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 to be materially different from estimated future results, performance or achievements expressed or implied by those forward-looking statements. All forward-looking statements will affect 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 Logan 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 Cedar. I would now like to introduce your host for today's conference, Mr. Ted Goldsorff, Chairman and Chief Executive Officer of Mount Logan Capital. Mr. Goldsorff, 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, and internal consolidated financial statements, all of which were released Thursday evening and are available on our website and Cedar. During the evening this morning, to discuss our results and outlook for the business, our Chief Financial Officer, Nate Ketaklossens, our President, Henry Wong, and our Head of Investor Relations, Scott Chan. As a reminder, all references to dollar announcements in this call are in US dollars and much otherwise stated. Overall, we are pleased with the strong financial performance we saw across our team business segments, and we are looking forward to sharing more about that with you today. We are also pleased to announce that we will be paying our 23rd consecutive quarter of the evidence, which would consist of a 2 Canadian cents 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 a joint policy statement and preliminary form S4 with the FTC on May 5. 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 CBOA Canada. To date, our team has been incredibly hard at work on several key initiatives. We completed the conversion of our IFRS financial payments to US DAF, which is a step to progress our announced business combinations with 180 degree capital. We also pulled from minority investment and runway growth of $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 increased our insurance capital AUM, while we also remained 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 seen in executing a new opportunity to grow our business and remain focused on the performance of our managed assets, achieving a .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 within ability and Mount Logan. 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 have shaped 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 discipline, credit selection, and prudent risk management. 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 like Able, which will be able to accrue the benefits of all Mount Logan stakeholders. To respect our financial results, over the last 12 months, Mount Logan delivered fee-related earnings for FRE of $3.1 million, representing the 25% -over-year increase. Spread-related earnings, SRD, totaled $7.8 million for the period, down slightly from $9.5 million in the prior year due to actuarial adjustments. The .3% spread earnings margin for the truly 12-month period means 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 in auditions, alternative income funds, which have been blinded down since the third quarter of 2024. We expect performance to return to normalize levels next quarter. The retail funds received significant opportunity to capture market share, given the relatively low allocation to price alternatives industry-wide and the large total addressable markets. We remain committed to the retail distribution channel and view it as a key catalyst for future growth. Profic, our opportunistic and diversified credit interval funds, delivered another quarter of growth, with net assets increasing to $155 million as of March 31. -to-day through May 14, Profic has achieved .9% returns in -to-day performance and demonstrated resiliency amid the period of market disruption. We believe the solid performance thus far in 2025, combined with approximately 9% annualized credit and annual bills, positioned SouthX well for fundraising momentum as a differentiated private credit offering. Team Wow, AltSix, our other Profic Interval Funds, reported total net assets of approximately $207 million at quarter ends. On the institutional side, our BDC and CLO funds collectively represented $1.1 million in assets as of quarter ends. These vehicles continue to provide strong visibility into Mount Logan's hotline, driven by stable and competitive capital. As the quarter ends, 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 .8% of the portfolio in equity securities as of the end of Q1, down from .8% in the prior quarter. Mount Logan maintains exposure to its second BDC, Portman Ridge, through its minority ownership senior at-crest, Portman Ridge's investment advisor. As of quarter end, Portman Ridge reported approximately $450 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 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. Continue to evaluate opportunities to scale our CLO platforms following the successes realized managing the CLOs as we took over from Garrison Transaction. Mount Logan Management Specialty Finance Focus Vehicle, the ultimate alternative income fund, ended Q1 with approximately $157 million in asset center management. 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 clearly expect the majority of assets to be sold over the next few years. We remain confident in the long-term potential of our specialty finance platform, which we are doing in attractive segments within private credits given the field 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 provide long-term value for our shareholders. On the insurance side, first quarter investment assets were $1.02 billion and down slightly year over year. Early in the first quarter, Mount Logan invested $2.5 million in Proceeds Incubility to support a new multi-year guarantee annuity block of approximately $40 million and also secure a $40 million investment management mandate with HIPAA RE, Abilities Reinsurance Counterparties, which will support asset growth and increase in management fees, demonstrating the powerful flywheel effect of owning insurance advantage in a large portion of the assets in-house. Abilities Total Assets managed by Mount Logan were $646 million, representing more than 60% of Abilities Total Investment assets. The insurance difference remains highly security to Mount Logan and is a priority for our team and a key source of growth looking ahead. We are actively deploying capital and managing investments with attractive risk-adjusted returns across the credit spectrum. As we re-insure more annuities, we