Mount Logan Capital Inc. (NEO: MLC) (the “Company” or “Mount
Logan”) announced today its financial results for the fourth
quarter and fiscal year ended December 31, 2023. All amounts are
stated in United States dollars, unless otherwise indicated. The
financial results have been adjusted for the adoption of IFRS 17
Insurance Contracts (“IFRS 17”) which became effective January 1,
2023.
Fourth Quarter 2023
Highlights
- Total revenue for the asset
management segment of the Company of $3.7 million, an
increase of $1.1 million as compared to the fourth quarter of 2022.
The increase is primarily attributable to growth in fees
attributable to the inclusion of Ovation management and incentive
fees, increase in CLO fees, growth in the Opportunistic Credit
Interval Fund, and other sub-advisory activities of Mount Logan.
Fourth quarter asset management revenues excludes $1.3 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, during the fourth quarter of 2023, which
increased by 82% as compared to the fourth quarter 2022 of $0.7
million.
- Fee Related Earnings
(“FRE”) for the asset management segment of the Company
was $2.6 million for the three months ended December 31, 2023, an
increase of $0.8 million compared to the fourth quarter of 2022 of
$1.8 million primarily driven by the previously mentioned revenue
improvements.
- Total net investment income
for the insurance segment was $19.3 million for the three
months ended December 31, 2023, an increase of $2.6 million
compared to the fourth quarter of 2022 driven by an increase in
total insurance investment assets and improvements in yield across
the investment portfolio attributable to deployment of capital in a
higher rate environment.
Full Year Milestones
- Total revenue for the asset
management segment of the Company was $11.8 million, an
increase of $2.5 million as compared to $9.3 million in fiscal 2022
largely due to the acquisition of Ovation in the third quarter of
2023, and previously mentioned growth in fees generated across
Mount Logan’s managed investment vehicles. Fiscal 2023 management
revenues excludes the $4.2 million attributable to managing a
significant portion of Ability’s assets during fiscal 2023, which
increased by 80% as compared to management fees in respect of
Ability of $2.4 million in fiscal 2022.
- FRE for the asset
management segment of the Company was $6.3 million,
flat as compared to $6.3 million in fiscal 2022, which reflects the
increase of revenues offset by one-time expenses in respect of
growth investments, which management expects will decrease in
fiscal 2024 for the asset management segment.
- Achieved
9.2%1 yield on the insurance
investment portfolio for fiscal 2023, which was up from
6.2% as compared to fiscal 2022, which reflects ongoing portfolio
and capital optimization across the insurance solutions portfolio
alongside the benefit of higher base rates.
- Ability’s total assets
managed by Mount Logan increased to $537.1 million for
fiscal 2023, up $200.2 million from fiscal 2022 managed assets of
$336.9 million. The increase in managed assets supported the
increased management fees paid by Ability of $4.2 million to Mount
Logan Management LLC, a wholly-owned subsidiary of the Company.
Finished fiscal 2023 with $1.0 billion in total investment assets
at Ability, up $124 million or 14% from fiscal 2022 investment
assets of $884.6 million.
- Book value of the Insurance
segment ended 2023 at $66.5 million, an increase of $2.8
million as compared to $63.7 million for fiscal 2022.
Subsequent Events
- The Company is pleased to
announce that Nikita Klassen has been
appointed by the Company’s board of directors as the new
Chief Financial Officer and Corporate Secretary of the Company,
effective March 31, 2024., Ms. Klassen currently serves as the
Senior Controller of the Company and has over 14 years of
experience in the financial services industry, including roles as
Director, Accounting Policy at Silicon Valley Bank; Vice President,
SEC Reporting and Accounting Policy at Galaxy Digital (TSX: GLXY);
and Director, Global Accounting Policy and Advisory at American
Express (NYSE: AXP). Ms. Klassen has also previously provided audit
and consulting services in various roles over a 6 year career at
PricewaterhouseCoopers LLP. Ms. Klassen holds a Bachelor of
Commerce (Hons) degree from the Asper School of Business at the
University of Manitoba and is a Chartered Professional Accountant
(Canada).
- Chief Financial Officer and
Corporate Secretary Jason Roos communicated his plans to
resign from his roles at Mount Logan, as well as his other
roles at BC Partners Advisors L.P. effective March 31, 2024. Mr.
Roos’ decision is not related to any disagreement relating to the
Company’s accounting, strategy, management, operations, policies,
regulatory matters, or practices (financial or otherwise). Mr. Roos
will continue to support the executive team in an advisory capacity
for an extended period of time.
- Declared a shareholder
distribution in the amount of C$0.02 per common share for
the year ended December 31, 2023, payable on April 2, 2024 to
shareholders of record at the close of business on March 25, 2024.
This cash dividend marks the eighteenth 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 the completion of
a $18.8 million capital raise and opportunistic refinancing,
representing an important milestone for the business as it
simplifies Mount Logan’s capital structure at an attractive
fixed-rate over the next 8 years. $13.6 million of
the net proceeds of the offering were used to repay all existing
indebtedness at Lind Bridge L.P., a wholly owned subsidiary of
Mount Logan, which had previously been raised to support direct
growth investment into Ability. The balance of the proceeds of the
offering will be used for general corporate purposes, primarily
supporting the Company’s working capital position, and paying
outstanding transaction fees and expenses.
- Ability amended its
reinsurance agreement, effective, January 10, 2024, with
Atlantic Coast Life Insurance Company and with Sentinel Security
Life Insurance Company pursuant to which Ability will assume a 20%
quota share coinsurance of premium of multi-year guaranteed annuity
("MYGA") policies issued and approved on or after October 1,
2023.
Management Commentary
- Ted Goldthorpe, Chief
Executive Officer and Chairman of Mount Logan stated, “As
we close out 2023, we are seeing strong earnings momentum across
both the asset management and insurance solutions segments of the
Company. Top line performance for the asset management segment of
the Company and net investment income for the insurance segment of
the Company saw impressive growth throughout the year, and we
believe is a leading indicator of our expectations for 2024.”
Selected Financial
Highlights
- Total Capital of the
Company, consisting of both debt borrowings and equity, as
at December 31, 2023, was $129.5 million, an increase of $10.5
million from December 31, 2022. Total capital consists of debt
obligations and total shareholders’ equity.
- Basic Earnings per share
(“EPS”) was $(0.69) for the fiscal year ended December 31,
2023, a decrease of $(2.87) from $2.18 for the 2022 fiscal year.
The decrease in EPS resulted primarily from a decrease in the net
insurance finance income in 2023 fiscal year compared to the 2022
fiscal year. The decrease in net insurance finance income in the
2023 fiscal year was attributable to changes in risk-adjusted
market interest rates.
- Adjusted basic EPS
was $(0.44) for the 2023 fiscal year, a decrease of $(2.74) from
$2.30 for the 2022 fiscal year.
Results of Operations by
Segment
($ in Thousands)
Years ended December 31 |
|
2023 |
|
|
2022 |
|
|
2021 |
|
Reported Results (1) |
|
|
|
|
|
|
|
|
|
Asset
management |
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
11,831 |
|
|
$ |
9,345 |
|
|
$ |
8,772 |
|
Expenses |
|
|
26,680 |
|
|
|
13,044 |
|
|
|
11,515 |
|
Net income (loss) – asset
management |
|
|
(14,849 |
) |
|
|
(3,699 |
) |
|
|
(2,743 |
) |
Insurance |
|
|
|
|
|
|
|
|
|
Revenue (2) |
|
|
69,143 |
|
|
|
(27,818 |
) |
|
|
2,807 |
|
Expenses |
|
|
70,087 |
|
|
|
(80,268 |
) |
|
|
(30,810 |
) |
Net
income (loss) – insurance |
|
|
(944 |
) |
|
|
52,450 |
|
|
|
33,617 |
|
Income before income taxes |
