Good morning, and thank you for joining us today for Maiden's Third Quarter 2012 Earnings Conference Call. Presenting on the call today, we have Art Raschbaum, Maiden's Chief Executive Officer; along with John Marshaleck, our Chief Financial Officer.

Also in attendance today is Pat Haveron, Executive Vice President.

Before we begin, I would like to note that the information presented here today contains projections or other forward-looking statements regarding future events or the future financial performance of the company. These statements are based on current expectations and future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from these expectations.

We refer you to the documents the company files from time to time with the Securities and Exchange Commission, specifically the company's annual report on Form 10-K and our quarterly reports on Form 10-Q.

Some of our discussions about the company's performance today will include reference to both non-GAAP financial measures and information that reconciles those measures to GAAP, as well as certain operating metrics and may be found in our filings with the SEC and in our news release located on Maiden Investor Relations website.

I will now call the -- I will now turn the call over to Art.

Thank you, Noah. Good morning, and thanks for joining us for our third quarter 2012 earnings call.

I'm pleased to report that Maiden's performance during the third quarter continues to demonstrate the ongoing success of our unique strategy, with a quarter-to-quarter increase in book value per share of over 6%; an improvement in the run rate of our investment income; continued profitable underwriting results; a 6% increase in net premiums written compared to the third quarter of 2011; and strong operating earnings per share of $0.27.

Year-to-date book value per share has increased 14% to $12.14 due to a combination of earnings, investing in capital management activities and the increased market value of our investment portfolio. Importantly, as John will discuss in a moment, total equity is now over $1 billion, up 34% from year-end 2011.

Maiden's business model is predicated, as you may know, on a highly differentiated strategy of writing a lower layer, traditionally less volatile, non-catastrophe reinsurance programs coupled with a high degree of operating efficiency, while serving the needs of small to midsized regional and specialty insurers in the U.S. and internationally.

The business philosophy has allowed Maiden to produce more stable operating results and reinsures with more volatility-oriented portfolios, while at the same building a dynamic profitable growing business. Across Maiden, we continue to enjoy continued organic growth, reflecting both new client relationships, as well as growth from our existing clients.

Many of our clients today are experiencing favorable pricing trends, which we believe could ultimately benefit our reinsurance experience.

Net premiums written for the first 9 months of 2012 were $1.5 billion, and that's an increase of 11% over the third quarter of 2011. The Diversified Reinsurance segment, which includes our U.S.

subsidiary Maiden Re, and our international business development activity, Maiden International Insurance Services, as well as our Bermuda underwriting activities, excluding the AmTrust and ACAC Quota Shares, has written 2.8% more of bulk premium volume in the third quarter 2012, as compared to the same quarter in 2011.

We've seen growth from existing clients moderate a bit this year, with new account activity making up most of the increase. Additionally, in select instances, we've lowered our participation and, in some cases, non-renewed a couple of highly competitive larger accounts as we continue our focus to strengthen underwriting performance.

However, the client retention rate for U.S. treaty business remained at 90% for the third quarter.

Net premiums written for the -- our AmTrust Quota Share Reinsurance segment are up 7.4% in the third quarter and 17.7% year-to-date. The most significant contributors to the premium increases are from worker's compensation, warranty and special risk, including the European Hospital Liability business.

These segments are benefiting from favorable pricing trends as well as strong business development.

Our strategic quota share with ACAC, which is the former GMAC Insurance, personal auto insurance company, has seen net premiums written increase 13.9% and 16.4% in the third quarter and on a year-to-date basis, respectively, compared to the same periods in 2011. ACAC continues its growth by targeting preferred auto clients and carefully expanding its geographic footprint.

Our consolidated combined ratio was 98.2% compared to 97.4% in the third quarter of 2011. And we recognize that this remains above our target of 96% and we continue to adjust the portfolio in an effort to achieve our target.

While we do believe that rate improvements for our clients will ultimately translate to improved underwriting ratios for Maiden, it is a bit too early for us to realize the benefit of those improvements.

Our Diversified Reinsurance segment experienced some areas of elevated loss experience, which resulted in a combined ratio 98%. We're taking actions to mitigate some of the inconsistency in result.

As an example, while we continue to see higher-than-expected loss costs in our German auto reinsurance portfolio, which is produced by the Maiden International Insurance Services, our loss ratios have at least stabilized, and that reflects the actions that have already been taken. And we continue today to work with our partners to adjust contracts and improve our results.

We expect to begin to see the benefit of these changes work their way into the portfolio in the coming quarters.

The combined ratio for the AmTrust Quota Share Reinsurance segment was 97% for the third quarter of 2012, and that's an improvement from the 97.8% combined ratio recorded in the third quarter of 2011. The net reduction was driven by an overall reduction in seeding commission, and that reflects the changing mix between the lower commission -- the lower seeding commission European Hospital Liability program and the balance of the interest portfolio.

The ACAC Quota Share segment produced a 96% combined ratio in the third quarter of 2012, which was consistent with the same period in 2011.

Across our business segments, we're all -- we believe that we're very well positioned to continue to properly expand our business and we're very focused on enhancing underwriting performance. In the quarter, we made significant strides as well in strengthening investment earnings, increasing invested assets, strengthening our balance sheet and increasing our financial flexibility.

I'd like to turn the discussion over to John Marshaleck, our Chief Financial Officer, to review these accomplishments and also provide a bit more financial detail on the quarter. John?

Thanks, Art, and good morning. I'd like to spend the next few minutes reviewing some important aspects of our third quarter results.

Net operating earnings for the third quarter were $19.5 million or $0.27 per diluted common share compared with $21.4 million or $0.29 per diluted common share in the third quarter of 2011. Underwriting income decreased by approximately $3.1 million and interest expense increased by approximately $1.4 million, partially offset by an increase in investment income of $2.8 million compared to the third quarter of 2011.

Net investment income continued to trend higher during the third quarter with an increase of 14.9% to $21.6 million compared to the third quarter of 2011, and up to -- up 4.1% for the year-to-date period compared to the same period in 2011. The average yield on the fixed income portfolio, excluding cash, is 3.42%, with an average duration of 3.32 years.

New money yield during the quarter was 3.06%, which was made up of corporate bonds and U.S. agency mortgage-backed securities with an average duration of 4.91 years.

Corporate bonds now make up 48% of our invested assets, while U.S. agency mortgage-backed securities represent 41% of the portfolio.

A combination of capital raises, strong operating cash flows and earnings has led to strong invested asset growth and has helped to increase the net investment income, which has helped offset the decline in new investment yields.

We've continued to generate strong cash flows during the third quarter of 2012, with operating cash flow of 102 -- of approximately $102 million. This helped contribute to operating cash flow for the first 9 months of 2012 of $268 million.

General and administrative expenses for the quarter totaled $13.6 million compared with $12.5 million in the third quarter of 2011. The general and administrative expense ratio continues to decline to 2.9% versus 3% in the third quarter of 2011.

Efficiency is a very important aspect of Maiden's business model, with lower expense relatively -- with lower expense relativities improve our margins and translate to more competitive pricing in the long run.

During the third quarter, we were able to take advantage of a strong market for preferred shares at the end of August, with an opportunistic issuance of $150 million of 8.25% noncumulative preferred shares. Over the last 18 months, we have significantly strengthened our capital position, providing us with a substantial level of flexibility to respond to continued opportunities to build our reinsurance portfolio and potentially replace the 14% coupon trust preferred securities.

In conjunction with the completion of the preferred deal, our board authorized management to buy back shares at its discretion. We believe that a buyback authorization is an important tool that we now have to further strengthen shareholder value and plan to use it as warranted.

Additionally, as a sign of continued confidence we have in our business, yesterday, we announced the 12.5% increase in our quarterly dividend. I'm very pleased with the work we have completed to strengthen Maiden's balance sheet this year.

We have been able to access an excellent market for debt and preferred shares. We continue to maintain a high efficient capital structure, which is managed to optimize value for our shareholders.

Our total assets increased 16.3% to $3.9 billion compared to $3.4 billion at the end of 2011. Total cash on hand at September 30 was $182 million and shareholders' equity was $1 billion, an increase of 33.7% compared to December 31, 2011.

I now turn it, the call, over to Art for some additional comments.

Thank you, John. Before concluding our remarks, I'd like to spend a few minutes discussing current market conditions and also the potential impact from Hurricane Sandy.

