What changed in this filing

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Item 1. Financial Statements

2025-11-05 compared with 2025-08-15 · 330 added, 284 removed, 1639 unchanged (27% of the section changed)

4 unchanged sentences

dollars, except share and per share data)

September 30,

2025 December 31,

17 unchanged sentences

Net loan receivable from related party 101,689 —

Intangible assets 11,438 —

Intangible assets (includes $ 9,169 from related parties in 2025)

Funds withheld receivable (Allowance for expected credit losses:

5 unchanged sentences

Unearned premiums (includes $ 19,401 from related parties in 2025)

Earn out liability 2,679 —

Liability for securities purchased 11,692 —

5 unchanged sentences

Total liabilities

1,009,326 904

Commitments and Contingencies

3 unchanged sentences

Additional paid-in capital 177,101 10,107

Accumulated other comprehensive income 559 —

Accumulated other comprehensive loss

Retained Earnings (accumulated deficit) 18,952 ( 5,528 )

10 unchanged sentences

dollars, except per share data)

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2025 2024 2025 2024

17 unchanged sentences

Commission and other acquisition expenses

1,718 — 2,112 —

General and administrative expenses

4 unchanged sentences

Gain on bargain purchase — — ( 73,590 ) —

Foreign exchange and other losses

Foreign exchange and other (gains) losses

( 2,854 ) — 2,155 —

1 unchanged sentence

21,502 1,181 ( 42,225 ) 3,980

Net income (loss) before income taxes

Net (loss) income before income taxes

( 4,057 ) ( 429 ) 66,066 ( 1,353 )

income tax expense

Net income (loss) from continuing operations

Interest in loss of equity method investments

( 24 ) — ( 24 ) —

Net (loss) income from continuing operations

( 4,088 ) ( 429 ) 65,940 ( 1,353 )

Loss from discontinued operations, net of income tax ( 965 ) — ( 1,460 ) —

Net income (loss)

Net (loss) income

$ ( 5,053 ) $ ( 429 ) $ 64,480 $ ( 1,353 )

Basic and diluted earnings (loss) from continuing operations per share attributable to Kestrel common shareholders

Basic and diluted (loss) earnings from continuing operations per share attributable to Kestrel common shareholders

$ ( 0.53 ) $ ( 0.16 ) $ 12.99 $ ( 0.49 )

1 unchanged sentence

( 0.12 ) — ( 0.29 ) —

Basic and diluted earnings (loss) per share attributable to Kestrel common shareholders

$ 15.05 $ ( 0.20 ) $ 18.80 $ ( 0.34 )

Basic and diluted (loss) earnings per share attributable to Kestrel common shareholders

$ ( 0.65 ) $ ( 0.16 ) $ 12.70 $ ( 0.49 )

4 unchanged sentences

(in thousands of U.S.

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2025 2024 2025 2024

Net income (loss) $ 69,927 $ ( 547 ) $ 69,533 $ ( 924 )

Other comprehensive income

Net (loss) income $ ( 5,053 ) $ ( 429 ) $ 64,480 $ ( 1,353 )

Other comprehensive income (loss)

Net unrealized holdings gains on AFS fixed maturities

1 unchanged sentence

Foreign currency translation adjustment ( 1,694 ) — ( 1,620 ) —

Other comprehensive income, before tax

Other comprehensive loss, before tax

( 1,475 ) — ( 916 ) —

Income tax expense related to components of other comprehensive income — — — —

Other comprehensive income, after tax

Comprehensive income (loss)

Other comprehensive loss, after tax

( 1,475 ) — ( 916 ) —

Comprehensive (loss) income

$ ( 6,528 ) $ ( 429 ) $ 63,564 $ ( 1,353 )

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands of U.S.

For the Three Months Ended June 30, For the Six Months Ended June 30,

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2025 2024 2025 2024

4 unchanged sentences

Ending balance

100 27 100 27

Additional paid-in capital

5 unchanged sentences

177,101 10,047 177,101 10,047

Accumulated other comprehensive income

Accumulated other comprehensive loss

Beginning balance

1 unchanged sentence

Foreign currency translation adjustment

( 1,694 ) — ( 1,620 ) —

Ending balance

( 916 ) — ( 916 ) —

Retained earnings (accumulated deficit)

1 unchanged sentence

24,005 ( 5,161 ) ( 5,528 ) ( 4,237 )

Net income (loss) 69,927 ( 547 ) 69,533 ( 924 )

Net (loss) income ( 5,053 ) ( 429 ) 64,480 ( 1,353 )

Distribution to shareholders — — ( 40,000 ) —

3 unchanged sentences

Beginning balance

( 51,463 ) — — —

Shares issued to Maiden Reinsurance — — ( 51,463 ) —

7 unchanged sentences

(in thousands of U.S.

For the Six Months Ended June 30, 2025 2024

For the Nine Months Ended September 30, 2025 2024

Cash flows from operating activities

Net income (loss)

$ 64,480 $ ( 1,353 )

1 unchanged sentence

Adjustments to reconcile net income to net cash flows from operating activities:

Other non-cash expenses including depreciation, amortization, share-based compensation and leases 2,797 34

Gain on bargain purchase ( 73,590 ) —

Other non-cash expenses (credit losses, depreciation, amortization, share-based compensation, leases) ( 18 ) 51

Interest in loss of equity method investments

Net realized and unrealized investment gains

Change in allowance for expected credit losses 215 —

Gain on bargain purchase ( 73,590 ) —

Foreign exchange and other losses

20 unchanged sentences

Proceeds from sale and redemption of other investments 1,065 —

Proceeds from sale and redemption of equity method investments 163 —

Cash acquired from purchase of business 79,807 —

Net loan receivable from related party 6,750 —

Others, net ( 18 ) —

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Cash flows from financing activities:

34 unchanged sentences

Certain prior year comparatives have been reclassified to conform to current period presentation.

The effect of these reclassifications had no impact on previously reported shareholders' equity or net income, except t he 2024 Kestrel equity was recast to conform with the current number of common shares issued to Kestrel equityholders and revised equity structure.

The effect of these reclassifications had no impact on previously reported shareholders' equity or net income, except the 2024 Kestrel equity was recast to conform with the current number of common shares issued to Kestrel equityholders and revised equity structure.

Please see section on Accounting Treatment for the Combination for further details on reclassifications.

7 unchanged sentences

The Combination creates a capital light, fee-based insurance platform with the ability to selectively deploy underwriting capacity to optimize shareholder returns.

As of June 30, 2025, Maiden Reinsurance Ltd.

As of September 30, 2025, Maiden Reinsurance Ltd.

(“Maiden Reinsurance”) owns approximately 22.4 % of the Company's total outstanding common shares, which is eliminated for accounting and financial reporting purposes in our condensed consolidated financial statements.

7 unchanged sentences

In addition, the former equityholders of Kestrel Group LLC remain entitled to receive contingent consideration up to the lesser of (x) $ 45.0 million payable in common shares of Kestrel Group upon the achievement of certain financial milestones, and (y) 2.75 million common shares of Kestrel Group.

Following completion of the Combination, the board of directors of Kestrel Group consists of seven directors, made up of four directors selected by Kestrel Intermediate Ledbetter Holdings LLC, two of whom are independent under applicable securities laws and stock exchange rules, and three directors selected by AmTrust, two of whom are independent under applicable securities laws and stock exchange rules.

(“AmTrust”), two of whom are independent under applicable securities laws and stock exchange rules.

Please see Note 10.

13 unchanged sentences

This determination is primarily based on the following factors:

1) the former Kestrel LLC equityholders have the ability to nominate a majority of the members of the board of directors of the combined company and 2) subsequent to consummation of the transaction, when combined with the shares held by Maiden Reinsurance, which shares Luke Ledbetter (acting in his capacity as President of Maiden Reinsurance) is authorized and has the discretion to vote on behalf of Maiden Reinsurance, the former Kestrel LLC equityholders have a majority of the voting rights of the combined company.

1) the former Kestrel LLC equityholders have the ability to nominate a majority of the members of the board of directors of the combined company and 2) subsequent to consummation of the transaction, when combined with common shares held by Maiden Reinsurance, of which Luke Ledbetter (acting in his capacity as President of Maiden Reinsurance) is authorized and has the discretion to vote on behalf of Maiden Reinsurance, the former Kestrel LLC equityholders have a majority of the voting rights of the combined company.

As such, Maiden is treated as the acquired company for accounting purposes.

28 unchanged sentences

Short-term income protection business was written on a primary basis by our wholly owned subsidiaries Maiden Life Försäkrings AB ("Maiden LF") and Maiden General Försäkrings AB ("Maiden GF") in the Scandinavian and Northern European markets.

On November 29, 2024, Maiden entered into an agreement to sell its Swedish subsidiaries, Maiden LF and Maiden GF to a group of international insurance and reinsurance companies headquartered in the United Kingdom.

On November 29, 2024, Maiden entered into an agreement to sell Maiden LF and Maiden GF to a group of international insurance and reinsurance companies headquartered in the United Kingdom.

Maiden GF and Maiden LF were the principal operating subsidiaries of the Company’s International Insurance Services (“IIS”) platform.

1 unchanged sentence

In June 2025, the Swedish Financial Supervisory Authority (“SFSA”) declined to approve the sale of Maiden GF and Maiden LF.

The proposed acquirer, whose application was denied by the SFSA, has subsequently indicated its intent to proceed with the acquisition of only Maiden GF at the previously agreed valuation and believes it will satisfactorily address the deficiencies identified by the SFSA in its June 2025 decision.

Maiden and the proposed acquirer are currently in the process of finalizing the terms of an amended sale agreement and this transaction is subject to customary regulatory approvals.

The proposed acquirer whose application was denied by the SFSA and Maiden have now entered into an amended sale agreement for the acquisition of only Maiden GF at the previously agreed valuation, The proposed acquirer believes it will satisfactorily address the deficiencies identified by the SFSA in its June 2025 decision.

This amended transaction remains subject to customary regulatory approvals.

KESTREL GROUP LTD

4 unchanged sentences

The sale will continue to be an all-cash transaction and pursuant to the proposed terms of the agreement, certain existing staff of Maiden GF will transition to the proposed acquirer.

In the wake of the decision of the SFSA, management continues to evaluate strategic alternatives for that business, including a possible sale to a different third-party or a possible run-off and liquidation of the entity.

In the wake of the decision of the SFSA, management continues to evaluate strategic alternatives for that business as well as Maiden LF, including a possible sale to a different third-party or a possible run-off and liquidation of the entity.

Maiden LF and Maiden GF are not writing any new business and their non-insurance related assets and liabilities are represented as held-for-sale in our condensed consolidated financial statements.

1 unchanged sentence

Assets Held for Sale" for additional information regarding the effect of the pending transactions on the Company's Condensed Consolidated Financial Statements.

Except as explicitly described as held for sale or as discontinued operations, and unless otherwise noted, all discussions and amounts presented herein relate to the Company's continuing operations except for net income, net income attributable to Kestrel and net income attributable to Kestrel common shareholders.

Except as explicitly described as held for sale or as discontinued operations, and unless otherwise noted, all discussions and amounts presented herein relate to the Company's continuing operations except for net income, and net income attributable to Kestrel common shareholders.

KESTREL GROUP LTD

3 unchanged sentences

Significant Accounting Policies

The following contains a description of the Company's significant accounting policies for the six months ended June 30, 2025:

The following contains a description of the Company's significant accounting policies for the nine months ended September 30, 2025:

Basis of Reporting and Consolidation — These Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the U.S.