believe the overall risk profile of our liabilities improves as our legacy insurance portfolio becomes a smaller piece of our overall business. Before I turn the call over to Nikita Clarkson, I want to take a moment to emphasize our continued excitement about the future of Mount Logan. We built a business defined by stability to build F, C, and Spray earnings across our two core segments, with visibility into near-term organic growth within our asset management and insurance segments. The acquisition investment introability remains the best example of how Mount Logan drives growth organically. Since acquiring Ability, Mount Logan contributed approximately $40 million in capital to support myGov Reinsurance Agreements and increased our managed KUM to $646 million. Today, Ability generates approximately $6.2 million in annual gross loan rate management fees and contributed $7.8 million to spread related earnings for the last 12 months, and is the centerpiece of our affordable key 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 our created and complementary M&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 present-day insurance state. For our asset management segment, in the first quarter of 2025, we generated $3.2 million of revenue. Breaking down our asset management revenue further, our CLOs generated approximately $750,000 in management for the quarter, while topics, our interval funds, generated $1.1 million in management and incentive fees. In that loss related to Alt-5 recorded within the administration and servicing fees was approximately $290,000 for the quarter. With regards to our VDCs, Loganwood generated $805,000 in management fees, and we recognized a $282,000 gain on our minority interest in Sierra Press, which manages Portman Ridge. Overall, these results contribute us 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 available to turn vaccine costs, related to the strategic initiatives mentioned later. Excluding these corporate overhead costs, asset management operating expenses decreased by 6% quarter over quarter, as the fourth quarter of 2024 included two one-time expenses relating to the entanglement recognized on the Ovington Funds Investment and Management and costs associated with the corporate credit facility upside. With the quarter ended March 31, Mount Logan incurred $1.9 million in interest and credit facility expenses, which primarily relate to our corporate credit facility and debenture units. Our interest expense increased quarter over quarter, due to increase in borrowing and increase in paid and paid interest on the debenture units. C-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. FRE increased year over year due to the growth in fees across managed vehicles, partially offset by high expenses associated with the operations of the waitress. Moving on to our insurance business, insurance service results decreased by $700,000 quarter over quarter due to the unfavorable impact of import updates related to the Guardian blog 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 gain from investment activities increased due to lower treasury yields. The growth increase in net gain from investment activities was offset by a $6.4 million increase in net gain relating to the collateral held under the Funds withheld arrangement with Funds Treatment, which is referred to as the realized and unrealized lock-on indebted derivative 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 cost provision on investment assets and IFRS-C of GAP conversion costs for actuarial work. These increases were partly offset by unrealized losses of $2 million on assets held by the company under its modified pulling charge agreement with Dysfest, which is recorded as a decrease in the insurance assets. There also was a $700,000 reduction in investment contracts liabilities due to higher than average costs by the policy surrendered. These surrendered charges generate E-Income to the company, which offsets the increase in creation on the policies. Striking rated earnings was $7.8 million for the trail in 12 months ended March 31, 2025, a slight increase of $1.7 million compared to the trail in 12 months ended March 31, 2024. SREs decreased year over year due to higher cost of funds, partly 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 trail in 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 portfolio. Mount Lodon reported basic and diluted loss per share of $0.48 for the first quarter of 2025. This is compared to basic and diluted earnings per share of $0.25 to $0.23 respectively for the three months ended December 31, 2024. A 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 for the first quarter over quarter. As of March 31, 2025, Mount Lodon's balance sheet reflected total assets of $1.7 billion, total liabilities of $1.65 billion, and shareholders' equity of $48.9 million. The decrease in shareholders' equity from the fourth quarter of 2024 was due to net loss during the current quarter. On the asset management side of the balance sheet, total assets decreased by 4.3 percent from the quarter over quarter to 60.9. This is primarily caused by investing an additional $2.5 million of capital into abilities, 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, which is a minority investment in runway, partially offset by a reduction in stock-back shares. Other assets increased primarily due to the increase in deferred past assets. Asset management total liabilities increased 3.6 percent, to $97.9 million, primarily driven by the increase in accrued acquisition-related transaction costs. This increase was partially offset by a decrease in announced 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 investments for OEO 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 an increase in insurance contract liabilities of $21.2 million as lower treasury bills applied to the higher present values of liabilities. Accrued expenses and other liabilities also increased by $4.9 million, driven by incentives to be payable to a third party on this asset 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. These increases were partially offset by a $5 million decrease in investment contract liabilities as a result of the increase surrendered, as well as claim payments, partially offset by interest accretion on the remaining NIDIL 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 the West Street rate. 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.

