Mount Logan Capital Inc.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Mount Logan Capital's first quarter 2025 results conference call. Before we begin, I would like to remind listeners that except for historical information, the matters discussed during this call may include forward-looking statements within the meaning of the applicable Canadian security legislation. Forward-looking statements involve known and unknown risks and uncertainties and other factors that may cause actual financial results performance or achievements should be materially different from estimated future results, performance or achievements expressed or implied by those forward-looking statements. All forward-looking statements reflect the company's current views with respect to future events and are subject to risks and uncertainties and assumptions we have made in drawing the conclusions included in such forward-looking statements. The company is not obligated to update or revise any forward-looking statements and we do not assume any obligation to do so. For a description of the risks associated with Mount Loding Capital's business, as well as information about the material factors and assumptions that could cause results to differ from any forward-looking statements and other relevant factors, please refer to the company's public disclosure record, particularly the company's MD&O and annual information form for the year ended December 31, 2024, which are available on CEDA. I would now like to introduce your host for today's conference, Mr. Ted Goldthorpe, Chairman and Chief Executive Officer of Mount Logan Capital. Mr. Goldthorpe, you may begin.

Thank you. Good morning, everyone. We appreciate you joining us for our first quarter 2025 results call. During the call, we will refer to information provided in the first quarter 2025 press release, MD&A, and interim consolidated financial statements, all of which were released Thursday evening. and are available on our website and CDAR. During the day this morning, to discuss our results and outlets for the business, our Chief Financial Officer, Ms. Peter Clausen, our President, Henry Wong, and our Head of Investor Relations, Scott Chen. As a reminder, all references to dollar amounts in this call are in U.S. dollars and much otherwise stated. Overall, we are pleased with the strong financial performance we saw across our key business segments, and we are looking forward to sharing more about that with you today We also are pleased to announce that we obtained our 23rd consecutive quarterly dividend, which would consist of a 2.8% per share distribution for shareholders of record as of May 27, 2025. As a reminder, during our first quarter, we announced a transformative all-stock combination with 180-degree capital, which remains subject to regulatory and shareholder approvals. We filed the joint proxy statement and preliminary form S4 with the NCC on May 6. We anticipate the transaction closing in the second half of 2025, currently estimated for late Q3. Following the combination, the company will operate under the Mount Logan banner and is expected to be listed on the NASDAQ, transitioning from its current listing on the CDOA Canada. To date, our team has been incredibly hard at work on several key initiatives. Completing the conversion of our IFRS financial statements to U.S. DAF, which is a step took progress our announced business combination with 180-degree capital. We also floored for minority investment and runway growth, a $1.3 billion AUM venture lending platform, with the issuance of $5 million in common equity. On the asset management side, we entered into a new investment management agreement that has increased our insurance capital AUM. We also remain active in our evaluation of new investment opportunities, and management of our portfolios and spent significant time on the road meeting with new and prospective investors in our managed funds and vehicles amongst the volatile market backdrop. On the insurance side, we are seeing and executing a new opportunity to grow our business and remain focused on the performance of our managed assets, achieving a 1.3% spread earnings margin on a 12-month basis. This remains in excess of our stated 1% target which we believe provides ample protection for our policyholders and will help contribute to sustained organic growth with inability and not learning. Before we provide a more detailed discussion of our first quarter results, I did want to touch on the market volatility and overall macro conditions that are shaping our business through the first and second quarter, driven by shifting trade dynamics, inflationary pressures, and evolving monetary policy. These conditions underscore the importance of maintaining a consistent credit investment approach across all cycles and taking a long-term perspective rooted in disciplined credit selection and true risk management. The funds we manage are supported by permanent and semi-permanent capital, which enables us to take advantage of opportunities in these times of volatility where others are less able, which will be able to accrue the benefits of all now loading stakeholders. In respect to the financial results for the last 12 months, Mount Logan delivered fee-related earnings, or FRE, of $8.1 million, representing a 25% year-over-year increase. Spread-related earnings, SRE, totaled $7.8 million for the period, down slightly from $9.5 million in the prior year due to actuarial adjustments. The 1.3% spread earnings margin for the trailing 12-month period remains low in excess of our stated target of 1%. For the quarter, Asset management and incentive fees were $2.9 million compared to $3.5 million in the prior year, primarily reflecting an incentive fee reduction innovations alternative