5 unchanged sentences

For financial reporting purposes, the net assets of Kestrel Group are stated at historical carrying values and its condensed consolidated financial statements are presented as the predecessor to the combined company in the historical financial statements following consummation of the transaction on May 27, 2025.

The assets and liabilities of Maiden are recorded at their fair values measured as of the acquisition date.

The assets and liabilities of Maiden are recorded at the fair values measured as of the acquisition date.

The operating results of Maiden are only presented within the consolidated results of Kestrel from the date of acquisition going forward.

11 unchanged sentences

Short-term investments - These investments are comprised of securities due to mature within one year of the date of purchase.

The Company held no short-term investments as at June 30, 2025 and 2024.

The Company held no short-term investments as at September 30, 2025 and 2024.

Equity securities - Equity securities currently include privately held common and preferred stocks.

97 unchanged sentences

In connection with the Combination Agreement on May 27, 2025, the assets and liabilities of Maiden were recorded at their fair values measured as of the acquisition date.

The Company has elected the fair value option for certain equity method investments and direct lending investments, and these investments are reported at their fair values as of June 30, 2025.

The Company has elected the fair value option for certain equity method investments and direct lending investments, and these investments are reported at their fair values as of September 30, 2025.

Please see Note 4 (b).

20 unchanged sentences

Assumed and ceded reinsurance contracts that lack a significant transfer of risk are treated as deposits.

No deposit contracts are held as at June 30, 2025 and 2024.

No deposit contracts are held as at September 30, 2025 and December 31, 2024.

Acquisition expenses represent the costs of writing business that vary with, and are primarily related to, the production of that business.

24 unchanged sentences

Please see details for the earn out liability in Note 11.

Commitments and Contingencies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q.

Intangible Assets — The fair value of intangible assets includes two components acquired as a result of the Combination:

4 unchanged sentences

Please see details for the VOBA in Note 15.

Business Combination in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q which is recorded as part of Intangible Assets on the Condensed Consolidated Balance Sheets.

Business Combination in the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q which is recorded as part of Intangible Assets on the Condensed Consolidated Balance Sheets.

• Fair value adjustment to historical loss reserves and LAE and reinsurance recoverable on unpaid losses:

5 unchanged sentences

Please see details for the fair value discount on reserves and recoverables in Note 15.

Business Combination in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q which is recorded as part of Intangible Assets on the Consolidated Balance Sheets.

Business Combination in the Notes to the Condensed Consolidated Financial Statements in this Form 10-Q which is recorded as part of Intangible Assets on the Consolidated Balance Sheets.

Retroactive Reinsurance - Retroactive reinsurance agreements are those in which a reinsurer agrees to reimburse the ceding company for liabilities incurred as a result of past insurable loss events.

We do not record any income or expense on recognition of the reinsurance contract's assets and liabilities at inception, except for any gains realized as a result of bargain purchase acquisitions which are recorded as part of foreign exchange and other gains (losses) immediately in income.

The Company does not record any income or expense on recognition of the reinsurance contract's assets and liabilities at inception, except for any gains realized as a result of bargain purchase acquisitions which are recorded as part of foreign exchange and other gains (losses) immediately in income during the period it arises.

Any subsequent remeasurement of the value of liabilities is recorded to net loss and LAE in the Condensed Consolidated Statements of Income.

5 unchanged sentences

The premium consideration that we charge the ceding companies under retroactive reinsurance contracts may be lower than the undiscounted estimated ultimate losses payable due to the time value of money.

After receiving the premium consideration in full from cedents at the inception of the contract, we invest the premium received over an extended period of time, thereby generating investment income.

After receiving the premium consideration in full from cedents at the inception of the contract, the premiums received are invested over an extended period of time, thereby generating investment income.

KESTREL GROUP LTD

3 unchanged sentences

Significant Accounting Policies (continued)

We expect to generate profits from these retroactive reinsurance contracts when taking into account the premium received and expected investment income, less contractual obligations and expenses.

Deferred charge assets will be recorded in other assets (if and when applicable), and any deferred gain liabilities are shown separately in the Consolidated Balance Sheets, and amortized over the estimated claim payment period of the related contract with the periodic amortization reflected in income as a component of net loss and LAE.

The amortization of deferred charge assets and deferred gain liabilities is adjusted at each reporting period to reflect new estimates of the amount and timing of remaining loss and LAE payments.

The Company expects to generate profits from these retroactive reinsurance contracts when taking into account the premium received and expected investment income, less contractual obligations and expenses.

Deferred charge assets will be recorded in other assets (if and when applicable), and any deferred gain liabilities will be shown separately in the Consolidated Balance Sheets, and amortized over the estimated claim payment period of the related contract with the periodic amortization reflected in income as a component of net loss and LAE.

The amortization of deferred charge assets and deferred gain liabilities will be adjusted at each reporting period to reflect new estimates of the amount and timing of remaining loss and LAE payments.

Changes in the estimated amount and timing of payments of unpaid losses may have an effect on the unamortized deferred charge assets and deferred gain liabilities and the amount of periodic amortization.

1 unchanged sentence

For operating leases that have a lease term of more than twelve months, the Company recognized a lease liability (presented as part of accrued expenses and other liabilities) and a right-of-use asset (presented as part of other assets) in the Consolidated Balance Sheets at the present value of the remaining lease payments until expiration.

As the lease contracts generally do not provide an implicit discount rate, the Company used a weighted-average discount rate of 7.1 %, representing its estimated secured incremental borrowing rate, in calculating the present value of the lease liability.

As the lease contracts generally do not provide an implicit discount rate, the Company uses a weighted-average discount rate of 7.2 %, representing its estimated secured incremental borrowing rate, in calculating the present value of the lease liability.

The Company has made an accounting policy election not to include renewal, termination, or purchase options that are not reasonably certain of exercise when determining the term of the borrowing.

23 unchanged sentences

Income tax related interest and penalties would be included as income tax expense.

The Company has not recorded or accrued any interest or penalties during the years ended June 30, 2025 and 2024.

The Company has not recorded or accrued any interest or penalties during the periods ended September 30, 2025 and 2024.

Share-Based Compensation Expense — Pursuant to the 2025 Equity Incentive Plan, the Company is authorized to issue restricted share awards and performance-based restricted shares, share options and other equity-based awards to its employees and directors.

13 unchanged sentences

However, any undistributed losses are not allocated to the participating securities.

Treasury Shares — Treasury shares include common shares owned by Maiden Reinsurance which are eliminated for accounting and financial reporting purposes in the Company’s Consolidated Balance Sheet at June 30, 2025.

Since treasury shares are not considered outstanding for share count purposes, the common shares held by Maiden Reinsurance are excluded from the average number of common shares outstanding for basic and diluted earnings per share.

5 unchanged sentences

Assets and liabilities of foreign subsidiaries and divisions, whose functional currency is not the U.S.

dollar, are translated at year-end exchange rates.

Revenues and expenses of these entities are translated at average exchange rates during the year.

dollar, are translated at exchange rates at the end of the reporting period.

Revenues and expenses of these entities are translated at average exchange rates during the reporting period.

The effects of the foreign currency translation adjustment for foreign entities are included in AOCI.

The amount of the cumulative translation adjustment at June 30, 2025 was $ 74 .

The amount of the cumulative translation adjustment at September 30, 2025 was $( 1,620 ).

Revenue Recognition - Fee Revenue

9 unchanged sentences

For contractual arrangements with minimum annual fees, Kestrel amortizes the minimum fee over the contract period.

At June 30, 2025, the amount of contract assets was $ 1,323 and is included in Other Assets on the Company's condensed consolidated balance sheets (December 31, 2024 - $ 968 ).

At September 30, 2025, the amount of contract assets was $ 1,605 which is included in Other Assets on the Company's condensed consolidated balance sheets (December 31, 2024 - $ 968 ).

Please see Note 3.

4 unchanged sentences

The strategic shift test does not apply because the acquired businesses were not previously part of Kestrel Group, the acquiring entity, and are currently classified as held-for-sale on the acquisition date.

Therefore, the unaudited condensed consolidated combined financial statements for the three and six months ended June 30, 2025 and 2024 exclude the non-insurance related operations of Maiden GF and Maiden LF because those businesses are not considered part of Kestrel’s continuing operations.

Therefore, the unaudited condensed consolidated results of operations for the three and nine months ended September 30, 2025 exclude the non-insurance related operations of Maiden GF and Maiden LF because those businesses are not considered part of Kestrel’s continuing operations.

Please refer to Note 14.

52 unchanged sentences

All remaining assets are allocated to Corporate.

Kestrel’s chief operating decision maker ("CODM") is the Company's Chief Executive Officer, Luke Ledbetter for both the Program Services segment and the Legacy Reinsurance segment.

Kestrel’s chief operating decision maker ("CODM") is the Company's Chief Executive Officer, for both the Program Services segment and the Legacy Reinsurance segment.

The significant segment expenses as reported in the computation of underwriting results in the tables below are used by the Company's CODM in assessing segment performance on a quarterly basis and supports their decision on how to allocate resources within the Company.

4 unchanged sentences

Segment Information (continued)

The following tables summarize the underwriting results of our reportable segments and the reconciliation of our reportable segments' underwriting results to consolidated net income for the three months ended June 30, 2025 and 2024, respectively:

For the Three Months Ended June 30, 2025 Legacy Reinsurance (1)

Program Services Total

The following tables summarize the underwriting results of our reportable segments and the reconciliation of our reportable segments' underwriting results to consolidated net loss from continuing operations for the three months ended September 30, 2025 and 2024, respectively:

For the Three Months Ended September 30, 2025 Legacy Reinsurance Program Services Total

Gross premiums written

4 unchanged sentences

$ 6,836 $ — $ 6,836

— 1,621 1,621

Net loss and LAE ( 10,406 ) — ( 10,406 )

3 unchanged sentences

( 3,689 ) ( 664 ) ( 4,353 )

Underwriting and fee income (loss)

Underwriting (loss) and fee income

$ ( 8,977 ) $ 957 $ ( 8,020 )

Reconciliation to net income from continuing operations

Reconciliation to net loss from continuing operations

Net investment income and net realized and unrealized investment gains

1 unchanged sentence

Change in fair value of earn out liability 2,679

Gain on bargain purchase 73,590

Foreign exchange and other losses, net

Foreign exchange and other gains, net

Other general and administrative expenses

Income tax expense

Net income from continuing operations

(1) Legacy Reinsurance underwriting results only include the post-combination period of May 28, 2025 to June 30, 2025.

For the Three Months Ended June 30, 2024 Legacy Reinsurance Program Services Total

Interest in loss of equity method investments

Net loss from continuing operations

For the Three Months Ended September 30, 2024 Legacy Reinsurance Program Services Total

$ — $ 700 $ 700

11 unchanged sentences

Segment Information (continued)

The following tables summarize the underwriting results of our reportable segments and the reconciliation of our reportable segments' underwriting results to consolidated net income for the six months ended June 30, 2025 and 2024, respectively:

For the Six Months Ended June 30, 2025 Legacy Reinsurance (1)

The following tables summarize the underwriting results of our reportable segments and the reconciliation of our reportable segments' underwriting results to consolidated net income (loss) from continuing operations for the nine months ended September 30, 2025 and 2024, respectively:

For the Nine Months Ended September 30, 2025 Legacy Reinsurance (1)

Program Services Total

12 unchanged sentences

( 5,432 ) ( 2,003 ) ( 7,435 )

Underwriting and fee income

Underwriting (loss) and fee income

$ ( 2,731 ) $ 969 $ ( 1,762 )

2 unchanged sentences

Interest and amortization expenses

Change in fair value of earn out liability ( 2,679 )

Gain on bargain purchase 73,590

2 unchanged sentences

Income tax expense

Interest in loss from equity method investments

Net income from continuing operations

(1) Legacy Reinsurance underwriting results only include the post-combination period of May 28, 2025 to June 30, 2025.

