KG 10-K & 10-Q changes, risk factors and insider trading

On May 27, 2025, Kestrel Group LLC (“Kestrel LLC”) and Maiden Holdings, Ltd. (“Maiden”) completed their previously announced combination ("Combination"), forming a new, publicly listed specialty program group operating under the name Kestrel Group Ltd (“Kestrel Group” or "Parent Company"). Maiden shares ceased trading on the NASDAQ Capital Market ("Nasdaq") at the close of market on May 27, 2025.2025 and Kestrel Group shares began trading on the Nasdaq at open of market on May 28, 2025 under the ticker symbol “KG”. Upon the closing of the Transactions (the “Closing”), Maiden and Kestrel LLC are now wholly owned subsidiaries of the Company, which was rebranded as Kestrel Group and renamed “Kestrel Group Ltd” ("Kestrel" or the "Company").

The Combination createscreated a capital light,capital-light, fee-based insurance platform with the ability to selectively deploy underwriting capacity to optimize shareholder returns, withsupported by a commitment to innovation, client service and long-term relationships.

Kestrel specializes in providing fronting services to insurance program managers, managing general agencies (MGAs), reinsurers, and reinsurance brokers. Kestrel facilitates insurance transactions utilizingthrough its exclusive management contracts with four insurance carriers, all of which are rated A- “Excellent” by A.M. Best. These contracts enable Kestrel to offer both admitted and surplus lines in all U.S. states. Kestrel LLC generally does not assume significant underwriting risk and produces lines of business such as casualty, workers’ compensation, catastrophe-exposed property, and non-catastrophe-exposed property, with diverse risk durations, sizes, and product types.

Kestrel continues to write business through its exclusive use of four A.M. Best A- FSC XV insurance carriers Sierra Specialty Insurance Company, Rochdale Insurance Company, Park National Insurance Company and Republic Fire and Casualty Insurance Company (collectively, “AmTrust Insurance Companies”), all subsidiaries of AmTrust Financial Services, Inc. (“AmTrust”). Kestrel currently retains an option to acquire the AmTrust Insurance Companies for a period of up to three years afterfollowing closingthe from AmTrust.Closing. AmTrust is a significant shareholder of Kestrel. Please see Note 10. Related Party Transactions for further information regarding the Company's relationship with AmTrust.

As of MarchJune 31,30, 2026, Maiden Reinsurance Ltd. ("Maiden Reinsurance") ownsowned 22.1%22.2% of the Company's total issued and outstanding common sharesshares, which is eliminated for accounting and financial reporting purposes onin the Company's condensed consolidated financial statements. On April 29, 2025, former Maiden shareholders approved thea proposal to removeremoving the 9.5% voting limitation at the Company's special general meeting of its shareholders (the "Special Meeting"). TheMaiden Reinsurance's ownership of common shares by Maiden Reinsurance was made in compliance with Maiden Reinsurance'sits investment policy and was approved by the Vermont Department of Financial Regulation ("Vermont DFR").

Our Program Services segment consists of a cohesive suite of products and services offered by Kestrel that are integrated and interdependent. Kestrel’s revenue is highly concentrated because of thea capacity distribution agreementsagreement with an individual single customer. Capacity distribution fees are collected from program managers or MGAs for providing support services and granting contractual access to our insurance carrier network and are considered a single performance obligation. Support services provided forunder these insurance and reinsurance brokerage arrangements include compliance and regulatory reporting and administrative support which culminate in the placement of bound insurance coverage. Kestrel considers these arrangements a single revenue stream.

Our Legacy Reinsurance segment consists of primarily reinsurance business previously produced by Maiden, which had been segregated into two reportable segments: AmTrust Reinsurance and Diversified Reinsurance. Business formerly classified in the AmTrust Reinsurance segment is now described as "AmTrust Reinsurance Legacy Business" whileand business formerly classified in the Diversified Reinsurance segment is referred to as "Diversified Reinsurance Legacy Business" within this new segment.