As we've seen for most of this year, primary insurers in the U.S. continued to successfully increase rates in most lines of business, with casualty lines trending higher than property lines and specific areas, such as worker's compensation and personal lines experiencing the most lift.

While rate increases are not uniform and they vary depending upon line of business, geography, type of insurance, on balance, the trend is favorable. This was further confirmed in meetings of -- that we had with clients and prospects at last week's Annual PCI and Property Casualty Insurer Convention.

As we've commented in the past, a favorable insured pricing trend is ultimately beneficial to Maiden since our ultimate premium can be significantly influenced by our client's pricing activities. While we do develop our rates based on our objective assessment of changing client rate levels and exposure, in an increasing rate environment, continued levels of rate strengthening can favorably impact underwriting performance for us.

In addition to the favorable pricing trend, we are seeing some increased interest in additional reinsurance support for both existing customers and prospects.

In Europe, German nonlife insurers are implementing rate increases, particularly in the motor segment. The trend is expected to maintain momentum through 2013, following a number of very challenging areas where rates have been relatively competitive.

This is an area of focus for our International Insurance Services team and we expect to benefit from these rate increases.

Alternatively, following strong rate increases, the United Kingdom auto insurance markets began to develop signs of increasing competition, although rates remain up year-on-year. The delayed implementation of Solvency II could delay some European rate firming opportunities as well, as insurers who were expected to be more capital constrained under the new regulations may not experience immediate pressure.

Overall, and on balance, however, we believe the primary pricing trends remain favorable. We'll continue to maintain a disciplined approach to underwriting, while leveraging our significant competitive advantages to continue to build our profitable underwriting portfolio.

Finally, our thoughts are with those who were impacted by Hurricane Sandy. With our U.S.

business headquartered in New Jersey, many of our employees experienced firsthand the destructive force of the storm. For Maiden, Hurricane Sandy will undoubtedly impact our fourth quarter underwriting results, but it's far too early to provide a credible estimate.

As we have commented in the past, while Maiden focus on providing non-catastrophe support to our clients and managing our per-client exposure by utilizing contract terms to reduce our vulnerability to a single event. In an event as geographically diverse and as significant as we believe Sandy is, we believe that a number of our clients will likely be impacted.

Importantly, however, Maiden's ultimate loss from this event should be significantly lower than losses likely to be experienced by more severity-oriented insurers and reinsurers. We're in the process, today, of contacting every client in the exposed area to offer our full support and to better understand the impact of Sandy on their business and potentially ours.

As we have in the past, when we feel that we've developed a credible number, we'll publicly report that amount. But we do believe that the impact of Sandy and this week's Nor'easter could stimulate both increased demand for capital support and further rate strengthening, and we believe that Maiden is well-positioned to benefit from these impacts.

At Maiden, we're consistently working towards increasing shareholder value. Increasingly, we have a number of tools at our disposal to continue to strengthen shareholder returns.

For instance, we believe that positive pricing trends and a continued focus on careful risk selection will lead to better underwriting results.

On the investment side, adding investable assets has helped to offset falling yields and we'll continue to search for ways to improve returns within our risk tolerances. Capital management will also remain an important way to improve Maiden's return profile and we look forward to the beginning of 2014 when we can repurchase the 14% coupon trust preferred securities to further enhance earnings.

In summary, we're very pleased with our continued progress and we remain highly confident that Maiden is well positioned with its highly differentiated reinsurance strategy and operating platform to deliver superior risk-adjusted returns over time. This concludes our prepared remarks.

Operator, could you please open the lines for Q&A?

I wanted to ask about just the loss ratios were higher and you covered some of this in your commentary, but I want to dig down into this a little bit more. The loss ratios, particularly in the Diversified Reinsurance segment, have remained elevated; yet, you were able to deliver a combined ratio that was actually better than our expectation there, in particular, on managing both the acquisition costs and G&A expense ratios.

And so I just kind of want to understand better how that mechanism works. How you're able to kind of push expense down when loss is up?

And how we should think about that relationship going forward? Should we plan on kind of more like a high rather than mid-60s loss ratio in Diversified Reinsurance going forward?

Randy, this is John. Really, the -- when we price business, we price to a combined ratio.