income fund, which has been lying down since the third quarter of 2024. We expect performance to return to normalized levels next quarter. The resale funds received significant opportunity to capture market share given the relatively low allocation to prize alternatives industry-wise, and the large total addressable market. We remain committed to the retail distribution channel and view it as a key catalyst for future growth. Sofix, our opportunistic and diversified credit interval fund, delivered another quarter of growth, with net assets increasing to $155 million as of March 31st. Year-to-date through March-May 14th, Sofix has achieved 3.9% returns in year-to-date performance and demonstrated resiliency amid the period of market disruption. We believe the solid performance thus far in 2025 combined with its approximately 9% annualized dividend yield positions SOCX well for fundraising momentum as a differentiated type of credit offering. Meanwhile, ALTSIF, our other credit-focused interval fund, reported total net assets of approximately $207 million a quarter. On the institutional side, our BDC and CLO funds collectively represented 1.1 billion in assets as of quarter end. These vehicles continue to provide strong visibility into Mount Logan's top line, driven by stable fees income generated from permanent and semi-permanent capital basis. As of quarter end, Logan Ridge has a total asset base of approximately $181 million and remains focused on transitioning the portfolio away from the legacy equity positions with only 10.8% of the portfolio in equity securities as of the end of Q1. down from 13.8% in the prior quarter. Mount Logan maintains exposure to its second BDC, Portman Ridge, through its Minority Ownership Request, Portman Ridge's Investment Advisor. As of quarter end, Portman Ridge reported approximately $415 million in total assets. The advisory relationship continues to generate consistent quarterly cash distributions for Mount Logan, contributing to a stable recurring income. We remain excited about the proposed combination of Logan Ridge and Portman Ridge and believe the transaction offers the benefit of increased scale, improved liquidity, and enhanced operational efficiencies, all of which will strengthen our ability to deliver greater value to shareholders with those respective vehicles. On the CLO side, AUM for the quarter was $540 million. We continue to evaluate opportunities to scale our CLO platform following the successes realized managing the CLOs that we took over through garrison transactions. That loan and management specialty finance focus vehicle, the Alternative Income Fund, ended Q1 with approximately $157 million in asset center management. In the third quarter of 2024, we made the strategic decision to initiate an orderly liquidation of the fund. During this process, we made focus on maximizing value for investors and currently expect the majority of assets to be sold over the next few years. To remain confident in the long-term potential of our specialty finance platform, which we view as an attractive segment within private credit given its yield profile, structural protections, and ability to serve credit-worthy and underserved market segments that we are underbanked. We continue to score new opportunities to leverage our team's expertise and drive long-term value for our shareholders. On the insurance side, first quarter investment ask-ups were $1.02 billion and down slightly year-over-year. Early in the first quarter, Mount Logan invested $2.5 million in proceeds into Ability, support a new multi-year guaranteed annuity block of approximately $40 million, and also secure a $40 million investment management mandate with tips to read. Ability's Reinsurance Counterparty, which will support asset growth and increase in management fees, demonstrating the powerful flywheel effect of owning insurance advantaged in a large portion of the assets in-house. Ability's total assets managed by Balbogan were $646 million, representing more than 60% of Ability's total investment assets. The insurance difference remains highly strategic to Mount Logan and is a priority for our team and a key source of growth looking ahead. We're actively deploying capital and managing investments with attractive risk-adjusted returns across the credit spectrum. As we reinsure more annuities, we believe the overall risk profile of our liability base improves as our legacy insurance portfolio becomes a smaller piece of our overall business. Before I turn the call over to Nikita Klassen, I want to take a moment to emphasize our continued excitement about the future of Mount Logan. We built a business defined by stability in both fee and spread earnings across our two core segments, with visibility into near-term organic growth within our asset management and insurance segments. The acquisition and investment into ability remains the best example of how Mount Logan can drive growth organically. Since acquiring Ability, Mount Logan contributed approximately $40 million in capital to support MIGA reinsurance agreements and increased our managed AUM to $646 million. Today, Ability generates approximately $6.2 million in annual gross run rate management fees and contributed $7.8 million in spread-related earnings for the last 12 months and is the centerpiece of our forward-looking business strategy. While our near-term focus remains on the announced 180-degree capital transactions We remain committed to driving organic growth across our key business segments, achieving excellent returns for investors and shareholders in our managed vehicles, and continue to evaluate accretive and complementary V&A opportunities. With that, I will hand the call over to Nikita to walk through our financial results for the quarter.

Good morning, everyone. I will now summarize our key highlights for the first quarter of 2025. As a reminder, all figures referenced on today's call will be in U.S. dollars, Mount Logan's functional and presentation currency. For our Alfred Ramsey segment, in the first quarter of 2025, we generated $3.2 million worth of revenue. Breaking down our asset management revenues further, our CLOs generated approximately $750,000 in management for the quarter, while SOFIC, our interval fund, generated $1.1 million in management and incentives. The net loss related to Outfit recorded within the administration and service agencies was approximately $298,000 for the quarter. With regards to our VDCs, Logan Ridge generated $805,000 in management fees, and we recognized a $282,000 gain on our minority interest in Sierra Crest, which manages Portman Ridge. Overall, these results contributed to revenues increasing by 28% quarter over quarter. We incurred approximately $12.6 million in operating expenses in the asset management segment in the first quarter. This figure includes $7.1 million of corporate overhead expenses, of which $4.5 million is attributable to transaction costs related to the strategic initiatives mentioned by Ted. Excluding the corporate overhead costs, asset management operating expenses decreased 6% quarter-over-quarter, as the fourth quarter of 2024 included two one-time expenses awaiting to be entirely recognized on the Ovation Fund Investment Management Agreement and costs associated with the corporate credit facility upgrades. By the quarter ended March 31st, Mount Logan incurred $1.9 million in interest and credit facility expenses, which primarily relate to our corporate credit facility and the venture unit. Our interest expense increased quarter over quarter, the increase in borrowing and increased paid and timed interest on the debenture unit. Fee-related earnings was $8.1 million for the trailing 12 months ended March 31, 2025, an increase of $1.6 million compared to the trailing 12 months ended March 31, 2024. SRE increased year-over-year due to the growth in fees across managed vehicles, partially offset by higher expenses associated with the operations of a waitress. Moving on to our insurance business, insurance service results decreased by $700,000 quarter over quarter due to the unfavorable impact of in-force updates related to the guardian block within our runoff long-term care book of business, while total revenue for the insurance business in the current quarter increased by $19.6 million compared to the prior quarter as the net gains from investment activities increased due to lower treasury yields. The gross increase in net gains from investment activities was offset by a $6.4 million increase in net gains relating to the collateral held under the Funds Withheld Arrangement, which is referred to as the realized and unrealized loss on indebted derivatives within the Statement of Comprehensive Income. Total expenses for the insurance business in the current quarter increased by $39.4 million compared to the prior quarter. The increase in expenses was driven by lower treasury yields this quarter, which resulted in significantly higher insurance finance expenses of $41.6 million compared to the prior quarter. Additionally, general admin and other expenses increased by $600,000 due to the higher credit loss provision on investment assets and IFRS to discount conversion costs for actuarial work. These increases were partially offset by unrealized losses of $2 million on assets held by the company under its Modified Toll Insurance Agreement, which is recorded as a decrease in reinsurance assets. There also was a $700,000 reduction in investment contract liabilities due to higher-than-average MISA policy surrenders. These surrender charges generate fee income to the company, which offsets the interest accretion on the policies. Regularly, the earnings were $7.8 million for the trailing 12 months ended March 31, 2025, a slight decrease of $1.7 million compared to the trailing 12 months ended March 31, 2024. SRE decreased year-over-year due to higher cost of funds, partially offset by increased investment incomes and lower operating expenses. Cost of funds increased due to the unfavorable impact of in-force updates to our guardian block of long-term care business, whereas the trailing 12 months of 2024, there was a favorable in-force impact of $4.8 million to the Medeco block of business. Investment income increased due to an increase in total insurance, investment assets, and improvement in yields across the portfolios. Mount Logan reported basic and diluted loss per share of 48 cents for the first quarter of 2025. This is compared to basic and diluted earnings per share of 25 cents and 23 cents respectively for the three-month ended December 31, 2024. The decrease in earnings per share resulted from an increase in net insurance finance expense, increase in net investment income, and the increase in insurance service results per quarter over a quarter. As of March 31, 2025, Mount Logan's balance sheet reflected total assets of $1.7 billion, total liabilities of $1.65 billion, and shareholders' equities of $48.9 million. The decrease in shareholders' equities from the fourth quarter of 2024 was used in that loss during the current quarter. On the asset management side of the balance sheet, total assets decreased by 4.3% quarter-over-quarter to $60.9%. This is primarily caused by investing an additional $2.5 million of capital into ability, which eliminates some consolidation and decrease in working capital accounts. The decrease in assets was partially offset by an increase in investments in other assets. Investments increased $3.9 million due to the minority investment in runway, partially offset by redemption in stock-backed shares. Other assets increased primarily due to the increase in deferred past assets. Asset management total liabilities increased 3.6% to $97.9 million, primarily driven by the increase in accrued acquisition-related transaction costs. This increase was partially offset by a decrease in amounts due to affiliates as operating expenses owed to external providers were settled during the quarter. On the insurance side of the balance sheet, total assets increased quarter-over-quarter by $17.1 million to $1.7 billion. The increase in assets was attributable to an increase in cash and cash equivalents as some of the investment portfolio was liquidated and an increase in reinsurance contract assets. Reinsurance contract assets increased as lower discount rates were applied to these balances due to lower treasury bills. Our insurance segment reported total liabilities of $1.6 billion, representing an increase of $19.2 million from December 31, 2024. The increase in liabilities was attributable to increase in insurance contract liabilities of $21.2 million as lower treasury yields led to the higher present values of liabilities. Accrued expenses and other liabilities also increased by $4.9 million driven by incentives payable to a third party on this debt that's held under the Monco agreement. Additionally, debt obligations of the insurance company grew in the first quarter as a new surplus note for $3 million was issued. Each increase was partially offset by a $5 million decrease in investment contract liabilities as a result of the increased surrender, as well as claim payment, partially offset by interest accretion on the remaining NIDA liabilities. The interest swap derivative also decreased by $3.3 million due to lower yields. Further, the funds with held liabilities also decreased by $1.5 million due to recovery from festering rates. Overall, the company has experienced strong SRE and FRE into the first quarter of 2025, and we look forward to the transformational year ahead for Mount Logan. I will now turn the call back to Ted for some closing remarks.