227
                )Ceding
                    commission expensed
                
                
                37,187
                
                
                20,307
                
                
                83,105
                
                
                20,307Loss
                    and loss adjustment expense
                
                
                65,664
                
                
                37,667
                
                
                146,084
                
                
                37,667Interest
                    income on loan to related party
                
                
                1,481
                
                
                -
                
                
                3,766
                
                
                -
  13
  The
          Reinsurance Agreement requires that Maiden Insurance provide to AII sufficient
          collateral to secure its proportional share of AII’s obligations to the U.S.
          AmTrust Ceding Insurers. The amount of the collateral, in the form of a
          loan at
          September 30, 2008 was $167,975 and the accrued interest was $1,481. AII
          is
          required to return to Maiden Insurance any assets of Maiden Insurance in
          excess
          of the amount required to secure its proportional share of AII’s collateral
          requirements, subject to certain deductions.
 
 *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 $1,381 and $3,131 of reinsurance brokerage
          expense for the three and nine months ended September 30, 2008, respectively
          and
          deferred reinsurance brokerage of $3,003 as at September 30, 2008 as a
          result of
          this agreement. In comparison, the Company recorded approximately $787
          of
          reinsurance brokerage expense for
          the
          three months ended September 30, 2007 and for the period from May 31, 2007
          (inception) to September 30, 2007 and
          deferred reinsurance brokerage of $1,598 as at September 30, 2007 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 $401 and $811
          as
          expense, which is included in other operating expenses, for the three and
          nine
          months ended September 30, 2008.
 
 *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%. The Company recorded
          approximately  $254
          and
          $970 of investment management fees for the three and nine months ended
          September
          30, 2008, respectively as a result of this agreement. In comparison, the
          Company
          recorded approximately  $470
          of
          investment management fees for
          the
          three months ended September 30, 2007 and for the period from May 31, 2007
          (inception) to September 30, 2007 ,
          respectively as a result of this agreement.
 
 **9.**
                **Segments**
   The
          Company currently operates two business segments, Reinsurance - AmTrust
          Quota
          Share and Reinsurance - Other. The Company evaluates segment performance
          based
          on segment profit and includes an allocation of investment income based
          on the
          average investment return on the actual cash generated by the segment as
          the
          Company does not manage its investment portfolio by segment. Other expenses
          are
          allocated on an actual basis except salaries and benefits where management’s
          judgment is applied, the Company does not allocate general corporate expenses
          to
          the segments. The following tables summarize business segments as follows:
 
 Three
                    Months Ended September 30, 2008
                
                Reinsurance - AmTrust Quota
                  Share
                
                Reinsurance -
                  Other
                
                Corporate
                  and other
                
                Total**Revenues**Net
                    premium written
                
                $
                102,673
                
                $
                10,514
                
                $
                -
                
                $
                113,187Earned
                    premium
                
                
                110,495
                
                
                3,100
                
                
                -
                
                
                113,595Investment
                    income and other revenues
                
                
                1,523
                
                
                12
                
                
                7,439
                
                
                8,974Other
                    than temporary impairment losses
                
                
                -
                
                
                -
                
                
                (42,538
                )
                
                (42,538
                )Total
                    revenues
                
                
                112,018
                
                
                3,112
                
                
                (35,099
                )
                
                80,031**Expenses**Loss
                    and loss adjustment expenses
                
                
                65,664
                
                
                1,251
                
                
                -
                
                
                66,915Commission
                    and other acquisition expenses
                
                
                36,908
                
                
                1,391
                
                
                -
                
                
                38,299Other
                    expenses
                
                
                258
                
                
                856
                
                
                1,219
                
                
                2,333Total
                    expenses
                
                
                102,830
                
                
                3,498
                
                
                1,219
                
                
                107,547Net
                    income (loss)
                
                $
                9,188
                
                $
                (386
                )
                $
                (36,318
                )
                $
                (27,516
                )
  14
  Nine
                      Months Ended September 30, 2008
                  
                  Reinsurance - AmTrust Quota
                    Share
                  
                  Reinsurance -
                    Other
                  
                  Corporate
                    and other
                  
                  Total**Revenues**Net
                      premium written
                  
                  $
                  353,690
                  
                  $
                  33,180
                  
                  $
                  -
                  
                  $
                  386,870Earned
                      premium
                  
                  
                  250,531
                  
                  
                  5,708
                  
                  
                  -
                  
                  
                  256,239Investment
                      income and other revenues
                  
                  
                  3,904
                  
                  
                  12
                  
                  
                  20,593
                  
                  
                  24,509Other
                      than temporary impairment losses
                  
                  
                  -
                  
                  
                  
                  
                  
                  (42,538
                  )
                  
                  (42,538
                  )Total
                      revenues
                  
                  
                  254,435
                  
                  
                  5,720
                  
                  
                  (21,945
                  )
                  
                  238,210**Expenses**Loss
                      and loss adjustment expenses
                  
                  
                  146,084
                  
                  
                  2,278
                  
                  
                  -
                  
                  
                  148,362Commission
                      and other acquisition expenses
                  
                  
                  82,523
                  
                  
                  2,534
                  
                  
                  -
                  
                  
                  85,057Other
                      expenses
                  
                  
                  635
                  
                  
                  1,485
                  
                  
                  3,880
                  
                  
                  6,000Total
                      expenses
                  
                  
                  229,242
                  
                  
                  6,297
                  
                  
                  3,880
                  
                  
                  239,419Net
                      income (loss)
                  
                  $
                  25,193
                  
                  $
                  (577
                  )
                  $
                  (25,825
                  )
                  $
                  (1,209
                  )
  Three Months Ended to September 30, 2007
                
                Reinsurance -
                  AmTrust
                  Quota Share
                
                Reinsurance -
                  Other
                
                Corporate
                  and other
                
                Total**Revenues**Net
                    premium written
                
                $
                190,801
                
                $
                -
                
                $
                -
                
                $
                190,801Earned
                    premium
                
                
                62,966
                
                
                -
                
                
                -
                
                
                62,966Investment
                    income and other revenues
                
                
                -
                
                
                -
                
                
                7,590
                
                
                7,590Other
                    than temporary impairment losses
                
                
                -
                
                
                -
                
                
                -
                
                
                -Total
                    revenues
                
                
                62,966
                
                
                -
                
                
                7,590
                
                
                70,556**Expenses**Loss
                    and loss adjustment expenses
                
                
                37,667
                
                
                -
                
                
                -
                
                
                37,667Commission
                    and other acquisition expenses
                
                
                20,307
                
                
                -
                
                
                -
                
                
                20,307Other
                    expenses
                
                
                5
                
                
                -
                
                
                1,237
                
                
                1,242Total
                    expenses
                
                
                57,979
                
                
                -
                
                
                1,237
                
                
                59,216Net
                    income (loss)
                
                $
                4,987
                
                $
                -
                
                $
                6,353
                
                $
                11,340
  
 Period
                    from May 31, 2007 (inception) to September 30, 2007
                
                Reinsurance -
                  AmTrustQuota
                  Share
                
                Reinsurance -
                  Other
                
                Corporate
                  and other
                
                Total**Revenues**Net
                    premium written
                
                $
                190,801
                
                $
                -
                
                $
                -
                
                $
                190,801Earned
                    premium
                
                
                62,966
                
                
                -
                
                
                -
                
                
                62,966Investment
                    income and other revenues
                
                
                -
                
                
                -
                
                
                7,649
                
                
                7,649Other
                    than temporary impairment losses
                
                
                -
                
                
                -
                
                
                -
                
                
                -Total
                    revenues
                
                
                62,966
                
                
                -
                
                
                7,649
                
                
                70,615**Expenses**Loss
                    and loss adjustment expenses
                
                
                37,667
                
                
                -
                
                
                -
                
                
                37,667Commission
                    and other acquisition expenses
                
                
                20,307
                
                
                -
                
                
                -
                
                
                20,307Other
                    expenses
                
                
                5
                
                
                -
                
                
                1,373
                
                
                1,378Total
                    expenses
                
                
                57,979
                
                
                -
                
                
                1,373
                
                
                59,352Net
                    income (loss)
                
                $
                4,987
                
                $
                -
                
                $
                6,276
                
                $
                11,263
  15
 
 Reinsurance - AmTrust Quota
                  Share
                
                Reinsurance -
                  Other
                
                Corporate and
                  Other
                
                TotalAs
                    of September 30, 2008Reinsurance
                    balances receivable
                
                $
                79,642
                
                $
                19,137
                
                $
                -
                
                $
                98,779Deferred
                    commission and other acquisition costs
                
