Mount Logan Capital : 2021 Management Discussion & Analysis

MANAGEMENT'S DISCUSSION AND ANALYSIS for the years ended December 31, 2021 and 2020

Management's Discussion and Analysis

The Management's Discussion and Analysis ("MD&A") for Mount Logan Capital Inc. (the "Company," "we," "us," or "our") is provided to enable readers to assess our financial condition and results of operations as at and for the year ended December 31, 2021, compared with the prior fiscal year. This MD&A should be read in conjunction with the audited annual consolidated financial statements of the Company for the years ended December 31, 2021 and 2020 and the accompanying notes thereto. This MD&A is dated March 22, 2022.

Unless otherwise indicated, all amounts are stated in thousands of United States dollars ("USD"), except for shares and per share data, and have been derived from consolidated financial statements of the Company prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board.

Additional information about the Company, including our audited annual consolidated financial statements and our annual information form dated March 22, 2022 in respect of the year ended December 31, 2021 (the "Annual Information Form") are available on SEDAR at www.sedar.com.

Caution Regarding Forward-Looking Statements

Certain information contained in this MD&A constitutes forward-looking information, which is information regarding possible events, conditions or results of operations of the Company that is based upon assumptions about future economic conditions and courses of action and which is inherently uncertain. All information other than statements of historical fact may be forward-looking information. Forward-looking information may include, but is not limited to, statements with respect to our objectives and priorities for fiscal 2022 and beyond, our strategies or future actions, expectations for our financial condition, capital position or share price, the regulatory environment in which we operate, the results of, or outlook for, our operations or for the Canadian and U.S. economies, and the COVID-19 pandemic, and include statements made by our management. Forward-looking statements are typically identified by words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "might", "project", "predict", "potential", "target", "intend", "would", "could", "should", "believe" and similar words or phrases (including negative variations) or grammatical variations thereof. Forward-looking information contained in this MD&A includes, without limitation, statements and information about the receipt by the Company of proceeds from the sale by Cline (as defined below) to Allegiance (as defined below) of all the shares of NECC (as defined below), the timing thereof and the distribution of any proceeds to the holders of CVRs (as defined below); SCIM (as defined below) remaining the investment adviser of ACIF (as defined below) following each one year renewal period following its initial two-year term and that the Company will continue to receive the net economic benefit derived by SCIM under the ACIF Advisory Agreement (as defined below); ML Management (as defined below) remaining the collateral manager of the CLOs (as defined below) and the investment manager of Logan Ridge (as defined below); the Company's plans to extend the maturity of its CLOs in light of expiring reinvestment periods or launch new collateralized loan obligations to create new incomes streams; the Company's plans to reposition Logan Ridge's portfolio and the Company's expectations for higher portfolio income as a result thereof; the Company's plans to scale the business of Logan Ridge through strategic acquisitions; the expected benefits to the Company of the acquisition of Ability Insurance Company ("Ability") including, without limitation, a significant increase in the Company's assets under management, the generation of recurring management fees and increased income through insurance earnings as the Company transitions to a hybrid asset management business and insurance solutions model; the Company's minority investment in CPCP (as defined below) will provide the Company with opportunities in the Canadian private debt market; the phaseout of LIBOR (as defined below) and the timing thereof; our expansion from a lending-oriented credit platform to an alternative asset management company and insurance solutions provider and the related asset management fee income; our expectations regarding anticipated investment activities and results, financing activities, the sufficiency of taxable income to support deferred tax assets and other factors that may impact our operating results, and the performance of global capital markets and interest rates.

Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. Readers are cautioned not to place undue reliance on the forward-looking information contained in this MD&A, as a number of factors - many of which are beyond our control and the effects of which are difficult to predict - could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking information. Some of the risks and other factors that could cause results to differ materially from those expressed in the forward-looking information contained in this MD&A include, but are not limited to: risks relating to investment performance and our ability to generate taxable income from operations, market fluctuations, the strength of the Canadian, U.S. and other economies, foreign exchange fluctuations, political and economic conditions in the countries in which the interests of the Company's portfolio investments are located, the continued impact of the novel coronavirus including the progression of the virus, the emergence of variants and the timing of the manufacture and distribution of vaccines and the level of public acceptance thereof, that the ACIF Advisory Agreement is subject to approval every year following its initial two-year term by ACIF's board of trustees, including a majority of its independent trustees, and such approvals may not be obtained, the risk that collateral management agreements in respect of the CLOs may be terminated at the direction of holders of a specified supermajority in principal amount of the notes issued by the CLO, the risk that the assets held by the CLOs are prepaid or go into default resulting in a reduction in collateral management fees, the investment advisory agreement in respect of Logan Ridge is subject to approval every year following its initial two-year term by Logan Ridge's board of directors, including a majority of its independent directors, and such approvals may not be obtained, the Company may not be able to identify and complete strategic acquisitions through Logan Ridge in order to scale the business, the management of assets of Ability may not generate recurring

