Mount Logan Capital Inc. Announces Fourth Quarter and Fiscal 2024 Financial Results
Generated $15.3 million of insurance segment Spread Related Earnings ("SRE") for the year ended December 31, 2024, a significant increase over the prior year period
Asset management segment generated $7.5 million in Fee Related Earnings ("FRE") for the year ended December 31, 2024, a 36% increase over the prior year, and within our previously stated 2024 FRE guidance range
During the quarter, the Company completed an amendment to its existing corporate credit facility, which included an upsize to support key business initiatives and introduced a pricing step-down mechanism
During January 2025, the Company announced it entered into a definitive agreement to combine with 180 Degree Capital Corp. (NASDAQ:TURN) in an all-stock transaction. The surviving entity is expected to operate as Mount Logan Capital Inc. ("New Mount Logan") and to be listed on Nasdaq under the symbol MLCI
In January 2025, Mount Logan also announced it completed its previously announced minority investment in Runway Growth Capital LLC, a $1.3 billion Assets Under Management ("AUM") private credit asset manager, alongside BC Partners Credit
All amounts are stated in United States dollars, unless otherwise indicated
TORONTO, March 13, 2025 (GLOBE NEWSWIRE) -- Mount Logan Capital Inc. (Cboe Canada: MLC) ("Mount Logan" or the "Company") announced today its financial results for the year ended December 31, 2024.
Fourth Quarter 2024 Highlights
- Total revenue for the asset management segment of the Company of $4.4 million, an increase of $0.7 million, or 19%, as compared to the fourth quarter of 2023. The increase is primarily due to growth in fees attributable to management of the Opportunistic Credit Interval Fund ("SOFIX") and higher equity investment earnings on Sierra Crest Investment Management. Fourth quarter asset management revenues exclude $1.2 million of management fees associated with Mount Logan's management of the assets of Ability Insurance Company ("Ability"), a wholly-owned subsidiary of the Company.
- Total net investment income for the insurance segment was $23.8 million for the three months ended December 31, 2024, an increase of $4.5 million, or 23%, as compared to the fourth quarter of 2023, owing to an increase in the investment portfolio and improvement in investment income relative to fourth quarter 2023 due to a reversal of an over-accrual of income in third quarter of 2023. Excluding the funds withheld under reinsurance contracts and Modco, the insurance segment's net investment income was $15.3 million, an increase of $3.1 million, or 25%, as compared to the fourth quarter of 2023.
Full Year Milestones
- Total revenue for the asset management segment was $15.7 million, an increase of $3.9 million as compared to $11.8 million in 2023, largely driven by management and incentive fee growth. Management and incentive fees increased $5.8 million from the prior year, mainly due to the expiration of fee-sharing agreements associated with the CLOs in December 2023, higher SOFIX management and incentive fees due to performance improvement and increased AUM, a full year of management and incentive fees from Ovation's managed fund compared to 2023 during which the Ovation acquisition closed in the third quarter of 2023, and sub-advisory fees continuing to scale with increased AUM throughout 2024.
- FRE for the asset management segment was $7.5 million, an increase of 36% compared to 2023, due to increased management and incentive fees as previously discussed.
- Achieved 8.5%1 yield on the insurance investment portfolio for 2024, due to ongoing portfolio and capital optimization across the insurance solutions portfolio alongside the benefit of higher treasury yields. Excluding the funds withheld under reinsurance contracts and Modco, the yield was 8.8%.
- Ability's total assets managed by Mount Logan increased to $620.1 million for 2024, up $83.0 million from 2023 assets of $537.1 million. Mount Logan finished 2024 with $1.05 billion in total investment assets at its insurance segment, up $36.8 million, or 4%, from 2023 investment assets of $1.01 billion.
- Book value of the insurance segment for 2024 was $88.1 million, an increase of $21.6 million as compared to $66.5 million for 2023, driven by higher insurance net income.
- SRE for the insurance segment increased to $15.3 million for 2024, up $17.0 million from 2023 of $(1.7) million, primarily driven by an increase in net investment income, and lower cost of funds and operating expenses. SRE is a non-IFRS financial measure used to assess the insurance segment's generation of profits excluding the impact of certain market volatility and other one-time, non-core components of insurance segment income (loss). The Company believes this measure is useful to shareholders as it provides additional insight into the underlying economics of the insurance segment.
Subsequent Events
- Declared a shareholder distribution in the amount of C$0.02 per common share for the quarter ended December 31, 2024, payable on April 10, 2025 to shareholders of record at the close of business on April 3, 2025. This cash dividend marks the twenty-second consecutive quarter of the Company issuing a C$0.02 distribution to its shareholders. This dividend is designated by the Company as an eligible dividend for the purpose of the Income Tax Act (Canada) and any similar provincial or territorial legislation. An enhanced dividend tax credit applies to eligible dividends paid to Canadian residents.
- Announced Mount Logan entered into a definitive agreement to combine with 180 Degree Capital Corp. (NASDAQ:TURN) ("180 Degree Capital"), in an all-stock transaction (the "Business Combination"). The surviving entity is expected to be a Delaware corporation operating as New Mount Logan listed on Nasdaq under the symbol MLCI. In connection with the Business Combination, MLC shareholders will receive proportionate ownership of New Mount Logan determined by reference to Mount Logan's transaction equity value at signing, subject to certain pre-closing adjustments, relative to 180 Degree Capital's Net Asset Value ("NAV") at closing. Shareholders holding approximately 26% of the outstanding shares of Mount Logan and approximately 20% of the outstanding shares of 180 Degree Capital signed voting agreements supporting the Business Combination, and an additional 8% of Mount Logan and 7% of 180 Degree Capital shareholders, respectively, have provided written non-binding indications of support for the Business Combination.
- Announced Mount Logan successfully completed purchase of minority stake in Runway Growth Capital LLC ("Runway"), an SEC registered investment adviser, managing approximately $1.4 billion in private credit assets. Mount Logan acquired the minority stake alongside BC Partners Credit, who acquired the majority stake in the platform through private funds managed by BC Partners Credit. There will be no change to Runway's management team or day-to-day operations following close of the transaction.
- Portman Ridge Finance Corporation (NASDAQ:PTMN) and Logan Ridge Finance Corporation (NASDAQ:LRFC) announced that they have entered into an agreement under which LRFC will merge with and into PTMN, subject to the receipt of certain shareholder approvals and the satisfaction of other closing conditions. Mount Logan currently earns management fees from LRFC and has a minority stake in PTMN's manager, Sierra Crest Investment Management.
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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.
Management Commentary
- Ted Goldthorpe, Chief Executive Officer and Chairman of Mount Logan stated, "We are pleased to report our strong fourth quarter and full year 2024 results, reflecting the sustainable earnings power of our asset management and insurance platforms. In 2024, we delivered significant growth in both Fee Related Earnings on the asset management segment, and Spread Related Earnings in our insurance platform, providing a solid foundation for continued momentum in 2025. Our focus remains on driving consistent operating performance improvements, while advancing our strategic priorities to scale the business through organic growth and strategic acquisitions, which includes our recently announced transactions with 180 Degree Capital and Runway".
Selected Financial Highlights
- Total Capital of the Company was $150.3 million at December 31, 2024, an increase of $20.8 million as compared to December 31, 2023. Total capital consists of debt obligations and total shareholders' equity.
- Consolidated net income (loss) before taxes was $6.1 million for 2024, an increase of $21.9 million from ($15.8) million in 2023. The increase was primarily attributable to the improvement in insurance service result, decrease in net insurance finance expenses, increase in net investment income and decline in general, administrative and other expenses under the insurance segment when compared to 2023.
- Basic Earnings per share ("EPS") was $0.22 for 2024, an increase of $0.91 from $(0.69) for 2023.
- Adjusted basic EPS was $0.46 for 2024, an increase of $0.90 from $(0.44) for 2023.
Results of Operations by Segment
($ in Thousands)
| Year Ended | |||||||
| Year ended December 31, | 2024 | 2023 | |||||
| Reported Results | |||||||
| Asset management | |||||||
| Revenue | $ | 15,692 | $ | 11,831 | |||
| Expenses | 35,187 | 26,680 | |||||
| Net income (loss) - asset management | (19,495 | ) | (14,849 | ) | |||
| Insurance | |||||||
| Revenue (1) | 64,155 | 69,143 | |||||
| Expenses | 38,521 | 70,087 | |||||
| Net income (loss) - insurance | 25,634 | (944 | ) | ||||
| Income before income taxes | 6,139 | (15,793 | ) | ||||
| Provision for income taxes | (550 | ) | (663 | ) | |||
| Net income (loss) | $ | 5,589 | $ | (16,456 | ) | ||
| Basic EPS | $ | 0.22 | $ | (0.69 | ) | ||
| Diluted EPS | $ | 0.20 | $ | (0.69 | ) | ||
| Adjusting Items | |||||||
| Asset management | |||||||
| Transaction costs (2) | (2,174 | ) | (3,721 | ) | |||
| Acquisition integration costs (3) | (250 | ) | (1,125 | ) | |||
| Non-cash items (4) | (3,978 | ) | (972 | ) | |||
| Impact of adjusting items on expenses | (6,402 | ) | (5,818 | ) | |||
| Adjusted Results | |||||||
| Asset management | |||||||
| Revenue | $ | 15,692 | $ | 11,831 | |||
| Expenses | 28,785 | 20,862 | |||||
| Net income (loss) - asset management | (13,093 | ) | (9,031 | ) | |||
| Income before income taxes | 12,541 | (9,975 | ) | ||||
| Provision for income taxes | (550 | ) | (663 | ) | |||
| Net income (loss) | $ | 11,991 | $ | (10,638 | ) | ||
| Basic EPS | $ | 0.46 | $ | (0.44 | ) | ||
| Diluted EPS | $ | 0.43 | $ | (0.44 | ) | ||
| (1) | Insurance Revenue line item is presented net of insurance service expenses and net expenses from reinsurance contracts held. |
| (2) | Transaction costs are related to business acquisitions and strategic initiatives transacted by the Company. |
| (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. |
| (4) | Non-cash items include amortization and impairment of acquisition-related intangible assets and impairment of goodwill, if any. |
Asset Management
Total Revenue – Asset Management
($ in Thousands)
| Year ended December 31, | 2024 | 2023 | |||||
| Management and incentive fee | $ | 15,008 | $ | 9,225 | |||
| Equity investment earnings | 680 | 1,124 | |||||
| Interest income | 1,091 | 1,087 | |||||
| Dividend income | 356 | 584 | |||||
| Net gains (losses) from investment activities | (1,443 | ) | (189 | ) | |||
| Total revenue — asset management | $ | 15,692 | $ | 11,831 | |||
Fee Related Earnings ("FRE")
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:
($ in Thousands)
| Year ended December 31, | 2024 | 2023 (4) | |||||
| Net income (loss) and comprehensive income (loss) | $ | 5,589 | $ | (16,456 | ) | ||
| Adjustment to net income (loss) and comprehensive income (loss): | |||||||
| Total revenue - insurance (1) | (64,155 | ) | (69,143 | ) | |||
| Total expenses - insurance | 38,521 | 70,087 | |||||
| Net income - asset management (2) | $ | (20,045 | ) | $ | (15,512 | ) | |
| Adjustments to non-fee generating asset management business and other recurring revenue stream: | |||||||
| Management fee from Ability | 6,025 | 3,848 | |||||
| Interest income | (1 | ) | — | ||||
| Dividend income | (498 | ) | (584 | ) | |||
| Net gains (losses) from investment activities (3) | 1,443 | 189 | |||||
| Administration and servicing fees | 1,605 | 1,036 | |||||
| Transaction costs | 2,174 | 3,721 | |||||
| Amortization of intangible assets | 3,978 | 972 | |||||
| Interest and other credit facility expenses | 7,935 | 5,977 | |||||
| General, administrative and other | 4,931 | 5,924 | |||||
| Fee Related Earnings | $ | 7,547 | $ | 5,571 | |||
| (1) | Includes add-back of management fees paid to ML Management (as defined below). |
| (2) | Represents net income for asset management, as presented in the Interim Consolidated Statement of Comprehensive Income (Loss). |
| (3) | Includes unrealized gains or losses on the debt warrants. |
| (4) | FRE for the year ended December 31, 2023 has been recalculated to conform with improved expense allocation methodologies implemented for the year ended December 31, 2024. |
Insurance
Total Revenue – Insurance
($ in Thousands)
| Year ended December 31, | 2024 | 2023 | |||||
| Insurance service result | $ | (8,379 | ) | $ | (23,374 | ) | |
| Net investment income | 92,770 | 87,105 | |||||
| Net gains (losses) from investment activities | (3,719 | ) | 29,105 | ||||
| Realized and unrealized gains (losses) on embedded derivative — funds withheld | (16,754 | ) | (31,403 | ) | |||
| Other income | 237 | 7,710 | |||||
| Total revenue — net of insurance services expenses and net expenses from reinsurance | $ | 64,155 | $ | 69,143 | |||
Spread Related Earnings ("SRE")
Effective March 31, 2024, the Company has introduced a new non-IFRS measure, SRE. 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.
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.
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 represents the difference between actual and expected cashflows and includes the impact of certain changes to non-financial assumptions.
The Company reconciles SRE to net income (loss) before tax from its insurance segment activities, as follows:
| Three Months Ended | |||||||||||||||||||||||||||
| Q4-2024 | Q3-2024 | Q2-2024 | Q1-2024 | Q4-2023 | Q3-2023 | Q2-2023 | Q1-2023 | Q4-2022 | |||||||||||||||||||
| Net income (loss) and comprehensive income (loss) before tax | $ | 6,522 | $ | (17,378 | ) | $ | 3,847 | $ | 13,148 | $ | (1,946 | ) | $ | 16,243 | $ | (903 | ) | $ | (29,187 | ) | $ | 4,901 | |||||
| Adjustment to net income (loss) and comprehensive income (loss): | |||||||||||||||||||||||||||
| Total revenue - asset management (1) | (4,442 | ) | (3,826 | ) | (3,394 | ) | (4,030 | ) | (3,723 | ) | (3,186 | ) | (2,996 | ) | (1,926 | ) | (2,651 | ) | |||||||||
| Total expenses - asset management | 13,440 | 7,481 | 6,651 | 7,615 | 7,839 | 6,868 | 6,133 | 5,840 | 4,132 | ||||||||||||||||||
| Net income - insurance (2) | 15,520 | (13,723 | ) | 7,104 | 16,733 | 2,170 | 19,925 | 2,234 | (25,273 | ) | 6,382 | ||||||||||||||||
| Adjustments to Insurance segment business: | |||||||||||||||||||||||||||
| Management fees to ML Management | (1,167 | ) | (1,501 | ) | (1,529 | ) | (1,429 | ) | (1,345 | ) | (1,110 | ) | (969 | ) | (823 | ) | (740 | ) | |||||||||
| Net (gains) losses from investment activities (3) | 17,681 | (13,267 | ) | 887 | (2,995 | ) | (10,116 | ) | (2,113 | ) | (1,454 | ) | 1,493 | (3,418 | ) | ||||||||||||
| Other Income (4) | — | — | — | — | (7,353 | ) | — | — | — | — | |||||||||||||||||
| Net insurance finance (income)/expense (5) | (28,702 | ) | 30,940 | (5,442 | ) | (11,769 | ) | 14,399 | (17,684 | ) | (5,275 | ) | 20,650 | (924 | ) | ||||||||||||
| Loss on onerous contracts (6) | (545 | ) | (822 | ) | 945 | 6,884 | 286 | 2,451 | 4,214 | 490 | — | ||||||||||||||||
| General, administrative and other (7) | 338 | 239 | 464 | 447 | 502 | 1,289 | 1,546 | 144 | — | ||||||||||||||||||
| Spread Related Earnings | $ | 3,125 | $ | 1,866 | $ | 2,429 | $ | 7,871 | $ | (1,457 | ) | $ | 2,758 | $ | 296 | $ | (3,319 | ) | $ | 1,300 | |||||||
| (1) | Includes add-back of management fees paid by Ability to ML Management. |
| (2) | Represents net income before tax for the insurance segment, as presented in the annual Consolidated Statement of Comprehensive Income (Loss). |
| (3) | Excludes net (gains) losses from investment activities on assets retained by the Company under funds withheld arrangement with Front Street Re and Vista. |
| (4) | Represents non-operating income. |
| (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. |
| (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. |
| (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. |
The following table presents SRE, the performance measure of the insurance segment:
($ in Thousands)
| Year Ended | |||||||
| December 31, 2024 | December 31, 2023 | ||||||
| Fixed Income and other investment income, net (1) | $ | 53,675 | $ | 48,134 | |||
| Cost of funds | (30,353 | ) | (39,032 | ) | |||
| Net Investment spread | 23,322 | 9,102 | |||||
| Other operating expenses | (8,032 | ) | (10,824 | ) | |||
| Spread Related Earnings | $ | 15,290 | $ | (1,722 | ) | ||
| SRE % of Average Net Investments | 2.5 | % | -0.3 | % | |||
| (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"). |
Spread related earnings ("SRE") was $15.3 million for 2024 compared with $(1.7) million for 2023, an increase of $17.0 million. SRE increased year-over-year due to increased investment income, lower cost of funds, and decline in other operating expenses. Investment income increased primarily due to higher total insurance investment assets as a result of new multi-year guaranteed annuity ("MYGA") business and improvements in yield across the investment portfolio attributable to deployment of capital in a higher rate environment up through the second quarter of 2024. Cost of funds declined primarily from a decrease in the amortization of reinsurance contractual service margin ("CSM") in the current period due to change in the CSM amortization methodology, as well as the one-time benefit of $4.8 million in the first quarter of 2024 as a result of an in-force update to Long Term Care business. Other operating expenses decreased as a result of efforts to reduce overall operating costs.
SRE as a percentage of average net invested assets was 2.5% for the year ended December 31, 2024 compared with -0.3% for the year ended December 31, 2023.
Liquidity and Capital Resources
As of December 31, 2024, the asset management segment had $77.8 million (par value) of borrowings outstanding, of which $33.8 million had a fixed rate and $44 million had a floating rate. As of December 31, 2024, the insurance segment had $14.3 million (par value) of borrowings outstanding. Liquid assets, including high-quality assets that are marketable, can be pledged as security for borrowings, and can be converted to cash in a time frame that meets liquidity and funding requirements. As of December 31, 2024 and December 31, 2023, the total liquid assets of the Company were as follows:
($ in Thousands)
| As at | December 31, 2024 | December 31, 2023 | |||
| Cash and cash equivalents | $ | 85,988 | $ | 90,220 | |
| Restricted cash posted as collateral | 15,716 | — | |||
| Investments | 639,932 | 643,578 | |||
| Management fee receivable | 3,268 | 2,599 | |||
| Receivable for investments sold | 17,045 | 6,511 | |||
| Accrued interest and dividend receivable | 20,489 | 19,340 | |||
| Total liquid assets | $ | 782,438 | $ | 762,248 | |
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.
As at December 31, 2024, the Company had working capital of $231.2 million, reflecting current assets of $245.3 million, offset by current liabilities of $14.1 million, as compared with working capital of $183.4 million as at December 31, 2023, reflecting current assets of $230.8 million, offset by current liabilities of $47.4 million. The increase in working capital was attributed to an increase in cash within the asset management business from increased management and incentive fee receipts, net proceeds from the issuance of debenture units, and the upsize of the existing credit facility at MLC US Holdings. The decrease in due to affiliates is driven by paydowns to BC Partners and a reclassification of the maturity of these balances from current to unspecified, and the decrease in accrued expenses is driven by lower transaction costs, transition services agreement costs, and legal fee accruals also contributed to the increase in working capital. In the insurance business, the settlement of payables related to MYGA against the new MYGA policies assumed as well as an increase in receivables for investments sold contributed to the increase in working capital.
Interest Rate Risk
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.
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.
| As at | December 31, 2024 | December 31, 2023 | |||||
| 50 basis point increase (1) | $ | 7,559 | $ | 20,186 | |||
| 50 basis point decrease (1) | (18,939 | ) | (21,860 | ) | |||
| (1) | Losses are presented in brackets and gains are presented as positive numbers. |
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.
Conference Call
The Company will hold a conference call on Friday, March 14, 2025 at 9:00 a.m. Eastern Time to discuss the fourth quarter and 2024 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".
Canada Dial-in Toll Free: 1-833-950-0062
US Dial-in Toll Free: 1-833-470-1428
International Dial-ins
Access Code: 601424
About Mount Logan Capital Inc.
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.
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.
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.
Non-IFRS Financial Measures
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.
Cautionary Statement Regarding Forward-Looking Statements
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 acquisition of a minority interest in Runway as well as the proposed transaction 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 transaction, 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 potential benefits of combining Mount Logan's and Ovation's platform including an increase in fee-related earnings as a result of the acquisition; 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; synergies to be achieved by both the Company and Runway through the Company's strategic minority investment in Runway and the satisfaction of the conditions upon which closing of the Runway transaction is conditional; 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 transaction with 180 Degree Capital, the risk that an event, change or other circumstance could give rise to the termination of the proposed transaction with 180 Degree Capital, the risk that a condition to closing of the proposed transaction with 180 Degree Capital may not be satisfied, the risk of delays in completing the proposed transaction 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 acquisition of Ovation 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.
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.
Contacts:
Mount Logan Capital Inc.
365 Bay Street, Suite 800
Toronto, ON M5H 2V1
[email protected]
Nikita Klassen
Chief Financial Officer
[email protected]
Scott Chan
Investor Relations
[email protected]
| MOUNT LOGAN CAPITAL INC. | ||||||||||
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||||||
| (in thousands of United States dollars, except share and per share amounts) | ||||||||||
| As at | Notes | December 31, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||||
| Asset Management: | ||||||||||
| Cash | $ | 8,933 | $ | 990 | ||||||
| Investments | 6 | 21,668 | 26,709 | |||||||
| Intangible assets | 9 | 24,801 | 28,779 | |||||||
| Other assets | 8,187 | 6,593 | ||||||||
| Total assets — asset management | 63,589 | 63,071 | ||||||||
| Insurance: | ||||||||||
| Cash and cash equivalents | 77,055 | 89,230 | ||||||||
| Restricted cash posted as collateral | 19 | 15,716 | — | |||||||
| Investments | 6 | 1,045,436 | 1,008,637 | |||||||
| Reinsurance contract assets | 13 | 392,092 | 442,673 | |||||||
| Intangible assets | 9 | 2,444 | 2,444 | |||||||
| Goodwill | 9 | 55,015 | 55,015 | |||||||
| Other assets | 38,183 | 27,508 | ||||||||
| Total assets — insurance | 1,625,941 | 1,625,507 | ||||||||
| Total assets | $ | 1,689,530 | $ | 1,688,578 | ||||||
| LIABILITIES | ||||||||||
| Asset Management | ||||||||||
| Due to affiliates | 10 | $ | 10,470 | $ | 12,113 | |||||
| Debt obligations | 12 | 78,427 | 62,030 | |||||||
| Derivatives - debt warrants | 12 | 504 | — | |||||||
| Accrued expenses and other liabilities | 5,097 | 3,494 | ||||||||
| Total liabilities — asset management | 94,498 | 77,637 | ||||||||
| Insurance | ||||||||||
| Debt obligations | 12 | 14,250 | 14,250 | |||||||
| Insurance contract liabilities | 13 | 1,048,413 | 1,107,056 | |||||||
| Investment contract liabilities | 14 | 227,041 | 169,314 | |||||||
| Derivatives | 19 | 5,192 | — | |||||||
| Funds held under reinsurance contracts | 239,918 | 238,253 | ||||||||
| Accrued expenses and other liabilities | 2,995 | 30,116 | ||||||||
| Total liabilities — insurance | 1,537,809 | 1,558,989 | ||||||||
| Total liabilities | 1,632,307 | 1,636,626 | ||||||||
| EQUITY | ||||||||||
| Common shares | 11 | 116,118 | 115,607 | |||||||
| Warrants | 11 | 1,129 | 1,129 | |||||||
| Contributed surplus | 7,917 | 7,240 | ||||||||
| Surplus (Deficit) | (46,083 | ) | (50,166 | ) | ||||||
| Cumulative translation adjustment | (21,858 | ) | (21,858 | ) | ||||||
| Total equity | 57,223 | 51,952 | ||||||||
| Total liabilities and equity | $ | 1,689,530 | $ | 1,688,578 | ||||||
| MOUNT LOGAN CAPITAL INC. | |||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||
| (in thousands of United States dollars, except share and per share amounts) | |||||||||
| Year ended | |||||||||
| Notes | December 31, 2024 | December 31, 2023 | |||||||
| REVENUE | |||||||||
| Asset management | |||||||||
| Management and incentive fee | 7 | $ | 15,008 | $ | 9,225 | ||||
| Equity investment earning | 680 | 1,124 | |||||||
| Interest income | 1,091 | 1,087 | |||||||
| Dividend income | 356 | 584 | |||||||
| Net gains (losses) from investment activities | 4 | (1,443 | ) | (189 | ) | ||||
| Total revenue — asset management | 15,692 | 11,831 | |||||||
| Insurance | |||||||||
| Insurance revenue | 8 | 91,602 | 87,806 | ||||||
| Insurance service expenses | 8 | (78,385 | ) | (78,155 | ) | ||||
| Net expenses from reinsurance contracts held | 8 | (21,596 | ) | (33,025 | ) | ||||
| Insurance service result | (8,379 | ) | (23,374 | ) | |||||
| Net investment income | 5 | 92,770 | 87,105 | ||||||
| Net gains (losses) from investment activities | 4 | (3,719 | ) | 29,105 | |||||
| Realized and unrealized gains (losses) on embedded derivative — funds withheld | (16,754 | ) | (31,403 | ) | |||||
| Other income | 237 | 7,710 | |||||||
| Total revenue, net of insurance service expenses and net expenses from reinsurance contracts held — insurance | 64,155 | 69,143 | |||||||
| Total revenue | 79,847 | 80,974 | |||||||
| EXPENSES | |||||||||
| Asset management | |||||||||
| Administration and servicing fees | 10 | 5,895 | 2,943 | ||||||
| Transaction costs | 2,174 | 3,721 | |||||||
| Amortization and impairment of intangible assets | 9 | 3,978 | 972 | ||||||
| Interest and other credit facility expenses | 12 | 7,935 | 5,977 | ||||||
| General, administrative and other | 15,205 | 13,067 | |||||||
| Total expenses — asset management | 35,187 | 26,680 | |||||||
| Insurance | |||||||||
| Net insurance finance (income) expenses | 5 | 3,490 | 28,871 | ||||||
| Increase (decrease) in investment contract liabilities | 14 | 9,972 | 6,316 | ||||||
| (Increase) decrease in reinsurance contract assets | 15,302 | 20,238 | |||||||
| General, administrative and other | 9,757 | 14,662 | |||||||
| Total expenses — insurance | 38,521 | 70,087 | |||||||
| Total expenses | 73,708 | 96,767 | |||||||
| Income (loss) before taxes | 6,139 | (15,793 | ) | ||||||
| Income tax (expense) benefit — asset management | 16 | (550 | ) | (663 | ) | ||||
| Net income (loss) and comprehensive income (loss) | $ | 5,589 | $ | (16,456 | ) | ||||
| Earnings per share | |||||||||
| Basic | $ | 0.22 | $ | (0.69 | ) | ||||
| Diluted | $ | 0.20 | $ | (0.69 | ) | ||||
| Dividends per common share — USD | $ | 0.06 | $ | 0.05 | |||||
| Dividends per common share — CAD | $ | 0.08 | $ | 0.07 | |||||