For the Six Months Ended June 30, 2024 Legacy Reinsurance Program Services Total

(1) Legacy Reinsurance underwriting results only include the post-combination period of May 28, 2025 to September 30, 2025.

For the Nine Months Ended September 30, 2024 Legacy Reinsurance Program Services Total

$ — $ 2,457 $ 2,457

11 unchanged sentences

Segment Information (continued)

The following tables summarize the financial position of the Company's reportable segments including a reconciliation to the Company's consolidated total assets at June 30, 2025 and December 31, 2024:

June 30, 2025 Legacy Reinsurance Program Services Total

The following tables summarize the financial position of the Company's reportable segments including a reconciliation to the Company's consolidated total assets at September 30, 2025 and December 31, 2024:

September 30, 2025 Legacy Reinsurance Program Services Total

Reinsurance balances receivable, net

29 unchanged sentences

Kestrel amortizes the minimum fee over the contract period.

The financial information relating to net premiums written by major line of business within the Legacy Reinsurance segment for the three and six months ended June 30, 2025 are detailed below:

For the Three and Six Months Ended June 30, 2025

The financial information relating to net premiums written by major line of business within the Legacy Reinsurance segment for the three and nine months ended September 30, 2025 are detailed below:

For the Three Months Ended September 30, 2025

Net premiums written

2 unchanged sentences

Legacy Reinsurance Segment $ 3,895

(1) Legacy Reinsurance segment results only include the post-combination period of May 28, 2025 to June 30, 2025.

The financial information for net premiums earned by major line of business within the Legacy Reinsurance segment for the three and six months ended June 30, 2025 are detailed below:

For the Three and Six Months Ended June 30, 2025

For the Nine Months Ended September 30, 2025

Net premiums written Total

Diversified Legacy Reinsurance $ 4,967

AmTrust Legacy Reinsurance 23

Legacy Reinsurance Segment (1)

(1) Legacy Reinsurance segment results only include the post-combination period of May 28, 2025 to September 30, 2025.

KESTREL GROUP LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands of U.S.

dollars, except share and per share data)

Segment Information (continued)

The financial information for net premiums earned by major line of business within the Legacy Reinsurance segment for the three and nine months ended September 30, 2025 are detailed below:

For the Three Months Ended September 30, 2025

Net premiums earned

2 unchanged sentences

Legacy Reinsurance Segment $ 6,836

(1) Legacy Reinsurance segment results only include the post-combination period of May 28, 2025 to June 30, 2025.

For the Nine Months Ended September 30, 2025

Net premiums earned Total

Diversified Legacy Reinsurance $ 5,266

AmTrust Legacy Reinsurance 3,992

Legacy Reinsurance Segment (1)

(1) Legacy Reinsurance segment results only include the post-combination period of May 28, 2025 to September 30, 2025.

KESTREL GROUP LTD

8 unchanged sentences

a) Fixed Maturities

The amortized cost, gross unrealized gains and losses, and fair value of fixed maturities at June 30, 2025 are as follows:

June 30, 2025 Original or amortized cost Gross unrealized gains Gross unrealized losses Fair value

The amortized cost, gross unrealized gains and losses, and fair value of fixed maturities at September 30, 2025 are as follows:

September 30, 2025 Original or amortized cost Gross unrealized gains Gross unrealized losses Fair value

treasury bonds

10 unchanged sentences

The Company separately presents the accrued interest receivable balance on its AFS fixed maturity investments on the Condensed Consolidated Balance Sheets under accrued investment income.

The amount of accrued interest receivable on AFS securities was $ 658 at June 30, 2025.

The amount of accrued interest receivable on AFS securities was $ 727 at September 30, 2025.

The Company has elected the practical expedient to exclude accrued interest from both the fair value and the amortized cost basis of the AFS fixed maturity securities for the purposes of identifying and measuring any impairments under the allowance for expected credit losses standard.

Write-offs of accrued interest receivable balances are recognized in net investment gains and losses in the period in which they are deemed uncollectible.

There was no write-off recognized on the accrued interest receivable during the three and six months ended June 30, 2025.

There was no write-off recognized on the accrued interest receivable during the three and nine months ended September 30, 2025.

The contractual maturities of our fixed maturities are shown below.

Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

June 30, 2025 Amortized cost Fair value

September 30, 2025 Amortized cost Fair value

Due in one year or less

11 unchanged sentences

Less than 12 Months 12 Months or More Total

June 30, 2025 Fair

September 30, 2025 Fair

value Unrealized

1 unchanged sentence

value Unrealized

treasury bonds

$ 20,855 $ — $ — $ — $ 20,855 $ —

agency bonds – mortgage-backed

381 ( 2 ) — — 381 ( 2 )

government bonds $ 52,623 $ ( 57 ) $ — $ — $ 52,623 $ ( 57 )

Collateralized loan obligations 9,374 ( 7 ) — — 9,374 ( 7 )

Corporate bonds

7,454 ( 3 ) — — 7,454 ( 3 )

Total temporarily impaired fixed maturities

$ 61,997 $ ( 64 ) $ — $ — $ 61,997 $ ( 64 )

At June 30, 2025, there were 19 securities in an unrealized loss position for less than 12 months with a fair value of $ 106,726 and unrealized losses of $ 41 .

At September 30, 2025, there were 12 securities in an unrealized loss position for less than 12 months with a fair value of $ 61,997 and unrealized losses of $ 64 .

Allowance for Expected Credit Losses & Non-Credit Related Impairment Costs

The Company evaluates AFS securities for impairment when fair value is below amortized cost on a quarterly basis.

If the Company intends to sell or will be required to sell the security before its anticipated recovery, the full amount of the impairment loss is charged to net income (loss) and included in net investment gains (losses).

If the Company does not intend to sell or will not be required to sell the security before its anticipated recovery, an allowance for expected credit losses is established and the portion of the loss relating to credit factors is recorded in net income (loss).

KESTREL GROUP LTD

3 unchanged sentences

Investments (continued)

Allowance for Expected Credit Losses & Non-Credit Related Impairment Costs

The Company evaluates AFS securities for impairment when fair value is below amortized cost on a quarterly basis.

The non-credit impairment amount of the loss (which could be related to interest rates and/or market conditions) is recognized in other comprehensive income.

7 unchanged sentences

Although these securities are not analyzed for credit losses, they are evaluated for impairment based on the Company's intention to sell and likely requirement to sell.

Based on the Company's analysis at June 30, 2025, the unrealized gains on the Company’s AFS fixed maturity securities were due to non-credit factors and were expected to be recovered as the related securities approach maturity.

At June 30, 2025, the Company did not intend to sell the securities in an unrealized loss position and it is not more likely than not that the Company will be required to sell these securities before the anticipated recovery of their amortized costs.

Therefore, there was no allowance recorded for expected credit losses on AFS securities for the three and six months ended June 30, 2025.

The following tables summarize the credit ratings of our fixed maturities as at June 30, 2025:

June 30, 2025 Amortized cost Fair value % of Total

Based on the Company's analysis at September 30, 2025, net unrealized gains on the Company’s AFS fixed maturity securities were due to non-credit factors and were expected to be recovered as the related securities approach maturity.

At September 30, 2025, the Company did not intend to sell the securities in an unrealized loss position and it is not more likely than not that the Company will be required to sell these securities before the anticipated recovery of their amortized costs.

Therefore, there was no allowance recorded for expected credit losses on AFS securities for the three and nine months ended September 30, 2025.

The following tables summarize the credit ratings of our fixed maturities as at September 30, 2025:

September 30, 2025 Amortized cost Fair value % of Total

treasury bonds

17 unchanged sentences

In addition, even if certain other investments and equity method investments are not eligible for redemption or sales are restricted, we may still receive income distributions from those investments.

The collateralized investments in direct lending entities of $ 49,978 at June 30, 2025 are carried at fair market value.

The collateralized investments in direct lending entities of $ 53,616 at September 30, 2025 are carried at fair market value.

Financial Instruments provides a measurement basis election for most financial instruments using a choice of either historical cost or fair value, including other investments, allowing reporting entities to mitigate potential mismatches that arise under the current mixed measurement attribute model.

In connection with the Combination on May 27, 2025, the assets and liabilities of Maiden were recorded at their fair values measured as of the acquisition date.

The Company has elected the fair value option for its investments in direct lending entities, and these investments are reported at fair value as of June 30, 2025.

The Company has elected the fair value option for its investments in direct lending entities, and these investments are reported at fair value as of September 30, 2025.

Please see Note 5(d).

6 unchanged sentences

Other investments

The table shows the composition of the Company's other investments at fair value as of June 30, 2025:

June 30, 2025

The table shows the composition of the Company's other investments at fair value as of September 30, 2025:

September 30, 2025

Fair value % of Total

10 unchanged sentences

There is no active market for these investments.

The following table provides the cost and fair values of the equity securities held at June 30, 2025:

June 30, 2025

The following table provides the cost and fair values of the equity securities held at September 30, 2025:

September 30, 2025

Cost Fair Value

2 unchanged sentences

Total equity securities $ 11,145 $ 11,350

All privately held securities held at June 30, 2025 are subject to contractual sale restrictions.

All privately held securities held at September 30, 2025 are subject to contractual sale restrictions.

Each of these investments are subject to agreements that restrict the transfer, sale, and indemnification of these privately held investments indefinitely.

11 unchanged sentences

The equity method investments currently include real estate investments accounted for under the equity method and other investments measured at fair value.

The table below shows the total value of the Company's equity method investments as of June 30, 2025 including those classified as other investments under the fair value option:

June 30, 2025

The table below shows the total value of the Company's equity method investments as of September 30, 2025 including those classified as other investments under the fair value option:

September 30, 2025

Carrying Value % of Total

12 unchanged sentences

As a result of the Combination on May 27, 2025, the assets and liabilities of Maiden were recorded at their fair values measured as of the acquisition date.

The Company has elected the fair value option for certain of its equity method investments, and these investments are reported at their fair values as of June 30, 2025.

The table below shows the carrying/fair values and beneficial ownership percentage of the Company's equity method investments, including those measured using the fair value option and reported in other investments, as of June 30, 2025, the summarized financial data of each equity method investment for the six months ended June 30, 2025 and the Company's realized and unrealized gains (losses) on these investments for the three and six months ended June 30, 2025:

June 30, 2025 For the Six Months Ended June 30, 2025 For the Three and Six Months Ended June 30, 2025

The Company has elected the fair value option for certain of its equity method investments, and these investments are reported at their fair values as of September 30, 2025.

The table below shows the carrying/fair values and beneficial ownership percentage of the Company's equity method investments, including those measured using the fair value option and reported in other investments, as of September 30, 2025, the summarized financial data of each equity method investment for the nine months ended September 30, 2025 and the Company's realized and unrealized gains (losses) on these investments for the nine months ended September 30, 2025:

September 30, 2025 For the Nine Months Ended September 30, 2025 For the Nine Months Ended September 30, 2025

Carrying Value Beneficial Ownership Investee Revenue (1)

8 unchanged sentences

Total equity method investments $ 107,129 $ 2,139

The Company inclu ded summarized financial data of its equity method investees for the three months ended March 31, 2025 as this period represents the most recent audited financial statements available at the time of filing the Company's Form 10-Q for the three and six months ended June 30, 2025.