Thanks, Nikita. In closing, we are excited about the prospect of our business and believe we have built the foundation for future success. Despite the challenging macro backdrop, our portfolios are well positioned and we continue to actively deploy capital to take advantage of the attractive opportunities we see in the volatile market. We remain incredibly excited about our announced business combination with 20 degree capital, which will be key in helping us achieve our goals and ambitions, and we expect to provide further updates as the transaction progresses. This concludes the preparable remarks. We will now transition the call to the student accession of the operator, please go ahead,

Nikita. Thank you. If you would like to ask a question, please press star and then 1 on your telephone keypad. You will be advised when to ask your question. The first question today comes from Matthew Lee with Camacord. Please go ahead, Matthew.

Hi, good morning. Thanks for taking my question. I maybe wanted to draw another bit on the SRE, which is a bit lower than we were expecting for the quarter. You know, lots of moving parts there, but just maybe talk about what key items and how to the number, and more importantly how confident you are in the ability to have the 10 million plus SRE in 2025 as we've chatted a little before.

Sure, thanks, Matt. So I would say that I would look at SRE more on the trailing 12 month basis than the discrete quarter, recognizing that it went from 0.4 million in Q1 to 3.1 million in Q4. So the way we look at it is more on an annualized basis because of when we received the actuarial updates on the runoff long-term care block. You can get muted over time as that book continues to run off, but we've seen generally favorable updates overall between FedECO and Guardian blocks, but we did see the gap in Q1. In terms of adjusted SRE, if we were to normalize for these types of updates, it would show that SRE actually increased significantly more, since 9.6 million versus 4.7 million in the prior year. So I think we're decently confident that we'll see favorable trending towards the 10 million that you mentioned into this year, especially bolstered by the new MIGA flow agreement that we have. The MIGA portfolio isn't impacted by these types of updates, and so as long as we're able to guarantee that there is a crediting rate and what we're deploying that capital into can move this spread, and we keep a really mindful approach to how our expenses are doing, we're fairly confident that 10 million is doable.

All right, that's helpful. And then maybe on AUM, it feels like the elevation is going down instead of going as planned, and ability is starting to get a bit flat. I think the net impact would certainly lower by a quarter of a quarter AUM, but how can we think about growth in the book this year? And I guess it would be mainly ability and still fix it and drive it,

right? Yeah, I think that's a good question. So I think we kind of break our business into two. One is our growth areas and one is our stable and I would say like patch-rolling AUM, which is kind of in wind down. So AIS in wind down, so that'll definitely shrink, but it'll be more than offset by AUM growth and ability, and we also expect our Opportunistic Fund stock export dimension to grow as well. So we actually feel very confident that our AUM should increase this

year. That's very helpful, actually. Thank you. We'll provide, just for everybody, we'll provide additional disclosure on that in the subsequent quarters.

Thank you. Our next question comes from Mark Trevbolt, the clinicals.

Please go ahead.

Hey guys, in terms of Mark Trevbolt's tellery, how do you characterize the AUM as a theme and how does that quality of that in face market?

Yeah, well, I think it's a good question. Yeah, I think it's a good question. I think it's really good. A lot of uncertainty, companies are very inward focused and private equity activity has really slowed down. That being said, because of where we play in the market, we actually have a pretty decent pipeline and we can't really tell if that's, that's like, it's very inconsistent with macro. I think the reason for that is, one is I think our hit rate has gone up and quite frankly we've just won some deals that our hit rate has been higher than normal. I don't think that's indicative of the trend. And number two is like, you know, again, like our market is consolidating so fast that a lot of our previous peers either sold themselves or have moved way up market. So we feel like where we are now, like as an overall platform, we really don't feel like there's like as much competition as there has been because the people raising the money have moved way up and there's a number of players who can do things smaller than us. But kind of where we play, we're feeling that there's less competition. And the second thing I'd say is, is for the first time in 25 years, we are seeing decent relative value in Europe versus the U.S. So our deployment in Europe actually is higher than normal because for a whole bunch of reasons, but if the present was a little bit wider, again, banks seem to be slowing down competition-wise there. And I think a number of people are seeing kind of better relative value in Europe as well.

Thank you. The next question comes from Craig Chan with Empire Life Investments. Please go ahead.

Hi, good morning. I have a couple of questions. First up, is the time work for the 180 degree capital transactions still expected for mid 2025?

Yes, that's our intent. So we've already amended it for early last week. And so that starts the clock for the FTCs for the comment letter process. So take, we anticipate a few rounds of comments, largely dependent on just going through regular, regulatory process with the staff, at what point, at which point we'll start the proxy solicitation. And so that's just going through the timeline. A comparative estimate puts us at the end of 23 to close. Ideally, it speaks for everyone that we'd like that to be significantly sooner, or we're going to hit the ground running as an aspect of our student entity. However, just the regulatory process that we have to go through.

Okay, thank you. And what is the MLT stock and high conversion value after 212025?

I can take this as a sub-topic for the question, Craig. The opposed to one, the estimated MLT stock and high conversion price is about $340 per share. That's about flat -by-quarter from year-end results. And to take this up back, the transaction return, the total transaction return, our conversion price is based on $2224 IFRS, a put value of $67.4 million in US dollars. And that includes the last adjustment as well. The biggest adjustment is the one that we closed one way for $5 million, $5 million US dollars in new issue equity, just to support that as well. So $340 per share, $67.4 million. And then we just followed the F4 that we keep approaching. So another US gap, we do want to note that our put value does increase to $404 million. $57 million under IFRS has issued for 2024. And a lot of that increases on the different accounting and more reserves, reducing the liabilities and increasing the equity on the US

gap. Okay, Craig. Thank you.

Thank you. The next question comes from Nick Arbona with Manulife

Wealth. Please go ahead.

Thank you. Yes, I actually, I've got two questions as well. First, regarding insurance, it looks like you guys have some good momentum within that segment. So what are the key insurance initiatives going forward?

Yeah, good question. I would say, you know, our goal is twofold. One is to grow the overall size of the business. So we're just entering into a new, we're in the process of entering into a new contract to grow the business. So that's getting into organic growth. And then the second thing is, you know, as I mentioned in my script, you know, we're managing today around 50% of the assets. And obviously the goal is to manage more of that over time. So we can grow not only by growing each insurance company, but we can also grow by managing more of the assets.

Awesome. Okay, thank you. And just in regards to stock exchange performance, do you believe that, you know, better performance could lead to improved growth load?

Yeah, good question. I mean, you know, we mark our business based on franchise and differentiation. We try not to go to some returns. The inception of the day returns for stock exchange for us. And it's had a really good year today. And one thing that happened is during the care volatility, performance was strongly positive. So that's really helping us from a marketing perspective. And so it should lead to better growth for us.

Awesome. Okay, thanks so much. Thank you.

Thank you. Our next question comes from Matt Hedbolt with Canaccord.

Please go ahead.

So from a sector basis, how do you guys vision within the tariffs?

Yeah,

originally, that's what it's meant to be. So we play folks on enterprise. So we're taking software, healthcare, industrial, sports, P&F, financials, places like that. So we have a very, very, very low consumer sector presence. We really only have one company that has tariff pressures. And that company is an unbelievable business, low levered and has like incredibly high market share. And they're going to be able to pass on price increases. So the big thing we're pushing on our companies is second and third order effects. So what happens if there's recession? You know, what happens with supply chain disruptions, things like that. But we have very, very little of a way of direct tariff exposure. Okay.

Thanks, Ed.

Thank you. There are currently no questions in the queue. Please be reminded, if you would like to ask a question, press start or buy one on your telephone keypad now. There are no further questions. So I will hand you back to your host who can do

today's

conference. Thank you. Thank you, everyone, for your time today. As always, we are happy to make ourselves available any questions you may have on the business. We look forward to speaking with you to recap Q2 2025 results in August. We hope you all have a great week end and thank you so much.

Thank you, everyone, for joining us today. This concludes our call and you may now disconnect your lines.