AmTrust Reinsurance Legacy Business includes all business ceded to Maiden Reinsurance by AmTrust, primarily the quota share reinsurance agreement (“AmTrust Quota Share”) between Maiden Reinsurance and AmTrust’s wholly owned subsidiary, AmTrust International Insurance, Ltd. (“AII”) and the European hospital liability quota share reinsurance contract ("European Hospital Liability Quota Share") with AmTrust’s wholly owned subsidiaries, AEL and AIU DAC, both of which are in run-off effective as ofsince January 1, 2019, as discussed in Note 10. Related Party Transactions of the Notes to Condensed Consolidated Financial Statements included in Part I Item 1. "Financial Information". In addition, the Company has a retroactive reinsurance agreement and a commutation agreement that further reducesreduce its exposure and limitslimit the potential volatility related to AmTrust liabilities, which areas discussed in Note 8. Reinsurance of the Notes to Condensed Consolidated Financial Statements included in Part I Item 1. "Financial Information".

Diversified Reinsurance legacy business comprises a run-off portfolio of predominantly property and casualty reinsurance business focusing on regional and specialty property and casualty insurance companies located primarily in Europe, as well as transactions previously entered into by Genesis Legacy Solutions ("GLS") as described in Note 1. Basis of Presentation under Legacy Reinsurance Operations.

The Company does not presently underwrite prospective reinsurance risksrisks, butthough it may consider selectively deployingdeploy underwriting capacity in the future to optimize shareholder returns in support of the Company'sits Program Services operations.operations, as further discussed under "Business Strategy" below.

Our strategic focus centers on growing the fee income component of our Program Services business, which will increase our earnings before interest, taxes, depreciation and amortization ("EBITDA") while effectively managing the continuing run-off of the legacy Maiden alternative asset and reinsurance portfolios. OurThis focusgrowth onstrategy growingmay, ourfrom feetime businessto maytime, considerinvolve selectively deploying underwriting capacity to optimize shareholder returns in support of thisthe business.

We continue to activelypursue pursuereinsurance mechanisms with our existing partners reinsurance mechanisms that would selectively deploy the Company’sCompany's underwriting capacity andto facilitate and accelerate the growth of our Program Services segment.

We believe this strategy will creategenerate the greatest risk-adjusted shareholder returns in order toand increase EBITDA and book value for our common shareholders,shareholders over both the near and long-term.long Ourterm. assessmentWe is thatexpect these areas of strategic focus wouldto enhance our profitability through increased returns,profitability, which would alsoin turn increase the likelihood of fully utilizing theour significant net operating loss ("NOL") carryforwards, as described further below, whichand wouldthereby increase both GAAP book value and create additional common shareholder value. The recognitionRecognition of the related deferred tax asset on our Condensed Consolidated Balance Sheet remains a leading priority for the Company to increase its GAAP book value.Company.

As a result of the Combination, as of March 31, 2026, we holdheld $221.0$218.4 million in alternative investments whichas includeof June 30, 2026, including equity securities, equity method investments and other investments inacross a wide variety of asset classes. Please refer to theSee "Liquidity and Capital Resources" section- on "Other Investments, Equity Method Investments and Equity Investments" for further information on these alternative asset classesclasses, andincluding a detailed discussion of their investment returns. Recent developments and trends in financial markets, particularly aswith regardsrespect to private assets, indicate that it may take longer than expected to achieve those returns and we have factored that into future capital allocation decisions.

Prior to the Combination, Maiden had determined that thisits asset management strategy did not serve its longer-term strategic goals, which had shifted to a focus ontoward developing or acquiring fee income oriented insurance operationsoperations. and hadMaiden ceased making commitments to these alternative asset classes and hadbegan begun to disposedisposing of these investments. Subsequent toFollowing the Combination, we have continued to pursue this objective and seekare to findseeking appropriate opportunities to dispose of these assetsassets, andwhich we believe this is a high priority in support of focusing our efforts on growing our Program Services business.

Accordingly, we expect our alternative investment portfolio to becontinue reducedto decrease in future periodsperiods, as we believe it is critical to repositionrepositioning our balance sheet and increaseincreasing our liquidity is critical in support of theour current initiatives being pursued.initiatives. We have not made, and do not expect to makemake, any such new commitments to alternative investments at this time.

While we believe that the Combination will increase the likelihood of achieving our stated objectives, there can be no assurance that the run-off of itsour insurance liabilities will run-off at levels that will allow us to achieve those goals. As a result, we continue to pursue finality solutions to resolve the AmTrust liabilities not covered by the LPT/ADC Agreement, including through third-parties. There can beis no guarantee that we will execute such finality solutions and these solutionsthey could involve significant charges to executeexecute. and weWe are actively evaluating the potential costs and benefits of such solutions, to the extent they arebecome available to the Company.

We believe the Combination and our ability to increase EBITDA will create opportunities to utilize Maiden'sthe Company's NOL carryforwards that totaled $466.7$471.6 million at MarchJune 31,30, 2026. Approximately $387.6$383.4 million of NOL carryforwards expire in various years beginning in 2029. As of MarchJune 31,30, 2026, $79.1$88.2 million or 16.9%18.7% of the Company's NOL carryforwards have no expiry date under the relevant U.S. tax law. The NOL carryforwards combined with additional net deferred tax assets ("DTA") primarily related to Maiden's insurance liabilities result in net U.S. DTA (before valuation allowance) of $138.7 million or $17.73 per common share at March 31, 2026.

For further details on the NOL carryforwards, please see Note 13. Income Taxes included under Part 1 Item 1 "Financial Information" of the Quarterly Report on Form 10–Q for the threesix months ended MarchJune 31,30, 2026.

Three and Six Months Ended MarchJune 31,30, 2026 and 2025 Financial Highlights

(3)Underwriting income (loss) and fee income or (loss) is a non-GAAP measure and is calculated as net premiums earned plus fee revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities. See "Key Financial Measures" for additional information.

(7)Diluted book value per common share is calculated by dividing shareholders' equity, adjusted for assumed proceeds from the exercise of dilutive options, by the number of outstanding common shares plus dilutive optionsoptions, restricted shares and restrictedperformance based shares (assuming exercise of all dilutive share based awards). See "Key Financial Measures" for additional information.

In addition to our key financial measures presented in accordance with GAAP in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations and Comprehensive Loss,(loss) income, management uses certain non-GAAP financial measures to evaluate the Company's financial performance and the overall growth in value generated for the Company’s common shareholders. Management believes that these measures, which may be defined differently by other companies, explain the Company’s results to investors in a manner that allows for a more complete understanding of the underlying trends in the Company’s business. The non-GAAP measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. The calculation of these key financial measures including the reconciliation of non-GAAP measures to the nearest GAAP measure and relevant discussions are found within Item 2 - "Management's Discussion and Analysis of Financial Condition - Results of Operations and Non-GAAP Measures" and are summarized as follows:

Non-GAAP operating earnings (loss) is an internal performance measure used by management as these measures focus on the underlying fundamentals of the Company's operations by excluding, on a recurring basis: (1) net realized and unrealized investment gains (losses); (2) foreign exchange and other gains (losses); (3) interest in income (loss) of equity method investments; and (4) amortization of intangible assets. It also excludes on a non-recurring basis: (1) lossthe bargain purchase gain resulting from discontinuedthe operations,Combination neton May 27, 2025, (2) the change in fair value of incomethe taxearn andout liability; (23) litigation costs from GLS related arbitration; (4) restructuring and severance costs; and (35) costs incurred due to the Combination on May 27, 2025. We excluded net realized investment gains (losses), interest in income (loss) of equity method investments and foreign exchange and other gains (losses) as we believe these are influenced by market opportunities and other factors. We do not believe amortization of intangible assets, the net loss from our discontinued operations; restructuring and severance costs; and costs incurred due to the Combination on May 27, 2025 are representative of our ongoing and future business. We believe all of these amounts are substantially independent of our business and any potential future underwriting process, therefore their inclusion would distort the analysis of underlying trends in our operations.

Underwriting lossincome and fee income is a non-GAAP measure and is calculated as net premiums earned plus fee revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities. For purposes of these non-GAAP operating measures, the fee-generating business which is included in our Program Services segment, is considered part of the underwriting operations of the Company. Management believes that this measure is important in evaluating the underwriting performance of the Company and its segments. This measure is also a useful tool to measure the profitability of the Company separately from the investment results and is also a widely used performance indicator in the insurance industry. A reconciliation of the Company's underwriting results can be found in the Condensed Consolidated Financial Statements in the "Notes to Condensed Consolidated Financial Statements (unaudited) Note 3. Segment Information" under Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q.

The Company does not present certain non-GAAP measures such as combined ratio and its related components in this Quarterly Report on Form 10-Q for the three and six months ended MarchJune 31,30, 2026, as it believes that as the run-off of our reinsurance portfolios progresses, such ratios are increasingly not meaningful and of little value to readers as they evaluate the financial results of the Company. While an important metric of success, underwriting and fee income does not reflect all components of profitability, as it does not recognize the impact of investment income earned on premiums between the time premiums are received and the time loss payments are ultimately paid to clients. Because we do not manage our cash and investments by segment, investment income and interest expense are not allocated to the reportable segments. Certain general and administrative expenses are generally allocated to segments based on actual costs incurred.

The critical accounting policies and estimates should also be read in conjunction with Notes to Consolidated Financial Statements: Note 2. Significant Accounting Policies included under Part II, Item 8 "Financial Statements and Supplementary Data" of our Annual Report Form 10-K filed on March 13, 2026 for a full understanding of the Company’s accounting policies. There have been no changes during the three and six months ended MarchJune 31,30, 2026 to those critical accounting policies and estimates disclosed in our Annual Report.

As a result of the Combination on May 27, 2025, the Company acquired Maiden's legacy operations, which includes significant underwriting and investment activities, along with operating expenses and interest expense associated with Maiden's senior notes outstanding. Maiden's results of operations are reported for the three and six months ended MarchJune 31,30, 20262025 only and because the prior period results ofinclude operations dosubsequent notto includeMay the27, operations2025 of Maiden,therefore the year-over-year comparisons are generally not directly comparable. The following table sets forth our selected unaudited Condensed Consolidated Statement of Operations data for the three months ended March 31, 2026 and 2025:

(1)Underwriting loss and fee income (loss) related general and administrative expenses is a non-GAAP measure. Please refer to "General and Administrative Expenses" below for additional information related to these corporate expenses and the reconciliation to those presented in our unaudited Condensed Consolidated Statements of Operations.

(2)Underwriting loss and fee income (loss) is a non-GAAP measure and is calculated as net premiums earned plus fee revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities.

Results for the three months ended MarchJune 31,30, 2026

•realizedThe andLegacy unrealizedReinsurance investmentsegment gainsunderwriting loss of $1.3 million for the three months ended MarchJune 31,30, 2026 compared to netunderwriting investment lossesincome of $0.0$5.8 million for the same respective period in 2025; andlargely due to:

•interestImproved inunderwriting lossresults on a current accident year basis, with underwriting income of equity$0.6 method investments was $1.0 thousandmillion for the three months ended MarchJune 31,30, 2026 compared to $0.0an underwriting loss of $2.0 million for the same respective period in 2025.

•corporateCombined generalinvestment andloss administrativeof expenses increased to $7.5$0.5 million for the three months ended MarchJune 31,30, 2026 compared to $0.6combined investment income of $2.6 million for the same period in 2025 largelyprimarily due to the inclusion of Maiden operating costs; and:

•foreignnet exchangerealized and otherunrealized gainsinvestment losses of $2.2$3.0 million for the three months ended MarchJune 31,30, 2026,2026 compared to foreignnet exchangerealized and otherunrealized lossesinvestment gains of $0.0$1.1 million for the same period in 2025,2025; primarilypartly dueoffset to appreciation of the U.S dollar on the re-measurement of net loss reserves and insurance related liabilities denominated in the British pound and euro.by: