What happened

Bermuda-based reinsurance company Maiden Holdings Ltd. (NASDAQ:MHLD) reported its third-quarter earnings on Friday afternoon, and to say that investors were unhappy would be an understatement. As of 11:15 a.m. EST on Monday, the stock had plunged by more than 25%.

So what

There was little to like in Maiden's third-quarter earnings report. The headline earnings number wasn't even close to what the market was looking for -- while analysts had expected a $0.18 profit, the company posted a massive $2.83-per-share loss, a staggering amount considering it's more than Maiden's current stock price.

Maiden Holdings lost money at an alarming rate during the third quarter.

Image source: Getty Images.

Furthermore, the company's combined ratio of 150.7% shows that Maiden isn't even close to an underwriting profit. This means that the company is paying about $1.50 out in claims for every $1 it takes in as premium income.

As a result of the massive loss, as well as writedowns from business divestitures, book value has plunged by more than 50% over the past quarter alone, from $7.71 to $3.71 per share currently.

Maiden is currently in a transitional period and has chosen to divest some of its operations, and just recently signed an agreement to transfer a portfolio of losses off of its books. The goal is to strengthen the company's financial position and create long-term sustainability, but there's still a long way to go.

Now what

The one possible silver lining is that Maiden Holdings' net premiums increased by 11.6% year over year in the third quarter. However, until the reinsurer manages to get its losses under control, I wouldn't expect the stock to turn around anytime soon.

Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.