Mount Logan Capital Inc. (Cboe Canada: MLC) (“Mount Logan” or the
“Company”) announced today its financial results for the first
quarter ended March 31, 2024. All amounts are stated in United
States dollars, unless otherwise indicated.
First Quarter 2024
Highlights
- Total revenue for the asset management segment of the
Company of $4.0 million, an increase of $2.1 million, or
109%, as compared to the first quarter of 2023. The increase is
primarily due to growth in fees attributable to the inclusion of
Ovation management and incentive fees, increase in CLO fees, growth
in the Opportunistic Credit Interval Fund, and other sub-advisory
activities of Mount Logan. First quarter asset management revenues
exclude $1.4 million of management fees associated with Mount
Logan’s management of the assets of Ability Insurance Company
(“Ability”), a wholly-owned subsidiary of the Company, during the
first quarter of 2024, which increased by $0.6 million, or 74% as
compared to first quarter 2023 of $0.8 million.
- Total net investment income for the insurance
segment was $21.8 million for the three months ended March
31, 2024, an increase of $1.6 million, or 7.8%, as compared to the
first quarter of 2023, driven by an increase in total insurance
investment assets and improvements in yield across the investment
portfolio attributable to deployment of capital in a higher rate
environment. Excluding the funds withheld under reinsurance
contracts and Modco, Ability’s net investment income was $14.1
million, an increase of $3.0 million, or 27%, as compared to the
first quarter of 2023.
- 7.9%1 yield on the insurance investment
portfolio as of March 31, 2024 reflective of ongoing
portfolio and capital optimization across the insurance solutions
portfolio alongside the benefit of higher base rates. Excluding the
funds withheld under reinsurance contracts and Modco, the yield was
8.5%.
- Ability’s total assets managed by Mount Logan
increased to $616.8 million as of March 31, 2024, up $145.6 million
from first quarter 2023 of $471.2 million. As of March 31, 2024,
the insurance segment included $1.0 billion in total investment
assets, up $138.2 million or 15% from first quarter 2023 investment
assets of $904.8 million.
- Book value of the insurance segment as of
March 31, 2024 was $82.6 million, an increase of $56.0 million as
compared to $26.6 million for first quarter 2023.
- Published SRE disclosure for the insurance
segment, generating $9.5 million for the trailing twelve
months ended March 31, 2024. SRE is a non-IFRS financial measure
used to assess the insurance segment’s generation of profits
excluding the impact of certain market volatility and other
one-time, non-core components of insurance segment income (loss).
The Company believes this measure is useful to shareholders as it
provides additional insight into the underlying economics of the
insurance segment.
- FRE for the asset management segment was $1.6
million for the three months ended March 31, 2024, an increase of
$0.2 million, or 15% compared to the first quarter of March 31,
2023. FRE was $6.5 million for the twelve months ended March 31,
2024, an increase of $0.4 million, or 7.1%, compared to the twelve
months ended March 31, 2023 of $6.1 million primarily driven by the
previously mentioned revenue improvements.
- Announced the completion of an $18.8 million capital
raise and opportunistic refinancing, representing an important
milestone for the business as it simplifies Mount Logan’s capital
structure at an attractive fixed-rate over the next 8
years. $13.6 million of the net proceeds of the
offering were used to repay all existing indebtedness at Lind
Bridge L.P., a wholly owned subsidiary of Mount Logan, which had
previously been raised to support direct growth investment into
Ability. The balance of the proceeds of the offering are being used
for general corporate purposes, primarily supporting the Company’s
working capital position, and paying outstanding transaction fees
and expenses.
Subsequent Events
- Declared a shareholder distribution in the amount of
C$0.02 per common share for the quarter ended March 31,
2024, payable on May 31, 2024 to shareholders of record at the
close of business on May 22, 2024. This cash dividend marks the
nineteenth consecutive quarter of the Company issuing a C$0.02
distribution to its shareholders. This dividend is designated by
the Company as an eligible dividend for the purpose of the Income
Tax Act (Canada) and any similar provincial or territorial
legislation. An enhanced dividend tax credit applies to eligible
dividends paid to Canadian residents.
Management Commentary
- Ted Goldthorpe, Chief Executive Officer and Chairman of
Mount Logan stated, “We are excited to announce our first
quarter 2024 results, which demonstrate the earnings power of both
our asset management and insurance segments. Fee Related Earnings,
or FRE, of the asset management segment was up significantly
year-over-year and highlights the growing profitability of our
asset management business. Additionally, today we published a
new non-IFRS metric, Spread Related Earnings, or SRE, which
highlights the profitability of our insurance segment and provides
additional information to enable shareholders to better understand
the financial performance of our insurance segment.”
_______________________________
1The yield is calculated based on the net
investment income excluding reinsured portfolio income less
management fees paid to Mount Logan divided by the average of
investments in financial assets for the current and prior period,
and then is annualized.