So, when we look at it, at a select piece of business, if we see the loss or the expected losses are at a certain rate and we try to build our reinsurance contract with the appropriate expenses to give us a certain combined ratio. So what you're seeing, from last year to this year, is a change in a mix of the business and certainly, that has effect -- goes back to our pricing.

But if you compare the quarterly loss ratio in the third quarter to the second, it's pretty much in line. So you will see this from time to time.

Our portfolio does change. Quota share contracts, obviously, have a completely different structure than an excess or loss contract, and then would have, obviously, different components.

But again, we're focusing in on a certain return on that business.

John, I would add to that, that as we see opportunities, potentially for lower layer access, there're different expense relativities associated with access. And so that'll also reflect in a higher loss ratio, lower expense ratio.

So mix plays a huge part in it. I'm sorry, I interrupted.

No, no. Sorry -- so I guess the way I'm thinking of it is, for instance, in Diversified Reinsurance, there was elevated losses with a -- like a German auto program.

And so, to me, that was something that wasn't priced for at the inception of the contract; yet…

That's correct.

It almost seems like the expense ratio's keeping up with stuff like that real time. Or is this just the business mix coming through and that German item and the other items just weren't as bad this quarter?

The German item has stabilized. I mean our -- we did not have elevated levels, more stable from the last quarter, but the German contract is a flat-rated contract.

There are no kind of experience-adjustment provisions for the German auto. So an increase in the loss ratio doesn't result in a lowering of the expense ratio on that component.

So that has driven up our overall diversified loss ratio over the last few quarters. As I mentioned in my prepared remarks, that we do see a fair amount of effort underway both with us and our client.

And we do expect to see that elevated level come down. But on balance, I think, quarter-to-quarter, we're about the same in terms of the German auto business.

Okay. And just quickly on buyback versus dividends.

I guess you're going to do buyback as warranted?

Yes.

Has there been a limitation up until now? Is that why you weren't able to do any in the quarter?

Well, we are -- we certainly were limited during our traditional blackout period, and so we could not buy during that period, but we're going to be kind of judicious and careful about it. We still believe, Randy, that one of the most significant things we can do if we have excess capital, is take out the trust preferred securities in January of 2014.

That's a 14% coupon instrument that if we eliminate will have a more permanent long-term beneficial effect. That said, when we see opportunities on the margin to significantly sort of take advantage of an aberration of the market with a lower share price, we'll take advantage of it.

So we were sort of blocked out the last couple of weeks, but obviously, if opportunities present themselves going forward, we'll take advantage of them when we can.

And should we think of the budgets for that as 1/2 of the preferred rates more or less?

No, I don't -- I wouldn't say it'd be that large. I'd -- and I -- we really don't have a formal budget per se for it.

What we really do is go through a process of saying if we have $1 of capital today -- of excess capital, we're better off to hold it until January 2014 where we can get a permanent benefit or we better off to deploy it today to buy back shares at a reduced price, and that's really kind of the calculus we go through. We are constrained to the extent that the authority from our Board, which is the 1/2 that you referred to, but at this point, I wouldn't expect any large commitment of buyback in the short run.

I wanted to -- you mentioned change of mix of business on Diversified Reinsurance business and I was just curious. Would that be affecting the timing of the earned premium as well?

Just in our calculation, it was off a little bit more than we expected and I was just wondering if that's more just a timing issue and effectively affected by the mix of business that you're writing?

Ken, this is John. Not normally, as normally, we would expect a relatively even earning pattern on both types of contracts; that would be a quota share and an excess of loss.

You do get, from time to time, for example, in an excess of loss contract, you can have more premium recorded upfront as written and then it's earned off over the period and then you do get adjustments to that at the end of the contract from time to time. So that could have some impact.

But generally, we try to anticipate what the expected earned premium is and record it in a proper accounting quarter, but you do get adjustments from time to time. But I would say it's not -- that's not a normal occurrence where there're differences.

Okay. And then -- and this is maybe digging a little too deep into the AmTrust segment itself.

But the loss ratio you -- is down about 1.1 points year-over-year or at least quarter-over-quarter from third quarter 2011 to now. But the -- at AmTrust, on a net basis, theirs was probably net higher in general.

