Shares of Maiden Holdings plunged by more than 20 per cent in after-hours trading after the reinsurer reported a net loss of $63.6 million for the third quarter, driven primarily by a bolstering of loss reserves.

The Bermudian firm’s net operating loss of 66 cents per share fell short of analysts’ expectations of earnings per share of 9 cents, sparking a sell-off after the results were announced.

Maiden’s shares, which had closed regular trading at $8.40, tumbled 16.7 per cent to $7 after hours, having at one point fallen as much as 20.8 per cent.

The reinsurer with offices on Front Street, Hamilton, estimated net catastrophe losses of $20 million in the third quarter, but it was the net adverse development on loss reserves of $77.7 million, which had the biggest impact on results.

Maiden recorded $61.1 million of net adverse development in the AmTrust reinsurance segment, predominantly in its general liability line of business.

In addition, the diversified reinsurance division had to bolster reserves by $7.9 million, related to prior-year losses, while the discontinued excess and surplus lines property business saw $8.7 million of adverse development, mainly emanating from increases in Superstorm Sandy loss reserves. That storm occurred five years ago.

Art Raschbaum, Maiden’s chief executive officer, said: “Importantly, we believe that the actions we have taken to address historical loss reserve development while improving underlying business trends will benefit Maiden and our shareholders in the future.”

He added the results, despite the losses, showed some favourable trends.

“In the quarter we realised improved non-catastrophe operating performance in the US portion of our diversified reinsurance segment,” he said. “Across all of the diversified reinsurance segment we enjoyed strong premium growth. Investment earnings and invested assets continue to grow and operating cash flow was strong.”

During the quarter, Maiden repurchased just over two million common shares at an average price of $7.11 per share. Book value per share was $11.30 at the end of September, down 6.8 per cent over the first nine months of the year.