The Company inclu ded summarized financial data of its equity method investees as reported at June 30, 2025 as this period represents the most recent audited financial statements available at the time of filing the Company's Form 10-Q for the three and nine months ended September 30, 2025.

Fair value adjustments have been recorded under realized and unrealized gains (losses) for those equity method investments reported at fair value.

Seiden LP and Seiden MGMT LP are measured using equity method accounting at June 30, 2025.

Investment results for equity method investments only include the post-combination period of May 28, 2025 to September 30, 2025

Seiden LP and Seiden MGMT LP are measured using equity method accounting at September 30, 2025.

The interest in loss of equity method investments has been recorded on its own line item on the income statement and not within realized and unrealized gains (losses).

KESTREL GROUP LTD

4 unchanged sentences

c) Net Investment Income

Net investment income was derived from the following sources for the three and six months ended June 30, 2025 and 2024:

For the Three Months Ended June 30, For the Six Months Ended June 30,

Net investment income was derived from the following sources for the three and nine months ended September 30, 2025 and 2024:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2025 2024 2025 2024

12 unchanged sentences

Realized gains or losses on the sale of investments are determined on the basis of the first in first out cost method.

The following tables show the net realized and unrealized investment gains (losses) included in the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2025:

For the three and six months ended June 30, 2025

Gross gains Gross losses Net

The following tables show the net realized and unrealized investment gains (losses) included in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2025:

For the Three Months Ended September 30, 2025 Gross gains Gross losses Net

Fixed maturities

3 unchanged sentences

Net realized and unrealized investment gains (losses) $ 6,159 $ ( 665 ) $ 5,494

For the Nine Months Ended September 30, 2025 Gross gains Gross losses Net

Fixed maturities

$ 1,499 $ ( 111 ) $ 1,388

Equity securities 205 — 205

Other investments

5,888 ( 929 ) 4,959

Net realized and unrealized investment gains (losses) $ 7,592 $ ( 1,040 ) $ 6,552

Realized and unrealized gains and losses from equity securities detailed above include both sales and distributions of equity securities and unrealized gains and losses coming from fair value changes.

Net unrealized gains recognized for equity securities still held at the reporting date for the three and six months ended June 30, 2025, respectively, included:

For the Three and Six Months Ended June 30, 2025

Net unrealized gains recognized for equity securities still held at the reporting date for the three and nine months ended September 30, 2025, respectively, included:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Net gains recognized for equity securities

1 unchanged sentence

Net unrealized gains recognized for equity securities still held at the reporting date

Proceeds from sales of fixed maturity investments were $ 7,312 for the three and six months ended June 30, 2025.

Net unrealized gains included in accumulated other comprehensive income ("AOCI") were as follows at June 30, 2025:

June 30, 2025

Proceeds from sales of AFS fixed maturity investments were $ 7,878 and $ 15,190 for the three and nine months ended September 30, 2025, respectively.

KESTREL GROUP LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands of U.S.

dollars, except share and per share data)

Investments (continued)

Net unrealized gains included in accumulated other comprehensive income ("AOCI") were as follows at September 30, 2025:

September 30, 2025

Net unrealized gains on fixed maturity investments

4 unchanged sentences

Change, net of deferred income tax

KESTREL GROUP LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands of U.S.

dollars, except share and per share data)

Investments (continued)

e) Restricted Cash and Cash Equivalents and Investments

1 unchanged sentence

The assets in trust as collateral are primarily cash and highly rated fixed maturities.

The fair values of the Company's restricted assets at June 30, 2025 are:

June 30, 2025

The fair values of the Company's restricted assets at September 30, 2025 are:

September 30, 2025

Restricted cash – third party agreements $ 24,097

2 unchanged sentences

Restricted investments – in trust for third party agreements at fair value (amortized cost 2025:

2025 – $ 53,766 )

Restricted investments – in trust for related party agreements at fair value (amortized cost 2025:

2025 – $ 143,741 )

Restricted investments – liability for investments purchased for related party agreements ( 8,167 )

42 unchanged sentences

ASC 825, "Disclosure About Fair Value of Financial Instruments" , requires all entities to disclose the fair value of their financial instruments for assets and liabilities recognized and not recognized in the balance sheet, for which it is practicable to estimate fair value.

The following describes the valuation techniques used by the Company to determine the fair value of financial instruments that are measured at fair value on a recurring basis held at June 30, 2025.

The following describes the valuation techniques used by the Company to determine the fair value of financial instruments that are measured at fair value on a recurring basis held at September 30, 2025.

government and U.S.

86 unchanged sentences

In determining the level of the hierarchy in which the estimate is disclosed, the highest priority is given to unadjusted quoted prices in active trading markets and the lowest priority to unobservable inputs that reflect significant market assumptions.

At June 30, 2025, the Company classified its financial instruments measured at fair value on a recurring basis in the following valuation hierarchy:

June 30, 2025 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value Based on NAV Practical Expedient Total Fair Value

At September 30, 2025, the Company classified its financial instruments measured at fair value on a recurring basis in the following valuation hierarchy:

September 30, 2025 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value Based on NAV Practical Expedient Total Fair Value

Fixed maturities

15 unchanged sentences

The Company analyzes and reviews the information and prices received from the Pricing Service to ensure that the prices provided represent a reasonable estimate of fair value.

The Pricing Service was utilized to estimate fair value measurements for 100.0 % of our fixed maturities at June 30, 2025.

The Pricing Service was utilized to estimate fair value measurements for 100.0 % of our fixed maturities at September 30, 2025.

The Pricing Service utilizes market quotations for fixed maturity securities that have quoted market prices in active markets.

1 unchanged sentence

treasury bonds generally do not trade actively on a daily basis, the Pricing Service prepares estimates of fair value measurements using relevant market data, benchmark curves, sector groupings and matrix pricing and these have been classified as Level 2 within the fair value hierarchy.

At June 30, 2025, the Company did not adjust any pricing provided to it based on the review performed by its investment managers.

There were no transfers to or from Level 3 during the three and six months ended June 30, 2025, respectively.

At September 30, 2025, the Company did not adjust any pricing provided to it based on the review performed by its investment managers.

There were no transfers to or from Level 3 during the three and nine months ended September 30, 2025, respectively.

At June 30, 2025, the Company holds Level 3 financial instruments which currently consist of alternative investments of $ 138,919 and an underwriting-related derivative liability of $ 3,984 on a reinsurance contract written by GLS which is included in accrued expenses and other liabilities.

The Level 3 investments include collateralized investments in direct lending entities of $ 49,978 at June 30, 2025 which are carried at fair market value using significant unobservable inputs.

At September 30, 2025, the Company holds Level 3 financial instruments which currently consist of alternative investments of $ 144,308 and an underwriting-related derivative liability of $ 3,984 on a reinsurance contract written by GLS which is included in accrued expenses and other liabilities.

The Level 3 investments include collateralized investments in direct lending entities of $ 53,616 at September 30, 2025 which are carried at fair market value using significant unobservable inputs.

These direct loans are illiquid and require long-term capital commitments, and so significant judgment was used in its valuation.

Therefore the Company classifies its fair value as Level 3 within the fair value hierarchy.

Therefore, these investments are classified as Level 3 in the fair value hierarchy.

The fair values for equity securities of $ 11,350 are estimated using quarterly unaudited capital and financial statements provided by the investee or recent private market transactions, where applicable.

4 unchanged sentences

Any changes to the financial information provided by the investee could result in a significantly higher or lower valuation at the reporting date.

Due to significant unobservable inputs in valuations, the Company classifies the fair values as Level 3 within the fair value hierarchy.

KESTREL GROUP LTD

3 unchanged sentences

Fair Value of Financial Instruments (continued)

Due to significant unobservable inputs in these valuations, the Company classifies the fair values as Level 3 within the fair value hierarchy.

The fair value of underwriting-related derivative instruments of $ 3,984 is determined using a discounted cash flow model in which the Company examines current market conditions, historical results as well as contract specific information that may impact future cash flows in order to assess the reasonableness of inputs used in the valuation model .

Due to significant unobservable inputs in these valuations, the Company classifies the fair values as Level 3 within the fair value hierarchy .

The following table provides a summary of quantitative information regarding the significant unobservable inputs used in determining the fair value of other investments measured at fair value on a recurring basis under the Level 3 classification at June 30, 2025:

Fair Value Valuation Technique Unobservable Inputs Range

5 unchanged sentences

Underwriting-related derivative liability $ 3,984 Discounted cash flows Duration matched discount rates 5.0 % to 6.0 %

The following table shows the reconciliation of beginning and ending balances for investments measured at fair value on a recurring basis using Level 3 inputs for the three and six months ended June 30, 2025, respectively.

The Company includes any related interest and dividend income in net investment income and are excluded from the reconciliation in the table below:

For the Three and Six Months Ended June 30, 2025

The following table shows the reconciliation of beginning and ending balances for investments measured at fair value on a recurring basis using Level 3 inputs for the three and nine months ended September 30, 2025, respectively.

The Company includes any related interest and dividend income in net investment income and thus are excluded from the reconciliation in the table below:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Balance - beginning of period $ 138,919 $ —

6 unchanged sentences

The fair value of financial instruments accounting guidance also applies to financial instruments disclosed, but not carried, at fair value, except for certain financial instruments related to insurance contracts .

At June 30, 2025, the carrying values of cash equivalents (including restricted amounts), accrued investment income, reinsurance balances receivable and certain other assets and liabilities approximate fair values due to their inherent short duration.

At September 30, 2025, the carrying values of cash equivalents (including restricted amounts), accrued investment income, reinsurance balances receivable and certain other assets and liabilities approximate fair values due to their inherent short duration.

As these financial instruments are not actively traded, the fair values of these financial instruments are classified as Level 2 in the fair value hierarchy.

At June 30, 2025, the carrying value of the net loan receivable from related party approximates fair value.

At September 30, 2025, the carrying value of the net loan receivable from related party approximates fair value.

The fair value of the net loan receivable is primarily determined by estimating expected future cash flows and discounting them using current interest rates for similar loans with similar credit risk.

As the net loan receivable from related party is not actively traded, its fair value is classified as Level 3 in the fair value hierarchy.

The fair values of the Company's outstanding Senior Notes (as defined in Note 7.

Long-Term Debt ) are based on indicative market pricing obtained from a third-party pricing service which uses observable market inputs, and therefore the fair values of these liabilities are classified as Level 2 in the fair value hierarchy.

KESTREL GROUP LTD

3 unchanged sentences

Fair Value of Financial Instruments (continued)

The fair values of the Company's outstanding Senior Notes (as defined in Note 7.

The following table presents the respective principal amount and fair values for the Senior Notes as at June 30, 2025:

June 30, 2025

The following table presents the respective principal amount and fair values for the Senior Notes as at September 30, 2025:

September 30, 2025

Principal Amount Fair Value

17 unchanged sentences

Kestrel Group common shareholders are entitled to receive dividends.

For the three and six months ended June 30, 2025, the Company's Board of Directors did not declare any dividends to common shareholders.

For the three and nine months ended September 30, 2025, the Company's Board of Directors did not declare any dividends to common shareholders.