Selected Financial
Highlights
- Total Capital of the Company was $147.1
million at March 31, 2024, an increase of $17.6 million as compared
to December 31, 2023. Total capital consists of debt obligations
and total shareholders’ equity.
- Consolidated net income(loss) before taxes was
$13.1 million for the three months ended March 31, 2024, an
increase of $42.3 million from $(29.2 million) for the first
quarter 2023. The increase is due to increases in risk-adjusted
market interest rates, which resulted in lower net insurance
finance expense.
- Basic Earnings per share (“EPS”) was
$0.51 for the three months ended March 31, 2024, an increase of
$1.84 from $(1.33) for the first quarter 2023. The increase in EPS
resulted primarily from an increase in the net insurance finance
income in the first quarter 2024 compared to the first quarter
2023. The increase in net insurance finance income in the first
quarter 2024 was attributable to changes in risk-adjusted market
interest rates.
- Adjusted basic EPS was $0.54 for the first
quarter 2024, an increase of $1.84 from $(1.30) for the first
quarter 2023.
Results of Operations by
Segment
($ in Thousands)
| |
Three Months Ended |
|
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
|
March 31, 2023 |
|
| Reported
Results(1) |
|
|
|
|
|
|
|
|
| Asset
management |
|
|
|
|
|
|
|
|
|
Revenue |
$ |
4,030 |
|
|
$ |
3,723 |
|
|
$ |
1,926 |
|
| Expenses |
|
7,315 |
|
|
|
7,839 |
|
|
|
5,840 |
|
| Net income (loss) - asset
management |
|
(3,285 |
) |
|
|
(4,116 |
) |
|
|
(3,914 |
) |
|
Insurance |
|
|
|
|
|
|
|
|
| Revenue(2) |
|
17,555 |
|
|
|
30,847 |
|
|
|
10,186 |
|
| Expenses |
|
822 |
|
|
|
28,677 |
|
|
|
35,459 |
|
| Net
income (loss) - insurance |
|
16,733 |
|
|
|
2,170 |
|
|
|
(25,273 |
) |
| Income before income
taxes |
|
13,148 |
|
|
|
(1,946 |
) |
|
|
(29,187 |
) |
|
Provision for income taxes |
|
(56 |
) |
|
|
(315 |
) |
|
|
(265 |
) |
| Net income
(loss) |
$ |
13,092 |
|
|
$ |
(2,261 |
) |
|
$ |
(29,452 |
) |
| Basic EPS |
$ |
0.51 |
|
|
$ |
(0.09 |
) |
|
$ |
(1.33 |
) |
| Diluted
EPS |
$ |
0.50 |
|
|
$ |
(0.09 |
) |
|
$ |
(1.33 |
) |
| Adjusting
Items |
|
|
|
|
|
|
|
|
| Asset
management |
|
|
|
|
|
|
|
|
| Transaction costs(3) |
|
(251 |
) |
|
|
(1,413 |
) |
|
|
(158 |
) |
| Acquisition integration
costs(4) |
|
(250 |
) |
|
|
— |
|
|
|
(375 |
) |
|
Non-cash items(5) |
|
(346 |
) |
|
|
(553 |
) |
|
|
(140 |
) |
| Impact
of adjusting items on expenses |
|
(847 |
) |
|
|
(1,966 |
) |
|
|
(673 |
) |
| Adjusted
Results |
|
|
|
|
|
|
|
|
| Asset
management |
|
|
|
|
|
|
|
|
| Revenue |
$ |
4,030 |
|
|
$ |
3,723 |
|
|
$ |
1,926 |
|
| Expenses |
|
6,768 |
|
|
|
5,873 |
|
|
|
5,167 |
|
| Net
income (loss) - asset management |
|
(2,738 |
) |
|
|
(2,150 |
) |
|
|
(3,241 |
) |
| Income before income
taxes |
|
13,995 |
|
|
|
20 |
|
|
|
(28,514 |
) |
|
Provision for income taxes |
|
(56 |
) |
|
|
(315 |
) |
|
|
(265 |
) |
| Net income
(loss) |
$ |
13,939 |
|
|
$ |
(295 |
) |
|
$ |
(28,779 |
) |
| Basic EPS |
$ |
0.54 |
|
|
$ |
(0.01 |
) |
|
$ |
(1.30 |
) |
| Diluted
EPS |
$ |
0.54 |
|
|
$ |
(0.01 |
) |
|
$ |
(1.30 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
(1) Certain comparative figures have been reclassified to
conform with the current year's presentation, including the
reclassification of "Net realized and unrealized gain (loss)" to
"Revenue"
(2) Insurance Revenue line item is presented net of insurance
service expenses and net expenses from reinsurance contracts
held.
(3) Transaction costs are related to business acquisitions and
strategic initiatives transacted by the Company.
(4) Acquisition integration costs are consulting and
administration services fees related to integrating a business into
the Company. Acquisition integration costs are recorded in general,
administrative and other expenses.
