Mount Logan Capital Inc. Announces Second Quarter 2025 Financial Results
Declared quarterly distribution of C$0.02 per common share in the third quarter of 2025, the twenty-fourth consecutive quarter of a shareholder distribution
Asset management segment generated $8.4 million in Fee Related Earnings ("FRE") for the trailing twelve months ended June 30, 2025, a 28% increase over the prior year period
Generated $4.6 million of Spread Related Earnings ("SRE") for the trailing twelve months ended June 30, 2025, which reflects 0.7% of spread earnings on Ability's assets
Mount Logan and 180 Degree Capital (NASDAQ:TURN) filed definitive proxy materials for the proposed Business Combination
Mount Logan expects to hold a special meeting of its shareholders on August 22nd at 10:00 A.M. (Eastern Time) to consider several resolutions related to the Business Combination
All amounts are stated in United States dollars, unless otherwise indicated
TORONTO, Aug. 07, 2025 (GLOBE NEWSWIRE) -- Mount Logan Capital Inc. (Cboe Canada: MLC) ("Mount Logan" or the "Company") announced today its financial results for the quarter ended June 30, 2025.
Second Quarter 2025 Highlights
FRE for the asset management segment was $1.9 million for the quarter, an increase of 19% compared to the second quarter of 2024, due to stability in management fee revenues, as well as reduction in expenses within the asset management expense. FRE for the trailing twelve months was $8.4 million, an increase of 28% from the comparative trailing twelve-month period, primarily attributable to the increase in fee revenue, equity investment earnings and other income, combined with the decrease in general, administrative and other expenses.
Total revenue for the asset management segment of the Company was $4.5 million, an increase of $1.2 million, or 34%, as compared to the second quarter of 2024. Asset management revenues exclude $1.6 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, which increased by $0.1 million, or approximately 6% as compared to the second quarter 2024 of $1.5 million.
Total net investment income for the insurance segment was $20.6 million for the three months ended June 30, 2025, a decrease of $2.9 million, or 12%, as compared to the second quarter of 2024, owing to a decrease in bond yields, reduced investment balance, interest expense related to interest rate swaps and reduction in previously accrued income on legacy mortgage loan portfolio assets within Ability's sub-managed portfolio.
Achieved 7.2%1 yield on the insurance investment portfolio for the quarter ended June 30, 2025. Excluding the funds withheld under reinsurance contracts and modified coinsurance, the yield was 7.4%.
Ability's total assets managed by Mount Logan increased to $680 million as of June 30, 2025, an increase of $43 million from the second quarter of 2024 of $636 million. As of June 30, 2025, the insurance segment included approximately $1.1billion in total investment assets, flat from the second quarter of 2024 investment assets of $1.1 billion.
Book value of the insurance segment as of June 30, 2025 was $88.5 million, a decrease of $0.3 million as compared to $88.8 million for the second quarter of 2024. SRE for the insurance segment was $4.6 million for the trailing twelve months ended June 30, 2025, down $7.0 million from the trailing twelve months ended June 30, 2024 of $11.6 million, primarily driven by an increase in cost of funds, partially offset by lower other operating expenses. The increase in cost of funds was primarily driven by an unfavorable in-force update, as claims were higher than anticipated, to the Long Term Care ("LTC") business (Guardian block) of $1.8 million for the trailing twelve months ended June 30, 2025, while there was a favorable in-force update to the LTC business (Medico block) of $4.8 million for the twelve months ended June 30, 2024. Additionally, higher interest accretion on LTC liabilities further contributed to the increase in cost of funds. Other operating expenses decreased as we continue to optimize and streamline operations and reduce overall expenses.
Subsequent Events
Declared a shareholder distribution in the amount of C$0.02 per common share for the quarter ended June 30, 2025, payable on August 25, 2025 to shareholders of record at the close of business on August 19, 2025. This cash dividend marks the twenty-fourth 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.