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MANAGEMENT'S DISCUSSION AND ANALYSIS for the years ended December 31, 2021 and 2020

management fees for ML Management as currently contemplated and the Company may not achieve sufficient income through insurance earnings to provide meaningful diversification having regard to the Company's business model, the business and future activities of CPCP may not result in a significant benefit to the Company and other risks included elsewhere in this MD&A under the heading "Risks Factors" and in the Annual Information Form and other public disclosure documents filed with certain Canadian securities regulatory authorities and available under the Company's profile at www.sedar.com. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove to be incorrect, actual results may vary materially from those described in this MD&A as anticipated, believed, estimated or expected.

Readers are cautioned that the foregoing lists of factors are not exhaustive. Although the Company has attempted to identify important factors that could cause actual events and results to differ materially from those described in the forward-looking information, there may be other factors that cause events or results to differ from those intended, anticipated or estimated. The forward-looking information contained in this MD&A is provided as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as otherwise required by law. All of the forward- looking information contained in this MD&A is expressly qualified by this cautionary statement.

Nature of Business

Overview

The Company 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.

As an asset management firm, the Company, through its wholly-owned subsidiary, Mount Logan Management LLC ("ML Management"), earns management fees, incentive fees, and servicing fees for providing investment management, monitoring and other services to investment vehicles and advisers. We also earn investment income by investing 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, and minority equity stakes in funds and companies. ML Management is registered as an investment adviser with the United States Securities and Exchange Commission under the Investment Advisors Act of 1940, as amended, and is registered to act in an investment advisory role for clients in the United States.

Our insurance business is operated by Ability Insurance Company ("Ability"), which we acquired on October 29, 2021. Ability is a Nebraska domiciled insurer and reinsurer of long-term care policies. As part of the transaction, we invested $10.0 million of capital into Ability to strengthen its balance sheet and launch a platform for the reinsurance of annuities, which is expected to reinsure $150.0 million of fixed annuities within the twelve month period following the close of the acquisition. As a result of this acquisition, Ability's assets and operations have been consolidated with our operating results from and after October 29, 2021. Accordingly, comparability of our results for periods prior and subsequent to the Ability transaction may be limited.

The common shares of the Company trade on the Neo Exchange Inc. (the "NEO Exchange") under the symbol "MLC".

Our Business

Our reporting segments include asset management and insurance. The asset management segment reflects our historical operations and the insurance segment represents Ability's operations.

We have successfully diversified across multiple credit-oriented vehicles, as discussed below, all of which are underpinned by recurring fee related earnings ("FRE") and permanent or long duration capital.

Asset Management - Advisory

The Company expanded its focus from a lending-oriented credit platform to an alternative asset management platform in the United States. Through its subsidiaries, the Company, acquired certain investment management contracts and/or the economic benefit thereof thereby providing a growing stream of asset management fee income.

On October 30, 2020, the Company entered into a services agreement (the "SCIM Services Agreement") with Sierra Crest Investment Management LLC ("SCIM") pursuant to which the Company provides certain administrative services to SCIM in respect of the management of the Alternative Credit Income Fund ("ACIF"). On December 17, 2020, the SCIM Services Agreement was amended to be between the Company's wholly-owned subsidiary, MLC US Holdings LLC ("US Holdings"), and SCIM. Under the SCIM Services Agreement, in exchange for the administrative services provided, SCIM pays to US Holdings, on a quarterly basis, an amount equal to the aggregate base management and incentive fees received by SCIM from ACIF in respect of such quarter, net of debt service, a quarterly fee to be retained by SCIM comprised of a specified amount, plus an allocable portion of the compensation of SCIM's investment professionals in connection with their performance of investment advisory services for ACIF (collectively, the "Retained Benefits"). In addition, SCIM is reimbursed by US Holdings quarterly for certain expenses it incurs in connection with the investment advisory services provided to ACIF. Pursuant to this arrangement, US Holdings receives the net economic benefit derived by SCIM under the ACIF advisory agreement (the "ACIF Advisory Agreement"), subject to the holdback of the Retained Benefits and expense reimbursements.

On November 12, 2020, the Company, through its wholly-owned subsidiary, ML Management completed its acquisition of the rights of Garrison Investment Management LLC and other sellers (collectively, "GARS Sellers") under certain investment management agreements, the general partnership interests of the GARS Sellers under certain partnership agreements and the rights of the GARS Sellers under certain collateral

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MANAGEMENT'S DISCUSSION AND ANALYSIS for the years ended December 31, 2021 and 2020

management agreements relating to Garrison Funding 2018-1 LP and Garrison MML CLO 2019-1 LP (collectively, the "CLOs") (the "CLO Acquisition"). ML Management, as the investment manager of the CLOs, receives management fees based on aggregate gross assets under management, paid quarterly, and subject to various reductions based on caps, transaction fees, and fee-sharing arrangements. Following the completion of the CLO Acquisition, the names of Garrison Funding 2018-1 LP and Garrison MML CLO 2019-1 LP were changed to Mount Logan Funding 2018-1 LP and Mount Logan MML CLO 2019-1 LP, respectively.

On July 1, 2021, the Company, through ML Management, completed its acquisition of certain assets from Capitala Investment Advisors, LLC ("CIA") (the "Capitala Acquisition") and ML Management became the investment adviser of Logan Ridge Finance Corporation ("Logan Ridge," formerly, Capitala Finance Corp.), a U.S. publicly traded business development company whose common stock is listed on NASDAQ. ML Management, as the investment adviser of Logan Ridge, receives a fee for investment advisory and management services consisting of two components - a 1.75% annual base management fee based upon gross assets and an incentive fee tied to performance.

The following is a list of the investment vehicles managed by subsidiaries of the Company:

• Logan Ridge Finance Corporation
• Mount Logan Funding 2018-1 LP ("2018-1 CLO")
• Mount Logan MML CLO 2019-1 LP
• Mount Logan Middle Market Funding LP
• Mount Logan Middle Market Funding A LP
• Mount Logan Middle Market Funding II LP
• Mount Logan Middle Market Funding II A LP

Asset Management - Loans

The Company, directly and through its subsidiaries, focuses on investing in public and private debt securities in the North American market. The Company actively sources, evaluates, underwrites, 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.

The Company applies rigorous and deep due diligence to the credit opportunities it assesses. Priorities include establishing downside protection and principal preservation through financial and structural protections, seeking to generate attractive returns utilizing the skill and experience of management, and leveraging the expertise and network of management.

The sourcing, negotiation and documentation of highly structured investments by management of the Company permits the construction of a diversified portfolio of investments through the use of flexible and innovative loan strategies.

While focused on senior secured middle-market credit, depending on market conditions, the Company may evaluate employing a variety of credit investing strategies as part of its investment program. These could include leveraged yield strategies, private and mezzanine lending and structured equity, dislocated structured credit/regulatory capital investments, and other credit-oriented investments as further discussed below:

Leveraged Yield Strategies

• Low leveraged bank loan funds: employing various strategies to invest in primarily secured bank loans with low loan-to-value ("LTV") metrics and selective and prudent financing at the asset level. This is a strategy typically employed during periods of market or sector dislocation or when an individual company's loans do not reflect true fundamental value.
• Synthetic baskets: investments in par or near-par performing bank loans via total return swaps or similar financing structures.

Private and Mezzanine Lending and Structured Equity

• Private and mezzanine lending: providing creative financing solutions to borrowers with custom documentation. Borrowers in the middle-market seek resourceful financing partners that have industry expertise, can provide certainty of execution, and can transact on an expedited timeline.
• Structured Equity: investing in minority structured convertible preferred equity with significant downside protection through company selection and robust negative controls.

Dislocated Structured Credit/Regulatory Capital

• Primary and secondary structured products: opportunistic investments in non-traditional credit instruments with varying counterparty credit risk.
• Regulatory capital relief: structured financing solutions to mitigate regulatory capital constraints for borrowers. Rising regulatory capital requirements for financial institutions create an opportunity for non-traditional capital providers to structure capital solution programs aimed at mitigating banks' risk of near-term capital losses in return for insurance-like payments on first loss pieces assumed by financial investors.

Investments are made and are expected to be made primarily in developed markets with a focus on North America although the Company may invest in markets outside of North America if the Company identifies investment opportunities that offer particular value.

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MANAGEMENT'S DISCUSSION AND ANALYSIS for the years ended December 31, 2021 and 2020

Investment restrictions

The Company conducts its activities within the general parameters of its investment objective and strategy but subject to certain specific restrictions. In pursuing its investment strategy, the Company generally aims to adhere to the following investment restrictions:

• Diversification - the net amount invested by the Company in the investments of any one issuer (on a look through basis) will not exceed 20% of the portfolio of the Company, as determined at the time of such investment other than securities issued or guaranteed by the government of Canada, the government of the United States or a province, state or territory thereof.
• Foreign exposure - the net amount invested by the Company in securities outside of Canada and the United States will not exceed 50% of the net asset value of the Company, as determined at the time of such investment.
• Liquidity - the nature of the Company's business allows for investments in public and private securities, and there are no specific restrictions on the liquidity of the assets in which the Company may invest. However, management will ensure that the Company's investment portfolio has sufficient liquidity to satisfy any borrowing obligations, to manage the dividend policy, if any, adopted by the board of directors (the "Board") of the Company from time to time and any share buy-back arrangements.
• Hedging - the Company may use derivatives to hedge credit risk, its exposure to changes in interest rates and currency fluctuations and to gain exposure to individual securities and markets instead of directly buying the securities. The Company may use treasury futures and/or government bonds to hedge against changes in interest rates and may use credit default swaps and credit default indices to hedge credit risk.

Asset Management - Other

In December 2020, the Company, through its indirect wholly-owned subsidiary, MLCSC Holdings LLC ("MLCSC Holdings") acquired a minority stake in SCIM. SCIM manages Portman Ridge Finance Corp., a U.S. business development company, and ACIF. The Company receives periodic distributions from SCIM and recognizes its share of profit or loss in SCIM.

Insurance - Ability

Our insurance business is operated by Ability. The Company acquired 100% of the equity of Ability in the fourth quarter of 2021. Beginning with the fourth quarter of 2021, we present Ability's financial results as a separate reportable segment.

Ability is a Nebraska domiciled insurer and reinsurer of long-term care policies. The acquisition of Ability by the Company combines two products that the Company believes are, and will continue to be, in high demand - insurance solutions and asset management. The Company's acquisition of Ability brings additional capital, strengthening of the investment portfolio, stability and continuity of liability management, and new growth opportunities that will provide increased security to policyholders. The acquisition positions the Company for a new stage of growth with a commitment for immediate and future capital, product diversification, asset management opportunities, de-risking legacy assets, and enhancing risk based capital ("RBC"). The stronger capital base and alignment will allow the Company to scale asset and liability origination for the benefit of Ability's policyholders as well as the Company and its shareholders.

Ability is unique in the insurance industry in that its long-term care portfolio's morbidity risk has been largely reinsured to third-parties. Ability is also no longer re-insuring new long-term care risk and will continue to expand on its specialty health product offerings and begin to reinsure annuity products.

Long-term care insurance policies reimburse policyholders a daily amount (up to a pre-selected limit), upon meeting certain requirements, for services to assist with daily living assisted living facilities as they age.

Annuities are a contract with an insurer where individuals agree to pay a certain amount of money, either in a lump sum or through installments, which entitles them to receive a series of payments at a future date (often lasting for a specified number of years offering a fixed or variable rate based on a market index).

Recent Developments

On October 29, 2021, the Company completed the acquisition of 100% of the equity of Ability (the "Ability Acquisition") for a purchase price of $20.0 million, comprised of the issuance of an unsecured promissory note in the amount of $15.0 million and an aggregate of 1,579,671 common shares of the Company having an aggregate value of $5.0 million. As part of the Ability Acquisition, the Company invested $10.0 million of capital into Ability to strengthen Ability's balance sheet and launch a platform for the reinsurance of annuities, which is expected to reinsure $150.0 million of fixed annuities within the twelve month period following the close of the Ability Acquisition. ML Management has been engaged as an investment adviser for a portion of Ability's assets, increasing ML Management's assets under management.

Also on October 29, 2021, the Company issued an aggregate of 1,258,931 common shares of the Company having an aggregate value of $4.0 million and paid $1.0 million in cash to CIA as part of the deferred purchase price payable by the Company pursuant to the acquisition of Logan Ridge.

During the fourth quarter of 2021, the Company completed the reset of the 2018-1 CLO reinvestment period and extended its maturity date, which will result in a recurring stream of management fee.

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MANAGEMENT'S DISCUSSION AND ANALYSIS for the years ended December 31, 2021 and 2020

Subsequent Events

On March 22, 2022, the Board declared a cash dividend in the amount of CAD$0.02 per common share to be paid on April 8, 2022 to shareholders of record as of March 31, 2022.