Holders of Kestrel Group common shares have no pre-emptive, redemption, conversion or sinking fund rights.

2 unchanged sentences

Under the Kestrel Group bye-laws, the holders of at least a majority of the Kestrel Group common shares voting in person or by proxy at a meeting must approve any merger, amalgamation, business combination or similar transaction with another company.

At June 30, 2025, the aggregate authorized share capital of the Company is 42,500,000 shares of which 9,979,477 common shares were issued.

At September 30, 2025, the aggregate authorized share capital of the Company is 42,500,000 shares of which 9,979,477 common shares were issued.

This includes 7,741,943 common shares outstanding, and 2,237,534 treasury shares as discussed further below.

The remaining 32,520,523 shares are undesignated at June 30, 2025.

At June 30, 2025, there are 31,929 common shares that will be issued and outstanding upon vesting of restricted shares.

The remaining 32,520,523 shares are undesignated at September 30, 2025.

At September 30, 2025, there are 136,197 common shares that will be issued and outstanding upon vesting of restricted shares.

b) Common Shares issuable under Incentive Plans

6 unchanged sentences

c) Treasury Shares

Treasury shares include 2,237,534 common shares owned by Maiden Reinsurance which are not treated as outstanding common shares on the Condensed Consolidated Balance Sheet at June 30, 2025.

Treasury shares include 2,237,534 common shares owned by Maiden Reinsurance which are not treated as outstanding common shares on the Condensed Consolidated Balance Sheet at September 30, 2025.

The following tables set forth financial information regarding the changes in the balances of each component of AOCI:

For the three and six months ended ended June 30, 2025

Change in net unrealized gains on investment Foreign currency translation Total

For the Three Months Ended September 30, 2025 Change in net unrealized gains on investment Foreign currency translation Total

Beginning balance $ 485 $ 74 $ 559

Other comprehensive income (loss) before reclassifications 219 ( 1,694 ) ( 1,475 )

Amounts reclassified from AOCI to net income, net of tax — — —

Net current period other comprehensive income (loss)

219 ( 1,694 ) ( 1,475 )

Ending balance $ 704 $ ( 1,620 ) $ ( 916 )

For the Nine Months Ended September 30, 2025 Change in net unrealized gains on investment Foreign currency translation Total

Beginning balance

Other comprehensive income before reclassifications 704 ( 1,620 ) ( 916 )

Net current period other comprehensive income

Ending balance, Maiden shareholders $ 485 $ 74 $ 559

Amounts reclassified from AOCI to net income, net of tax

Net current period other comprehensive income (loss)

704 ( 1,620 ) ( 916 )

Ending balance

$ 704 $ ( 1,620 ) $ ( 916 )

KESTREL GROUP LTD

3 unchanged sentences

Long-Term Debt

At June 30, 2025, Kestrel Group had outstanding publicly-traded senior notes which were issued in 2016 ("2016 Senior Notes") by its now wholly owned subsidiary Maiden and outstanding publicly-traded senior notes which were issued in 2013 ("2013 Senior Notes") by its now wholly owned subsidiary, Maiden Holdings North America, Ltd.

At September 30, 2025, Kestrel Group had outstanding publicly-traded senior notes which were issued in 2016 ("2016 Senior Notes") by its now wholly owned subsidiary Maiden and outstanding publicly-traded senior notes which were issued in 2013 ("2013 Senior Notes") by its now wholly owned subsidiary, Maiden Holdings North America, Ltd.

("Maiden NA").

2 unchanged sentences

On May 27, 2025 in connection with the Combination, (i) Maiden, as issuer, the Company, as guarantor, and Wilmington Trust, National Association, as trustee, entered into a second supplemental indenture (the “Second Supplemental Indenture”) to that certain indenture dated as of June 14, 2016, providing that the Company will fully and unconditionally guarantee Maiden’s 6.625 % Senior Notes due 2046 and (ii) Maiden NA, as issuer, the Company, as guarantor, and Wilmington Trust Company, as trustee, entered into a fourth supplemental indenture (together with the Second Supplemental Indenture, the “Supplemental Indentures”) to that certain indenture dated as of June 24, 2011, providing that the Company will fully and unconditionally guarantee MHNA’s 7.75 % Senior Notes due 2043.

The following tables detail the issuances of Senior Notes outstanding at June 30, 2025:

June 30, 2025 2016 Senior Notes 2013 Senior Notes Total

The following tables detail the issuances of Senior Notes outstanding at September 30, 2025:

September 30, 2025 2016 Senior Notes 2013 Senior Notes Total

Principal amount $ 110,000 $ 152,361 $ 262,361

6 unchanged sentences

Effective interest rate 11.77 % 11.63 %

Total interest and amortization expense incurred on the Senior Notes for the three and six months ended June 30, 2025 was $ 1,899 , of which $ 1,342 was accrued as interest payable at June 30, 2025.

Total interest and amortization expense incurred on the Senior Notes for the three and nine months ended September 30, 2025 was $ 5,077 and $ 6,976 , respectively, of which $ 1,342 was accrued as interest payable at September 30, 2025.

Under the Combination, the Senior Notes were acquired at their respective fair market values on May 27, 2025, therefore the difference between the principal amount of the acquired debt and the fair market value of the acquired debt is being amortized over the remaining life of the Senior Notes up to par value.

The amortization for the fair value adjustment was $ 114 for the three and six months ended June 30, 2025.

The amortization for the fair value adjustment was $ 301 and $ 415 for the three and nine months ended September 30, 2025.

Under the terms of the 2013 Senior Notes, the 2013 Senior Notes can be redeemed, in whole or in part, at Maiden NA's option at any time and from time to time, until maturity at a redemption price equal to 100 % of the principal amount of the notes to be redeemed plus accrued but unpaid interest on the principal amount being redeemed to, but not including, the redemption date.

13 unchanged sentences

In the event that one or more of our reinsurers or retrocessionaires are unable to meet their obligations under these agreements, the Company would not realize the full value of the reinsurance recoverable balances.

The effect of ceded reinsurance on net premiums written and earned and on net loss and LAE for the six months ended June 30, 2025 was as follows:

For the Six Months Ended June 30, 2025

The effect of ceded reinsurance on net premiums written and earned and on net loss and LAE for the nine months ended September 30, 2025 was as follows:

For the Nine Months Ended September 30, 2025

Premiums written

2 unchanged sentences

Loss and LAE ceded

The Company's reinsurance recoverable on unpaid losses balance as at June 30, 2025 was $ 520,520 presented in the Condensed Consolidated Balance Sheets.

As of June 30, 2025, the total allowance for expected credit losses on the Company's reinsurance recoverable balance was $ 1,655 .

The following table provides a reconciliation of the beginning and ending balances of the allowance for expected credit losses on reinsurance recoverable for the three and six months ended June 30, 2025:

For the Three and Six Months Ended June 30, 2025

The Company's reinsurance recoverable on unpaid losses balance as at September 30, 2025 was $ 492,790 presented in the Condensed Consolidated Balance Sheets.

As of September 30, 2025, the total allowance for expected credit losses on the Company's reinsurance recoverable balance was $ 1,459 .

The following table provides a reconciliation of the beginning and ending balances of the allowance for expected credit losses on reinsurance recoverable for the three and nine months ended September 30, 2025:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Allowance for expected credit losses on reinsurance recoverable, beginning of period $ 1,655 $ —

Expected credit losses on recoverables where credit losses were not previously recognized — 1,655

Decrease in allowance for expected credit losses on reinsurance recoverable where credit losses were previously recognized

( 196 ) ( 196 )

Allowance for expected credit losses on reinsurance recoverable, end of period $ 1,459 $ 1,459

1 unchanged sentence

treaty reinsurance business held by Maiden Reinsurance were 100.0 % retroceded to Cavello in exchange for a ceding commission.

The reinsurance recoverable on unpaid losses due from Cavello under this retrocession agreement was $ 36,195 at June 30, 2025.

The recoverable due from Cavello is net of an allowance for expected credit losses of $ 780 as at June 30, 2025.

The reinsurance recoverable on unpaid losses due from Cavello under this retrocession agreement was $ 33,220 at September 30, 2025.

The recoverable due from Cavello is net of an allowance for expected credit losses of $ 598 as at September 30, 2025.

On July 31, 2019, Maiden Reinsurance and Cavello entered into a Loss Portfolio Transfer and Adverse Development Cover Agreement ("LPT/ADC Agreement") pursuant to which Cavello assumed the loss reserves as of December 31, 2018 associated with the AmTrust Quota Share in excess of a $ 2,178,535 retention up to $ 600,000 , in exchange for a retrocession premium of $ 445,000 .

2 unchanged sentences

The LPT/ADC Agreement meets the criteria for risk transfer and is thus accounted for as retroactive reinsurance.

As of June 30, 2025, the reinsurance recoverable on unpaid losses under the LPT/ADC Agreement was $ 481,747 which was net of an allowance for expected credit losses of $ 707 as at June 30, 2025.

Cavello provided collateral in the form of a letter of credit in the amount of $ 445,000 to AmTrust under the LPT/ADC Agreement.

Cavello is subject to additional collateral funding requirements as explained in Note 10.

Related Party Transactions.

As of June 30, 2025, the amount of collateral required was $ 432,202 .

Under the terms of the LPT/ADC Agreement, the covered losses associated with the Commutation and Release Agreement with AmTrust are eligible to be covered but recoverable only when such losses are paid or settled by AII or its affiliates, provided such losses and other related amounts shall not exceed $ 312,786 .

Cavello's parent company, Enstar Group Limited, has credit ratings of BBB+ from both Standard & Poor's and Fitch Ratings at June 30, 2025.

As of September 30, 2025, the reinsurance recoverable on unpaid losses under the LPT/ADC Agreement was $ 458,004 which was net of an allowance for expected credit losses of $ 695 as at September 30, 2025.

KESTREL GROUP LTD

3 unchanged sentences

Reinsurance (continued)

Cavello provided collateral in the form of a letter of credit in the amount of $ 445,000 to AmTrust under the LPT/ADC Agreement.

Cavello is subject to additional collateral funding requirements as explained in Note 10.

Related Party Transactions.

As of September 30, 2025, the amount of collateral required was $ 390,388 .

Cavello's parent company, Enstar Group Limited, has credit ratings of BBB+ from both Standard & Poor's and Fitch Ratings at September 30, 2025.

On July 18, 2025, the Company received correspondence from Cavello disputing the dates of loss assigned by Maiden Reinsurance’s cedant in the underlying reinsurance contract to a significant number of claims regarding certain coverage.

3 unchanged sentences

At this time, the Company cannot predict the outcome of these issues.

Please refer to Part II.

Other Information, Item 1A.

Risk Factors for more information regarding these reinsurance and collateral arrangements with Cavello.

KESTREL GROUP LTD

16 unchanged sentences

The reserve for loss and LAE consists of:

June 30, 2025

September 30, 2025

Reserve for reported loss and LAE

2 unchanged sentences

The following table represents a reconciliation of our beginning and ending gross and net loss and LAE reserves:

For the Six Months Ended June 30, 2025

For the Nine Months Ended September 30, 2025

Gross loss and LAE reserves, January 1

5 unchanged sentences

Effect of foreign exchange rate movements

Net loss and LAE reserves, June 30 202,912

Reinsurance recoverable on unpaid losses, June 30 520,520

Gross loss and LAE reserves, June 30 $ 723,432

Net loss and LAE reserves, September 30 184,877

Reinsurance recoverable on unpaid losses, September 30 492,790

Gross loss and LAE reserves, September 30 $ 677,667

Actuarial Methods Used to Estimate Loss and LAE Reserves

7 unchanged sentences

As an underwriting year matures and actual loss experience becomes more credible, other methods may be applied in determining the estimated ultimate losses.

