Generated $15.3 million of insurance segment Spread Related Earnings ("SRE”) for the year ended December 31, 2024, a significant increase over the prior year period
Asset management segment generated $7.5 million in Fee Related Earnings ("FRE”) for the year ended December 31, 2024, a 36% increase over the prior year, and within our previously stated 2024 FRE guidance range
During the quarter, the Company completed an amendment to its existing corporate credit facility, which included an upsize to support key business initiatives and introduced a pricing step-down mechanism
During January 2025, the Company announced it entered into a definitive agreement to combine with 180 Degree Capital Corp. (Nasdaq: TURN) in an all-stock transaction. The surviving entity is expected to operate as Mount Logan Capital Inc. ("New Mount Logan") and to be listed on Nasdaq under the symbol MLCI
In January 2025, Mount Logan also announced it completed its previously announced minority investment in Runway Growth Capital LLC, a $1.3 billion Assets Under Management (”AUM”) private credit asset manager, alongside BC Partners Credit
All amounts are stated in United States dollars, unless otherwise indicated
TORONTO, March 13, 2025 (GLOBE NEWSWIRE) -- Mount Logan Capital Inc. (Cboe Canada: MLC) ("Mount Logan” or the "Company”) announced today its financial results for the year ended December 31, 2024.
Fourth Quarter 2024 Highlights
- Total revenue for the asset management segment of the Company of $4.4 million, an increase of $0.7 million, or 19%, as compared to the fourth quarter of 2023. The increase is primarily due to growth in fees attributable to management of the Opportunistic Credit Interval Fund ("SOFIX") and higher equity investment earnings on Sierra Crest Investment Management. Fourth quarter asset management revenues exclude $1.2 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.
- Total net investment income for the insurance segment was $23.8 million for the three months ended December 31, 2024, an increase of $4.5 million, or 23%, as compared to the fourth quarter of 2023, owing to an increase in the investment portfolio and improvement in investment income relative to fourth quarter 2023 due to a reversal of an over-accrual of income in third quarter of 2023. Excluding the funds withheld under reinsurance contracts and Modco, the insurance segment's net investment income was $15.3 million, an increase of $3.1 million, or 25%, as compared to the fourth quarter of 2023.
- Total revenue for the asset management segment was $15.7 million, an increase of $3.9 million as compared to $11.8 million in 2023, largely driven by management and incentive fee growth. Management and incentive fees increased $5.8 million from the prior year, mainly due to the expiration of fee-sharing agreements associated with the CLOs in December 2023, higher SOFIX management and incentive fees due to performance improvement and increased AUM, a full year of management and incentive fees from Ovation's managed fund compared to 2023 during which the Ovation acquisition closed in the third quarter of 2023, and sub-advisory fees continuing to scale with increased AUM throughout 2024.
- FRE for the asset management segment was $7.5 million, an increase of 36% compared to 2023, due to increased management and incentive fees as previously discussed.
- Achieved 8.5%1 yield on the insurance investment portfolio for 2024, due to ongoing portfolio and capital optimization across the insurance solutions portfolio alongside the benefit of higher treasury yields. Excluding the funds withheld under reinsurance contracts and Modco, the yield was 8.8%.
- Ability's total assets managed by Mount Logan increased to $620.1 million for 2024, up $83.0 million from 2023 assets of $537.1 million. Mount Logan finished 2024 with $1.05 billion in total investment assets at its insurance segment, up $36.8 million, or 4%, from 2023 investment assets of $1.01 billion.
- Book value of the insurance segment for 2024 was $88.1 million, an increase of $21.6 million as compared to $66.5 million for 2023, driven by higher insurance net income.
- SRE for the insurance segment increased to $15.3 million for 2024, up $17.0 million from 2023 of $(1.7) million, primarily driven by an increase in net investment income, and lower cost of funds and operating expenses. 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.
- Declared a shareholder distribution in the amount of C$0.02 per common share for the quarter ended December 31, 2024, payable on April 10, 2025 to shareholders of record at the close of business on April 3, 2025. This cash dividend marks the twenty-second 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.
- Announced Mount Logan entered into a definitive agreement to combine 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. In connection with the Business Combination, MLC shareholders 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.
- Announced Mount Logan successfully completed purchase of minority stake in Runway Growth Capital LLC ("Runway”), an SEC registered investment adviser, managing approximately $1.4 billion in private credit assets. Mount Logan acquired the minority stake alongside BC Partners Credit, who acquired the majority stake in the platform through private funds managed by BC Partners Credit. There will be no change to Runway's management team or day-to-day operations following close of the transaction.
- Portman Ridge Finance Corporation (Nasdaq: PTMN) and Logan Ridge Finance Corporation (Nasdaq: LRFC) announced that they have entered into an agreement under which LRFC will merge with and into PTMN, subject to the receipt of certain shareholder approvals and the satisfaction of other closing conditions. 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 strong fourth quarter and full year 2024 results, reflecting the sustainable earnings power of our asset management and insurance platforms. In 2024, we delivered significant growth in both Fee Related Earnings on the asset management segment, and Spread Related Earnings in our insurance platform, providing a solid foundation for continued momentum in 2025. Our focus remains on driving consistent operating performance improvements, while advancing our strategic priorities to scale the business through organic growth and strategic acquisitions, which includes our recently announced transactions with 180 Degree Capital and Runway”.
- Total Capital of the Company was $150.3 million at December 31, 2024, an increase of $20.8 million as compared to December 31, 2023. Total capital consists of debt obligations and total shareholders' equity.
- Consolidated net income (loss) before taxes was $6.1 million for 2024, an increase of $21.9 million from ($15.8) million in 2023. The increase was primarily attributable to the improvement in insurance service result, decrease in net insurance finance expenses, increase in net investment income and decline in general, administrative and other expenses under the insurance segment when compared to 2023.
- Basic Earnings per share ("EPS”) was $0.22 for 2024, an increase of $0.91 from $(0.69) for 2023.
- Adjusted basic EPS was $0.46 for 2024, an increase of $0.90 from $(0.44) for 2023.
($ in Thousands)
| Year Ended | |||||||
| Year ended December 31, | 2024 | 2023 | |||||
| Reported Results | |||||||
| Asset management | |||||||
| Revenue | $ | 15,692 | $ | 11,831 | |||
| Expenses | 35,187 | 26,680 | |||||
| Net income (loss) - asset management | (19,495 | ) | (14,849 | ) | |||
| Insurance | |||||||
| Revenue (1) | 64,155 | 69,143 | |||||
| Expenses | 38,521 | 70,087 | |||||
| Net income (loss) - insurance | 25,634 | (944 | ) | ||||
| Income before income taxes | 6,139 | (15,793 | ) | ||||
| Provision for income taxes | (550 | ) | (663 | ) | |||
| Net income (loss) | $ | 5,589 | $ | (16,456 | ) | ||
| Basic EPS | $ | 0.22 | $ | (0.69 | ) | ||
| Diluted EPS | $ | 0.20 | $ | (0.69 | ) | ||
| Adjusting Items | |||||||
| Asset management | |||||||
| Transaction costs (2) | (2,174 | ) | (3,721 | ) | |||
| Acquisition integration costs (3) | (250 | ) | (1,125 | ) | |||
| Non-cash items (4) | (3,978 | ) | (972 | ) | |||
| Impact of adjusting items on expenses | (6,402 | ) | (5,818 | ) | |||
| Adjusted Results | |||||||
| Asset management | |||||||
| Revenue | $ | 15,692 | $ | 11,831 | |||
| Expenses | 28,785 | 20,862 | |||||
| Net income (loss) - asset management | (13,093 | ) | (9,031 | ) | |||
| Income before income taxes | 12,541 | (9,975 | ) | ||||
| Provision for income taxes | (550 | ) | (663 | ) | |||
| Net income (loss) | $ | 11,991 | $ | (10,638 | ) | ||
| Basic EPS | $ | 0.46 | $ | (0.44 | ) | ||
| Diluted EPS | $ | 0.43 | $ | (0.44 | ) | ||
| (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. |
Total Revenue - Asset Management
($ in Thousands)
| Year ended December 31, | 2024 | 2023 | |||||
| Management and incentive fee | $ | 15,008 | $ | 9,225 | |||
| Equity investment earnings | 680 | 1,124 | |||||
| Interest income | 1,091 | 1,087 | |||||
| Dividend income | 356 | 584 | |||||
| Net gains (losses) from investment activities | (1,443 | ) | (189 | ) | |||
| Total revenue - asset management | $ | 15,692 | $ | 11,831 | |||
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)
| Year ended December 31, | 2024 | 2023 (4) | |||||
| Net income (loss) and comprehensive income (loss) | $ | 5,589 | $ | (16,456 | ) | ||
| Adjustment to net income (loss) and comprehensive income (loss): | |||||||
| Total revenue - insurance (1) | (64,155 | ) | (69,143 | ) | |||
| Total expenses - insurance | 38,521 | 70,087 | |||||
| Net income - asset management (2) | $ | (20,045 | ) | $ | (15,512 | ) | |
| Adjustments to non-fee generating asset management business and other recurring revenue stream: | |||||||
| Management fee from Ability | 6,025 | 3,848 | |||||
| Interest income | (1 | ) | - | ||||
| Dividend income | (498 | ) | (584 | ) | |||
| Net gains (losses) from investment activities (3) | 1,443 | 189 | |||||
| Administration and servicing fees | 1,605 | 1,036 | |||||
| Transaction costs | 2,174 | 3,721 | |||||
| Amortization of intangible assets | 3,978 | 972 | |||||
| Interest and other credit facility expenses | 7,935 | 5,977 | |||||
| General, administrative and other | 4,931 | 5,924 | |||||
| Fee Related Earnings | $ | 7,547 | $ | 5,571 | |||
| (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). |
| (3) | Includes unrealized gains or losses on the debt warrants. |
| (4) | FRE for the year ended December 31, 2023 has been recalculated to conform with improved expense allocation methodologies implemented for the year ended December 31, 2024. |
Total Revenue - Insurance
($ in Thousands)
| Year ended December 31, | 2024 | 2023 | |||||
| Insurance service result | $ | (8,379 | ) | $ | (23,374 | ) | |
| Net investment income | 92,770 | 87,105 | |||||
| Net gains (losses) from investment activities | (3,719 | ) | 29,105 | ||||
| Realized and unrealized gains (losses) on embedded derivative - funds withheld | (16,754 | ) | (31,403 | ) | |||
| Other income | 237 | 7,710 | |||||
| Total revenue - net of insurance services expenses and net expenses from reinsurance | $ | 64,155 | $ | 69,143 | |||
Effective March 31, 2024, the Company has introduced a new non-IFRS measure, 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 securityholders 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:
| Three Months Ended | |||||||||||||||||||||||||||
| Q4-2024 | Q3-2024 | Q2-2024 | Q1-2024 | Q4-2023 | Q3-2023 | Q2-2023 | Q1-2023 | Q4-2022 | |||||||||||||||||||
| Net income (loss) and comprehensive income (loss) before tax | $ | 6,522 | $ | (17,378 | ) | $ | 3,847 | $ | 13,148 | $ | (1,946 | ) | $ | 16,243 | $ | (903 | ) | $ | (29,187 | ) | $ | 4,901 | |||||
| Adjustment to net income (loss) and comprehensive income (loss): | |||||||||||||||||||||||||||
| Total revenue - asset management (1) | (4,442 | ) | (3,826 | ) | (3,394 | ) | (4,030 | ) | (3,723 | ) | (3,186 | ) | (2,996 | ) | (1,926 | ) | (2,651 | ) | |||||||||
| Total expenses - asset management | 13,440 | 7,481 | 6,651 | 7,615 | 7,839 | 6,868 | 6,133 | 5,840 | 4,132 | ||||||||||||||||||
| Net income - insurance (2) | 15,520 | (13,723 | ) | 7,104 | ()[\]\\.,;:\s@\"]+)*)|(\".+\"))@((\[[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\])|(([a-zA-Z\-0-9]+\.)+[a-zA-Z]{2,}))$/;return b.test(a)}$(document).ready(function(){if(performance.navigation.type==2){location.reload(true)}$("iframe[data-lazy-src]").each(function(b){$(this).attr("src",$(this).attr("data-lazy-src"))});if($(".owl-article-body-images").length){$(".owl-article-body-images").owlCarousel({items:1,loop:true,center:false,dots:false,autoPlay:true,mouseDrag:false,touchDrag:false,pullDrag:false,nav:true})}var a=$("#display_full_text").val();if(a==0){$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:$("#cms_article_id").val()},dataType:"json",success:function(b){},error:function(b,d,c){}})}$(".read-full-article").on("click",function(d){d.preventDefault();var b=$(this).attr("data-cmsArticleId");var c=$(this).attr("data-productId");var f=$(this).attr("data-href");dataLayer.push({event:"paywall_click",paywall_name:"the_manila_times_premium",paywall_id:"paywall_article_"+b});$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:b,productId:c},dataType:"json",success:function(e){window.location.href=$("#BASE_URL").val()+f},error:function(e,h,g){}})});$(".article-embedded-newsletter-form .close-btn").on("click",function(){$(".article-embedded-newsletter-form").fadeOut(1000)})});$(document).on("click",".article-embedded-newsletter-form .newsletter-button",function(){var b=$(".article-embedded-newsletter-form .newsletter_email").val();var d=$("#ga_user_id").val();var c=$("#ga_user_yob").val();var a=$("#ga_user_gender").val();var e=$("#ga_user_country").val();if(validateEmail(b)){$.ajax({url:"/ajax/sendynewsletter",type:"POST",data:{email:b},success:function(f){$(".article-embedded-newsletter-form .nf-message").html(f);$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000);dataLayer.push({event:"newsletter_sub",user_id:d,product_name:"newsletter",gender:a,yob:c,country:e})},error:function(f,h,g){}})}else{$(".article-embedded-newsletter-form .nf-message").html("Please enter a valid email address.");$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000)}});$(document).on("click",".article-embedded-newsletter-form .nf-message",function(){$(this).removeClass("show");$(this).html("")});
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