Mount Logan Capital : Q3 2022 Financial Statements

MOUNT LOGAN CAPITAL INC.

Unaudited Consolidated Financial Statements

Nine months ended September 30, 2022 and 2021

MOUNT LOGAN CAPITAL INC.

Unaudited Interim Consolidated Statements of Financial Position

(in thousands of United States dollars)

					September 30,		December 31,
As at	Notes	2022			2021
ASSETS
Asset Management:
Cash	$	6,275		$	14,433
Restricted cash				52			135
Investments	7		26,121			35,209
Intangible assets	9		21,463			22,060
Other assets	15		4,685			4,180
Total assets - asset management				58,596			76,017
Insurance:
Cash and cash equivalents	$	40,933			29,733
Investments	7		833,603			881,170
Reinsurance assets	13		243,959			329,902
Intangible assets	9		4,707			2,504
Goodwill	9		55,015			55,015
Other assets	15		40,761			18,970
Total assets - insurance				1,218,978			1,317,294
Total assets			$	1,277,574		$	1,393,311
LIABILITIES
Asset Management
Due to affiliates	10		578		$	3,852
Debt obligations	12		45,996			42,708
Contingent value rights	11		2,969			4,169
Accrued expenses and other liabilities	15		1,329			3,916
Total liabilities - asset management				50,872			54,645
Insurance							ok
Debt obligations	12		2,250			2,250
Insurance contract liabilities	13		808,318			942,865
Investment contract liabilities	14		73,456			-
Funds held under reinsurance contracts				225,343			291,296
Reinsurance liabilities	13		10,606			10,528
Accrued expenses and other liabilities	15		10,363			6,421
Total liabilities - insurance				1,130,336			1,253,360
Total liabilities				1,181,208			1,308,005
EQUITY
Common shares	11		108,055			108,055
Warrants	11		1,129			1,129
Contributed surplus				7,240			7,240
Surplus (Deficit)				1,800			(9,260)
Cumulative translation adjustment				(21,858)		(21,858)
Total equity				96,366			85,306
Total liabilities and equity			$	1,277,574		$	1,393,311
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. September 30, 2022 INTERIM REPORT 2

MOUNT LOGAN CAPITAL INC.

Unaudited Interim Consolidated Statements of Comprehensive Income (Loss)

(in thousands of United States dollars, except per share amounts)

			Three Months Ended					Nine Months Ended
		September 30,	September 30,			September 30,	September 30,
	Notes		2022			2021				2022			2021
REVENUE
Asset management
Management and servicing fees	8	$	980		$	1,902	$	4,822		$	3,052
Interest income			311			795				951			2,254
Dividend income			-		15				276			152
Net gains (losses) from investment activities	5		457			473				657			834
Total revenue - asset management			1,748			3,185				6,706			6,292
Insurance
Premium income
Gross premiums			26,114			-				74,892			-
Premiums ceded to reinsurers			(16,747)		-				(50,137)		-
Net premiums			9,367			-				24,755			-
Net investment income	6		15,527			-				38,358			-
Net gains (losses) from investment activities	5		(31,596)		-				(118,166)		-
Realized and unrealized gains (losses) on embedded derivative - funds
withheld			11,898			-				48,959			-
Other income			1,168			-				3,845			-
Total revenue - insurance			6,364			-				(2,249)		-
Total revenue			8,112			3,185				4,457			6,292
EXPENSES
Asset management
Administration fees	10		358			278				983			822
Transaction costs			-		500				-		1,005
Amortization of intangible assets	9		199			202				597			588
Interest and other credit facility expenses	12		867			965				2,394			1,517
General, administrative and other			1,586			1,167				4,951			2,325
Total expenses - asset management			3,010			3,112				8,925			6,257
Insurance
Policy benefits and claims:
Gross claims and benefits			24,720			-				79,521			-
Increase (decrease) in insurance contract liabilities	13		(59,020)		-				(134,547)		-
Increase (decrease) in investment contract liabilities	14		324			-				888			-
Benefits and expenses ceded to reinsurers			(23,010)		-				(72,538)		-
(Increase) decrease in reinsurance assets	13		37,728			-				96,449			-
Net policy benefits and claims			(19,258)		-				(30,227)		-
Administration fees			1,745			-				5,634			-
Interest expense			-		-				56			-
Insurance expenses			1,414			-				3,851			-
Other expenses			1,762			-				3,925			-
Total expenses - insurance			(14,337)		-				(16,761)		-
Total expenses			(11,327)		3,112				(7,836)		6,257
Income (loss) before taxes			19,439			73				12,293			35
Income tax (expense) benefit - asset management	16		149			406				(195)		509
Net income (loss) and comprehensive income (loss)		$	19,588		$	479			$	12,098		$	544
Earnings per share	11
Basic		$	0.88		$	0.03	$	0.55		$	0.03
Diluted		$	0.87		$	0.02	$	0.54		$	0.03
Dividends per common share - USD		$	0.02		$	0.02	$	0.05		$	0.05
Dividends per common share - CAD		$	0.02		$	0.02	$	0.06		$	0.06

The accompanying notes are an integral part of these consolidated financial statements.

Mount Logan Capital Inc. September 30, 2022 INTERIM REPORT 3

MOUNT LOGAN CAPITAL INC.

Unaudited Interim Consolidated Statements of Changes in Equity

(in thousands of United States dollars, except number of shares)

		Number of
		Voting															Cumulative
		Common			Common						Contributed			Surplus		Translation		Total
Nine months ended September 30, 2022	Notes	Shares			Shares			Warrants			Surplus			(Deficit)			Adjustment			Equity
Balance at December 31, 2021		22,190,195	$	108,055	$	1,129	$	7,240	$	(9,260)	$	(21,858)	$	85,306
Shareholder dividends	11	-			-			-			-			(1,038)		-		(1,038)
Net income (loss) and comprehensive
income (loss)		-			-			-			-			12,098			-		12,098
Balance at September 30, 2022		22,190,195			108,055			1,129			7,240			1,800			(21,858)			96,366
		Number of
		Voting															Cumulative
		Common			Common						Contributed						Translation		Total
Nine Months Ended September 30, 2021	Notes	Shares			Shares			Warrants			Surplus			Deficit			Adjustment			Equity
Balance at December 31, 2020		16,963,379	$	93,480	$	1,086	$	7,240	$	(36,770)	$	(21,858)	$	43,178
Share issuance	11	223,214			477			-			-			-		-		477
Shareholder dividends	11	-			-			-			-			(554)		-		(554)
Net income (loss) and comprehensive
income (loss)		-			-			-			-			65			-			65
Balance at September 30, 2021		17,186,593			93,957			1,086			7,240			(37,259)		(21,858)		43,166

The accompanying notes are an integral part of these consolidated financial statements.

Mount Logan Capital Inc. September 30, 2022 INTERIM REPORT 4

MOUNT LOGAN CAPITAL INC.

Unaudited Interim Consolidated Statements of Cash Flows

(in thousands of United States dollars)
For the nine months ended September 30,	Notes	2022			2021
Operating Activities
Comprehensive income (loss)	$	12,098		$	544
Adjustments to reconcile comprehensive income (loss) to net cash provided by (used in) operating
activities:
Net realized (gains) loss on investments			3,824			(315)
Net realized (gains) loss on foreign currency			(4)		(26)
Net change in unrealized (appreciation) depreciation on investments			113,442			(445)
Net change in unrealized (appreciation) depreciation on foreign currency			247			(48)
Payment in-kind			(22)		-
Change in equity investments			(996)		(658)
Net amortization of premiums and accretion of discounts on investments			(1)		(73)
Amortization of debt issuance costs			173			475
Amortization of intangible assets			906			588
(Increase) decrease in operating assets:
Due from affiliates			-		-
Reinsurance assets			85,943			-
Deferred tax asset			-		(1,778)
Other assets			(21,665)		(1,508)
Increase (decrease) in operating liabilities:
Due to affiliates			(3,274)		1,832
Insurance contract liabilities - Insurance			(134,546)		-
Investment contract liabilities - Insurance			73,456			-
Funds held under reinsurance contracts - Insurance			(65,954)		-
Reinsurance liabilities			78			-
Accrued expenses and other liabilities			1,355			938
Contingent value rights			(1,200)		(285)
Other cash used in operating activities			(1,970)		-
Net cash provided by (used in) operating activities			61,890			(759)
Investing Activities
Purchases of investments			(283,618)		(53,555)
Proceeds from sales and repayments of investments			222,360			42,633
Intangible assets			-			(9,601)
Net cash provided by (used in) investing activities			(61,258)		(20,523)
Financing Activities
Shareholder dividends	11		(1,038)		(863)
Proceeds from issuance of common shares, net of offering costs			-		5,654
Proceeds from borrowings of asset management business			4,365			36,114
Repayments of borrowings of asset management business			(1,250)		(39,730)
Net cash provided by (used in) financing activities			2,077			1,175
Net increase (decrease) in cash and restricted cash			2,709			(20,107)
Effects of exchange rate changes on cash and restricted cash			250			(190)
Cash and restricted cash, beginning of period			44,301			24,278
Cash and restricted cash, end of period		$	47,260		$	3,981
Supplemental disclosures of cash flow information
Interest received	$	34,678		$	2,097
Interest paid			2,911			1,278
Dividends received			384			152
Income taxes paid			531			-
Dividends paid			1,038			863
Financing costs payable			-		710
Issuance of warrants			-		43
Seller note			-		4,000
Intangible assets payable			-		5,750
Cash and restricted cash
Asset management
Cash	$	6,275		$	2,140
Restricted cash			52			1,841
Total asset management			6,327			3,981
Insurance
Cash			40,933			-
Total insurance			40,933			-
Total cash and restricted cash	$	47,260		$	3,981

The accompanying notes are an integral part of these consolidated financial statements.

Mount Logan Capital Inc. September 30, 2022 INTERIM REPORT 5