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

Mount Logan, together with its consolidated subsidiaries is an alternative asset management and insurance solutions company. Mount Logan manages its business through two business segments: Asset Management and Insurance Solutions. Its Asset Management segment is focused on investing in and actively managing credit investment opportunities in North America through its wholly-owned subsidiary Mount Logan Management LLC (“ML Management”). The Insurance Solutions segment is conducted by Ability Insurance Company (“Ability”), a Nebraska domiciled insurer that specializes in reinsuring annuity products for the increasing number of individuals seeking to fund retirement needs. Ability also holds a run-off book of long-term care policies. As of MarchJune 31,30, 2026, Mount Logan no longer had any direct full time employees.

Mount Logan’s Asset Management segment focuses on generating recurring asset management fee streams across a variety of credit investing strategies. Mount Logan raises, invests and manages funds, accounts and other vehicles with an emphasis on private credit. As of MarchJune 31,30, 2026, Mount Logan had a total AUM of $2.1$2.0 billion.

The Asset Management segment also holds a minority interest in Sierra Crest Investment Management (“SCIM”), which manages BCP Investment Corporation (“BCIC”),BCIC, formerly known as Portman Ridge Finance Corp. (“Portman” or “Portman Ridge”), a United States business development company, and Alternative Credit Income Fund (“ACIF”), a closed-end interval fund that invests in a portfolio of public and private credit investments. SCIM is majority owned by BCPA.

Mount Logan carefully monitors economic and market conditions that could potentially give rise to market volatility and affect its business operations, including inflation and benchmark interest rates. According to the U.S. Bureau of Labor Statistics, the annual U.S. inflation rate increased to 3.3%3.5% from December 31, 2025 to MarchJune 31,30, 2026. This heightening of inflation was part of a broader trend of increasing inflationary pressures. The Federal Reserve maintained the federal funds rate target range at 3.5%3.50% to 3.75% throughout the firstsecond quarter of 2026, following a series of rate cuts in late 2025,2025. and as ofat its MarchJune 2026 meeting continued to signalbalance aconcerns cautiousabout approachinflation, growth, and labor market conditions. Monetary-policy paths across major economies were not uniformly easing as of June 30, 2026: some central banks maintained their policy rates, while others raised rates in lightresponse ofto mixedpersistent signalsor onrenewed inflationinflationary andpressures. growth. WhileAccordingly, the Federal Reserve inand the United States andother central banks incould othermaintain countries have continued to cut interestpolicy rates asat current levels or raise them further if inflation ratesremains haveelevated graduallyor weakened,reaccelerates, theywhile mayweaker raiseeconomic ratesgrowth againor labor-market conditions could result in therenewed futureeasing. dueMore togenerally, ongoinghigher inflationrates, concerns.fiscal Thistightening, potential increase, combined with reduced government spending and financialor market volatility,volatility couldcan furthercontribute elevateto economic uncertainty and associatedrecession risks.risk, Additionally,and interestsuch rate hikes or other government measures aimed at curbing inflation might lead to recessionary pressures globally. Such a recessionconditions could significantly and adversely impactaffect Mount Logan’s business, financial condition, operationalresults results,of operations, liquidity, and cash flows.

Both medium-term and long-term rates increased between the fourth quarter of 2025first and the firstsecond quarter of 2026, with the U.S. 10-year Treasury yield at 4.44% as of June 30, 2026 compared to 4.32% as of March 31, 2026 compared to 4.17% as of December 31, 2025.2026. Short term rates remained relatively flatincreased in the same period, with the 3-month secured overnight financing rate at 3.73% as of June 30, 2026 compared to 3.68% as of March 31, 2026 compared to 3.65% as of December 31, 2025 respectively.2026.

As of MarchJune 31,30, 2026, Ability’s net invested asset portfolio included $327$329.9 million of floating rate investments, or 43%44% of its net invested assets. In periods of prolonged low interest rates, the net investment spread may be negatively impacted by reduced investment income to the extent that Ability is unable to adequately reduce policyholder crediting rates due to policyholder guarantees in the form of minimum crediting rates or otherwise due to market conditions. A significant majority of the MYGA policies Ability reinsures have crediting rates that reset upon renewal. While Ability has the contractual right to not accept the renewals, its willingness to do so may be limited by competitive pressures.

During the first quarter of 2024, Mount Logan entered into interest rate swaps to economicallyconvert hedgefloating-rate interest receipts to fixed-rate interest receipts to reduce exposure to interest rate changes. Mount Logan recognize these derivatives as a Derivatives asset or Derivatives liability and they are presented on a gross basis in the Condensed Consolidated Statements of Financial Position and measured at fair value interestunless ratethere risk on floating rate debt investments. Mount Logan does not designate derivatives (interest rate swaps) as hedging instruments underis a fairlegal valueright hedgeof accounting model.set-off. Derivatives are initially measured at fair value with subsequent changes therein recognized in the Condensed Consolidated Statements of Comprehensive Income (Loss). as the swaps are in hedging relationships, with changes in fair value reclassified into Interest income in the same period as the hedged transactions affect earnings. Mount Logan’s derivative instruments are disclosed below:

The following discussion of financial measures under U.S. GAAP is based on Mount Logan’s Asset Management business as of MarchJune 31,30, 2026.

