Mount Logan Capital : 2021 Financial Statements

MOUNT LOGAN CAPITAL INC.

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

Independent Auditor's Report

To the Shareholders and the Board of Directors of Mount Logan Capital Inc.

Opinion

We have audited the consolidated financial statements of Mount Logan Capital Inc. (the "Company"), which comprise the consolidated statement of financial position as at December 31, 2021 and the consolidated statements of comprehensive income (loss), changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2021, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS").

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards ("Canadian GAAS") and auditing standards generally accepted in the United States of America ("U.S. GAAS"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada and the United States of America, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Matter

The consolidated financial statements of the Company for the year ended December 31, 2020, were audited by another auditor who expressed an unmodified opinion on those statements on March 22, 2021.

Other Information

Management is responsible for the other information. The other information comprises Management's Discussion and Analysis.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor's report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Canadian GAAS or U.S. GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian GAAS and U.S. GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, we express no such opinion.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies and material weaknesses in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

March 22, 2022

MOUNT LOGAN CAPITAL INC.

Consolidated Statements of Financial Position (in thousands of United States dollars)

As at December 31	Notes	2021			2020
ASSETS
Asset Management:
Cash		$	14,433		$	6,658
Restricted cash			135			17,620
Investments	7		35,209			45,219
Intangible assets	9		22,060			3,496
Other assets	14		4,180			17,992
Total assets - asset management			76,017			90,985
Insurance:
Cash and cash equivalents			29,733			-
Investments	7		881,170			-
Reinsurance assets	13		329,902			-
Intangible assets	9		2,504			-
Goodwill	9		55,015			-
Other assets	14		18,970			-
Total assets - insurance			1,317,294			-
Total assets		$	1,393,311		$	90,985
LIABILITIES
Asset Management
Due to affiliates	10	$	3,852		$	403
Debt obligations	12		42,708			39,412
Contingent value rights	11		4,169			3,954
Accrued expenses and other liabilities	14		3,916			4,038
Total liabilities - asset management			54,645			47,807
Insurance
Debt obligations	12		2,250			-
Insurance contract liabilities	13		942,865			-
Funds held under reinsurance contracts			291,296			-
Reinsurance liabilities	13		10,528			-
Accrued expenses and other liabilities	14		6,421			-
Total liabilities - insurance			1,253,360			-
Total liabilities			1,308,005			47,807
EQUITY
Common shares	11		108,055			93,480
Warrants	11		1,129			1,086
Contributed surplus			7,240			7,240
Deficit			(9,260)		(36,770)
Cumulative translation adjustment			(21,858)		(21,858)
Total equity			85,306			43,178
Total liabilities and equity		$	1,393,311		$	90,985
The accompanying notes are an integral part of these consolidated financial statements.
Approved by the Board of Directors
(signed) Edward (Ted) Goldthorpe			(signed) Rudolph Reinfrank
Edward (Ted) Goldthorpe		Rudolph Reinfrank
Chief Executive Officer and Chairman		Chairman of Audit Committee

Mount Logan Capital Inc. December 31, 2021 ANNUAL REPORT 5