Could you talk about maybe what you -- how you guys are setting that versus what -- maybe what AmTrust is? And maybe if it has a lot to do with what you're assuming, their mix for the quarter was about even for the premiums that they wrote, but for what you guys assume, is there -- what is the mix of how you assume that business?

Yes, Ken. There -- it is a business mix issue there.

As we don't -- as you know, as we -- it's not a 40% quota share of all their business. So the business mix does have an impact on the loss ratio.

Certainly, our -- the business we accept in under the quota share contract is different, so you do get differences in loss ratios from quarter-to-quarter. We have the Hospital Liability program.

Obviously, that has a different loss ratio than other components, so that has an impact on that. So it is really a business mix issue and it's really -- it's difficult now to compare exactly AmTrust loss ratio with ours because of the business that is not seeded.

Yes, I think that's absolutely accurate. We -- it's very hard to kind of do an apples-to-apples look.

They have things going on in underwriting years that preceded our participation in the business. There are some elements of their portfolio that we don't reinsure today that have different characteristics.

So compared to between the 2 is always difficult. But fundamentally, we're comfortable with the kind of position that we have on the account and we look at it carefully to make certain that we're comfortable with our total reserve position.

Very good. On the -- what you do reinsure from them, so they're like -- I guess the 2 segments would be the small commercial business and their specialty risk and extended warranty segment, at least those, they define them.

What percentage of the business are you assuming? And I mean, I know you're only getting the percentage of what you agree on, but of the 100% of their small commercial business that they define it, how much of that are you -- is excluded from your...

I'm not sure how they define it to be honest, but we do have a 40% quota share of their kind of traditional commercial lines business. So I'm not -- in fairness, I'm not exactly sure how all of the elements that they consider a part of their reported commercial business.

Okay. But then -- but even in that case, you're not taking all of that business.

There might be some exclusions in there still?

There could be. There could be elements that we don't take, that's right.

But, in general, if it's categorized in that sort of small commercial segment, we take 40% of it. Unless it's lines of business that were not part of the original arrangement, and then we look at those on a kind of an item-to-item basis and evaluate whether that's something we're going to add to the portfolio or provide support on or not.

All right. Last question I have just on the ACAC business.

From an exposure standpoint, where do they predominantly write? I mean is there -- I mean, I knew they had an initiative from growth recently.

From a concentration standpoint, where are they focused on and what kind of exposure? Is that where you think a good chunk of the exposure for Sandy could come through?

Could that be 1/3 of the exposure or...

Their largest state is North Carolina, and that's a big part of their agency book. New York is a fairly significant state.

Michigan is a big state for them as well. But typically, in auto, while we do see some effect in storms, on a relative basis, auto is not usually a big driver of sort of big catastrophe values.

In fact, part of that is that you can move vehicles, right. And generally when -- in an oncoming storm, that's certainly how you get from point A to point B.

We would probably see some level of elevation there I would think in terms of the quota and the loss ratio, but it's too early to tell.

Okay. And I was just thinking of this storm.

It didn't seem like it was maybe as many people drove those cars out, so I was curious. You're not seeing any change in trends, though, in normal expectations?

No, not really. I mean, when you say change in trends, absent anything that happens from Sandy, no, I wouldn't say we're seeing any significant trends there.

I just had a question on some of the new AmTrust initiatives, say, the car care plans acquisition just announced, which I think you're familiar with it from your prior days and it's a Case New Holland. Do those automatically fall under the existing arrangement that you have with them, or do you kind of -- is it more like the medical -- the Hospital Liability in Italy where you kind of get a thumbs-up, thumbs-down on it?

And, if that's the case, do you have any thoughts?

No. Assuming that they're in lines of business that we currently underwrite through the program, they'll be automatic.

So we expect car care plan will be automatic and Case New Holland, most likely, will follow the same characteristics of the warranty business they've been writing for Case New Holland, so I would expect that would flow. And in both of those cases, those are really kind of -- a big part of their business is fee incomes.

So, obviously, that doesn't flow to us. But in terms of car care, their extended warranty business would ultimately flow into the AmTrust international segment and we would expect flow to us as well under the quota share.

Well, thanks, everyone, for joining us today and we look forward to speaking with you in the future. Have a great day.