|
|
(15,793 |
) |
|
|
48,751 |
|
|
|
30,874 |
|
Provision for income taxes |
|
|
(663 |
) |
|
|
(430 |
) |
|
|
(2,144 |
) |
Net income (loss) |
|
$ |
(16,456 |
) |
|
$ |
48,321 |
|
|
$ |
28,730 |
|
Basic EPS |
|
$ |
(0.69 |
) |
|
$ |
2.18 |
|
|
$ |
1.55 |
|
Diluted
EPS |
|
$ |
(0.69 |
) |
|
$ |
2.15 |
|
|
$ |
1.54 |
|
Adjusting Items |
|
|
|
|
|
|
|
|
|
Asset
management |
|
|
|
|
|
|
|
|
|
Transaction
costs (3) |
|
|
(3,721 |
) |
|
|
(185 |
) |
|
|
(1,977 |
) |
Acquisition integration
costs (4) |
|
|
(1,125 |
) |
|
|
(1,875 |
) |
|
|
(1,448 |
) |
Non-cash items (5) |
|
|
(972 |
) |
|
|
(559 |
) |
|
|
(787 |
) |
Impact of adjusting items on expenses |
|
|
(5,818 |
) |
|
|
(2,619 |
) |
|
|
(4,212 |
) |
Adjusted Results |
|
|
|
|
|
|
|
|
|
Asset
management |
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
11,831 |
|
|
$ |
9,345 |
|
|
$ |
8,772 |
|
Expenses |
|
|
20,862 |
|
|
|
10,425 |
|
|
|
7,303 |
|
Net
income (loss) – asset management |
|
|
(9,031 |
) |
|
|
(1,080 |
) |
|
|
1,469 |
|
Income before income taxes |
|
|
(9,975 |
) |
|
|
51,370 |
|
|
|
35,086 |
|
Provision for income taxes |
|
|
(663 |
) |
|
|
(430 |
) |
|
|
(2,144 |
) |
Net income (loss) |
|
$ |
(10,638 |
) |
|
$ |
50,940 |
|
|
$ |
32,942 |
|
Basic EPS |
|
$ |
(0.44 |
) |
|
$ |
2.30 |
|
|
$ |
1.77 |
|
Diluted
EPS |
|
$ |
(0.44 |
) |
|
$ |
2.27 |
|
|
$ |
1.77 |
|
(1) Certain comparative figures have been
reclassified to conform with the current year’s presentation,
including the reclassification of "Net realized and unrealized gain
(loss)" to "Revenue" (2) Insurance Revenue line item is presented
net of insurance service expenses and net expenses from reinsurance
contracts held.(3) Transaction costs are related to business
acquisitions and strategic initiatives transacted by the
Company.(4) 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.(5) Non-cash items include
amortization of acquisition-related intangible assets and
impairment of goodwill, if any.
Asset Management
Total Revenue – Asset
Management
($ in Thousands)
Years ended December 31 |
|
2023 |
|
|
2022 |
|
Management fee |
|
$ |
9,225 |
|
|
$ |
5,200 |
|
Equity investment earning |
|
|
1,124 |
|
|
|
1,922 |
|
Interest income |
|
|
1,087 |
|
|
|
1,225 |
|
Dividend income |
|
|
584 |
|
|
|
276 |
|
Net
gains (losses) from investment activities |
|
|
(189 |
) |
|
|
722 |
|
Total revenue – asset management |
|
$ |
11,831 |
|
|
$ |
9,345 |
|
Fee Related Earnings
(“FRE”)
Fee related earnings ("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, |
|
|
|
|
2023 |
|
|
|
2022 |
|
Net income (loss) and comprehensive income
(loss) |
|
|
(16,456 |
) |
|
|
48,321 |
|
|
|
|
|
|
|
|
Adjustment to net
income (loss) and comprehensive income (loss): |
|
|
|
|
|
|
Total revenue –
insurance (1) |
|
|
(69,143 |
) |
|
|
27,818 |
|
Total
expenses – insurance |
|
|
70,087 |
|
|
|
(80,268 |
) |
Net income – asset management (2) |
|
|
(15,512 |
) |
|
|
(4,129) |
|
Adjustments to non-fee
generating asset management business and other recurring revenue
stream: |
|
|
|
|
|
|
Management fee from Ability |
|
|
4,247 |
|
|
|
2,356 |
|
Interest income |
|
|
— |
|
|
|
(138 |
) |
Dividend income |
|
|
(584 |
) |
|
|
(276 |
) |
Net gains (losses) from investment activities |
|
|
189 |
|
|
|
(722 |
) |
Administration and servicing fees |
|
|
1,036 |
|
|
|
782 |
|
Transaction costs |
|
|
3,721 |
|
|
|
185 |
|
Amortization of intangible assets |
|
|
972 |
|
|
|
559 |
|
Interest and other credit facility expenses |
|
|
5,977 |
|
|
|
3,564 |
|
General, administrative and other |
|
|
6,204 |
|
|
|
4,108 |
|
Fee Related Earnings |
|
$ |
6,250 |
|
|
$ |
6,289 |
|
(1) Includes add-back of management fees paid to
ML Management.(2) Represents net income for asset management, as
presented in the audited Consolidated Statement of Comprehensive
Income (Loss).
