PEMBROKE, Bermuda & DALLAS - Maiden Holdings , Ltd. (NASDAQ:MHLD) and Kestrel Group LLC have entered into an agreement to merge and form a new specialty insurance entity, with the transaction expected to close in the first half of 2025. The deal, subject to shareholder approval and regulatory conditions, will see Maiden shareholders receive shares in a new Bermuda-based company that will acquire both Maiden and Kestrel.
The combined entity will be rebranded as Kestrel Group and plans to list its shares on the Nasdaq. The transaction values Kestrel at up to $167.5 million, involving upfront cash, common shares, and an earnout. InvestingPro data reveals Maiden's current financial health score is rated as WEAK, with a concerning gross profit margin of -6.2%. Subscribers can access 8 additional key financial metrics and insights about this merger on InvestingPro. The leadership team will combine executives from both companies, including Luke Ledbetter as CEO, Terry Ledbetter as Executive Chairman, and Pat Haveron as President and CFO.
This strategic move aims to leverage a fee-revenue model and optimize returns for shareholders by focusing on specialty program and reinsurance underwriting. Post-transaction, Kestrel will continue its business through A.M. Best A- FSC XV insurance carriers, with an option to acquire these insurers from AmTrust Financial Services, Inc.
The agreement has been approved by Maiden's board, with some directors recusing themselves due to conflicts of interest, and unanimously by Kestrel's Board of Managers. The combined company's board will comprise seven directors, with a mix of representatives from both companies.
Maiden has paused its share repurchase program in light of the transaction, which also follows an ongoing reserve review that may result in charges of up to $150 million in the fourth quarter of 2024. Despite current challenges, the company maintains strong liquidity with a current ratio of 6.89, indicating sufficient assets to cover short-term obligations. For deeper insights into Maiden's financial stability and merger prospects, InvestingPro offers comprehensive analysis and valuation metrics. The review includes examining liabilities not covered by the Enstar LPT/ADC agreement and related transactions.
This merger represents a significant shift for Maiden, as outlined by CEO and CFO Pat Haveron, who highlighted the transformative nature of the deal and the growth potential in the specialty insurance market. Luke Ledbetter of Kestrel echoed these sentiments, emphasizing the acceleration of their growth plan and favorable market conditions.
The information in this article is based on a press release statement from Maiden Holdings, Ltd.
In other recent news, Maiden Holdings, a Bermuda-based holding company, announced the sale of its Swedish subsidiaries, Maiden General Försäkrings and Maiden Life Försäkrings, to a London-based consortium of insurance and reinsurance companies. The terms of the deal were not disclosed, but the sale is subject to regulatory approvals. According to Maiden's CEO, Patrick J. Haveron, this move aligns with the company's strategic shift towards less capital-intensive, fee-oriented endeavors and is expected to reduce operating expenses by nearly 20%.
The deal ensures that all existing staff and independent directors of the subsidiaries will continue their roles under the new ownership. Despite recent challenges, Maiden Holdings has demonstrated a 20.8% revenue growth in the last twelve months. The sale was advised by Hines Associates, a financial services corporate finance firm with experience in the European insurance market.
These recent developments are part of Maiden's broader strategy to manage and allocate assets and capital within the insurance and related financial services industries. The completion of the sale will see Maiden Holdings continue to focus on its core business strategy, leveraging its expertise in the insurance market to create shareholder value.
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