                
                79,144
                
                
                9,471
                
                
                -
                
                
                88,615Loan
                    to related party
                
                
                167,975
                
                
                -
                
                
                -
                
                
                167,975Corporate
                    and other assets
                
                
                13,243
                
                
                -
                
                
                772,363
                
                
                785,606Total
                    assets
                
                $
                340,004
                
                $
                28,608
                
                $
                772,363
                
                $
                1,140,975
 
 Reinsurance -
                  AmTrustQuota
                  Share
                
                Reinsurance -
                  Other
                
                Corporate and
                  Other
                
                Total**As of December 31,
                    2007**Reinsurance
                    balances receivable
                
                $
                27,990
                
                $
                -
                
                $
                -
                
                $
                27,990Deferred
                    commission and other acquisition costs
                
                
                44,215
                
                
                -
                
                
                -
                
                
                44,215Loan
                    to related party
                
                
                113,542
                
                
                -
                
                
                -
                
                
                113,542Corporate
                    and other assets
                
                
                -
                
                
                -
                
                
                529,861
                
                
                529,861Total
                    assets
                
                $
                185,747
                
                $
                -
                
                $
                529,861
                
                $
                715,608
 
 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
          nine
          months ended September 30, 2008 and 2007:
 
 Three Months Ended
                  September 30, 2008
                
                Three Months Ended
                  September 30, 2007
                
                Nine months ended
                  September 30, 2008
                
                Period from May 31, 2007
                  (inception) to September
                  30, 2007Total
                
                % of
                  Total
                
                Total
                
                % of Total
                
                Total
                
                % of
                  Total
                
                Total
                
                % of TotalGross
                    and net premiums written**Reinsurance
                    - AmTrust Quota Share**Workers
                    Compensation
                
                **$**
                30,174
                
                
                29.39
                %
                **$**
                78,913
                
                
                41.36
                %
                **$**
                103,231
                
                
                29.18
                %
                **$**
                78,913
                
                
                41.36
                %Specialty
                    Middle Market Property & Casualty
                
                
                9,091
                
                
                8.85
                %
                
                27,229
                
                
                14.27
                %
                
                30,572
                
                
                8.64
                %
                
                27,229
                
                
                14.27
                %Specialty
                    Risk and Extended Warranty
                
                
                49,844
                
                
                48.54
                %
                
                84,659
                
                
                44.37
                %
                
                119,519
                
                
                33.79
                %
                
                84,659
                
                
                44.37
                %Unitrin
                    Business Insurance (UBI)
                
                
                13,564
                
                
                13.22
                %
                
                **-**
                
                
                **-**
                
                
                100,368
                
                
                28.39
                %
                
                **-**
                
                
                **-**Total
                    Reinsurance - AmTrust Quota Share
                
                **$**
                102,673
                
                
                100.00
                %
                $
                190,801
                
                
                100.00
                %
                $
                353,690
                
                
                100.00
                %
                $
                190,801
                
                
                100.00
                %**Reinsurance
                    - Other**
                
                
                10,514
                
                
                **-**
                
                
                **-**
                
                
                **-**
                
                
                33,180
                
                
                **-**
                
                
                **-**
                
                
                **-****$**
                113,187
                
                
                100.00
                %
                $
                190,801
                
                
                100.00
                %
                $
                386,870
                
                
                100.00
                %
                $
                190,801
                
                
                100.00
                %Gross
                    and net premiums earned**Reinsurance
                    - AmTrust Quota Share**Workers
                    Compensation
                
                **$**
                32,156
                
                
                29.10
                %
                **$**
                28,870
                
                
                45.85
                %
                **$**
                96,440
                
                
                38.49
                %
                **$**
                28,870
                
                
                45.85
                %Specialty
                    Middle Market Property & Casualty
                
                
                10,961
                
                
                9.91
                %
                
                8,057
                
                
                12.80
                %
                
                30,265
                
                
                12.08
                %
                
                8,057
                
                
                12.80
                %Specialty
                    Risk and Extended Warranty
                
                
                29,657
                
                
                26.84
                %
                
                26,039
                
                
                41.35
                %
                
                72,661
                
                
                29.00
                %
                
                26,039
                
                
                41.35
                %Unitrin
                    Business Insurance (UBI)
                
                
                37,721
                
                
                34.15
                %
                
                **-**
                
                
                **-**
                
                
                51,165
                
                
                20.43
                %
                
                **-**
                
                
                **-**Total
                    AmTrust Quota Share
                
                **$**
                110,495
                
                
                100.00
                %
                $
                62,966
                
                
                100.00
                %
                $
                250,531
                
                
                100.00
                %
                $
                62,966
                
                
                100.00
                %**Reinsurance
                    - Other**
                
                
                3,100
                
                
                -
                
                
                -
                
                
                -
                
                
                5,708
                
                
                -
                
                
                -
                
                
                -**$**
                113,595
                
                
                100.00
                %
                $
                62,966
                
                
                100.00
                %
                $
                256,239
                
                
                100.00
                %
                $
                62,966
                
                
                100.00
                %
  16
  **10.**
                **Subsequent
                    Events**
 
 a)
                On
                    October 14, 2008, a hedge fund that the Company had invested
                    in decided to
                    close and liquidate its investments and return cash to shareholders
                    in
                    stages over an 18 month period. The fund was also a shareholder
                    in the
                    Company, we agreed to receive our shares from the fund, in lieu
                    of the
                    cash that the Company would have received upon the redemption
                    of 90% of
                    its investment in the fund. As a result of this transaction the
                    Company
                    received 962,336 shares at the valuation price of $3.95 per share.
                    The
                    Company will be holding these shares as Treasury
                    Shares.
 
 b)
                On
                    November 3, 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 for approximately $100 million, which was paid in cash.
                    The
                    Company’s wholly owned subsidiary, Maiden Insurance has assumed the
                    outstanding loss reserves associated with the GMAC RE business
                    (approximately $750 million as of September 30, 2008) along with
                    unearned
                    premium of around $200 million.
 
 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”). Consummation of
          the acquisition of these insurance companies is subject to regulatory approval.
          The consideration for GMAC Direct is $5.0 million plus an amount equal
          to the
          policyholders’ surplus as of the closing date and for Integon it is $3.2 million
          plus an amount equal to the policyholders’ surplus as of the closing
          date.
 
 Maiden
          Insurance received approximately $402.6 million in cash and $544.7 million
          in US
          government and agencies fixed maturity investments in trust accounts for
          the
          benefit of the cedents as the initial transfer amounts in connection with
          the transaction. Within 30 days of the closing the actual amounts as of
          the
          closing date shall be calculated and if different from the initial amounts
          a
          further transfer will be received or paid by Maiden Insurance.
 
 In
          support of the transaction the Company plans to raise additional equity
          of
          approximately $260 million through a rights offering to existing shareholders.
          Should the rights offering generate less than the planned $260 million
          the
          founding shareholders have committed equity funds which will be utilized
          as a
          backstop up to the full $260 million.
 
 c)
                On
                    November 12, 2008, the Company’s Board of Directors approved a quarterly
                    cash dividend of $0.05 per common share. This dividend is payable
                    January
                    15, 2009 to shareholders of record on January 2,
                    2009.
  17
 
 **Item
          2.** **** **MANAGEMENT’S
          DISCUSSION AND ANALYSIS OF** **FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS**
 
 Unless
          otherwise indicated or unless the context otherwise requires, all references
          in
          this Quarterly Report on Form 10-Q to “we,” “us,” “our” and similar expressions
          are references to Maiden Holdings and its consolidated subsidiary.
 
 The
          following is a discussion and analysis of our results of operations for
          the
          three and nine month periods ended September 30, 2008 and our financial
          condition as of September 30, 2008. This discussion and analysis should
          be read
          in conjunction with the attached unaudited interim consolidated financial
          statements and related notes and the audited consolidated financial statements
          and related notes contained in our Annual
          Report to Security Holders for the year ended December 31, 2007, previously
          filed with the Securities and Exchange Commission (“SEC”) on May 15,
          2008 .
 
 This
          Form
          10-Q contains forward-looking statements within the meaning of Section
          27A of
          the Securities Act of 1933, as amended, and Section 21E of the Securities
          Exchange Act of 1934, as amended, (the “Exchange Act”). We intend that the “safe
          harbor” provisions of the Private Securities Litigation Reform Act of 1995 apply
          to these forward-looking statements. Forward-looking statements are not
          statements of historical fact but rather reflect our current expectations,
          estimates and predictions about future results and events. These forward
          looking
          statements may use words such as “anticipate,” “believe,” “estimate,” “expect,”
“intend,” “predict,” “project” and similar expressions as they relate to us or
          our management. When we make forward-looking statements, we are basing
          them on
          management’s beliefs and assumptions, using information currently available to
          us. These forward-looking statements are subject to risks, uncertainties
          and
          assumptions. Factors that could cause such forward-looking statements not
          to be
          realized (which are described in more detail included or incorporated by
          reference herein and in other documents filed by us with the SEC) include,
          but
          are not limited to:
  •
                claims
                    development;
 •
                general
                    economic conditions and conditions specific to the reinsurance
                    markets in
                    which we operate;
 •
                pricing
                    competition;
 •
                rating
                    agency policies and practices;
 •
                catastrophic
                    events;
 •
                material
                    fluctuations in interest rates;
 •
                tax
                    and regulatory changes and conditions; and
 •
                loss
                    of key executives.
 