COVID Update

The outbreak of the novel coronavirus, or COVID-19, and emergence of variants in many countries continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. Adverse impacts experienced as a result of restrictions implemented to mitigate the spread of the pandemic include, but are not limited to, disruption in global supply chains, slowdown in hospitality, transportation, and entertainment industries, among other industries, decrease demand for certain products, increase in expenses, as well as interruptions in operations necessitating cost-cutting measures such as layoffs, reduction in the labor force, reduced discretionary spending and capital expenditures and supply contract renegotiation. The outbreak has triggered a period of global economic slowdown and continued volatility and could have a continued impact on economic and market conditions. The foregoing adverse impacts of the COVID-19 pandemic could continue even as certain jurisdictions begin or continue the process of lifting restrictions. The overall impact of the COVID-19 pandemic remains uncertain and depends on, among other things, the progression of the virus, the emergence of variants, the timing of the manufacture and distribution of vaccines and the level of public acceptance thereof and that the actions taken by governments in different jurisdictions vary. The rapid development and continued fluidity of this situation precludes any prediction as to the duration and extent of this pandemic and its impact on the Company's business and operating segments, financial condition, and results of operations. The Company continues to actively monitor developments with respect to this pandemic and its impact as part of the Company's overall investment objective, strategy, and operating segments.

Relative to the asset management segment, each company in the Company's investment portfolio has from time to time faced different pressures as a result of the COVID-19 pandemic. Aforementioned COVID-19 adverse impacts potentially affect each underlying portfolio company's business, operations, and financial condition, including a higher risk of defaults which could lead to lower cash flow and increased credit risk of borrowers, potentially ultimately leading to declines in the fair value of the Company's investment portfolio. In order to remain informed of potential negative impacts, the Company seeks to actively monitor its investment portfolio and have regular communications with its portfolio companies to continuously update, re-assess and mitigate these risks, trends and uncertainties. Furthermore, from a risk mitigation perspective, the Company aims to maintain a portfolio that is diversified by industry. The pandemic related disruption and financial distress experienced by our investment portfolio companies may have material adverse effects on our investment income, particularly our interest income received from our investments and would likely result in a decrease in the value of our investment in any such portfolio company.

The Company's insurance segment is subject to regulation and supervision by government authorities in the jurisdictions in which it operates. In the United States, state insurance regulators issued an unprecedented volume of emergency measures to address the impact of the COVID-19 pandemic on policyholders. These regulatory changes impacted policy administration and business practices for insurance companies, and, as content and timing varied by state, they have introduced additional operational and compliance complexity to the business. The Company continues to stay informed with changes in insurance industry regulations as well as the potential for further regulations that may develop as a result of COVID-19.

Overall, the Company's business continuity plan allowed it to continue to operate without disruption by mobilizing its workforce and working remotely.

We cannot predict the full impact of the COVID-19 pandemic, including its duration in Canada, the United States and worldwide and the magnitude of the economic impact of the outbreak, including with respect to the travel restrictions, business closures and other quarantine, stay-at-home orders and social distancing measures imposed on service providers and other individuals by various local, state, and federal governmental authorities, as well as non-Canadian and non-U.S. governmental authorities. As such, we are unable to predict the duration of any business and supply-chain disruptions, the extent to which the COVID-19 pandemic will negatively affect our portfolio companies' operating results, our insurance segment operations of Ability, or the impact that such disruptions may have on our results of operations and financial condition.

Depending on the duration and extent of the disruption to the operations of our portfolio companies, we expect that certain portfolio companies will experience financial distress and possibly default on their financial obligations to us and their other capital providers. The operational and financial performance of the portfolio companies in which we make investments depends on future developments, including the duration and spread of the outbreak, potential treatments and therapies, and the manufacture and distribution of vaccines and the public acceptance thereof, and such uncertainty may in turn impact our valuation of the portfolio companies. It is possible that some of our portfolio companies may significantly curtail business operations, furlough or lay off employees and terminate service providers, and defer capital expenditures if subjected to prolonged and severe financial distress, which would likely impair their business on a permanent basis. The pandemic related disruption and financial distress experienced by our portfolio companies may have material adverse effects on our investment income, particularly our interest income received from our investments and would likely result in a decrease in the value of our investment in any such portfolio company.

The new Ability insurance segment is deemed an essential business. Ability has continued to successfully operate in the environment of the COVID-19 pandemic and expects to continue to do so. Management has and will continue to implement developed plans and proposals for the

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