(5) Non-cash items include amortization of acquisition-related
intangible assets and impairment of goodwill, if any.
Asset
Management
Total Revenue – Asset Management
($ in Thousands)
| |
Three Months Ended |
|
|
March 31, 2024 |
|
March 31, 2023 |
|
Management fee |
$ |
3,494 |
|
$ |
1,237 |
| Equity investment earning |
|
224 |
|
|
468 |
| Interest income |
|
271 |
|
|
268 |
| Dividend income |
|
112 |
|
|
56 |
|
Net gains (losses) from investment activities |
|
(71 |
) |
|
(103) |
|
Total revenue — asset management |
$ |
4,030 |
|
$ |
1,926 |
| |
|
|
|
|
|
Quarter Ended Fee Related Earnings (“FRE”)
Fee Related Earnings (“FRE”) is a non-IFRS
financial measure used to assess the asset management segment’s
generation of profits from revenues that are measured and received
on a recurring basis and are not dependent on future realization
events. The Company calculates FRE, and reconciles FRE to net
income from it’s asset management activities, as follows:
| ($ in
Thousands) |
Three Months Ended |
|
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
|
Net income (loss) and comprehensive income
(loss) |
|
13,092 |
|
|
|
(29,452 |
) |
| |
|
|
|
|
|
| Adjustment to net
income (loss) and comprehensive income (loss): |
|
|
|
|
|
| Total revenue - insurance(1) |
|
(17,555 |
) |
|
|
(10,186 |
) |
| Total
expenses - insurance |
|
822 |
|
|
|
35,459 |
|
| Net income - asset
management(2) |
|
(3,641 |
) |
|
|
(4,179 |
) |
| Adjustments to non-fee generating
asset management business and other recurring revenue stream: |
|
|
|
|
|
|
Management fee from Ability |
|
1,429 |
|
|
|
823 |
|
|
Interest income |
|
— |
|
|
|
— |
|
|
Dividend income |
|
(112 |
) |
|
|
(56 |
) |
|
Net gains (losses) from investment activities |
|
71 |
|
|
|
103 |
|
|
Administration and servicing fees |
|
366 |
|
|
|
174 |
|
|
Transaction costs |
|
251 |
|
|
|
158 |
|
|
Amortization of intangible assets |
|
346 |
|
|
|
140 |
|
|
Interest and other credit facility expenses |
|
1,702 |
|
|
|
1,254 |
|
|
General, administrative and other |
|
1,233 |
|
|
|
3,013 |
|
|
Fee Related Earnings |
$ |
1,645 |
|
|
$ |
1,430 |
|
| |
|
|
|
|
|
|
|
(1) Includes add-back of management fees paid to ML Management
(as defined below).
(2) Represents net income for asset management, as presented in
the Interim Consolidated Statement of Comprehensive Income
(Loss).
The following table presents FRE, the performance measure of our
Asset segment for the trailing twelve month period ended March 31,
2024 and March 31, 2023 respectively:
Trailing Twelve Month FRE
| ($ in
Thousands) |
Trailing Twelve Months Ended |
|
|
|
March 31, 2024 |
|
|
March 31, 2023 |
|
|
Net income (loss) and comprehensive income
(loss) |
|
26,088 |
|
|
|
(4,056 |
) |
| |
|
|
|
|
|
| Adjustment to net
income (loss) and comprehensive income (loss): |
|
|
|
|
|
| Total revenue - insurance(1) |
|
(76,512 |
) |
|
|
2,831 |
|
| Total
expenses - insurance |
|
35,450 |
|
|
|
(6,798 |
) |
| Net income - asset
management(2) |
|
(14,974 |
) |
|
|
(8,023 |
) |
| Adjustments to non-fee generating
asset management business and other recurring revenue stream: |
|
|
|
|
|
|
Management fee from Ability |
|
4,853 |
|
|
|
2,170 |
|
|
Interest income |
|
— |
|
|
|
(95 |
) |
|
Dividend income |
|
(640 |
) |
|
|
(211 |
) |
|
Net gains (losses) from investment activities |
|
157 |
|
|
|
687 |
|
|
Administration and servicing fees |
|
1,228 |
|
|
|
748 |
|
|
Transaction costs |
|
3,814 |
|
|
|
343 |
|
|
Amortization of intangible assets |
|
1,178 |
|
|
|
500 |
|
|
Interest and other credit facility expenses |
|
6,425 |
|
|
|
4,057 |
|
|
General, administrative and other |
|
4,481 |
|
|
|
5,912 |
|
|
Fee Related Earnings |
$ |
6,522 |
|
|
$ |
6,088 |
|
| |
|
|
|
|
|
|
|
(1) Includes add-back of management fees paid to ML
Management.
(2) Represents net income for asset management, as presented in
the Interim Consolidated Statement of Comprehensive Income
(Loss).
Insurance
IFRS 17 Insurance Contracts (“IFRS 17”) is
effective for years beginning as of January 1, 2023, and has been
applied retrospectively with a transition date of January 1, 2022.
IFRS 17 does not impact the underlying economics of the business,
nor does it impact the Company’s business strategies.
Total Revenue – Insurance
($ in Thousands)
| |
Three Months Ended |
|
|
March 31, 2024 |
|
|
|
March 31, 2023 |
|
|
Insurance service result |
$ |
(3,092 |
) |
|
$ |
(4,961 |
) |
| Net investment income |
|
21,804 |
|
|
|
20,222 |
|
| Net gains (losses) from
investment activities |
|
2,666 |
|
|
|
2,609 |
|
| Realized and unrealized gains
(losses) on embedded derivative — funds withheld |
|
(3,829 |
) |
|
|
(7,684 |
) |
|
Other income |
|
6 |
|
|
|
- |
|
|
Total revenue — net of insurance services expenses and net
expenses from reinsurance |
$ |
17,555 |
|
|
$ |
10,186 |
|
| |
|
|
|
|
|
|
|
Spread Related Earnings
(“SRE”)
Effective March 31, 2024, the Company has introduced a new
non-IFRS measure, Spread Related Earnings (“SRE”).The Company uses
SRE to assess the performance of the insurance segment, excluding
the impact of certain market volatility and other one-time,
non-core components of insurance segment income (loss). Excluded
items under SRE are investment gains (losses), effects of discount
rates and other financial variables on the value of insurance
obligations (which is a component of “net insurance finance
income/(expense)”), other income and certain general,
administrative & other expenses. The Company believes this
measure is useful to shareholders as it provides additional insight
into the underlying economics of the insurance segment, as further
discussed below.
For the insurance segment, SRE equals the sum of (i) the net
investment income on the insurance segment’s net invested assets
(excluding investment income earned on funds held under reinsurance
contracts) less (ii) cost of funds (as described below) and (iii)
certain operating expenses.
Cost of funds includes the impact of interest accretion on
insurance and investment contract liabilities and amortization of
losses recognized for new insurance contracts that are deemed
onerous at initial recognition. It also includes experience
adjustments which represents the difference between actual and
expected cashflows and includes the impact of certain changes to
non-financial assumptions.
The Company reconciles SRE to net income (loss) before tax from
its insurance segment activities, as follows:
| ($ in
Thousands) |
Three Months Ended |
|
|
|
Q1-2024 |
|
Q4-2023 |
|
Q3-2023 |
|
Q2-2023 |
|
Q1-2023 |
|
Q4-2022 |
|
Q3-2022 |
|
Q2-2022 |
|
|
Net income (loss) and comprehensive income (loss) before
tax |
$ |
13,148 |
|
$ |
(1,946 |
) |
$ |
16,243 |
|
$ |
(903 |
) |
$ |
(29,187 |
) |
$ |
4,901 |
|
$ |
14,490 |
|
$ |
6,351 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjustment to net
income (loss) and comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenue - asset
management(1) |
|
(4,030 |
) |
|
(3,723 |
) |
|
(3,186 |
) |
|
(2,996 |
) |
|
(1,926 |
) |
|
(2,651 |
) |
|
(2,139 |
) |
|
(2,022 |
) |
| Total
expenses - asset management |
|
7,615 |
|
|
7,839 |
|
|
6,868 |
|
|
6,133 |
|
|
5,840 |
|
|
4,132 |
|
|
3,401 |
|
|
2,778 |
|
| Net income - insurance(2) |
|
16,733 |
|
|
2,170 |
|
|
19,925 |
|
|
2,234 |
|
|
(25,273 |
) |
|
6,382 |
|
|
15,752 |
|
|
7,107 |
|
| Adjustments to Insurance segment
business: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Management fees to ML
Management |
|
(1,429 |
) |
|
(1,345 |
) |
|
(1,110 |
) |
|
(969 |
) |
|
(823 |
) |
|
(740 |
) |
|
(607 |
) |
|
(527 |
) |
| Net (gains) losses from
investment activities(3) |
|
(2,995 |
) |
|
(10,116 |
) |
|
(2,113 |
) |
|
(1,454 |
) |
|
1,493 |
|
|
(3,418 |
) |
|
12,439 |
|
|
22,450 |
|
| Other Income(4) |
|
— |
|
|
(7,353 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Net insurance finance
(income)/expense(5) |
|
(11,769 |
) |
|
14,399 |
|
|
(17,684 |
) |
|
(5,275 |
) |
|
20,650 |
|
|
(924 |
) |
|
(31,286 |
) |
|
(35,028 |
) |
| Loss on onerous contracts(6) |
|
6,884 |
|
|
286 |
|
|
2,451 |
|
|
4,214 |
|
|
490 |
|
|
— |
|
|
— |
|
|
— |
|
|
General, administrative and other(7) |
|
447 |
|
|
502 |
|
|
1,289 |
|
|
1,546 |
|
|
144 |
|
|
— |
|
|
— |
|
|
— |
|
|
Spread Related Earnings |
$ |
7,871 |
|
$ |
(1,457 |
) |
$ |
2,758 |
|
$ |
296 |
|
$ |
(3,319 |
) |
$ |
1,300 |
|
$ |
(3,702 |
) |
$ |
(5,998 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes add-back of management fees paid by Ability to ML
Management.
(2) Represents net income for insurance segment, as presented in
the Interim Consolidated Statement of Comprehensive Income
(Loss).
(3) Excludes net (gains) losses from investment activities on
assets retained by the Company under funds withheld arrangement
with Front Street Re and Vista.
(4) Represents non-operating income.
(5) Includes the impact of changes in interest rates and other
financials assumptions and excludes interest accretion on insurance
contract liabilities and reinsurance contract assets.
(6) Represents the unamortized portion of future interest
accretion and ceded commissions paid at the time of issue of new
MYGA insurance contracts. Future interest accretion and ceded
commissions are amortized over the average duration of MYGA
contracts reinsured which aligns with the recognition of insurance
service revenue. Loss on onerous contracts are part of Insurance
service expense.
(7) Represents certain costs incurred by the insurance segment
for purposes of IFRS reporting but not the day to day operations of
the insurance company.
The following table presents SRE, the performance measure of the
insurance segment:($ in Thousands)
| |
Trailing Twelve Months Ended |
|
|
|
March 31, 2024 |
|
March 31, 2023 |
|
|
Fixed Income and other investment income, net(1) |
$ |
50,502 |
|
$ |
29,773 |
|
| Cost of
funds |
|
(32,318 |
) |
|
(27,358 |
) |
| Net Investment
spread |
|
18,184 |
|
|
2,415 |
|
| Other
operating expenses |
|
(8,716 |
) |
|
(14,134 |
) |
|
Spread Related Earnings |
|
9,468 |
|
|
(11,719 |
) |
| SRE % of Average Net
Investments |
|
1.7 |
% |
|
(2.7 |
%) |
| |
|
|
|
|
|
|
(1) Excludes net investment income from investment activities on
assets retained by the Company under funds withheld arrangement
with Front Street Re and Vista Life and Casualty Reinsurance
Company (“Vista”).
Spread related earnings ("SRE") was $9.5 million for the
trailing twelve months ended March 31, 2024 compared with
($11.8) million for the trailing twelve months ended March 31,
2023, an increase of $21.2 million. SRE increased year over year
due to increased investment income, lower cost of funds and other
operating expenses. Investment income increased primarily due to an
increase in total insurance investment assets and improvements in
yield across the investment portfolio attributable to deployment of
capital in a higher rate environment. Cost of funds decreased
primarily because of one-time benefit of $4.8 million in first
quarter of 2024 as a result of an in-force update to Long Term Care
business.
SRE as a percentage of average net invested assets was 1.7% for
the trailing twelve months ended March 31, 2024 compared with
(2.7)% for the trailing twelve months ended March 31, 2023.
Liquidity and Capital Resources
As of March 31, 2024, the asset management
segment had $65.5 million (par value) of borrowings outstanding, of
which $33.8 million had a fixed rate and $38 million had a floating
rate. As of March 31, 2024, the insurance segment had $14.3 million
(par value) of borrowings outstanding. Liquid assets, including
high-quality assets that are marketable, can be pledged as security
for borrowings, and can be converted to cash in a time frame that
meets liquidity and funding requirements. As of March 31, 2024 and
December 31, 2023, the total liquid assets of the Company were as
follows:
($ in Thousands)
|
As at |
March 31, 2024 |
|
December 31, 2023 |
|
Cash and cash equivalents |
$ |
67,850 |
|
$ |
90,220 |
| Restricted cash posted as
collateral |
|
12,253 |
|
|
— |
| Investments |
|
627,216 |
|
|
643,578 |
| Management fee receivable |
|
2,819 |
|
|
2,599 |
| Receivable for investments
sold |
|
51 |
|
|
6,511 |
| Accrued
interest and dividend receivable |
|
20,229 |
|
|
19,340 |
| Total
liquid assets |
$ |
730,418 |
|
$ |
762,248 |
| |
|
|
|
|
|
The Company defines working capital as the sum
of cash, restricted cash, investments that mature within one year
of the reporting date, management fees receivable, receivables for
investments sold, accrued interest and dividend receivables, and
premium receivables, less the sum of debt obligations, payables for
investments purchased, amounts due to affiliates, reinsurance
liabilities, and other liabilities that are payable within one year
of the reporting date.
As at March 31, 2024, the Company had
working capital of $203.0 million, reflecting current assets of
$212.1 million, offset by current liabilities of $9.1 million, as
compared with working capital of $183.4 million as at December 31,
2023, reflecting current assets of $230.8 million, offset by
current liabilities of $47.4 million. The increase in working
capital is primarily driven by increased cash in the Insurance
segment due to premium growth through the reinsurance of
MYGA. The cash reported and generated through insurance
activities in the Insurance segment cannot be used at the Issuer
level for working capital purposes without insurance regulatory
approvals.