 Other
          factors, such as changes in U.S. and global debt markets resulting from
          general
          economic conditions, market disruptions and significant interest rate
          fluctuations and changes in credit spreads, may adversely impact our investments
          or impede our access to, or increase the cost of, financing our operations.
          We
          caution that the foregoing list of important factors is not intended to
          be, and
          is not, exhaustive. We undertake no obligation to update or revise publicly
          any
          forward-looking statements, whether as a result of new information, future
          events or otherwise. If one or more risks or uncertainties materialize,
          or if
          our underlying assumptions prove to be incorrect, actual results may vary
          materially from what we projected. Any forward-looking statements in this
          Form
          10-Q reflect our current view with respect to future events and are subject
          to
          these and other risks, uncertainties and assumptions relating to our operations,
          results of operations, growth strategy and liquidity. All subsequent written
          and
          oral forward-looking statements attributable to us or individuals acting
          on our
          behalf are expressly qualified in their entirety by this paragraph.
 
 Our
          policy is to communicate events that we believe may have a material adverse
          impact on the Company’s operations or financial position, in a timely manner
          through a public announcement. It is also our policy not to make public
          announcements regarding events that we believe have a non-material impact
          to the
          Company’s operations or financial position based on management’s estimates and
          current information, other than through regularly scheduled calls, press
          releases or filings.
 
 **Overview**
 
 We
          are a
          Bermuda holding company organized to provide reinsurance business solutions
          to
          the property and casualty industry through Maiden Insurance, our reinsurance
          company subsidiary incorporated and licensed as a Class 3 insurer in Bermuda.
          Our solutions include quota share reinsurance as well as excess of loss
          reinsurance.
 
 We
          offer
          our products to small specialty property and casualty insurance companies
          located in the United States and Europe that are seeking to efficiently
          manage
          their capital. We may also reinsure other reinsurers of U.S. and European
          specialty property and casualty insurance business that have similar objectives.
          We also conduct business with managing general agents in the United States
          and
          Europe that manage programs that fit our expertise in specialty insurance
          as
          well as Lloyd’s syndicates and program administrators. We may on occasion, make
          strategic investments in some of our clients in order to enable those clients
          to
          expand their business and therefore the amount of business they do with
          us. We
          do not currently hold any such investments.
 
 We
          manage
          our business through two operating segments; Reinsurance - Amtrust Quota
          Share
          and Reinsurance - Other.
  18
  ***Reinsurance
          - AmTrust Quota Share***
 
 We
          entered into a quota share reinsurance agreement with AmTrust’s Bermuda
          reinsurance subsidiary, AII, which provides quota share reinsurance to
          AmTrust’s
          insurance company subsidiaries. We also entered into a master agreement
          with
          AmTrust pursuant to which we will cause Maiden Insurance, and AmTrust will
          cause
          its insurance company subsidiaries, through AII, to reinsure 40% of all
          business
          (net of reinsurance with unaffiliated reinsurers) of the types written,
          as of
          the effective date of the master agreement, by the insurance subsidiaries
          and
          Maiden Insurance will have an option to reinsure any new types of business
          that
          they may write. Effective as of July 1, 2007, we reinsure 40% of all business
          (net of reinsurance with unaffiliated reinsurers) written by AmTrust’s insurance
          company subsidiaries that is subject to the reinsurance agreement. In addition,
          we also assumed through AII, effective as of July 1, 2007, 40% of the unearned
          premium reserve of AmTrust’s insurance subsidiaries (and the corresponding loss
          exposure). Maiden Insurance pays AII a ceding commission of 31% based on
          ceded
          written premiums. The reinsurance agreement has an initial term of three
          years
          and will be extended for further terms of three years unless either party
          elects
          not to renew.
 
 On
          June
          11, 2008, the Company and AmTrust amended the quota share 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 Insurance 100%
          of $82.2
          million of unearned premium (net of inuring reinsurance) from the acquisition
          of
          UBI's in-force book of business. Additionally, AmTrust agreed to cede to
          Maiden
          40% of net premium written, effective as of June 1, 2008. Maiden Insurance
          will
          pay AmTrust a ceding commission of 34.375% on the unearned premium cession
          and
          the Retail Commercial Package Business.
 
 We
          also
          entered into a reinsurance brokerage agreement with a subsidiary of AmTrust
          pursuant to which we receive reinsurance brokerage services in exchange
          for a
          fee of 1.25% of all premiums we reinsure from AmTrust. The Company recorded
          approximately $1.3 million and $3.0 million of reinsurance brokerage expense
          for
          the three month and nine month period ended September 30, 2008, respectively.
 
 ***Reinsurance
          - Other***
 
 We
          continue to see increased flow of submission of reinsurance opportunities.
          Reinsurance intermediaries are the primary source of these opportunities.
          We
          have adopted a disciplined underwriting posture and thoroughly review all
          reinsurance opportunities before determining whether to participate. Between
          November 6, 2007 and November 6, 2008, we have received 344 reinsurance
          submissions. We have entered into fifteen reinsurance agreements for business
          other than the Quota Share Agreement with AmTrust with a gross premium
          written
          of $33.2 million. These contracts are, by gross premium written, 69% quota
          share
          and 31% excess of loss. By line of risk the split is 30% workers’ compensation,
          13% auto liability and 57% is specialty risk and general liability.
 
 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 $0.4 million and
          $0.8 million as expense, which is included in other operating expenses,
          for the
          three and nine months ended September 30, 2008.
 
 On
          November 3, 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 for approximately $100
          million, which was paid in cash. The Company’s wholly owned subsidiary, Maiden
          Insurance has assumed the outstanding loss reserves associated with the
          GMAC RE
          business (approximately $750 million as of September 30, 2008) along with
          unearned premium of around $200 million.
 
 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”). Consummation of
          the acquisition of these insurance companies is subject to regulatory approval.
          The consideration for GMAC Direct is $5.0 million plus an amount equal
          to the
          policyholders’ surplus as of the closing date and for Integon it is $3.2 million
          plus an amount equal to the policyholders’ surplus as of the closing
          date.
 
 Maiden
          Insurance received approximately $402.6 million in cash and $544.7 million
          in US
          government and agencies fixed maturity investments in trust accounts for
          the
          benefit of the cedents as
          the
          initial transfer amounts in connection with the transaction. Within 30
          days of
          the closing the actual amounts as of the closing date shall be calculated
          and if
          different from the initial amounts a further transfer will be received
          or paid
          by Maiden Insurance.
 
 In
          support of the transaction the Company plans to raise additional equity
          of
          approximately $260 million through a rights offering to existing shareholders.
          Should the rights offering generate less than the planned $260 million
          the
          founding shareholders have committed equity funds which will be utilized
          as a
          backstop up to the full $260 million.
  19
 
 **Principal
          Revenue and Expense Items**
 
 ***Revenues***
 
 *Premium
          Income.* We
          derive our revenue primarily from premiums assumed on reinsurance contracts
          net
          of any inuring reinsurance. Reinsurance premiums assumed are estimated
          based on
          reports and other information provided by brokers and ceding companies,
          supplemented by the Company's own estimates of premiums where reports have
          not
          been received or in cases where the amounts reported by brokers and ceding
          companies are adjusted to reflect management's best judgments and expectations.
          The information used in establishing these estimates is reviewed and subsequent
          adjustments are recorded in the period in which they are determined. These
          premiums are earned on a basis consistent with the terms of the underlying
          related insurance contracts.
 
 *Investment
          Income.* These
          include income from our investment portfolio, comprising net investment
          income
          and net realized gains and losses. Investment income is principally derived
          from
          interest earned on investments, partially offset by investment management
          fees
          and fees paid to our custodian bank. Net realized gains or losses include
          net
          realized investment gains or losses from the sale of investments.
 