A definitive joint proxy statement/prospectus was filed with the United States Securities and Exchange Commission (the "SEC") for the previously announced merger of Mount Logan with 180 Degree Capital Corp. (NASDAQ:TURN) ("180 Degree Capital"), in an all-stock transaction (the "Business Combination"). The surviving entity is expected to be a Delaware corporation operating as New Mount Logan listed on Nasdaq under the symbol "MLCI". As required under U.S. federal securities laws and related rules and regulations, the joint proxy statement/prospectus included Mount Logan's audited financial statements for the years ended December 31, 2024 and 2023 and quarters ended March 31, 2025 and March 31, 2024 prepared in accordance with U.S. Generally Accepted Accounting Principles. In connection with the Business Combination, shareholders of Mount Logan will receive proportionate ownership of New Mount Logan determined by reference to Mount Logan's transaction equity value at signing, subject to certain pre-closing adjustments, relative to 180 Degree Capital's Net Asset Value ("NAV") at closing. Shareholders holding approximately 26% of the outstanding shares of Mount Logan and approximately 20% of the outstanding shares of 180 Degree Capital signed voting agreements supporting the Business Combination, and an additional 8% of Mount Logan and 7% of 180 Degree Capital shareholders, respectively, have provided written non-binding indications of support for the Business Combination. Mount Logan's special meeting of shareholders is currently scheduled for August 22, 2025 to consider and, if deemed advisable, approve, various resolutions related to the Business Combination. Shareholders are encouraged to vote FOR all resolutions to be considered at the special meeting of shareholders.
Portman Ridge Finance Corporation (NASDAQ:PTMN) and Logan Ridge Finance Corporation (NASDAQ:LRFC) merger closed. Mount Logan currently earns management fees from LRFC and has a minority stake in PTMN's manager, Sierra Crest Investment Management.
________________________________
1The yield is calculated based on the net investment income less management fees paid to Mount Logan divided by the average of investments in financial assets for the current year and prior year.
Management Commentary
Ted Goldthorpe, Chief Executive Officer and Chairman of Mount Logan stated, "We are pleased to report our second quarter 2025 results, which reflect the durability of Mount Logan's fee-based business model. Our managed funds performance remains strong with low volatility, underpinned by our focus on investing in high quality, private credit assets that exhibit strong risk-adjusted returns. We remain excited about the opportunities we are seeing to deploy capital and increase our assets under management, while we remain focused on enacting operational improvements to increase profitability across our business. We are also nearing the conclusion of our proposed, transformative business combination with 180 Degree Capital. This transaction is expected to position us to accelerate growth across fee and spread-related earnings. A U.S. NASDAQ listing is also expected to broaden our investor base and improve trading liquidity."
Selected Financial Highlights
Total Capital of the Company was $142.0 million at June 30, 2025, a decrease of $8.3 million as compared to December 31, 2024. Total capital consists of debt obligations and total shareholders' equity.
Consolidated net income (loss) before taxes for the second quarter of 2025 was $(3.3) million, representing a $7.2 million decrease from $3.8 million in the second quarter of 2024. This decrease was primarily driven by higher net insurance finance expenses, due to increased interest accretion on LTC liabilities and lower treasury yields, lower insurance service result, due to higher loss recognition on the newly assumed MYGA business, and lower net investment income, owing to decrease in bond yields, interest expense related to interest rate swaps and write-off of accrued income on a mortgage loan. These decreases were partially offset by an increase in net gains from investment activities mainly from unrealized gains on assets and interest rate swaps resulting from lower treasury yields within the insurance segment. Additionally, higher corporate transaction costs related to the Business Combination and amortization expense on intangible assets under the asset management segment further contributed to the loss compared to the second quarter of 2024.
Basic Earnings (loss) per share ("EPS") was ($0.12) for the second quarter of 2025, a decrease of $0.26 from $0.14 for the second quarter of 2024.
Adjusted basic EPS was $0.03 for the second quarter of 2025, a decrease of $0.12 from $0.15 for the second quarter of 2024.
Results of Operations by Segment
Three Months Ended
Six Months Ended
June 30, 2025
March 31, 2025
June 30, 2024
June 30, 2025
June 30, 2024
Reported Results
Asset management
Revenue
$
4,545
$
3,192
$
3,394
$
7,737
$
7,424
Expenses
11,368
12,578
6,651
23,946
14,266
Net income (loss) - asset management
(6,823
)
(9,386
)
(3,257
)
(16,209
)
(6,842
)
Insurance
Revenue (1)
16,657
18,982
15,746
35,639
33,301
Expenses
13,170
23,280
8,642
36,450
9,464
Net income (loss) - insurance
3,487
(4,298
)
7,104
(811
)
23,837
Income before income taxes
(3,336
)
(13,684
)
3,847
(17,020
)
16,995
Provision for income taxes
(34
)
361
(265
)
327
(321
)
Net income (loss)
$
(3,370
)
$
(13,323
)
$
3,582
$
(16,693
)
$
16,674
Basic EPS
$
(0.12
)
$
(0.48
)
$
0.14
$
(0.59
)
$
0.65
Diluted EPS
$
(0.12
)
$
(0.48
)
$
0.14
$
(0.59
)
$
0.64
Adjusting Items
Asset management
Transaction costs (2)
(2,545
)
(4,545
)
—
(7,090
)
(251
)
Acquisition integration costs (3)
—
—
—
—
(250
)
Non-cash items (4)
(1,696
)
(737
)
(346
)
(2,433
)
(692
)
Impact of adjusting items on expenses
(4,241
)
(5,282
)
(346
)
(9,523
)
(1,193
)
Adjusted Results
Asset management
Revenue
$
4,545
$
3,192
$
3,394
$
7,737
$
7,424
Expenses
7,127
7,296
6,305
14,423
13,073
Net income (loss) - asset management
(2,582
)
(4,104
)
(2,911
)
(6,686
)
(5,649
)
Income before income taxes
905
(8,402
)
4,193
(7,497
)
18,188
Provision for income taxes
(34
)
361
(265
)
327
(321
)
Net income (loss)
$
871
$
(8,041
)
$
3,928
$
(7,170
)
$
17,867
Basic EPS
$
0.03
$
(0.29
)
$
0.15
$
(0.25
)
$
0.69
Diluted EPS
$
0.03
$
(0.29
)
$
0.15
$
(0.25
)
$
0.69
(1) Insurance Revenue line item is presented net of insurance service expenses and net expenses from reinsurance contracts held.
(2) Transaction costs are related to business acquisitions and strategic initiatives transacted by the Company.
(3) 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.
(4) Non-cash items include amortization and impairment of acquisition-related intangible assets and impairment of goodwill, if any.
Asset Management
Total Revenue, Asset Management
($ in Thousands)
Three Months Ended
Six Months Ended
June 30, 2025
June 30, 2024
June 30, 2025
June 30, 2024
Management and incentive fee
$
3,288
$
3,832
$
6,216
$
7,326
Equity investment earning
42
(57
)
324
167
Interest income
271
272
539
543
Dividend income
29
113
67
225
Other Income
6
—
305
—
Net gains (losses) from investment activities
909
(766
)
286
(837
)
Total revenue, asset management
$
4,545
$
3,394
$
7,737
$
7,424
Fee Related Earnings ("FRE")
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 its asset management activities, as follows:
($ in Thousands)
Three Months Ended
Six Months Ended
June 30, 2025
June 30, 2024
June 30, 2025
June 30, 2024
Net income (loss) and comprehensive income (loss)
$
(3,370
)
$
3,582
$
(16,693
)
$
16,674
Adjustment to net income (loss) and comprehensive income (loss):
Total revenue - insurance (1)
(16,657
)
(15,746
)
(35,639
)
(33,301
)
Total expenses - insurance
13,170
8,642
36,450
9,464
Net income - asset management (2)
(6,857
)
(3,522
)
$
(15,882
)
$
(7,163
)
Adjustments to non-fee generating asset management business and other recurring revenue stream:
Management fee from Ability
1,613
1,529
3,179
2,958
Interest income
—
(1
)
—