The following tablequarter summarizesto date and year to date tables summarize Mount Logan’s (i) management fees and (ii) incentive fees by fee generating vehicle:

Compensation and benefits expense consists of fixed salary, discretionary and non-discretionary bonuses, profit sharing expense associated with the performance fees earned and compensation expense associated with the vesting of non-cash equity-based awards. Mount Logan’s compensation arrangements with certain of its employees include non-cash equity-based awards, which are considered to be ‘performance-based incentives.’ The non-cash equity-based awards are granted subject to management’s discretion and approval by the Board of Directors. There are no clawback provisions associated with the non-cash equity-based awards; however, they are subject to a time-based vesting requirement and continued employment. To date, Mount Logan has not paid any profit sharing associated with performance fees. Because of these performance-based incentives, as Mount Logan’s net revenues increase, Mount Logan’s compensation costs rise. Mount Logan’s compensation costs also reflect the increased investment in people as Mount Logan continues to grow its AUM both organically and inorganically. During the fourth quarter of 2025, Mount Logan’s direct employees were transferred to BCPA. As such, as of MarchJune 31,30, 2026 Mount Logan has no direct employees. However, the compensation costs of BCPA employees who provide services to Mount Logan are attributed to Mount Logan based on AUM, and are now recorded within “Administration and servicing fees.”

Mount Logan grants equity awards to certain directors, officers, and service providers and employees,providers, consisting of Restricted Stock Units (“RSUs”) that generally vest and become exercisable in annual installments depending on the award terms. See Note 20. Equity based compensation to Mount Logan’s Condensed Consolidated Financial Statements for further discussion of equity-based compensation.

The following discussion of financial measures under U.S. GAAP is based on Mount Logan’s Insurance Solutions business, which is operated by Ability, as of MarchJune 31,30, 2026.

Net realized and change in unrealized gains (losses) from investment activities

Mount Logan had no income tax expense in the second quarter of 2026 compared to a small income tax benefit in the second quarter of 2025. Mount Logan’s income tax expense decreased in the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025. For the threesix months ended MarchJune 31,30, 2026, Mount Logan had no income tax expense while for the threesix months ended MarchJune 31,30, 2025, Mount Logan incurred an income tax expense of less than $0.1 million. Income tax expense was $nil for the threesix months ended MarchJune 31,30, 2026 as the statutory tax benefit arising from the pretax loss was fully offset by an increase in the valuation allowance against deferred tax assets and other items, as management determined that certain deferred tax assets generated in the period are not more-likely-than-not to be realized.

Below is a discussion of Mount Logan’s Condensed Consolidated Statements of Operations for the three and six months ended MarchJune 31,30, 2026 and 2025. For additional analysis of the factors that affected Mount Logan’s results at the segment level, see “Segment Analysis” below:

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

In this section, references to 2026 refer to the three months ended MarchJune 31,30, 2026 and references to 2025 refer to the three months ended MarchJune 31,30, 2025.

Revenues were $2.5$2.3 million in 2026, a decrease of $1.4$1.1 million from $3.8$3.3 million in 2025, driven by a decrease in management and incentive fees, partially offset by an increase in incentive fees, equity investment earnings and advisory and transaction fees earned in the first quarter of 2026.earnings.

Equity investment earnings increased by $0.1 million due to favorablebetter net income fromresults in SCIM, which waswere primarily driven by the elimination of the legacy cost reimbursement program at SCIM upon the Logan Ridge and Portman Ridge merger. SCIM was the adviser of Portman Ridge and effective July 15, 2025, upon closing of the merger of Logan Ridge and Portman Ridge,Portman, became the advisor to the combined company, renamed BCP Investment Corporation (“BCIC”).BCIC.

Expenses were $9.4$8.2 million in 2026, a decrease of $3.4$3.3 million from $12.7$11.5 million in 2025,2025. The decrease was primarily driven by the reduction inlower transaction costs,costs and amortization of intangible assets, partially offset by the increase inhigher general, administrative and other costs.expenses and interest and credit facility expenses.

Transaction costs decreased $4.5$2.8 million in 2026 given the 2025 transaction costs were related to Mount Logan’s merger with TURN, which closed in the third quarter of 2025. Refer to Note 3. Business combinations of the Condensed Consolidated Financial Statements for further details.detail. 2026 included no business acquisition costs and a net credit from reversals and refunds of other transaction costs.

Interest and other credit facility expenses increased by$0.2 less than $0.1 million in 2026million, as there was a net increase in debt obligations. The increase in debt from the issuance of exchange listed notes wasin January 2026 and the issuance of additional debenture units in April 2026 more than offset by the partial paydown on the MLC US Holdings credit facility in January 2026 (refer to Note 12. Debt obligations of the Condensedcondensed Consolidatedconsolidated Financialfinancial Statementsstatements for further detailsdetail).

Total investment and other income decreasedwas $1.7a million,loss of $0.2 million in 2026 compared with income of $1.2 million in 2025. The decrease was primarily duedriven toby movements on assets and liabilities held at fair value, andpartially offset by the lossincrease onin extinguishmentincome of debt fromunder the partialprofit-sharing paydown of the MLC US Holdings credit facility.agreement.