 ***Expenses***
 
 In
          our
          consolidated results, expenses consist of loss and loss adjustment expenses,
          commission and other acquisition expenses, salaries and benefits and operating
          expenses. Depending on the terms of the reinsurance agreements that we
          negotiate, our expenses may also include excise taxes, which are calculated
          as a
          percentage (1% for purposes of United States federal excise tax (“FET”)) of
          premiums ceded to us. Under our quota share reinsurance agreement with
          AmTrust,
          all payments of FET are the responsibility of AmTrust.
 
 *Loss
          and Loss Adjustment Expenses* .
          We
          establish loss and loss adjustment expense reserves in an amount equal
          to our
          estimate of the ultimate liability for claims under our reinsurance policies
          and
          the cost of adjusting and settling those claims. Our provision for loss
          and loss
          adjustment expense reserves in any period will include estimates for losses
          incurred (that is, the total sustained by us under policies, whether paid
          or
          unpaid) during such period and changes in estimates for prior
          periods.
 
 *Commission
          and Other Acquisition Expenses* .
          These
          expenses include ceding commissions and other acquisition costs. Acquisition
          costs consist of ceding commission and, reinsurance broking expense. These
          costs
          are expected to be capitalized and amortized as an expense as the premiums
          are
          earned on the treaties to which they pertain.
 
 Maiden
          Insurance pays ceding commissions to other insurance companies, including
          AmTrust, for the reinsurance premiums that we assume. Ceding commissions
          are
          intended to compensate the ceding company for the costs incurred to acquire
          the
          ceded business. Ceding commissions are typically paid on traditional quota
          share
          reinsurance agreements, but not on excess of loss reinsurance
          agreements.
 
 Under
          our
          quota share reinsurance agreement with AII, except for the Retail Commercial
          Package Business, we pay a ceding commission of 31% calculated as a percentage
          of ceded premiums. On the Retail
          Commercial Package Business, we pay to AmTrust a ceding commission of 34.375%.
 
 Reinsurance
          brokerage expense includes the 1.25% reinsurance brokerage fee that we
          pay to an
          AmTrust subsidiary on all reinsurance ceded by AmTrust as well as other
          reinsurance brokerage fees and commission expense we may incur to other
          intermediaries.
 
 
 *Salaries
          and benefits.* These
          payments comprise officers and employees salaries and related
          costs.
 
 *Foreign
          exchange gain/loss.* These
          comprise exchange differences arising when monetary items are settled or
          when
          monetary items are translated at rates different from those at which they
          were
          previously translated.
 
 *Other
          Operating Expenses* .
          Other
          operating expenses consist of other expenses related to our operations.
          Other
          operating expenses consist of general & administrative expenses such as fees
          payable to IGI under the brokerage services agreement, professional fees,
          rent,
          office supplies, depreciation and all other operating expenses not otherwise
          classified separately.
 
 ***Ratios***
 
 Management
          measures results for each segment on the basis of the “net loss ratio,” “net
          expense ratio,” and the “net combined ratio”.
 
 *Net
          Loss Ratio.* The net
          loss ratio is a measure of the underwriting profitability of an insurance
          company's business. Expressed as a percentage, this is the ratio of net
          losses
          and LAE incurred to net premiums earned.
 
 *Net
          Expense Ratio.* The net
          expense ratio is a measure of an insurance company's operational efficiency
          in
          administering its business. Expressed as a percentage, this is the ratio
          of the
          sum of ceding commissions, policy acquisition expenses, salaries and benefits,
          foreign exchange gain/loss and other operating expenses to net premiums
          earned.
  *Net
          Combined Ratio* .
          The net
          combined ratio is a measure of an insurance company's overall underwriting
          profit. This is the sum of the net loss and net expense ratios. If the
          net
          combined ratio is at or above 100%, an insurance company cannot be profitable
          without investment income, and may not be profitable if investment income
          is
          insufficient.
  20


We
      also
      use the following ratios:





*Net
      Leverage Ratio.* Net
      leverage ratio is measured by dividing annualized net premiums written by
      shareholders’ equity.





*Annualized Return
      on Equity.* Return
      on equity is calculated by dividing net income before and after realized
      gains/losses on investments by the average of shareholders’ equity.





**Measurement
      of Results; Outlook**





We
      use
      various measures to analyze the growth and profitability of our business
      operations. We measure growth in terms of gross and net premiums written and
      we
      measure underwriting profitability by examining our loss, underwriting expense
      and combined ratios. We also measure our gross and net written premiums to
      surplus ratios to measure the adequacy of capital in relation to premiums
      written. We analyze profitability by evaluating, net income and return on
      average equity.





*Premiums
      Written and Net Leverage Ratio* .
      We use
      gross premiums written to measure our sales of reinsurance products. Gross
      premiums written also correlates to our ability to generate net premiums earned.
      We target a net leverage ratio, of between approximately 1.2 to 1 and
      approximately 1.5 to 1 after a start-up period. Our annualized net leverage
      ratio was 0.95 to 1 and 1.43 to 1 for the three months ended September 30,
      2008
      and 2007, respectively. Our annualized net leverage ratio was 1.08 to 1 and
      1.07
      to 1 for the nine months ended September 30, 2008 and for the period from May
      31, 2007 (inception) to September 30, 2007, respectively.





*Net
      Loss Ratio* .
      The
      loss ratio measures the underwriting profitability of our reinsurance business.
      We target the pricing of our products to achieve a loss ratio of approximately
      55.0% to 65.0% over time. Our loss ratio was 58.9% and 59.8% for the three
      months ended September 30, 2008 and 2007, respectively. Our loss ratio was
      57.9%
      and 59.8% for the nine months ended September 30, 2008 and for the period from
      May 31, 2007 (inception) to September 30, 2007, respectively, respectively.
      There was an impact of $7 million on our loss ratio from hurricane Gustav and
      Ike for the three and nine months ended September 30, 2008, respectively.





*Net
      Expense Ratio* .
      We
      calculate our underwriting expense ratio on a gross basis (before the effect
      of
      ceded reinsurance) to measure our operational
      efficiency and on a net basis (after the effect of ceded reinsurance and related
      ceding commission income) to measure the effects on our consolidated net income.
      Our expense ratio on a gross basis was 35.8% and 34.2% for the three months
      ended September 30, 2008 and 2007, respectively. As we have not retroceded
      any
      amounts, the expense ratio on a net basis was also 35.8% and 34.2% for the
      three
      months ended September 30, 2008 and 2007, respectively. Our expense ratio on
      a
      gross basis was 35.5% and 34.5% for the nine months ended September 30, 2008
      and
      for the period from May 31, 2007 (inception) to September 30, 2007,
      respectively. As we have not retroceded any amounts, the expense ratio on a
      net
      basis was also 35.5% and 34.5% for the nine months ended September 30, 2008
      and
      for the period from May 31, 2007 (inception) to September 30, 2007,
      respectively.





*Net
      Combined Ratio* .
      We use
      the combined ratio to measure our underwriting performance. We analyze the
      combined ratio on a gross (before the effect of reinsurance) and net basis
      (after the effect of reinsurance). If the combined ratio is at or above 100%,
      we
      are not underwriting profitably and will not be profitable unless investment
      income is sufficient to offset underwriting losses. Our combined ratio was
      94.7%
      and 94.0% for the three months ended September 30, 2008 and 2007, respectively.
      Our combined ratio was 93.4% and 94.3% for the nine months ended September
      30,
      2008 and for the period from May 31, 2007 (inception) to September 30, 2007,
      respectively. We plan to write additional premiums without a proportional
      increase in expenses and further reduce the expenses component of our net
      combined ratio.





*Net
      Income and Return on Average Equity* .
      We use
      net income to measure our profits and return on average equity to measure our
      effectiveness in utilizing our shareholders’ equity to generate net income on a
      consolidated basis. Our target for return on average equity is 15% or better.
      Our annualized return on equity before net realized gains/losses on investments
      was 11.74% and 15.39% for the three September 30, 2008 and 2007, respectively.
      Our annualized return on equity before net realized gains/losses on investments
      was 10.84% and 135.95% for the nine months ended September 30, 2008 and for
      the
      period from May 31, 2007 (inception) to September 30, 2007, respectively. Our
      annualized return on equity after net realized gains/losses on investments
      was
      (21.50)% and 15.51% for the three months ended September 30, 2008 and 2007,
      respectively. Our annualized return on equity after net realized gains/losses
      on
      investments was (0.32)% and 137.01 for the nine months ended September 30,
      2008
      and for the period from May 31, 2007 (inception) to September 30, 2007,
      respectively. The net realized losses in 2008 mainly consist of the other than
      temporary impairment recognized by the Company on Lehman Brothers Inc.,
      Washington Mutual, Inc. fixed income securities and other investments of $17
      million, $20 million and $5.2 million respectively.


21


**Critical
      Accounting Policies**





The
      Company’s discussion and analysis of its results of operations, financial
      condition and liquidity are based upon the Company’s consolidated financial
      statements, which have been prepared in accordance with U.S. generally accepted
      accounting principles. The preparation of these financial statements requires
      the Company to make estimates and judgments that affect the amounts of assets
      and liabilities, revenues and expenses and disclosure of contingent assets
      and
      liabilities as of the date of the financial statements. As more information
      becomes known, these estimates and assumptions could change, which would have
      an
      impact on actual results that may differ materially from these estimates and
      judgments under different assumptions. The Company has not made any changes
      in
      estimates or judgments that have had a significant effect on the reported
      amounts as previously disclosed in the Company’s Form ARS filed with the SEC for
      the fiscal period ended December 31, 2007.





***Consolidated
      Result of Operations for the three and nine months ended September 30,
      2008.***





**Results
      of Operations:**





***Consolidated
      Result of Operations***





The
      Company was incorporated on May 31, 2007 and the Company’s subsidiary Maiden
      Insurance was incorporated on June 29, 2007 and commenced insurance operations
      effective July 1, 2007.




For the Three
                Months Ended
                September 30,
                2008
                (in thousands)
              
              For the Three
                Months Ended
                September 30,
                2007
                (in thousands)
              
              For the Nine
                Months Ended
                September 30,
                2008
                (in thousands)
              
              Period from May
                31 (inception) to
                September 30,
                2007
                (in thousands)**Revenues:**Premium
                  income:Net
                  premiums written
              
              $
              113,187
              
              $
              190,801
              
              $
              386,870
              
              $
              190,801Change
                  in unearned premiums
              
              
              408
              
              
              (127,835
              )
              
              (130,631
              )
              
              (127,835
              )**Net
                  earned premium**
              
              
              113,595
              
              
              62,966
              
              
              256,239
              
              
              62,966Net
                  investment income
              
              
              8,974
              
              
              7,503
              
              
              24,346
              
              
              7,562Net
                  realized investment gains (loss)
              
              
              (42,538
              )
              
              87
              
              
              (42,375
              )
              
              87**Total
                  revenues**
              
              
              80,031
              
              
              70,556
              
              
              238,210
              
              
              70,615**Expenses:**Loss
                  and loss adjustment
              
              
              66,915
              
              
              37,667
              
              
              148,362
              
              
              37,667Commission
                  and other acquisition expenses
              
              
              38,299
              
              
              20,307
              
              
              85,057
              
              
              20,307Salaries
                  and benefits
              
              
              673
              
              
              211
              
              
              1,820
              
              
              211Foreign
                  Exchange Loss
              
              
              359
              
              
              1
              
              
              364
              
              
              1Other
                  operating expenses
              
              
              1,301
              
              
              1,030
              
              
              3,816
              
              
              1,166**Total
                  expenses**
              
              
              107,547
              
              
              59,216
              
              
              239,419
              
              
              59,352**Net
                  income (loss)**
              
              $
              (27,516
              )
              $
              11,340
              
              
              (1,209
              )
              $
              11,263**Basic
                  and diluted earnings(loss) per common share**
              
              $
              (0.46
              )
              $
              0.20
              
              
              (0.02
              )
              $
              0.25**Dividends
                  declared per common share**
              
              $
              0.05
              
              $
              0.025
              
              
              0.15
              
              $
              0.025**Key
                  measures:**Net
                  loss ratio
              
              
              **58.9**
              **%**
              
              **59.8**
              **%**
              
              **57.9**
              **%**
              
              **59.8**
              **%**Net
                  expense ratio
              
              
              **35.8**
              **%**
              
              **34.2**
              **%**
              
              **35.5**
              **%**
              
              **34.5**
              **%**Net
                  combined ratio
              
              
              **94.7**
              **%**
              
              **94.0**
              **%**
              
              **93.4**
              **%**
              
              **94.3**
              **%**





***Consolidated
      Result of Operations for the three months ended September 30, 2008 and
      2007.***





*Net
      Premium Written* .


Net
      premium written was $113.1 million and $190.8 million for the three months
      ended
      September 30, 2008 and 2007, respectively, a decrease of $77.7 million or 41%.
      This variance was mainly because of the Unearned Premium transfer of $106.0
      million to the Company at the inception of the reinsurance agreement with AII
      in
      2007. This was offset by increase of premium increase of premium written of
      $28.4 million. This arose mainly from premium written on the addition in 2008
      of
      the Retail Commercial Package Business and contracts in the Reinsurance-other
      segment of $13.6 million and $10.5 million, respectively. Out of those premiums
      written, 90.7% and 100.0% for the three months ended September 30, 2008 and
      2007, respectively, were assumed under the reinsurance agreement with AII.





22





*Net
      Premium Earned* .


Net
      premium earned was $113.6 million and $63.0 million for the three months ended
      September 30, 2008 and 2007, respectively, an increase of $50.6 million or
      80%.
      This increase was mainly because of the net premium earned of $38 million on
      the
      Retail Commercial Package Business that the Company started writing in June
      2008. Out of those premiums earned, 97.3% and 100 % of those premiums for the
      three months ended September 30, 2008 and 2007, respectively, were assumed
      under
      the reinsurance agreement with AII.




*Net
      Investment Income* .


Net
      investment income (excluding realized gains/losses) was approximately $9.0
      million and $7.5 million for the three months ended September 30, 2008 and
      2007,
      respectively. The yields were approximately 5.22% and 10.36% for the three
      months ended September 30, 2008 and 2007, respectively. The increase of $1.5
      million or 20% is because the average invested assets for that period have
      grown
      to approximately $688 million for the three months ended September 30, 2008
      from
      $290 million for the three months ended September 30, 2007. We expect investment
      income to increase over time as more assets are invested.





*Net
      Realized Gain/loss on Investments* .


Net
      realized gains (loss) on investments was $(42.5) million and $0.1 million for
      the three months ended September 30, 2008 and 2007, respectively. The realized
      losses in 2008 mainly consist of the other than temporary impairment recognized
      by the Company on Lehman Brothers Inc. and Washington Mutual, Inc. fixed income
      securities and other investments of $17 million, $20 million and $5.2 million,
      respectively.





*Loss
      and Loss Adjustment Expenses* .


Loss
      and
      loss adjustment expenses were $66.9 million and $37.7 million for the three
      months ended September 30, 2008 and 2007, respectively. The increase of 76%
      is
      in line with the increase in the premium earned while the loss ratios remain
      stable at around 59%. We establish loss and loss adjustment expense reserves
      in
      an amount equal to our estimate of the ultimate liability for claims under
      our
      reinsurance policies and the cost of adjusting and settling those
      claims.





*Commission
      and Other Acquisition Expenses.*


Commission
      and other acquisition expenses were $38.3 million and $20.0 million for the
      three months ended September 30, 2008 and 2007, respectively. The increase
      of
      92% is partly because of increased earned premium and partly because of a
      slightly higher commission rate of 34.375% on the Retail Commercial Package
      Business.





***Consolidated
      Result of Operations for the nine months ended September 30, 2008 and period
      from May 31, 2007 (inception) to September 30, 2007.***





*Net
      Premium Written* .


Net
      premium written was $386.9 and $190.8 million for the nine months ended
      September30, 2008 and for the period from May 31, 2007 (inception) to September
      30, 2007, respectively, an increase of $196.1 million or 103%. This variance
      was
      mainly because the 2007 results include only three months of insurance operation
      compared to nine months in 2008. Out of those premiums written, 91.4% and 100.0%
      for the nine months ended September 30, 2008 and for the period from May 31,
      2007 (inception) to September 30, 2007, respectively, were assumed under the
      reinsurance agreement with AII.





*Net
      Premium Earned* .


Net
      premium earned was $256.2 million and $63.0 million for the nine months ended
      September 30, 2008 and for the period from May 31, 2007 (inception) to September
      30, 2007, respectively, an increase of $193.2 million or 307%. This variance
      was
      mainly because the 2007 results include only three months of insurance operation
      compared to nine months in 2008. Out of those premiums earned, 97.8%and 100
      % of
      those premiums were assumed under the reinsurance agreement with AII.





*Net
      Investment Income* .


Net
      investment income was $9.0 million and $7.6 million for the nine months ended
      September 30, 2008 and for the period from May 31, 2007 (inception) to September
      30, 2007, respectively. The yields were approximately 4.95% and 8.57 % for
      the
      nine months ended September 30, 2008 and for the period from May 31, 2007
      (inception) to September 30, 2007, respectively. The increase is because the
      average invested assets for that period have grown to approximately $660 million
      for the nine months ended September 30, 2008 from $265 million for the period
      from May 31, 2007 (inception) to September 30, 2007. We expect investment income
      to increase over time as more assets are invested.





*Net
      Realized Gain/loss on Investments* .


Net
      realized gains(loss) of $(42.3) million and $0.1 million for the nine months
      ended September 30, 2008 and for the period from May 31, 2007 (inception) to
      September 30, 2007, respectively. The realized losses in 2008 mainly consist
      of
      the other than temporary impairment recognized by the Company on Lehman Brothers
      Inc. and Washington Mutual, Inc. fixed income securities and other investments
      of $17 million, $20 million and $5.2 million, respectively.





*Loss
      and Loss Adjustment Expenses* .


Loss
      and
      loss adjustment expenses were $148.4 million and 37.7 million for the nine
      months ended September 30, 2008 and for the period from May 31 to September
      30,
      2007, respectively. The increase of 294% was mainly because the 2007 results
      include only three months of insurance operation compared to nine months in
      2008. We establish loss and loss adjustment expense reserves in an amount equal
      to our estimate of the ultimate liability for claims under our reinsurance
      policies and the cost of adjusting and settling those claims.





23





*Commission
      and Other Acquisition Expenses.*


The
      Commission and other acquisition expenses were $85.1 and $20.3 million for
      the
      nine months ended September 30, 2008 and for the period from May 31 to September
      30, 2007, respectively. The increase of 325% is mainly because the 2007 results
      includes only three months of insurance operation compared to nine months in
      2008.





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 realized gains and losses, general corporate
      expenses and any other non-core business income or expenses.





***AmTrust
      Quota Share Segment (unaudited):***


Three months
                ended September
                30, 2008
                (in thousands)
              
              Three months
                ended September
                30, 2007
                (in thousands)
              
              Nine months
                ended
                September
                30, 2008
                (in thousands)
              
              For the period
                from May 31
                to September
                30, 2007
                (in thousands)**Revenues**Net
                  premium written
              
              $
              102,673
              
              $
              190,801
              
              $
              353,690
              
              $
              190,801Earned
                  premium
              
              
              110,495
              
              
              62,966
              
              
              250,531
              
              
              62,966Investment
                  income and other revenues
              
              
              1,523
              
              
              -
              
              
              3,904
              
              
              -Net
                  realized investment gains (loss)
              
              
              -
              
              
              -
              
              
              -
              
              
              -Total
                  revenues
              
              $
              112,018
              
              $
              62,966
              
              $
              254,435
              
              $
              62,966**Expenses**Loss
                  and loss adjustment expenses
              
              
              65,664
              
              
              37,667
              
              
              146,084
              
              
              37,667Commission
                  and other acquisition expenses
              
              
              36,908
              
              
              20,307
              
              
              82,523
              
              
              20,307Other
                  expenses
              
              
              258
              
              
              5
              
              
              635
              
              
              5Total
                  expenses
              
              $
              102,830
              
              $
              57,979
              
              $
              229,242
              
              $
              57,979Net
                  income (loss)
              
              $
              9,188
              
              $
              4,987
              
              $
              25,193
              
              $
              4,987Loss
                  Ratio
              
              
              59.4
              %
              
              59.8
              %
              
              58.3
              %
              
              59.8
              %Expense
                  Ratio
              
              
              33.6
              %
              
              32.3
              %
              
              33.2
              %
              
              32.3
              %Combined
                  Ratio
              
              
              93.0
              %
              
              92.1
              %
              
              91.5
              %
              
              92.1
              %





***AmTrust
      Quota Share Segment Results of Operations for the Three Months Ended September
      30, 2008 and 2007***





*Net
      Premium Written* .


Net
      premium written was $102.7 million and $190.8 million for the three months
      ended
      September 30, 2008 and 2007, respectively, a decrease of $88.1 million or 46%.
      This variance was mainly because of the Unearned Premium transfer of $106.0
      million to the Company at the inception of the reinsurance agreement with AII
      in
      2007. This was offset by increase of premium increase of premium written of
      $28.4 million. This arose mainly from premium written on the addition in 2008
      of
      the Retail Commercial Package Business of $13.6 million.





*Net
      Premium Earned* .


Net
      premium earned was $110.5 million and $63.0 million for the three months ended
      September 30, 2008 and 2007, respectively, an increase of $47.5 million or
      75%.
      This increase was mainly because of the net premium earned of $38 million on
      the
      Retail Commercial Package Business that the Company started writing in June
      2008.





*Net
      Investment Income* .


Net
      investment income (excluding realized gains/losses) was approximately $1.5
      million and $0.0 million for the three months ended September 30, 2008 and
      2007,
      respectively. The investment income comprises of the interest earned on the
      loan
      to AII and investment income on the related premium retained. As the Company
      had
      not received premium and given loan to AII by September 30, 2007, there is
      no
      comparative investment income.





*Loss
      and Loss Adjustment Expenses* .


Loss
      and
      loss adjustment expenses were $65.7 million and $37.7 million for the three
      months ended September 30, 2008 and 2007, respectively, an increase of $28
      million or 74%. This increase is in line with the increase in the premium earned
      while the loss ratios remain stable at around 59%. We establish loss and loss
      adjustment expense reserves in an amount equal to our estimate of the ultimate
      liability for claims under our reinsurance policies and the cost of adjusting
      and settling those claims.





24





*Commission
      and Other Acquisition Expenses.*


Commission
      and other acquisition expenses were $36.9 million and $20.0 million for the
      three months ended September 30, 2008 and 2007, respectively, an increase of
      $16.9 million or 85%. This increase is partly because of increased earned
      premium and partly because of a slightly higher commission rate of 34.375%
      on
      the Retail Commercial Package Business.





***AmTrust
      Quota Share Segment Results of Operations for the Nine Months Ended September
      30, 2008 and period from May 31, 2007 (inception) to September 30,
      2007***





*Net
      Premium Written* .


Net
      premium written was $353.7 and $190.8 million for the nine months ended
      September 30, 2008 and for the period from May 31, 2007 (inception) to September
      30, 2007, respectively, an increase of $162.9 million or 85%. This variance
      was
      mainly because the 2007 results include only three months of insurance operation
      compared to nine months in 2008.





*Net
      Premium Earned* .


Net
      premium earned was $250.5 million and $63.0 million for the nine months ended
      September 30, 2008 and for the period from May 31, 2007 (inception) to September
      30, 2007, respectively, an increase of $187.5 million or 298%. This variance
      was
      mainly because the 2007 results include only three months of insurance operation
      compared to nine months in 2008.





*Net
      Investment Income* .


Net
      investment income (excluding realized gains/losses) was approximately $3.9
      million and $0.0 million for the three months ended September 30, 2008 and
      2007,
      respectively. The investment income comprises of the interest earned on the
      loan
      to AII and investment income on the related premium retained. As the Company
      had
      not received premium and given loan to AII by September 30, 2007, there is
      no
      comparative investment income.





*Loss
      and Loss Adjustment Expenses* .


Loss
      and
      loss adjustment expenses were $146.0 million and 37.7 million for the nine
      months ended September 30, 2008 and for the period from May 31 to September
      30,
      2007, respectively, an increase of $108.3 or 287%. This increase is in line
      with
      the increase in the premium earned while the loss ratios remain stable at around
      59%. We establish loss and loss adjustment expense reserves in an amount equal
      to our estimate of the ultimate liability for claims under our reinsurance
      policies and the cost of adjusting and settling those claims.





*Commission
      and Other Acquisition Expenses.*


Commission
      and other acquisition expenses were $82.5 and $20.0 million for the nine months
      ended September 30, 2008 and for the period from May 31 to September 30, 2007,
      respectively. The increase of $62.5 million or 313% is mainly because the 2007
      results includes only three months of insurance operation compared to nine
      months in 2008.





The
      following tables summarize the result of the Reinsurance – Other segment:





Reinsurance
                - Other
            
            Three months
              ended September
              30, 2008
              (in thousands)
            
            Three months
              ended September
              30, 2007
              (in thousands)
            
            Nine months
              ended
              September
              30, 2008
              (in thousands)
            
            Period from May
              31, 2007
              (inception) to
              September 30,
              2007
              (in thousands)**Revenues**Net
                premium written
            
            $
            10,514
            
            $
            -
            
            $
            33,180
            
            $
            -Earned
                premium
            
            
            3,100
            
            
            -
            
            
            5,708
            
            
            -Investment
                income and other revenues
            
            
            12
            
            
            -
            
            
            12
            
            
            -Net
                realized investment gains (loss)
            
            
            -
            
            
            -
            
            
            -
            
            
            -Total
                revenues
            
            $
            3,112
            
            $
            -
            
            $
            5,721
            
            $
            -**Expenses**Loss
                and loss adjustment expenses
            
            
            1,251
            
            
            -
            
            
            2,278
            
            
            -Commission
                and other acquisition expenses
            
            
            1,391
            
            
            -
            
            
            2,534
            
            
            -Other
                expenses
            
            
            856
            
            
            -
            
            
            1,485
            
            
            -Total
                expenses
            
            $
            3,498
            
            $
            -
            
            $
            6,297
            
            $
            -Net
                income (loss)
            
            $
            (386
            
            $
            -
            
            $
            (576
            
            $
            -Loss
                Ratio
            
            
            40.4
            %
            
            -
            
            
            39.9
            %
            
            -Expense
                Ratio
            
            
            72.5
            %
            
            -
            
            
            70.4
            %
            
            -Combined
                Ratio
            
            
            112.9
            %
            
            **-**
            
            
            110.3
            %
            
            **-**





Since
      the
      Company’s insurance operations did not commence its Reinsurance- Other segment
      by September 30, 2007, a detailed segment discussion has not been included.
      Any
      significant change has already been discussed in the consolidated results of
      operations.


25





**Liquidity
      and Capital Resources**





Maiden
      Holdings is a holding company, and as such, has no direct operations of its
      own.
      Substantially all of our operations are conducted by Maiden Insurance.
      Accordingly, we will have continuing cash needs for administrative expenses,
      dividends and the payment of principal and interest on any future borrowings.
      Funds to meet these obligations will come primarily from dividend payments
      from
      Maiden Insurance, however, there are restrictions on the payment of dividends
      by
      our insurance subsidiary. These restrictions, as well as our liquidity,
      principal capital requirements and related matters are described in more detail
      in the section entitled “Management’s Discussion and Analysis of Financial
      Condition and Results of Operations” Annual
      Report to Security Holders for the year ended December 31, 2007, previously
      filed with the Securities and Exchange Commission (“SEC”) on May 15,
      2008 .





***Our
      Liquidity Requirements***





Our
      principal consolidated cash requirements are payment of losses and loss
      adjustment expenses, ceding commissions to insurance companies including
      AmTrust, operating expenses and dividends to our shareholders. On June 4, 2008,
      the Company’s Board of Directors has approved an increase in the regular quarter
      dividend from $0.025 per common share to $0.05 per share. Any determination
      to
      pay dividends will be at the discretion of our Board of Directors and will
      be
      dependent upon our results of operations and cash flows, our financial position
      and capital requirements, general business conditions, legal, regulatory, rating
      agency and any contractual restrictions on the payment of dividends and any
      other factors our Board of Directors deems relevant, including Bermuda legal
      and
      regulatory constraints.





***Sources
      of Cash***





Our
      sources of cash principally consist of the net proceeds from reinsurance
      premiums collected, net cash settlements under our reinsurance agreement,
      investment income and proceeds from sales and redemptions of
      investments.





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


Nine Months Ended
                September 30, 2008
                (in thousands)
              
              Period from May 31,
                2007 (inception) to
                September 30, 2007
                (in thousands)Cash and
                  cash equivalents provided by (used in):Operating
                  activities
              
              $
              137,230
              
              
              4,049Investing
                  activities
              
              
              (345,336
              )
              
              (363,939
              )Financing
                  activities
              
              
              254,820
              
              
              529,919Change
                  in cash and cash equivalents
              
              $
              46,714
              
              
              170,029





Net
      cash
      provided by operating activities was positive for the nine months ended
      September 30, 2008 and for Period from May 31, 2007 (inception) to September
      30,
      2007. The increase is mainly on the operating earning which has increased from
      to $41.2 million during the nine months ended September 30, 2008 from $11.3
      million during the Period from May 31, 2007 (inception) to September 30, 2007.




Cash
      used
      in investing activities during the period represents, primarily, the net
      purchases (purchases less sales, maturities and calls) of investments. For
      the
      nine months ended September 30, 2008, the Company’s purchases and proceeds
      from maturities and calls on fixed maturity investments totaled
      $379 million and $88 million, respectively and the loan to related party
      increased by $54 million. For the Period from May 31, 2007 (inception) to
      September 30, 2007, the Company’s purchases and proceeds
      from maturities and calls on fixed maturity investments totaled
      $643 million and $55 million, respectively and the loan to related party
      increased by $14 million





Cash
      used
      in financing activities for the nine months ended September 30, 2008 consisted
      of net acquisition of $261.1 million of securities sold under agreements to
      repurchase and dividend payments of $6.0 million. In the period ended
      September 30, 2007, cash received for issuance of common share totaled $529.9
      million.


26


***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. As of September 30, 2008, there were $260.8 million
      principal amount outstanding at interest rates between 2.5% and 3.8%. Interest
      expense associated with these repurchase agreements was $2.0 million and $3.5
      million for the three and nine months ended September 30, 2008. Out of which
      $0.3 million was accrued as of September 30, 2008. The Company has approximately
      $260.8 million of collateral pledged in support of these
      agreements.





***Restrictions
      on Dividend Payments from Maiden Insurance***





Bermuda
      legislation imposes limitations on the dividends that Maiden Insurance may
      pay.
      As a regulated insurance company in Bermuda, Maiden Insurance is required under
      the Insurance Act to maintain a specified solvency margin and a minimum
      liquidity ratio and is prohibited from declaring or paying any dividends if
      doing so would cause Maiden Insurance to fail to meet its solvency margin and
      its minimum liquidity ratio. Under the Insurance Act, Maiden Insurance may
      not
      declare or pay dividends without the approval of the Bermuda Monetary Authority
      (“BMA”) if Maiden Insurance fails to meet its solvency margin and minimum
      liquidity ratio on the last day of the previous fiscal year. Under the Insurance
      Act, Maiden Insurance is prohibited, without the approval of the BMA, from
      reducing by 15% or more its total statutory capital as set forth on its
      financial statements for the previous year. In addition, under the Companies
      Act, Maiden Insurance may not declare or pay a dividend, or make a distribution
      from contributed surplus, if there are reasonable grounds for believing that
      it
      is, or would after the payment be, unable to pay its liabilities as they become
      due, or the realizable value of its assets would be less than the aggregate
      of
      its liabilities and its issued share capital and share premium accounts. As
      of
      September 30, 2008, we were in compliance with all solvency margin and minimum
      liquidity ratio requirements.





***Loan
      to AII and Other Collateral Arrangements***





Generally,
      under U.S. state insurance laws, a ceding company is not permitted to take
      credit for reinsurance in its statutory financial statements (meaning that
      it is
      not permitted to reduce its liabilities in such financial statements by the
      amount of losses ceded to a reinsurer) unless the reinsurer is accredited,
      licensed or otherwise approved by the insurance regulator in the ceding
      company’s state of domicile or provides collateral to secure its obligations to
      the ceding company under the reinsurance agreement. Acceptable collateral for
      these purposes can take a number of forms, including a ‘‘funds withheld’’
account (in which the ceding company retains control of the funds representing
      premiums transferred to the reinsurer and deducts ceded losses from such funds),
      letters of credit or a trust account established for the benefit of the ceding
      company (often called a ‘‘Regulation 114 trust’’). Maiden Insurance is not an
      accredited, licensed or otherwise approved reinsurer in any U.S. state and
      we
      expect that it may establish Regulation 114 trusts or may cause its bankers
      to
      issue letters of credit for the benefit of its ceding companies domiciled in
      the
      United States. A Regulation 114 trust must be funded with cash or high-quality
      instruments in an amount equal to at least 102% of the reinsurer’s obligations
      to the ceding company in order to receive credit on its statutory financial
      statements. Letters of credit issued by the Company’s bankers will also need to
      be collateralized with cash or high quality instruments in amount equal to
      at
      least 100% of the letters of credit issued.





Further,
      Maiden Insurance has agreed to collateralize its obligations under its
      reinsurance agreement with AII by one or more of the following methods, at
      the
      election of Maiden Insurance:





•
                by
                    lending assets to AII pursuant to a loan agreement between Maiden
                    Insurance and AII, with such assets being deposited by AII into
                    the
                    Regulation 114 trusts established or to be established by AII
                    for the sole
                    benefit of AmTrust’s U.S. insurance subsidiaries pursuant to the
                    reinsurance agreements between AII and those AmTrust
                    subsidiaries;


•
            by
                transferring to AII assets for deposit into those Regulation 114
                trusts;


•
            by
                delivering letters of credit to the applicable AmTrust U.S. insurance
                subsidiaries on behalf of AII; Or


•
                by
                    requesting that AII cause such AmTrust U.S. insurance subsidiaries
                    to
                    withhold premiums otherwise payable to Maiden Insurance through
                    AII.





In
      2007,
      Maiden Insurance elected to satisfy its collateral obligations under the Quota
      Share Agreement by lending funds (which may include cash or investments) on
      an
      unsecured basis to AII. As of September 30, 2008, cash and assets totaling
      $168.0 million, an increase of $54.4 million from December 31, 2007, were loaned
      to AII. As a result of the loan and the possible use of Regulation 114 trusts
      in
      the future, a substantial portion of our assets, including a disproportionate
      share of our higher-quality fixed-income investments, will not be available
      to
      us for other uses, which will reduce our financial flexibility. During the
      three
      and nine months ended September 30, 2008, the Company earned interest income
      on
      this loan of $1.5 million and $3.8 million respectively. The accrued interest
      on
      this loan was $1.5 million at September 30, 2008. As the loan was transacted
      after September 30, 2007, there was no interest income on the loan for the
      three
      months ended September 30, 2007 and for the period from May 31, 2007 (inception)
      to September 30, 2007




27





***Investment
      Portfolio***





Our
      investment portfolio, including cash and cash equivalents, increased $253.5
      million, or 48.2% to $779.7 million at September 30, 2008 from $526.2 million
      as
      of December 31, 2007. Our fixed maturities are classified as available for
      sale
      as of September 30, 2008, 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 $687.2 million and an amortized cost of
      $749.8 million. Sales of securities under repurchase agreements are
      accounted for as collateralized borrowing transactions and are recorded at
      their
      contracted amounts. Our investment portfolio is summarized in the table below
      by
      type of investment:




**September 30, 2008**
              
              **December 31, 2007****Carrying value**
                (in thousands)
              
              **Percentage**
                **of**
                **portfolio**
              
              **Carrying value**
                (in thousands)
              
              **Percentage**
                **of portfolio**Cash and cash equivalents
              
              
              82,443
              
              
              11
              %
              
              35,729
              
              
              7
              %U.S.
                  Agency - mortgage backed securities
              
              
              410,965
              
              
              53
              %
              
              205,023
              
              
              39
              %Corporate
                  fixed maturities
              
              
              276,221
              
              
              35
              %
              
              269,766
              
              
              51
              %Other
                  investments
              
              
              10,071
              
              
              1
              %
              
              15,656
              
              
              3
              %****Total
              
              
              779,700
              
              
              100
              %
              
              526,174
              
              
              100
              %





Over
      92.5% of our U.S. Agency - mortgage backed securities and corporate fixed
      maturities are A- rated or better. All of the U.S. Agency - mortgage backed
      securities we own are AAA rated.





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.





During
      the third quarter of 2008, there have been significant declines and high
      volatility in equity markets, a lack of liquidity in the credit markets and
      a
      widening of credit spreads on debt securities. These factors have had a
      significant adverse effect on the performance of the Company’s investment
      portfolio.




The
      Company has also recognized other than temporary impairment of $5.2 million
      on
      its investment in a hedge fund. On October 14, 2008, this fund decided to close
      and liquidate its investments and return cash to shareholders in stages over
      an
      18 month period. The fund was also a shareholder in the Company. We agreed
      to
      receive our shares from the fund, in lieu of the cash that the Company would
      have received upon the redemption of 90% its investment in the Fund. As a result
      of this transaction the Company received 962,336 shares at the valuation price
      of $3.95 per share. The Company will be holding these shares as Treasury
      Shares.





Some
      of
      the criteria we consider to evaluate other than temporary impairment
      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;




28





·
            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 discrete credit event resulting in (i) the issuer defaulting
                on material outstanding obligation (ii) the issuer seeking protection
                under bankruptcy law.





During
      the three months and nine months ended September 30, 2008, the Company
      recognized other than temporary impairment on Lehman Brothers Inc., Washington
      Mutual, Inc. fixed income securities and other investments of $17.4 million,
      $20.0 million and $5.2 million respectively. Other than those mentioned above,
      there were no other-than-temporary declines in the fair values of investments
      held in our investment portfolio.





In
      addition to non-cash write-downs of $2.0 million the Company took for impaired
      fixed income securities during the nine months ended September 30, 2008, at
      September 30, 2008 the Company had 32 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 32 corporate bonds in the industrial, bank
      & financial and other sectors, which have a fair value of approximately 13%,
      84% and 3%, respectively, and 13%, 85% and 2% of total 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. The Company believes these securities will recover and
      that we have the ability and intent to hold them until recovery.





**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 September 30, 2008, we had fixed maturity securities with
      a
      fair value of $687.2 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 September 30, 2008 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 September 30,
      2008.





**Hypothetical Change in Interest Rates**
            
            **Fair Value**
            
            **Estimated**
              **Change in**
              **Fair Value**
            
            **Hypothetical Percentage**
              **(Increase) Decrease in**
              **Shareholders’ Equity**200
                basis point increase
            
            $
            658,873
            
            $
            (28,313
            )
            
            (6
            )%100
                basis point increase
            
            
            672,884
            
            
            (14,302
            )
            
            (3
            )%No
                change
            
            
            687,186
            
            
            -
            
            
            0
            %100
                basis point decrease
            
            
            702,345
            
            
            15,159
            
            
            3
            %200
                basis point decrease
            
            $
            717,898
            
            $
            30,712
            
            
            6
            %





The
      interest rate sensitivity on the $167,975 loan to related party which carries
      an
      interest rate of one month LIBOR plus 90 basis points, 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.


29


***Credit
      Risk***


In
      providing reinsurance, we will 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.





***Risks
      Associated with Forward-Looking Statements Included in this Form
      10-Q***





This
      Form
      10-Q contains certain forward-looking statements within the meaning of Section
      27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
      Act
      of 1934, which are intended to be covered by the safe harbors created thereby.
      These statements include the plans and objectives of management for future
      operations, including plans and objectives relating to future growth of the
      Company’s business activities and availability of funds. The forward-looking
      statements included herein are based on current expectations that involve
      numerous risks and uncertainties. Assumptions relating to the foregoing involve
      judgments with respect to, among other things, future economic, competitive
      and
      market conditions, regulatory framework, weather-related events and future
      business decisions, all of which are difficult or impossible to predict
      accurately and many of which are beyond the control of the Company. Although
      the
      Company believes that the assumptions underlying the forward-looking statements
      are reasonable, any of the assumptions could be inaccurate and, therefore,
      there
      can be no assurance that the forward-looking statements included in this Form
      10-Q will prove to be accurate. In light of the significant uncertainties
      inherent in the forward-looking statements included herein, the inclusion of
      such information should not be regarded as a representation by the Company
      or
      any other person that the objectives and plans of the Company will be
      achieved.




**Item
      4.****Controls
      and Procedures**





The
      principal executive officer and principal financial officer of the Company
      have
      evaluated the Company’s disclosure controls and procedures and have concluded
      that, as of the end of the period covered by this report, such disclosure
      controls and procedures were effective in ensuring that information required
      to
      be disclosed by the Company in the reports that it files or submits under the
      Securities Exchange Act of 1934 is timely recorded, processed, summarized and
      reported. The principal executive officer and principal financial officer also
      concluded that such disclosure controls and procedures were effective in
      ensuring that information required to be disclosed by the Company in the reports
      that it files or submits under such Act is accumulated and communicated to
      the
      Company’s management, including its principal executive officer and principal
      financial officer, as appropriate, to allow timely decisions regarding required
      disclosure. During the most recent fiscal quarter, there have been no changes
      in
      the Company’s internal controls over financial reporting that have materially
      affected, or are reasonably likely to materially affect, the Company’s internal
      control over financial reporting.


30







PART
        II -
        OTHER INFORMATION
 
 Item
        2 **Unregistered
        Sales of Equity Securities and Use of Proceeds**
  We
        did
        not purchase any of our equity securities during the three months ended
        September 30, 2008.
 
 **Item
        4.**  **** **Submission
        of matters to a vote of security holders**
  There
        were no matter submitted for vote of security holders
  31
 
 **Item
        6.**  **Exhibits**
  **Exhibit**
                **Number**
              
              **Description**31.1
              
              Certification
                  of the Chief Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a),
                  for the quarter ended September 30, 2008.31.2
              
              Certification
                  of the Chief Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a),
                  for the quarter ended September 30, 2008.32.1
              
              Certification
                  of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350,
                  for
                  the quarter ended September 30, 2008.32.2
              
              Certification
                  of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350,
                  for
                  the quarter ended September 30,
                  2008.
  32
 
 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:November
                  13, 2008
              /s/ 
                  Art RaschbaumArt
                  Raschbaum
                Chief
                  Executive Officer/s/ 
                  Michael J. TaitMichael
                  J. Tait
                Chief
                  Financial Officer