Interest Rate Risk
The Company has obligations to policyholders and
other debt obligations that expose it to interest rate risk.
The Company also owns debt assets and interest rate swaps that are
exposed to interest rate risk. The fair value of these
obligations and assets may change if base rate changes in interest
rates occur.
The following table summarizes the potential
impact on net assets of hypothetical base rate changes in interest
rates assuming a parallel shift in the yield curve, with all other
variables remaining constant.
|
As at |
March 31, 2024 |
|
December 31, 2023 |
|
|
50 basis point increase(1) |
$ |
13,923 |
|
$ |
20,186 |
|
| 50
basis point decrease(1) |
|
(16,913 |
) |
|
(21,860 |
) |
| |
|
|
|
|
|
|
(1) Losses are presented in brackets and gains are presented as
positive numbers.
Actual results may differ significantly from
this sensitivity analysis. As such, the sensitivities should only
be viewed as directional estimates of the underlying sensitivities
for the respective factors based on the assumptions outlined
above.
Conference Call
The Company will hold a conference call on
Friday, May 10, 2024 at 11:00 a.m. Eastern Time to discuss the
first quarter 2024 financial results. Shareholders, prospective
shareholders, and analysts are welcome to listen to the call. To
join the call, please use the dial-in information below. A
recording of the conference call will be available on our Company’s
website www.mountlogancapital.ca in the ‘Investor Relations’
section under “Events”.
Canada Dial-in Toll Free: 1-833-950-0062US
Dial-in Toll Free: 1-833-470-1428International Dial-in:
1-929-526-1599Access Code: 989330
About Mount Logan Capital Inc.
Mount Logan Capital Inc. 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 Mount Logan Management LLC (“ML
Management”) and Ability Insurance Company (“Ability”),
respectively. The Company also actively sources, evaluates,
underwrites, manages, 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.
Ability is a Nebraska domiciled insurer and
reinsurer of long-term care policies acquired by Mount Logan in the
fourth quarter of fiscal year 2021. Ability is unique in the
insurance industry in that its long-term care portfolio’s morbidity
risk has been largely re-insured to third parties, and Ability is
no longer insuring or re-insuring new long-term care risk.
Non-IFRS Financial Measures
This press release makes reference to certain
non-IFRS financial measures. These measures are not recognized
measures under IFRS, do not have a standardized meaning prescribed
by IFRS and may not be comparable to similar measures presented by
other companies. Rather, these measures are provided as additional
information to complement IFRS financial measures by providing
further understanding of the Company’s results of operations from
management’s perspective. The Company’s definitions of non-IFRS
measures used in this press release may not be the same as the
definitions for such measures used by other companies in their
reporting. Non-IFRS measures have limitations as analytical tools
and should not be considered in isolation nor as a substitute for
analysis of the Company’s financial information reported under
IFRS. The Company believes that securities analysts, investors and
other interested parties frequently use non-IFRS financial measures
in the evaluation of issuers. The Company’s management also uses
non-IFRS financial measures in order to facilitate operating
performance comparisons from period to period.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains forward-looking
statements and information within the meaning of applicable
securities legislation. Forward-looking statements can be
identified by the expressions “seeks”, “expects”, “believes”,
“estimates”, “will”, “target” and similar expressions. The
forward-looking statements are not historical facts but reflect the
current expectations of the Company regarding future results or
events and are based on information currently available to it.
Certain material factors and assumptions were applied in providing
these forward-looking statements. The forward-looking statements
discussed in this release include, but are not limited to,
statements relating to the Company’s continued transition to an
asset management and insurance platform business and the entering
into of further strategic transactions to diversify the Company’s
business and further grow recurring management fee and other income
and increasing Ability’s assets; the Company’s plans to focus
Ability’s business on the reinsurance of annuity products; the
potential benefits of combining Mount Logan’s and Ovation’s
platform including an increase in fee-related earnings as a result
of the acquisition; the decrease in expenses in the asset
management segment; the historical growth in the asset management
segment and insurance segment being an indicator for future growth;
the growth and scalability of the Company’s business the Company’s
business strategy, model, approach and future activities; portfolio
composition and size, asset management activities and related
income, capital raising activities, future credit opportunities of
the Company, portfolio realizations, the protection of stakeholder
value; the expansion of the Company’s loan portfolio; the risk that
changes to IFRS, including the adoption of IFRS 17, could have a
material impact on the Company’s financial results and access to
capital; and the expansion of Mount Logan’s capabilities. All
forward-looking statements in this press release are qualified by
these cautionary statements. The Company believes that the
expectations reflected in forward-looking statements are based upon
reasonable assumptions; however, the Company can give no assurance
that the actual results or developments will be realized by certain
specified dates or at all. These forward-looking statements are
subject to a number of risks and uncertainties that could cause
actual results or events to differ materially from current
expectations, including that the Company has a limited operating
history with respect to an asset management oriented business
model; Ability may not generate recurring asset management fees,
increase its assets or strategically benefit the Company as
expected; the expected synergies by combining the business of Mount
Logan with the business of Ability may not be realized as expected;
the risk that Ability may require a significant investment of
capital and other resources in order to expand and grow the
business; the Company does not have a record of operating an
insurance solutions business and is subject to all the risks and
uncertainties associated with a broadening of the Company’s
business; the risk that the expected synergies of the acquisition
of Ovation may not be realized as expected and the matters
discussed under “Risks Factors” in the most recently filed annual
information form and management discussion and analysis for the
Company. Readers, therefore, should not place undue reliance on any
such forward-looking statements. Further, a forward-looking
statement speaks only as of the date on which such statement is
made. The Company undertakes no obligation to publicly update any
such statement or to reflect new information or the occurrence of
future events or circumstances except as required by securities
laws. These forward-looking statements are made as of the date of
this press release.
This press release is not, and under no
circumstances is it to be construed as, a prospectus or an
advertisement and the communication of this release is not, and
under no circumstances is it to be construed as, an offer to sell
or an offer to purchase any securities in the Company or in any
fund or other investment vehicle. This press release is not
intended for U.S. persons. The Company’s shares are not and will
not be registered under the U.S. Securities Act of 1933, as
amended, and the Company is not and will not be registered under
the U.S. Investment Company Act of 1940 (the “1940 Act”). U.S.
persons are not permitted to purchase the Company’s shares absent
an applicable exemption from registration under each of these Acts.
In addition, the number of investors in the United States, or which
are U.S. persons or purchasing for the account or benefit of U.S.
persons, will be limited to such number as is required to comply
with an available exemption from the registration requirements of
the 1940 Act.
Contacts:Mount Logan Capital
Inc.365 Bay Street, Suite 800Toronto, ON M5H
2V1info@mountlogancapital.ca
Nikita KlassenChief Financial
OfficerNiktia.Klassen@mountlogancapital.ca
| MOUNT LOGAN
CAPITAL INC. |
| CONSOLIDATED
STATEMENT OF FINANCIAL POSITION |
| (in
thousands of United States dollars, except share and per share
amounts) |
| |
|
As at |
Notes |
March 31, 2024 |
|
December 31, 2023 |
| ASSETS |
|
|
|
|
| Asset
Management: |
|
|
|
|
|
Cash |
|
$ |
2,602 |
|
$ |
990 |
| Investments |
6 |
|
26,245 |
|
|
26,709 |
| Intangible assets |
9 |
|
28,433 |
|
|
28,779 |
|
Other assets |
|
|
6,769 |
|
|
6,593 |
|
Total assets — asset management |
|
|
64,049 |
|
|
63,071 |
| Insurance: |
|
|
|
|
| Cash and cash equivalents |
|
|
65,248 |
|
|
89,230 |
| Restricted cash posted as
collateral |
18 |
|
12,253 |
|
|
- |
| Investments |
6 |
|
1,043,028 |
|
|
1,008,637 |
| Reinsurance contract assets |
13 |
|
425,930 |
|
|
442,673 |
| Intangible assets |
9 |
|
2,444 |
|
|
2,444 |
| Goodwill |
9 |
|
55,015 |
|
|
55,015 |
|
Other assets |
|
|
22,087 |
|
|
27,508 |
|
Total assets — insurance |
|
|
1,626,005 |
|
|
1,625,507 |
|
Total assets |
|
$ |
1,690,054 |
|
$ |
1,688,578 |
| LIABILITIES |
|
|
|
|
| Asset
Management |
|
|
|
|
| Due to affiliates |
10 |
$ |
10,728 |
|
$ |
12,113 |
| Debt obligations |
12 |
|
66,721 |
|
|
62,030 |
| Derivatives - debt warrants |
|
|
296 |
|
|
— |
|
Accrued expenses and other liabilities |
|
|
3,990 |
|
|
3,494 |
|
Total liabilities — asset management |
|
|
81,735 |
|
|
77,637 |
| Insurance |
|
|
|
|
| Debt obligations |
12 |
|
14,250 |
|
|
14,250 |
| Insurance contract
liabilities |
13 |
|
1,086,172 |
|
|
1,107,056 |
| Investment contract
liabilities |
14 |
|
203,592 |
|
|
169,314 |
| Derivatives |
18 |
|
672 |
|
|
- |
| Funds held under reinsurance
contracts |
|
|
235,273 |
|
|
238,253 |
|
Accrued expenses and other liabilities |
|
|
3,409 |
|
|
30,116 |
|
Total liabilities — insurance |
|
|
1,543,368 |
|
|
1,558,989 |
|
Total liabilities |
|
|
1,624,103 |
|
|
1,636,626 |
| EQUITY |
|
|
|
|
| Common shares |
11 |
|
115,897 |
|
|
115,607 |
| Warrants |
11 |
|
1,129 |
|
|
1,129 |
| Contributed surplus |
|
|
7,240 |
|
|
7,240 |
| Surplus (Deficit) |
|
|
(37,457) |
|
|
(50,166) |
|
Cumulative translation adjustment |
|
|
(21,858) |
|
|
(21,858) |
|
Total equity |
|
|
64,951 |
|
|
51,952 |
|
Total liabilities and equity |
|
$ |
1,690,054 |
|
$ |
1,688,578 |
| |
|
|
|
|
|
|
| MOUNT LOGAN
CAPITAL INC. |
| CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) |
| (in
thousands of United States dollars, except share and per share
amounts) |
| |
| |
|
Three months ended |
|
|
|
Notes |
March 31, 2024 |
|
|
March 31, 2023 |
|
|
|
|
|
|
|
|
|
| REVENUE |
|
|
|
|
|
|
| Asset
management |
|
|
|
|
|
|
|
Management fee |
7 |
$ |
3,494 |
|
|
$ |
1,237 |
|
| Equity investment earning |
|
|
224 |
|
|
|
468 |
|
| Interest income |
|
|
271 |
|
|
|
268 |
|
| Dividend income |
|
|
112 |
|
|
|
56 |
|
|
Net gains (losses) from investment activities |
4 |
|
(71 |
) |
|
|
(103 |
) |
|
Total revenue — asset management |
|
|
4,030 |
|
|
|
1,926 |
|
| Insurance |
|
|
|
|
|
|
| Insurance revenue |
8 |
|
22,741 |
|
|
|
21,805 |
|
| Insurance service expenses |
8 |
|
(25,184 |
) |
|
|
(21,686 |
) |
|
Net expenses from reinsurance contracts held |
8 |
|
(649 |
) |
|
|
(5,080 |
) |
| Insurance service result |
|
|
(3,092 |
) |
|
|
(4,961 |
) |
| Net investment income |
5 |
|
21,804 |
|
|
|
20,222 |
|
| Net gains (losses) from
investment activities |
4 |
|
2,666 |
|
|
|
2,609 |
|
| Realized and unrealized gains
(losses) on embedded derivative — funds withheld |
|
|
(3,829 |
) |
|
|
(7,684 |
) |
|
Other income |
|
|
6 |
|
|
|
— |
|
|
Total revenue, net of insurance service expenses and net
expenses from reinsurance contracts held — insurance |
|
|
17,555 |
|
|
|
10,186 |
|
|
Total revenue |
|
|
21,585 |
|
|
|
12,112 |
|
| EXPENSES |
|
|
|
|
|
|
| Asset
management |
|
|
|
|
|
|
| Administration and servicing
fees |
10 |
|
1,423 |
|
|
|
491 |
|
| Transaction costs |
|
|
251 |
|
|
|
158 |
|
| Amortization of intangible
assets |
9 |
|
346 |
|
|
|
140 |
|
| Interest and other credit
facility expenses |
12 |
|
1,702 |
|
|
|
1,254 |
|
|
General, administrative and other |
|
|
3,893 |
|
|
|
3,797 |
|
|
Total expenses — asset management |
|
|
7,615 |
|
|
|
5,840 |
|
| Insurance |
|
|
|
|
|
|
| Net insurance finance (income)
expenses |
5 |
|
(7,252 |
) |
|
|
24,484 |
|
| Increase (decrease) in investment
contract liabilities |
14 |
|
2,279 |
|
|
|
1,412 |
|
| (Increase) decrease in
reinsurance contract assets |
|
|
3,556 |
|
|
|
5,525 |
|
|
General, administrative and other |
|
|
2,239 |
|
|
|
4,038 |
|
|
Total expenses — insurance |
|
|
822 |
|
|
|
35,459 |
|
|
Total expenses |
|
|
8,437 |
|
|
|
41,299 |
|
|
Income (loss) before taxes |
|
|
13,148 |
|
|
|
(29,187 |
) |
|
Income tax (expense) benefit — asset management |
15 |
|
(56 |
) |
|
|
(265 |
) |
|
Income tax (expense) benefit — insurance |
|
|
|
|
|
|
|
Net income (loss) and comprehensive income
(loss) |
|
$ |
13,092 |
|
|
$ |
(29,452 |
) |
| Earnings per
share |
|
|
|
|
|
|
|
Basic |
|
$ |
0.51 |
|
|
$ |
(1.33 |
) |
|
Diluted |
|
$ |
0.50 |
|
|
$ |
(1.33 |
) |
| Dividends per common
share — USD |
|
$ |
0.02 |
|
|
$ |
0.02 |
|
| Dividends per common
share — CAD |
|
$ |
0.02 |
|
|
$ |
0.02 |
|
Mount Logan Capital (NEO:MLC)
過去 株価チャート
から 11 2024 まで 12 2024
Mount Logan Capital (NEO:MLC)
過去 株価チャート
から 12 2023 まで 12 2024