Insurance
IFRS 17 is effective for years beginning as of
January 1, 2023, and has been applied retrospectively with a
transition date of January 1, 2022. IFRS 17 does not impact the
underlying economics of the business, nor does it impact the
Company’s business strategies.
Total Revenue – Insurance
($ in Thousands)
Years ended December 31 |
|
2023 |
|
|
2022 |
|
Insurance service result |
|
$ |
(23,374 |
) |
|
$ |
(17,744 |
) |
Net investment income |
|
|
87,105 |
|
|
|
55,058 |
|
Net gains (losses) from
investment activities |
|
|
29,105 |
|
|
|
(107,581 |
) |
Realized and unrealized gains
(losses) on embedded derivative – funds withheld |
|
|
(31,403 |
) |
|
|
38,575 |
|
Other
income |
|
|
7,710 |
|
|
|
3,874 |
|
Total revenue – net of insurance services expenses and
net expenses from reinsurance |
|
$ |
69,143 |
|
|
$ |
(27,818 |
) |
Liquidity and Capital
Resources
As of December 31, 2023, the asset management
segment of the Company had $65.5 million (par value) of borrowings
outstanding, of which $27.5 million had a fixed rate and $38
million had a floating rate. As of December 31, 2023, the insurance
segment had $14.3 million (par value) of borrowings outstanding.
Liquid assets, including high-quality assets that are marketable,
can be pledged as security for borrowings, and can be converted to
cash in a time frame that meets liquidity and funding requirements.
As of December 31, 2023 and December 31, 2022, the total liquid
assets of the Company were as follows:
($ in Thousands)
As at |
|
December 31, 2023 |
|
|
December 31, 2022 |
|
Cash and cash equivalents |
|
$ |
90,220 |
|
|
$ |
65,898 |
|
Investments |
|
|
643,578 |
|
|
|
692,693 |
|
Management fee receivable |
|
|
2,599 |
|
|
|
1,385 |
|
Receivable for investments
sold |
|
|
6,511 |
|
|
|
1,249 |
|
Accrued
interest and dividend receivable |
|
|
19,340 |
|
|
|
16,157 |
|
Total liquid assets |
|
$ |
762,248 |
|
|
$ |
777,382 |
|
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, 2023, the Company has
working capital of $183.4 million, reflecting current assets of
$230.8 million, offset by current liabilities of $47.4 million, as
compared with working capital of $164.7 million as at
December 31, 2022, reflecting current assets of $197.4
million, offset by current liabilities of $32.7 million. The
increase in working capital is primarily driven by increased cash
in the insurance segment as a result of premium growth through the
reinsurance of MYGA. The cash reported and generated through
insurance activities in the insurance segment cannot be used at the
Issuer level for working capital purposes without insurance
regulatory approvals.
Interest Rate Risk
The Company has obligations to policyholders and
other debt obligations that expose it to interest rate risk. The
Company also owns debt assets that are exposed to interest rate
risk. The fair value of these obligations and assets may change if
base rate changes in interest rates occur.
The following table summarizes the potential
impact on net assets of hypothetical base rate changes in interest
rates assuming a parallel shift in the yield curve, with all other
variables remaining constant.
($ in Thousands)
As at |
|
December 31, 2023 |
|
|
December 31, 2022 (2) |
|
50 basis point increase (1) |
|
$ |
20,186 |
|
|
$ |
17,842 |
|
50
basis point decrease (1) |
|
|
(21,860 |
) |
|
|
(19,495 |
) |
(1) Losses are presented in brackets and gains
are presented as positive numbers.(2) Interest rate sensitivity as
at December 31, 2022 have been amended to reflect the addition
of investment contract liabilities and insurance contract
liabilities to the sensitivity calculation.
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 15, 2024 at 10:00 a.m. Eastern Time to discuss the
fourth quarter and fiscal 2023 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”.
Dial-in Toll Free:
1-833-470-1428International Dial-in:
1-404-975-4839Access Code: 493580
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. The Company 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.
Ability Insurance is a Nebraska domiciled
insurer and reinsurer of long-term care policies acquired by Mount
Logan in the fourth quarter of fiscal year 2021. Ability is unique
in the insurance industry in that its long-term care portfolio’s
morbidity risk has been largely re-insured to third parties, and
Ability is 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 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; the risk that
changes to IFRS, including the adoption of IFRS 17, could have a
material impact on the Company’s financial results and access to
capital; 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; 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 800Toronto, ON M5H
2V1info@mountlogancapital.ca
Jason RoosChief Financial
OfficerJason.Roos@mountlogancapital.ca
MOUNT LOGAN CAPITAL INC.CONSOLIDATED
STATEMENT OF FINANCIAL POSITION(in thousands of
United States dollars, except share and per share
amounts) |
|
As at |
|
December 31, 2023 |
|
|
December 31, 2022 |
|
ASSETS |
|
|
|
|
|
|
Asset
Management: |
|
|
|
|
|
|
Cash |
|
$ |
990 |
|
|
$ |
1,525 |
|
Restricted cash |
|
|
— |
|
|
|
53 |
|
Due from affiliates |
|
|
— |
|
|
|
12 |
|
Investments |
|
|
26,709 |
|
|
|
30,605 |
|
Intangible assets |
|
|
28,779 |
|
|
|
21,501 |
|
Other
assets |
|
|
6,593 |
|
|
|
4,792 |
|
Total assets — asset management |
|
|
63,071 |
|
|
|
58,488 |
|
Insurance: |
|
|
|
|
|
|
Cash and cash equivalents |
|
|
89,230 |
|
|
|
64,373 |
|
Investments |
|
|
1,008,637 |
|
|
|
884,627 |
|
Reinsurance contract
assets |
|
|
442,673 |
|
|
|
455,115 |
|
Intangible assets |
|
|
2,444 |
|
|
|
2,444 |
|
Goodwill |
|
|
55,015 |
|
|
|
55,015 |
|
Other
assets |
|
|
27,508 |
|
|
|
24,178 |
|
Total assets — insurance |
|
|
1,625,507 |
|
|
|
1,485,752 |
|
Total assets |
|
$ |
1,688,578 |
|
|
$ |
1,544,240 |
|
LIABILITIES |
|
|
|
|
|
|
Asset
Management |
|
|
|
|
|
|
Due to affiliates |
|
$ |
12,113 |
|
|
$ |
1,110 |
|
Debt obligations |
|
|
62,030 |
|
|
|
53,172 |
|
Contingent value rights |
|
|
- |
|
|
|
3,003 |
|
Accrued
expenses and other liabilities |
|
|
3,494 |
|
|
|
2,583 |
|
Total liabilities — asset management |
|
|
77,637 |
|
|
|
59,868 |
|
Insurance |
|
|
|
|
|
|
Debt obligations |
|
|
14,250 |
|
|
|
2,250 |
|
Insurance contract
liabilities |
|
|
1,107,056 |
|
|
|
1,073,251 |
|
Investment contract
liabilities |
|
|
169,314 |
|
|
|
89,358 |
|
Funds held under reinsurance
contracts |
|
|
238,253 |
|
|
|
231,839 |
|
Accrued
expenses and other liabilities |
|
|
30,116 |
|
|
|
25,404 |
|
Total liabilities — insurance |
|
|
1,558,989 |
|
|
|
1,422,102 |
|
Total liabilities |
|
|
1,636,626 |
|
|
|
1,481,970 |
|
EQUITY |
|
|
|
|
|
|
Common shares |
|
|
115,607 |
|
|
|
108,055 |
|
Warrants |
|
|
1,129 |
|
|
|
1,129 |
|
Contributed surplus |
|
|
7,240 |
|
|
|
7,240 |
|
Surplus (Deficit) |
|
|
(50,166 |
) |
|
|
(32,296 |
) |
Cumulative translation adjustment |
|
|
(21,858 |
) |
|
|
(21,858 |
) |
Total equity |
|
|
51,952 |
|
|
|
62,270 |
|
Total liabilities and equity |
|
$ |
1,688,578 |
|
|
$ |
1,544,240 |
|
MOUNT LOGAN CAPITAL INC.CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)(in
thousands of United States dollars, except share and per share
amounts) |
|
|
|
Years Ended |
|
|
|
December 31, 2023 |
|
|
December 31, 2022 |
|
|
|
|
|
|
|
|
REVENUE |
|
|
|
|
|
|
Asset
management |
|
|
|
|
|
|
Management fee |
|
$ |
9,225 |
|
|
$ |
5,200 |
|
Equity investment earning |
|
|
1,124 |
|
|
|
1,922 |
|
Interest income |
|
|
1,087 |
|
|
|
1,225 |
|
Dividend income |
|
|
584 |
|
|
|
276 |
|
Net
gains (losses) from investment activities |
|
|
(189 |
) |
|
|
722 |
|
Total revenue — asset management |
|
|
11,831 |
|
|
|
9,345 |
|
Insurance |
|
|
|
|
|
|
Insurance revenue |
|
|
87,806 |
|
|
|
95,514 |
|
Insurance service
expenses |
|
|
(78,155 |
) |
|
|
(119,777 |
) |
Net
expenses from reinsurance contracts held |
|
|
(33,025 |
) |
|
|
6,519 |
|
Insurance service results |
|
|
(23,374 |
) |
|
|
(17,744 |
) |
Net investment income |
|
|
87,105 |
|
|
|
55,058 |
|
Net gains (losses) from
investment activities |
|
|
29,105 |
|
|
|
(107,581 |
) |
Realized and unrealized gains
(losses) on embedded derivative — funds withheld |
|
|
(31,403 |
) |
|
|
38,575 |
|
Other
income |
|
|
7,710 |
|
|
|
3,874 |
|
Total revenue, net of insurance service expenses and net
expenses from reinsurance contracts held — insurance |
|
|
69,143 |
|
|
|
(27,818 |
) |
Total revenue |
|
|
80,974 |
|
|
|
(18,473 |
) |
EXPENSES |
|
|
|
|
|
|
Asset
management |
|
|
|
|
|
|
Administration and servicing
fees |
|
|
2,943 |
|
|
|
1,231 |
|
Transaction costs |
|
|
3,721 |
|
|
|
185 |
|
Amortization of intangible
assets |
|
|
972 |
|
|
|
559 |
|
Interest and other credit
facility expenses |
|
|
5,977 |
|
|
|
3,564 |
|
General, administrative and other |
|
|
13,067 |
|
|
|
7,505 |
|
Total expenses — asset management |
|
|
26,680 |
|
|
|
13,044 |
|
Insurance |
|
|
|
|
|
|
Net insurance finance (income)
expenses |
|
|
28,871 |
|
|
|
(100,027 |
) |
Increase (decrease) in
investment contract liabilities |
|
|
6,316 |
|
|
|
1,274 |
|
(Increase) decrease in
reinsurance contract assets |
|
|
20,238 |
|
|
|
5,685 |
|
General, administrative and other |
|
|
14,662 |
|
|
|
12,800 |
|
Total expenses — insurance |
|
|
70,087 |
|
|
|
(80,268 |
) |
Total expenses |
|
|
96,767 |
|
|
|
(67,224 |
) |
Income (loss) before taxes |
|
|
(15,793 |
) |
|
|
48,751 |
|
Income tax (expense) benefit — asset management |
|
|
(663 |
) |
|
|
(430 |
) |
Net income (loss) and comprehensive income
(loss) |
|
$ |
(16,456 |
) |
|
$ |
48,321 |
|
__________________________¹ The yield is
calculated based on the net investment income divided by the
average of investments in financial assets for the current and
prior period, and then is annualized.
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