The Loss Development ("LD") method is a reserving method in which ultimate losses are estimated by applying a loss development factor to actual reported (or paid) loss experience.

This method fully utilizes actual experience.

Multiplication of underwriting year actual reported (or paid) losses by its respective development factor produces the estimated ultimate losses.

KESTREL GROUP LTD

3 unchanged sentences

Reserve for Loss and Loss Adjustment Expenses (continued)

The Loss Development ("LD") method is a reserving method in which ultimate losses are estimated by applying a loss development factor to actual reported (or paid) loss experience.

This method fully utilizes actual experience.

Multiplication of underwriting year actual reported (or paid) losses by its respective development factor produces the estimated ultimate losses.

The LD method is based upon the assumption that the relative change in a given underwriting year’s losses from one evaluation point to the next is similar to the relative change in prior underwriting years’ losses at similar evaluation points.

24 unchanged sentences

The favorable or unfavorable PPD reflects changes in management's best estimate of the ultimate losses under the relevant reinsurance policies after considerable review of changes in actuarial assessments.

The following table summarizes (favorable) adverse PPD for our Legacy Reinsurance segment for the three and six months ended June 30, 2025:

For the Three and Six Months Ended June 30, 2025

KESTREL GROUP LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands of U.S.

dollars, except share and per share data)

Reserve for Loss and Loss Adjustment Expenses (continued)

The following table summarizes total PPD for our Legacy Reinsurance segment for the three and nine months ended September 30, 2025:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Prior Year Loss Development (favorable) adverse

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Diversified Business

In the Diversified Reinsurance legacy operations, the adverse PPD was $ 125 for the three and six months ended June 30, 2025 which was primarily driven by adverse development in GLS business.

KESTREL GROUP LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands of U.S.

dollars, except share and per share data)

Reserve for Loss and Loss Adjustment Expenses (continued)

In the Diversified Reinsurance legacy operations, the favorable PPD was $ 291 and $ 166 for the three and nine months ended September 30, 2025, respectively, which was primarily driven by favorable development in run-off business.

Legacy Reinsurance Segment:

AmTrust Business

The table below shows PPD for the AmTrust Reinsurance legacy operations for the three and six months ended June 30, 2025:

For the Three and Six Months Ended June 30, 2025

The table below shows PPD for the AmTrust Reinsurance legacy operations for the three and nine months ended September 30, 2025:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Prior Year Loss Development (favorable) adverse

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Total AmTrust Reinsurance PPD $ 6,911 $ ( 1,002 )

Net favorable PPD was $ 7,913 during the three and six months ended June 30, 2025 as detailed in the table above primarily experienced due to foreign currency fluctuations on reserves denominated in non-USD.

The PPD for AmTrust Reinsurance was primarily driven by adverse development in the European Hospital Liability Quota Share for the three and nine months ended September 30, 2025, respectively.

Total PPD was largely due to additional development recognized on European Hospital Liability business due to adjustments for certain death claims and a reduction in recoveries anticipated under the LPT/ADC Agreement which were offset by favorable development on worker's compensation and other lines of business in the AmTrust Quota Share.

KESTREL GROUP LTD

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In connection with the Combination, the Kestrel equityholders at the closing date received 2,749,996 common shares of the combined company.

The proportionate interest in these shares include 1,811,764 Common Shares issued to KILH for the benefit of Terry Ledbetter and Luke Ledbetter, constituting 18.2 % of the Company's issued Common Shares at June 30, 2025, and 776,470 Common Shares issued to AmTrust, constituting 7.8 % of the Company's issued Common Shares at June 30, 2025.

The proportionate interest in these shares include 1,811,764 Common Shares issued to KILH for the benefit of Terry Ledbetter and Luke Ledbetter, constituting 18.2 % of the Company's issued Common Shares at September 30, 2025, and 776,470 Common Shares issued to AmTrust, constituting 7.7 % of the Company's issued Common Shares at September 30, 2025.

Barry Zyskind is the beneficial owner of 318,714 Common Shares, constituting 4.1 % of the Common Shares outstanding.

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Each of Barry Zyskind, George Karfunkel and Leah Karfunkel disclaim beneficial ownership of the Common Shares owned by AmTrust to the extent permitted by law.

As discussed above, AmTrust holds approximately 7.8 % of the issued and outstanding Kestrel Group common shares and has the right to nominate (la) one non-independent director to the Kestrel Group Ltd board of directors for so long as AmTrust and its affiliates own at least 25 % of the shares of Kestrel Group issued to them at the closing of the Combination, and (b) two independent directors to the Kestrel Group board of directors for so long as AmTrust and its affiliates own at least 5 % of the shares of Kestrel Group and at least 25 % of the shares of Kestrel Group issued to them at the closing of the Combination.

As discussed above, AmTrust holds approximately 7.7 % of the issued and outstanding Kestrel Group common shares and has the right to nominate (a) one non-independent director to the Kestrel Group Ltd board of directors for so long as AmTrust and its affiliates own at least 25 % of the shares of Kestrel Group issued to them at the closing of the Combination, and (b) two independent directors to the Kestrel Group board of directors for so long as AmTrust and its affiliates own at least 5 % of the shares of Kestrel Group and at least 25 % of the shares of Kestrel Group issued to them at the closing of the Combination.

Kestrel Group writes its business on a fronting basis initially through the AmTrust Insurance Companies, and will cede up to 100 % of underwriting risk in exchange for a ceding fee based on gross premiums written.

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The Company also receives professional and administrative services through an expense reimbursement arrangement under the management agreement referenced below with AmTrust North America Inc.

The Company incurred costs related to this agreement of $ 96 and $ 244 during the three and six months ended June 30, 2025 compared to $ 176 and $ 616 for the same respective periods in 2024.

These amounts are presented in general and administrative fees in the condensed consolidated statement of operations and include services such as statutory financial reporting, IT processing, legal contracting, and insurance company compliance functions.

The Company incurred costs related to this agreement of $ 93 and $ 337 during the three and nine months ended September 30, 2025, respectively, compared to $ 91 and $ 707 for the same respective periods in 2024.

These amounts are presented in general and administrative fees in the condensed consolidated statement of operations and include professional services such as statutory financial reporting, IT processing, legal contracting, and insurance company compliance functions.

The Company also has an exclusive management contract with AmTrust North America Inc.

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In connection with the Combination Agreement, Kestrel will have the option to acquire these insurers from AmTrust for a period of up to three years after the closing date.

All fee revenue earned during the three and six months ended June 30, 2025 and 2024 were based on the net premiums associated with this agreement.

All fee revenue earned during the three and nine months ended September 30, 2025 and 2024 were based on the net premiums associated with this agreement.

KESTREL GROUP LTD

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As a result of the Commutation Agreement, Maiden Reinsurance reduced its exposure to AmTrust's Hospital Liability business, but still has exposure to Italian medical malpractice liabilities under the European Hospital Liability Quota Share.

The table below shows the effect of both of these quota share arrangements with AmTrust on the Company's Condensed Consolidated Income Statements for the three and six months ended June 30, 2025, respectively:

For the Three and Six Months Ended June 30, 2025

The table below shows the effect of both of these quota share arrangements with AmTrust on the Company's Condensed Consolidated Income Statements for the three and nine months ended September 30, 2025, respectively:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Gross and net premiums written $ 308 $ 23

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3 was effective upon the execution and delivery of the AR Loan Agreement and the Premium Repayment Loan Agreement approved by the Vermont DFR on February 7, 2025.

Pursuant to the terms of Post Termination Endorsement No.

1 to the European Hospital Liability Quota Share, Maiden Reinsurance strengthened the collateral protection provided by Maiden Reinsurance to AEL and AIU DAC by increasing the required funding percentage for Maiden Reinsurance under the collateral arrangements between the parties to the greater of 120 % of the Exposure (as defined therein) and the amount of security required to offset the increase in the Solvency Capital Requirement (“SCR”) that results from the changes in the SCR which arise out of Maiden Reinsurance's re-domestication as compared to the SCR calculation if Maiden Reinsurance had remained domesticated in a Solvency II equivalent jurisdiction with a solvency ratio above 100 % and provided collateral equivalent to 100 % of the Exposure.

KESTREL GROUP LTD

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Pursuant to the terms of Post Termination Endorsement No.

1 to the European Hospital Liability Quota Share, Maiden Reinsurance strengthened the collateral protection provided by Maiden Reinsurance to AEL and AIU DAC by increasing the required funding percentage for Maiden Reinsurance under the collateral arrangements between the parties to the greater of 120 % of the Exposure (as defined therein) and the amount of security required to offset the increase in the Solvency Capital Requirement (“SCR”) that results from the hanges in the SCR which arise out of Maiden Reinsurance's re-domestication as compared to the SCR calculation if Maiden Reinsurance had remained domesticated in a Solvency II equivalent jurisdiction with a solvency ratio above 100 % and provided collateral equivalent to 100 % of the Exposure.

Pursuant to the terms of Post Termination Endorsement No.

2 to the European Hospital Liability Quota Share, AmTrust has also agreed to reduce the collateral funding percentage on the European Hospital Liability Quota Share from 120 % to 105 %, on the effective date of this endorsement, which was approved by the Vermont DFR on February 19, 2025.

On December 31, 2024, Maiden Reinsurance and AmTrust entered into a Loan Agreement (the “Premium Repayment Loan Agreement”) by which Maiden Reinsurance will repay AII the principal amount of $ 24,259 representing settlement of a dispute over cessions of uncollectible ceded premiums written made by AII to Maiden Reinsurance, payable by Maiden Reinsurance in quarterly installments through the maturity date of December 31, 2032.

This settlement is netted against the loan receivable from related party on the Consolidated Balance Sheets at June 30, 2025.

This settlement is netted against the loan receivable from related party on the Consolidated Balance Sheets at September 30, 2025.

AmTrust may offset any amount payable against any amount due and unpaid by Maiden Reinsurance, under any agreement between AmTrust or its affiliate and Maiden Reinsurance or its affiliate, including without limitation, the European Hospital Liability Quota Share, dated April 1, 2011, as amended.

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• The outstanding balances under the AR Loan Agreement and Premium Repayment Loan Agreement are presented on a net basis.

The outstanding net loan receivable was $ 107,490 at June 30, 2025.

There was no allowance for expected credit losses recognized on the loan at June 30, 2025.

Net interest income on the net loan receivable was $ 659 for the three and six months ended June 30, 2025 with an effective yield of 5.8 %.

The outstanding net loan receivable was $ 101,689 at September 30, 2025.

There was no allowance for expected credit losses recognized on the loan at September 30, 2025.

Net interest income on the net loan receivable was $ 1,604 and $ 2,263 for the three and nine months ended September 30, 2025, respectively, with an effective yield of 6.1 % and 6.2 %, respectively.

b) European Hospital Liability Quota Share

Collateral has been provided to both AEL and AIU DAC under the European Hospital Liability Quota Share.

For AEL, the amount of the collateral held in reinsurance trust accounts at June 30, 2025 was $ 144,716 and the accrued interest was $ 592 .

For AEL, the amount of the collateral held in reinsurance trust accounts at September 30, 2025 was $ 137,806 and the accrued interest was $ 663 .

Asset Management Agreement

2 unchanged sentences

The agreement may be terminated upon 30 days written notice by either party.

The Company recorded $ 2 of investment management fees for the three and six months ended June 30, 2025 under this agreement.

On September 9, 2020, Maiden Reinsurance, AmTrust and AIIM entered into a novation agreement, effective July 1, 2020, which provided for the novation of the asset management agreement, dated January 1, 2018 between Maiden Reinsurance and AIIM, and the release by Maiden Reinsurance of AIIM's obligations under the asset management agreement.

The novation mandates that AmTrust is to be bound by the terms of the asset management agreement in place of AIIM and AmTrust agrees to perform any and all past, present and future obligations of AIIM under the asset management agreement.

On November 13, 2020, Maiden LF, Maiden GF, AmTrust and AIIM entered into a novation agreement, effective July 1, 2020, which provided for the novation of the asset management agreement, dated January 1, 2018 between Maiden LF, Maiden GF and AIIM, and the release by Maiden LF and Maiden GF of AIIM's obligations under the asset management agreement.

The Company recorded $ 46 and $ 48 of investment management fees for the three and nine months ended September 30, 2025, respectively, under this agreement.

KESTREL GROUP LTD

3 unchanged sentences

Related Party Transactions (continued)

Renewal Rights Transaction - IIS Business

3 unchanged sentences

All programs written by Maiden LF and GF, including those covered by the agreements as described above, are in the process of being cancelled in accordance with either their contractual terms or as applicable, the requirements of these agreements.

As at June 30, 2025, Maiden LF and Maiden GF had substantially completed all the main contractual obligations as per the AmTrust Renewal Rights Agreements.

As at September 30, 2025, Maiden LF and Maiden GF had substantially completed all the main contractual obligations as per the AmTrust Renewal Rights Agreements.

KESTREL GROUP LTD

3 unchanged sentences

Commitments, Contingencies and Guarantees

The following describes the Company's current commitments, contingencies and concentrations as of June 30, 2025:

The following describes the Company's current commitments, contingencies and concentrations as of September 30, 2025:

a) Concentrations of Credit Risk

At June 30, 2025, the Company’s assets where significant concentrations of credit risk may exist include total investments, cash and cash equivalents, net loan receivable from related party, reinsurance balances receivable, reinsurance recoverable on paid and unpaid losses and funds withheld receivable.

At September 30, 2025, the Company’s assets where significant concentrations of credit risk may exist include total investments, cash and cash equivalents, net loan receivable from related party, reinsurance balances receivable, reinsurance recoverable on paid and unpaid losses and funds withheld receivable.

Please refer to " Note 8.

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Segment Information , the Company's Program Services segment consists of a cohesive suite of fronting services that are integrated and interdependent.

For the three and six months ended June 30, 2025 and 2024, this revenue stream is highly concentrated due to capacity distribution agreements with an individual customer.

For the three and nine months ended September 30, 2025 and 2024, this revenue stream is highly concentrated due to capacity distribution agreements with an individual customer.

The Company evaluates the financial condition of its reinsurers, program managers and MGAs and monitors its concentration of credit risk on an ongoing basis.

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AmTrust has a financial strength/credit rating of A- (Excellent) from A.M.

Best at June 30, 2025.

Best at September 30, 2025.

To mitigate credit risk, the Company generally has a contractual right of offset thereby allowing claims to be settled net of any premiums or loan receivable.

The Company believes these balances as at June 30, 2025 will be fully collectible.

The Company believes these balances as at September 30, 2025 will be fully collectible.

b) Investment Commitments and Related Financial Guarantees

The Company's total unfunded commitments on other investments and equity method investments was $ 38,441 at June 30, 2025.

The table below shows the total unfunded commitments by type of investment as at June 30, 2025:

June 30, 2025

The Company's total unfunded commitments on other investments and equity method investments was $ 33,448 at September 30, 2025.

The table below shows the total unfunded commitments by type of investment as at September 30, 2025:

September 30, 2025

Fair Value % of Total

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The Company is not bound to such guarantees without its express authorization.

As discussed above, at June 30, 2025, guarantees of $ 71,598 were provided to lenders by the Company on behalf of real estate joint ventures, however, the likelihood of the Company incurring any losses pertaining to project level financing guarantees was determined to be remote.

As discussed above, at September 30, 2025, guarantees of $ 69,990 were provided to lenders by the Company on behalf of real estate joint ventures, however, the likelihood of the Company incurring any losses pertaining to project level financing guarantees was determined to be remote.

Therefore, no liability has been accrued under ASC 450-20.

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As a result of the Combination Agreement, Kestrel Equityholders are entitled to receive in contingent consideration up to the lesser of (x) an aggregate number of Kestrel Group common shares equal to $ 45.0 million divided by certain volume weighted average prices of such shares, subject to the achievement of certain EBITDA milestones by the businesses that Kestrel conducted immediately prior to closing and any extensions of such businesses or related or ancillary businesses existing thereafter, subject to other terms and conditions as set forth in the combination agreement and (y) 2.75 million common shares of Kestrel Group.

On June 30, 2025, the fair value of this contingent consideration was $ 2,679 which is reported on its own line in the Condensed Consolidated Balance Sheets.

The change in fair value of the earn out liability was an increase of $ 2,679 for the three and six months ended June 30, 2025, respectively, and was recorded in the condensed consolidated statements of net income during the reporting period.

On September 30, 2025, the fair value of this contingent consideration was $ 0 .

The fair value of the earn out liability decreased by $ 2,679 and $ 0 for the three and nine months ended September 30, 2025, respectively, which was recorded in the condensed consolidated statements of net income during the reporting period.

KESTREL GROUP LTD

3 unchanged sentences

Commitments, Contingencies and Guarantees (continued)

At June 30, 2025, the Company holds a contingent receivable in the insurance distribution industry.

At September 30, 2025, the Company holds a contingent receivable in the insurance distribution industry.

Pursuant to the terms of the investment agreement, the Company will receive a series of distributions.

The Company currently estimates that the net present value of these potential distributions is $ 14,347 which has been classified as receivable and reported in Other Assets on the condensed consolidated balance sheets at June 30, 2025.

Under ASC 805, the earn out consideration for this receivable will be adjusted to fair value at each reporting period with any changes in fair value reported immediately in net income.

Under ASC 805, the earn out consideration for this receivable is adjusted to fair value at each reporting period with any changes in fair value reported immediately in net income.

c) Operating Lease Commitments

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The Company's leases are currently classified as operating leases and none of them have non-lease components.

For operating leases that have a lease term of more than twelve months, and whose lease payments are above a certain threshold, the Company recognizes a lease liability and a right-of-use asset in the Condensed Consolidated Balance Sheets at the present value of the remaining lease payments until expiration.

For operating leases that have a lease term of more than twelve months, and whose operating lease payments are above a certain threshold, the Company recognizes a lease liability and a right-of-use asset in the Condensed Consolidated Balance Sheets at the present value of the remaining lease payments until expiration.

Kestrel’s principal executive offices are presently located at 8333 Douglas Avenue, Suite 1360 in Dallas, Texas.

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This Lease Agreement expires January 31, 2026 and will not be renewed.

This lease does not meet the minimum threshold for lease liability recognition and therefore its rent payments are expensed as incurred.

Kestrel also leases office space for the corporate office in Austin, Texas, through Kestrel Service Corporation, that expires in 2027.

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Termination of the lease is generally prohibited unless there is a violation under the lease agreement.

Neither of these leases meet the minimum threshold for lease liability recognition and therefore these rent payments are expensed as incurred.

Maiden also leases office space in a building in New York City that commenced in April 2024, which created a significant right-of-use asset and lease liability upon completion of leasehold improvements for the ten-year operating lease.

This lease comprises the entire lease liabilty and right-of-use asset that was recognized on the consolidated balance sheet at June 30, 2025.

This lease comprises most of the lease liabilty and right-of-use asset recognized on the condensed consolidated balance sheet at September 30, 2025.

As the lease contracts generally do not provide an implicit discount rate, the Company used the weighted-average discount rate of 7.2 %, representing its secured incremental borrowing rate, in calculating the present value of the lease liability.

At June 30, 2025, the Company's future lease obligations of $ 2,160 (2024 - $ 244 ) were calculated based on the present value of future annual rental commitments excluding taxes, insurance and other operating costs for non-cancellable operating leases discounted using its secured incremental borrowing rate.

At September 30, 2025, the Company's future lease obligations of $ 2,108 (December 31, 2024 - $ 244 ) were calculated based on the present value of future annual rental commitments excluding taxes, insurance and other operating costs for non-cancellable operating leases discounted using its secured incremental borrowing rate.

This amount has been recognized on the Condensed Consolidated Balance Sheet as a lease liability within accrued expenses and other liabilities with the right-of-use asset presented as part of other assets .

At June 30, 2025, the Company's right-of-use lease asset was $ 1,584 (2024 - $ 223 ).

At September 30, 2025, the Company's right-of-use lease asset was $ 2,085 (December 31, 2024 - $ 223 ).

The Company has made an accounting policy election not to include renewal, termination, or purchase options that are not reasonably certain of exercise when determining the term of the borrowing.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company's weighted-average remaining lease term is approximately 8.7 years at June 30, 2025.

The Company's weighted-average remaining lease term is approximately 8.4 years at September 30, 2025.

Under Topic 842, Leases , the Company continues to recognize the related leasing expense on a straight-line basis over the lease term on the Condensed Consolidated Statements of Income.

The Company's total lease expense was $ 91 and $ 151 for three and six months ended June 30, 2025 (2024:

The Company's total office lease expense was $ 156 and $ 298 for three and nine months ended September 30, 2025 (2024:

$ 48 and $ 142 ) recognized within general and administrative expenses consistent with the prior accounting treatment under Topic 840.

At June 30, 2025, the scheduled maturity of the Company's operating lease liabilities are expected to be as follows:

June 30, 2025

At September 30, 2025, the scheduled maturity of the Company's operating lease liabilities are expected to be as follows:

September 30, 2025

Thereafter 1,475

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On February 7, 2023, the District Court denied Plaintiffs’ motion for reconsideration of the District Court’s decision denying Plaintiffs’ objection to the Magistrate Judge’s December 2021 ruling on discovery.

On May 26, 2023, the Company filed a Renewed Motion to Dismiss the Second Amended Complaint or, in the Alternative, for Summary Judgment, which has been fully briefed.

On May 26, 2023, the Company filed a Renewed Motion to Dismiss the Second Amended Complaint or, in the Alternative, for Summary Judgment.

On December 19, 2023, the U.S.

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The Court also dismissed plaintiffs’ claims that the individual defendants were liable as control persons under Section 20(a) of the Securities Exchange Act for any such alleged false statements.

Plaintiffs have appealed to the United States Court of Appeals for the Third Circuit.

Plaintiffs appealed to the United States Court of Appeals for the Third Circuit.

On August 20, 2025, the United States Court of Appeals for the Third Circuit vacated the U.S.

District Court for the District of New Jersey’s order granting summary judgment to Maiden and individual defendants Arturo Raschbaum, Karen Schmitt, and John Marshalek .

The Third Circuit disagreed with the District Court’s holding that the current case record required judgment for Maiden, as a matter of law, on the issue of whether Maiden’s loss reserves were misleading.

The Court explained further that it was not issuing a ruling on the element of scienter.

The Third Circuit therefore vacated the opinion of the District Court and remanded the case to the District Court with instructions to permit plaintiffs to pursue discovery with respect to their claims for securities fraud under Section 10(b) of the Securities Exchange Act.

