Mount Logan Capital Inc. Announces Second Quarter 2025 Financial Results

Article content

Declared quarterly distribution of C$0.02 per common share in the third quarter of 2025, the twenty-fourth consecutive quarter of a shareholder distribution

Article content

Asset management segment generated $8.4 million in Fee Related Earnings (“FRE”) for the trailing twelve months ended June 30, 2025, a 28% increase over the prior year period

Article content

Article content

Generated $4.6 million of Spread Related Earnings (“SRE”) for the trailing twelve months ended June 30, 2025, which reflects 0.7% of spread earnings on Ability’s assets

Article content

Article content

Mount Logan and 180 Degree Capital (Nasdaq: TURN) filed definitive proxy materials for the proposed Business Combination

Article content

Article content

Mount Logan expects to hold a special meeting of its shareholders on August 22^nd at 10:00 A.M. (Eastern Time) to consider several resolutions related to the Business Combination

Article content

All amounts are stated in United States dollars, unless otherwise indicated

Article content

TORONTO, Aug. 07, 2025 (GLOBE NEWSWIRE) — Mount Logan Capital Inc. (Cboe Canada: MLC) (“Mount Logan” or the “Company”) announced today its financial results for the quarter ended June 30, 2025.

Article content

Second Quarter 2025 Highlights

Article content

Article content

Article content

Subsequent Events

Article content

Article content

________________________________

Article content

¹The yield is calculated based on the net investment income less management fees paid to Mount Logan divided by the average of investments in financial assets for the current year and prior year.

Article content

Management Commentary

Article content

Article content

Article content

Selected Financial Highlights

Article content

Article content

Article content

Results of Operations by Segment

Article content

Article content

(1) Insurance Revenue line item is presented net of insurance service expenses and net expenses from reinsurance contracts held.

Article content

(2) Transaction costs are related to business acquisitions and strategic initiatives transacted by the Company.

Article content

(3) Acquisition integration costs are consulting and administration services fees related to integrating a business into the Company. Acquisition integration costs are recorded in general, administrative and other expenses.

Article content

(4) Non-cash items include amortization and impairment of acquisition-related intangible assets and impairment of goodwill, if any.

Article content

Asset Management

Article content

Total Revenue – Asset Management

Article content

($ in Thousands)

Article content

Article content

Article content

Fee Related Earnings (“FRE”)

Article content

FRE is a non-IFRS financial measure used to assess the asset management segment’s generation of profits from revenues that are measured and received on a recurring basis and are not dependent on future realization events. The Company calculates FRE, and reconciles FRE to net income from its asset management activities, as follows:

Article content

($ in Thousands)

Article content

Article content

Article content

(1) Includes add-back of management fees paid to ML Management.

Article content

(2) Represents net income for asset management, as presented in the interim Consolidated Statement of Comprehensive Income (Loss).

Article content

(3) Includes unrealized gains or losses on the debt warrants.

Article content

The following table presents FRE, the performance measure of our asset management segment for the trailing twelve month period ended June 30, 2025 and June 30, 2024 respectively:

Article content

($ in Thousands)

Article content

Article content

(1) Includes add-back of management fees paid to ML Management.

Article content

(2) Represents net income for asset management, as presented across the interim Consolidated Statements of Comprehensive Income (Loss).

Article content

(3) Includes unrealized gains or losses on the debt warrants.

Article content

Insurance

Article content

Total Revenue – Insurance

Article content

($ in Thousands)

Article content

Article content

Spread Related Earnings (“SRE”)

Article content

The Company uses SRE to assess the performance of the insurance segment, excluding the impact of certain market volatility and other one-time, non-core components of insurance segment income (loss). Excluded items under SRE are investment gains (losses), effects of discount rates and other financial variables on the value of insurance obligations (which is a component of “net insurance finance income/(expense)”), other income and certain general, administrative & other expenses. The Company believes this measure is useful to securityholders as it provides additional insight into the underlying economics of the insurance segment, as further discussed below.

Article content

Article content

For the insurance segment, SRE equals the sum of (i) the net investment income on the insurance segment’s net invested assets (excluding investment income earned on funds held under reinsurance contracts) less (ii) cost of funds (as described below) and (iii) certain operating expenses.

Article content

Cost of funds includes the impact of interest accretion on insurance and investment contract liabilities and amortization of losses recognized for new insurance contracts that are deemed onerous at initial recognition. It also includes experience adjustments, which represent the difference between actual and expected cashflows and includes the impact of certain changes to non-financial assumptions.

Article content

The Company reconciles SRE to net income (loss) before tax from its insurance segment activities, as follows:

Article content

Article content

Article content

(1) Includes add-back of management fees paid by Ability to ML Management.

Article content

(2) Represents net income before tax for the insurance segment, as presented in the annual Consolidated Statement of Comprehensive Income (Loss).

Article content

(3) Excludes net (gains) losses from investment activities on assets retained by the Company under funds withheld arrangement with Front Street Re and Vista.

Article content

(4) Represents non-operating income.

Article content

(5) Includes the impact of changes in interest rates and other financials assumptions and excludes interest accretion on insurance contract liabilities and reinsurance contract assets.

Article content

(6) Represents the unamortized portion of future interest accretion and ceded commissions paid at the time of issue of new MYGA insurance contracts. Future interest accretion and ceded commissions are amortized over the average duration of MYGA contracts reinsured which aligns with the recognition of insurance service revenue. Loss on onerous contracts are part of Insurance service expense.

Article content

(7) Represents certain costs incurred by the insurance segment for purposes of IFRS reporting but not the day-to-day operations of the insurance company.

Article content

The following table presents SRE, the performance measure of the insurance segment:

Article content

($ in Thousands)

Article content

Article content

(1) Excludes net investment income from investment activities on assets retained by the Company under funds withheld arrangement with Front Street Re and Vista Life and Casualty Reinsurance Company (“Vista”).

Article content

Spread related earnings (“SRE”) was $4.6 million for the trailing twelve months ended June 30, 2025 compared with $11.6 million for the trailing twelve months ended June 30, 2024, a decrease of $7.0 million. SRE decreased year over year due to higher cost of funds, partially offset by lower other operating expenses. Cost of funds increased primarily due to an unfavorable impact of in-force update of $1.8 million related to the LTC business (Guardian block) whereas the trailing twelve months ended June 2024 had a favorable in-force impact of $4.8 million from the LTC business (Medico block). Additionally, higher interest accretion on LTC liabilities further contributed to the increase in cost of funds. Other operating expenses decreased driven by ongoing efforts to streamline operations and reduce overall expenses.

Article content

Article content

SRE as a percentage of average net invested assets was 0.7% for the trailing twelve months ended June 30, 2025 compared with 2.1% for the trailing twelve months ended June 30, 2024.

Article content

Liquidity and Capital Resources

Article content

As of June 30, 2025, the asset management segment had $77.8 million (par value) of borrowings outstanding, of which $33.8 million had a fixed rate and $44.0 million had a floating rate. As of June 30, 2025, the insurance segment had $17.3 million (par value) of borrowings outstanding, of which $14.3 million had a fixed rate and $3.0 million had a floating rate. Liquid assets, including high-quality assets that are marketable, can be pledged as security for borrowings, and can be converted to cash in a time frame that meets liquidity and funding requirements. As of June 30, 2025 and December 31, 2024, the total liquid assets of the Company were as follows:

Article content

($ in Thousands)

Article content

Article content

Article content

The Company defines working capital as the sum of cash, restricted cash, investments that mature within one year of the reporting date, management fees receivable, receivables for investments sold, accrued interest and dividend receivables, and premium receivables, less the sum of debt obligations, payables for investments purchased, amounts due to affiliates, reinsurance liabilities, and other liabilities that are payable within one year of the reporting date.

Article content

As at June 30, 2025, the Company had working capital of $238.2 million, reflecting current assets of $260.5 million, offset by current liabilities of $22.3 million, as compared with working capital of $231.2 million as at December 31, 2024, reflecting current assets of $245.3 million, offset by current liabilities of $14.1 million. The increase in working capital was primarily attributable to the increase in cash within the insurance business, partially offset by the decrease in cash within the asset management business, the decrease in investments and receivables for investments sold in the insurance business, and the increase in accrued expenses across both asset management and insurance.

Article content

Interest Rate Risk

Article content

The Company has obligations to policyholders and other debt obligations that expose it to interest rate risk.  The Company also owns debt assets and interest rate swaps that are exposed to interest rate risk.  The fair value of these obligations and assets may change if base rate changes in interest rates occur.

Article content

The following table summarizes the potential impact on net assets of hypothetical base rate changes in interest rates assuming a parallel shift in the yield curve, with all other variables remaining constant.

Article content

Article content

(1) Losses are presented in brackets and gains are presented as positive numbers.                                                                                    

Article content

Actual results may differ significantly from this sensitivity analysis. As such, the sensitivities should only be viewed as directional estimates of the underlying sensitivities for the respective factors based on the assumptions outlined above.

Article content

Conference Call

Article content

The Company will hold a conference call on Friday, August 8, 2025 at 11:00 a.m. Eastern Time to discuss the first quarter financial results. Shareholders, prospective shareholders, and analysts are welcome to listen to the call. To join the call, please use the dial-in information below. A recording of the conference call will be available on our Company’s website www.mountlogancapital.ca in the ‘Investor Relations’ section under “Events”.

Article content

Article content

Canada Dial-in Toll Free: 1-833-950-0062
US Dial-in Toll Free: 1-833-470-1428
International Dial-ins
Access Code: 386981

Article content

About Mount Logan Capital Inc.

Article content

Mount Logan Capital Inc. is an alternative asset management and insurance solutions company that is focused on public and private debt securities in the North American market and the reinsurance of annuity products, primarily through its wholly owned subsidiaries Mount Logan Management LLC (“ML Management”) and Ability Insurance Company (“Ability”), respectively. Mount Logan also actively sources, evaluates, underwrites, manages, monitors and primarily invests in loans, debt securities, and other credit-oriented instruments that present attractive risk-adjusted returns and present low risk of principal impairment through the credit cycle.

Article content

ML Management was organized in 2020 as a Delaware limited liability company and is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended. The primary business of ML Management is to provide investment management services to (i) privately offered investment funds exempt from registration under the Investment Company Act of 1940, as amended (the “1940 Act”) advised by ML Management, (ii) a non-diversified closed end management investment company that has elected to be regulated as a business development company, (iii) Ability, and (iv) non-diversified closed-end management investment companies registered under the 1940 Act that operate as interval funds. ML Management also acts as the collateral manager to collateralized loan obligations backed by debt obligations and similar assets.

Article content

Article content

Ability is a Nebraska domiciled insurer and reinsurer of long-term care policies and annuity products acquired by Mount Logan in the fourth quarter of fiscal year 2021. Ability is also no longer insuring or re-insuring new long-term care risk.

Article content

Non-IFRS Financial Measures

Article content

This press release makes reference to certain non-IFRS financial measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS financial measures by providing further understanding of the Company’s results of operations from management’s perspective. The Company’s definitions of non-IFRS measures used in this press release may not be the same as the definitions for such measures used by other companies in their reporting. Non-IFRS measures have limitations as analytical tools and should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. The Company believes that securities analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of issuers. The Company’s management also uses non-IFRS financial measures in order to facilitate operating performance comparisons from period to period.

Article content

Cautionary Statement Regarding Forward-Looking Statements

Article content

This press release contains forward-looking statements and information within the meaning of applicable securities legislation. Forward-looking statements can be identified by the expressions “seeks”, “expects”, “believes”, “estimates”, “will”, “target” and similar expressions. The forward-looking statements are not historical facts but reflect the current expectations of the Company regarding future results or events and are based on information currently available to it. Certain material factors and assumptions were applied in providing these forward-looking statements. The forward-looking statements discussed in this release include, but are not limited to, statements about the benefits of the closing of the proposed Business Combination involving the Company and 180 Degree Capital, including future financial and operating results, the Company’s and 180 Degree Capital’s plans, objectives, expectations and intentions, the expected timing and likelihood of completion of the proposed Business Combination, the regulatory environment in which the Company operates, and the results of, or outlook for, the Company’s operations or for the Canadian and U.S. economies, statements relating to the Company’s continued transition to an asset management and insurance platform business and the entering into of further strategic transactions to diversify the Company’s business and further grow recurring management fee and other income and increasing Ability’s assets; the Company’s plans to focus Ability’s business on the reinsurance of annuity products; the decrease in expenses in the asset management segment; the historical growth in the asset management segment and insurance segment being an indicator for future growth; the growth and scalability of the Company’s business the Company’s business strategy, model, approach and future activities; portfolio composition and size, asset management activities and related income, capital raising activities, future credit opportunities of the Company, portfolio realizations, the protection of stakeholder value; the expansion of the Company’s loan portfolio; and the expansion of Mount Logan’s capabilities. All forward-looking statements in this press release are qualified by these cautionary statements. The Company believes that the expectations reflected in forward-looking statements are based upon reasonable assumptions; however, the Company can give no assurance that the actual results or developments will be realized by certain specified dates or at all. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including that the Company has a limited operating history with respect to an asset management oriented business model; Ability may not generate recurring asset management fees, increase its assets or strategically benefit the Company as expected; the expected synergies by combining the business of Mount Logan with the business of Ability may not be realized as expected; the risk that Ability may require a significant investment of capital and other resources in order to expand and grow the business; the Company does not have a record of operating an insurance solutions business and is subject to all the risks and uncertainties associated with a broadening of the Company’s business; ability to obtain the requisite Company and 180 Degree Capital shareholder approvals, as well as governmental and regulatory approvals required for the proposed Business Combination with 180 Degree Capital; the risk that an event, change or other circumstance could give rise to the termination of the proposed Business Combination with 180 Degree Capital; the risk that a condition to closing of the proposed Business Combination with 180 Degree Capital may not be satisfied; the risk of delays in completing the proposed Business Combination with 180 Degree Capital; the risk that the businesses of the Company and with 180 Degree Capital will not be integrated successfully; the risk that the expected synergies of the Business Combination with 180 Degree Capital may not be realized as expected and the matters discussed under “Risks Factors” in the most recently filed annual information form and management discussion and analysis for the Company. Readers, therefore, should not place undue reliance on any such forward-looking statements. Further, a forward-looking statement speaks only as of the date on which such statement is made. The Company undertakes no obligation to publicly update any such statement or to reflect new information or the occurrence of future events or circumstances except as required by securities laws. These forward-looking statements are made as of the date of this press release.

Article content

Article content

This press release is not, and under no circumstances is it to be construed as, a prospectus or an advertisement and the communication of this release is not, and under no circumstances is it to be construed as, an offer to sell or an offer to purchase any securities in the Company or in any fund or other investment vehicle. This press release is not intended for U.S. persons. The Company’s shares are not and will not be registered under the U.S. Securities Act of 1933, as amended, and the Company is not and will not be registered under the U.S. Investment Company Act of 1940 (the “1940 Act”). U.S. persons are not permitted to purchase the Company’s shares absent an applicable exemption from registration under each of these Acts. In addition, the number of investors in the United States, or which are U.S. persons or purchasing for the account or benefit of U.S. persons, will be limited to such number as is required to comply with an available exemption from the registration requirements of the 1940 Act.

Article content

Contacts:
Mount Logan Capital Inc.
365 Bay Street, Suite 800
Toronto, ON M5H 2V1
[email protected]

Article content

Article content

Article content

Article content

Article content

Article content

Article content

Article content

Article content

Article content

Article content

Article content