The Third Circuit denied defendants’ petition for rehearing on September 16, 2025, but defendants may still seek to appeal the decision.

Maiden believes it has procedural and substantive defenses to the asserted claims, and it intends to oppose and defend against these claims.

On December 26, 2024, WUSO Holding Corporation and 683 Capital Partners filed a lawsuit against Maiden Holdings North America, Ltd.

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Plaintiffs allege that principal and interest payable under the 2013 Senior Notes are due currently, rather than upon the stated maturity date of the 2013 Senior Notes.

Maiden believes it has substantial procedural and substantive defenses to the asserted claims, and it intends to vigorously defend against these claims.

On June 17, 2025, the Supreme Court of the State of New York, County of New York, considered and granted Maiden’s motion to dismiss the complaint filed in this case.

Plaintiffs may pursue an appeal of this decision and also stated that they would take steps to comply with the no-action clause requesting the indenture trustee to commence a related action.

On August 6, 2025, plaintiffs filed a notice of appeal and have six months to perfect their appeal in the Appellate Division.

On June 17, 2025, the Supreme Court of the State of New York, County of New York, considered and granted Maiden’s motion to dismiss the complaint in its entirety.

On August 6, 2025, plaintiffs filed a notice of appeal, triggering a six month deadline to perfect their appeal in the First Judicial Department of the New York Appellate Division.

To the extent that plaintiffs do perfect and pursue their appeal of this decision, Maiden will oppose any such action.

In addition to filing the notice of appeal, on August 12, 2025, plaintiffs filed a separate complaint against Maiden in the Supreme Court of the State of New York, County of New York, as opposed to filing an amended complaint in the existing action.

In addition to filing the notice of appeal, on August 12, 2025, plaintiffs filed a separate complaint against Maiden in the Supreme Court of the State of New York, County of New York.

In the new complaint, plaintiffs allege that they have standing and authorization to bring suit, contending that they satisfied the no-action clause in the indenture because, on June 10, 2025, they requested, on behalf of holders of at least 25 % of the outstanding 2013 Senior Notes, that the indenture trustee commence a related action, accompanied by an offer to indemnify, and the indenture trustee did not institute such proceedings within 60 days of the request.

On October 6, 2025, a motion to dismiss was filed on behalf of Maiden.

Plaintiffs’ opposition is due November 17, 2025, and Maiden will file its reply on December 16, 2025.

We cannot predict when the Court will issue a decision on the motion.

Maiden believes it has substantial procedural and substantive defenses to the asserted claims, and it intends to vigorously defend against these claims.

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Earnings per Common Share

The following shows a summary of the elements used in calculating basic and diluted earnings per common share for the three and six months ended June 30, 2025 and 2024, respectively:

For the Three Months Ended June 30, For the Six Months Ended June 30,

The following shows a summary of the elements used in calculating basic and diluted earnings per common share for the three and nine months ended September 30, 2025 and 2024, respectively:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2025 2024 2025 2024

Net income from continuing operations

Net (loss) income from continuing operations

$ ( 4,088 ) $ ( 429 ) $ 65,940 $ ( 1,353 )

1 unchanged sentence

— — ( 315 ) —

Income available to Kestrel common shareholders before discontinued operations 70,236 ( 547 ) 69,912 ( 924 )

Net (loss) income available to Kestrel common shareholders before discontinued operations

( 4,088 ) ( 429 ) 65,625 ( 1,353 )

Loss from discontinued operations, net of income tax ( 965 ) — ( 1,460 ) —

Amount of loss from discontinued operations allocated to participating common shareholders (1)

Net income attributable to Kestrel common shareholders $ 69,742 $ ( 547 ) $ 69,418 $ ( 924 )

Net (loss) income attributable to Kestrel common shareholders $ ( 5,053 ) $ ( 429 ) $ 64,171 $ ( 1,353 )

Weighted average number of common shares – basic and diluted (1)

7,741,943 2,749,996 5,053,828 2,749,996

Basic and diluted earnings from continuing operations per share attributable to Kestrel shareholders $ 15.16 $ ( 0.20 ) $ 18.93 $ ( 0.34 )

Basic and diluted (loss) earnings from continuing operations per share attributable to Kestrel shareholders

$ ( 0.53 ) $ ( 0.16 ) $ 12.99 $ ( 0.49 )

Basic and diluted loss from discontinued operations per share attributable to Kestrel shareholders

Basic and diluted earnings per share attributable to Kestrel shareholders:

( 0.12 ) — ( 0.29 ) —

(1) There were no potentially dilutive securities for the three and six months ended June 30, 2025 and 2024.

The Company recognized income tax expense of $ 3 and $ 95 for the three and six months ended June 30, 2025 compared to $ 0 for the same respective periods in 2024 .

The effective tax rate on the Company's net income differs from the statutory rate of zero percent under Bermuda law due to tax on foreign operations, primarily the U.S.

Basic and diluted (loss) earnings per share attributable to Kestrel shareholders:

$ ( 0.65 ) $ ( 0.16 ) $ 12.70 $ ( 0.49 )

(1) There were no potentially dilutive securities for the three and nine months ended September 30, 2025 and 2024.

The Company recognized income tax expense of $ 7 and $ 102 for the three and nine months ended September 30, 2025 compared to $ 0 for the same respective periods in 2024 .

The effective tax rate on the Company's net loss differs from the statutory rate of zero percent under Bermuda law due to tax on foreign operations, primarily the U.S.

A valuation allowance has been established against the net U.S.

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and International net deferred tax assets as more evidence is needed regarding the utilization of these losses.

At June 30, 2025, the Company has available net operating loss carry-forwards of $ 454,825 (December 31, 2024:

At September 30, 2025, the Company has available net operating loss carry-forwards of $ 446,633 (December 31, 2024:

$ 358 ) for income tax purposes.

1 unchanged sentence

$ 0 ) of net operating loss ("NOL") carryforwards expire in various years beginning in 2029.

As of June 30, 2025, approximately $ 80,584 or 17.7 % of the Company's NOL carryforwards have no expiry date under the relevant U.S.

As of September 30, 2025, approximately $ 81,331 or 18.2 % of the Company's NOL carryforwards have no expiry date under the relevant U.S.

tax law (December 31, 2024 - $ 358 or 100.0 %).

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The transaction was subject to customary regulatory approvals.

In June 2025, the Swedish Financial Supervisory Authority (“SFSA”) declined to approve the sale of Maiden GF and Maiden LF.

Maiden and the proposed acquirer are currently in the process of finalizing the terms of an amended sale agreement and this transaction is subject to customary regulatory approvals.

In June 2025, the SFSA declined to approve the sale of Maiden GF and Maiden LF.

This amended transaction remains subject to customary regulatory approval.

The sale will continue to be an all-cash transaction and pursuant to the proposed terms of the agreement, certain existing staff of Maiden GF will transition to the proposed acquirer.

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Pursuant to the terms of the Proposed Swedish Subsidiaries Sale agreement, it is presently intended that any remaining historic business upon closing will be fully retroceded to Maiden Reinsurance thus there will be continuing involvement regarding the historical insurance operations.

Pursuant to the terms of the Proposed Swedish Subsidiaries Sale, this transaction met the relevant held for sale criteria at June 30, 2025 and accordingly, any non-insurance related assets and liabilities related to the sale consideration are classified as held-for-sale in the Condensed Consolidated Balance Sheets as at June 30, 2025.

Pursuant to the terms of the Proposed Swedish Subsidiaries Sale, this transaction met the relevant held for sale criteria at September 30, 2025 and accordingly, any non-insurance related assets and liabilities related to the sale consideration are classified as held-for-sale in the Condensed Consolidated Balance Sheets as at September 30, 2025.

The held-for-sale assets and liabilities and discontinued operations in the tables further below do not include any insurance related balances.

2 unchanged sentences

The strategic shift test does not apply because the acquired businesses were not previously part of Kestrel Group who represents the acquiring entity and therefore would be classified as held-for-sale on the acquisition date.

As the condensed consolidated statement of operations of Maiden included operations of Maiden GF and Maiden LF for the periods presented, adjustments to exclude the discontinued non-insurance activities of Maiden GF and Maiden LF were made for the three and six months ended June 30, 2025.

All insurance related balances are excluded from the held-for-sale assets and liabilities which amounted to net insurance liabilities of $ 5,095 as at June 30, 2025.

The Company estimated the fair value of the net assets held-for-sale to be based on the estimated selling price less costs to sell and these assets are classified as Level 2 within the fair value hierarchy as of June 30, 2025.

The assets and liabilities classified as held for sale on the Company's Condensed Consolidated Balance Sheets as at June 30, 2025 include the following:

All insurance related balances are excluded from the held-for-sale assets and liabilities which amounted to net insurance liabilities of $ 4,692 as at September 30, 2025.

The assets and liabilities classified as held for sale on the Company's Condensed Consolidated Balance Sheets as at September 30, 2025 include the following:

September 30,

Fixed maturities, available-for-sale, at fair value $ 6,479

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Total liabilities held for sale $ 734

The following table summarizes the major classes of items constituting the results from discontinued operations for the three and six months ended June 30, 2025 presented in the Condensed Consolidated Statements of Income:

For the Three and Six Months Ended June 30, 2025

The following table summarizes the major classes of items constituting the results from discontinued operations for the three and nine months ended September 30, 2025 presented in the Condensed Consolidated Statements of Income:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

Net investment income $ 93 $ 104

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Net loss from discontinued operations

$ ( 965 ) $ ( 1,460 )

KESTREL GROUP LTD

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At the closing date on May 27, 2025, the fair value of Maiden's net assets acquired were $ 189,127 which exceeded the consideration effectively transferred of $ 115,537 , resulting in a bargain purchase gain of $ 73,590 as shown in the table above.

This gain was recognized immediately in the condensed consolidated statement of income of Kestrel for the three and six months ended June 30, 2025.

This gain was recognized immediately in the condensed consolidated statement of income of Kestrel for the nine months ended September 30, 2025.

As discussed in Note 11.

Commitments, Contingencies and Guarantees , Kestrel Equityholders are entitled to receive in contingent consideration up to the lesser of (x) an aggregate number of Kestrel Group Ltd common shares equal to $ 45.0 million divided by certain volume weighted average prices of such shares, subject to the achievement of certain EBITDA milestones by the businesses that Kestrel conducted immediately prior to closing and any extensions of such businesses or related or ancillary businesses existing thereafter, subject to other terms and conditions as set forth in the combination agreement and (y) 2.75 million common shares of Kestrel Group.

On June 30, 2025, the fair value of this contingent consideration was $ 2,679 which is reported on its own line in the Condensed Consolidated Balance Sheets.

On September 30, 2025, the fair value of this contingent consideration was reduced to $ 0 as the business subject to the earnout computatiom continues to be re-evaluated.

The fair value of the earn out liability decreased by $ 2,679 and $ 0 for the three and nine months ended September 30, 2025, respectively, and recognized in the condensed consolidated statement of income on its own line item.

In connection with the Combination on May 27, 2025, the assets and liabilities of Maiden were recorded at fair value measured as of the acquisition date.

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Significant Accounting Policies .

The following table presents the components of intangible assets acquired as at May 27, 2025:

The following table presents the components of intangible assets acquired at May 27, 2025 and September 30, 2025:

May 27, 2025 September 30, 2025

Value of Business Acquired $ 2,207 $ 1,832

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements