KG filing — read by section

Item 2. Management’s Discussion and Analysis

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 
 The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this "Form 10-Q" or this "Report"). References in this Form 10-Q to the terms "we", "us", "our", "the Company", "Kestrel" or other similar terms mean the consolidated operations of Kestrel Group Ltd and its subsidiaries, unless the context requires otherwise. References in this Form 10-Q to the term "Kestrel Group" means Kestrel Group Ltd only. Certain reclassifications have been made for 2025 to conform to the 2026 presentation and have no impact on consolidated net income and total equity previously reported. 
 Note on Forward-Looking Statements 
 This Quarterly Report on Form 10-Q includes anticipated benefits of the business combination and integration of Maiden Holdings Ltd. and Kestrel Group LLC, projections concerning financial information and statements concerning future economic performance and events, plans and objectives relating to management, operations, products and services, and assumptions underlying these projections and statements. These projections and statements are forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 and are not historical facts but instead represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control. These projections and statements may address, among other things, our strategy for growth, product development, financial results and reserves. Our actual results and financial condition may differ, possibly materially, from these projections and statements and therefore you should not place undue reliance on them. 
 Factors that could cause our actual results and financial condition to differ, possibly materially, from those in the specific projections and statements are discussed throughout the Management's Discussion and Analysis of Financial Condition and Results of Operations and in "Risk Factors" in Item 1A. of Part I of our Annual Report on Form 10-K for the year ended December 31, 2025 that was filed with the U.S. Securities and Exchange Commission ("SEC") on March 13, 2026, however, those factors should not be construed as exhaustive. Forward-looking statements speak only as of the date they are made and we undertake no obligation to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by law. 
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 Overview 
 Introductory Note 
 On May 27, 2025, Kestrel Group LLC (“Kestrel LLC”) and Maiden Holdings, Ltd. (“Maiden”) completed their previously announced combination ("Combination"), forming a new, publicly listed specialty program group operating under the name Kestrel Group Ltd (“Kestrel Group” or "Parent Company"). Maiden shares ceased trading on the NASDAQ Capital Market ("Nasdaq") at close of market on May 27, 2025. Kestrel Group shares began trading on the Nasdaq at open of market on May 28, 2025 under the ticker symbol “KG”. Upon the closing of the Transactions (the “Closing”), Maiden and Kestrel LLC are now wholly owned subsidiaries of the Company, which was rebranded as Kestrel Group and renamed “Kestrel Group Ltd” ("Kestrel" or the "Company"). 
 The Combination creates a capital light, fee-based insurance platform with the ability to selectively deploy underwriting capacity to optimize shareholder returns, with a commitment to innovation, client service and long-term relationships. 
 Kestrel specializes in providing fronting services to insurance program managers, managing general agencies (MGAs), reinsurers, and reinsurance brokers. Kestrel facilitates insurance transactions utilizing its exclusive management contracts with four insurance carriers, all of which are rated A- “Excellent” by A.M. Best. These contracts enable Kestrel to offer both admitted and surplus lines in all U.S. states. Kestrel LLC generally does not assume significant underwriting risk and produces lines of business such as casualty, workers’ compensation, catastrophe-exposed property, and non-catastrophe-exposed property, with diverse risk durations, sizes, and product types. 
 Kestrel continues to write business through its exclusive use of A.M. Best A- FSC XV insurance carriers Sierra Specialty Insurance Company, Rochdale Insurance Company, Park National Insurance Company and Republic Fire and Casualty Insurance Company (collectively, “AmTrust Insurance Companies”), all subsidiaries of AmTrust Financial Services, Inc. (“AmTrust”). Kestrel currently retains an option to acquire the AmTrust Insurance Companies for a period of up to three years after closing from AmTrust. AmTrust is a significant shareholder of Kestrel. Please see Note 10. Related Party Transactions for further information regarding the Company's relationship with AmTrust. 
 As of March 31, 2026, Maiden Reinsurance Ltd. ("Maiden Reinsurance") owns 22.1% of the Company's total issued and outstanding common shares which is eliminated for accounting and financial reporting purposes on the Company's condensed consolidated financial statements. On April 29, 2025, former Maiden shareholders approved the proposal to remove the 9.5% voting limitation at the Company's special general meeting of its shareholders (the "Special Meeting"). The ownership of common shares by Maiden Reinsurance was made in compliance with Maiden Reinsurance's investment policy and approved by the Vermont Department of Financial Regulation ("Vermont DFR"). 
 Current Operations 
 Our business consists of two reportable segments: Program Services and Legacy Reinsurance. 
 Our Program Services segment consists of a cohesive suite of products and services offered by Kestrel that are integrated and interdependent. Kestrel’s revenue is highly concentrated because of the capacity distribution agreements with an individual customer. Capacity distribution fees are collected from program managers or MGAs for providing support services and granting contractual access to our insurance carrier network and are considered a single performance obligation. Support services provided for these insurance and reinsurance brokerage arrangements include compliance and regulatory reporting and administrative support which culminate in the placement of bound insurance coverage. Kestrel considers these arrangements a single revenue stream . 
 Our Legacy Reinsurance segment consists of primarily reinsurance business previously produced by Maiden, which had been segregated into two reportable segments: AmTrust Reinsurance and Diversified Reinsurance. Business formerly classified in the AmTrust Reinsurance segment is now described as "AmTrust Reinsurance Legacy Business" while business formerly classified in the Diversified Reinsurance segment is referred to as "Diversified Reinsurance Legacy Business" within this new segment. 
 AmTrust Reinsurance Legacy Business includes all business ceded to Maiden Reinsurance by AmTrust, primarily the quota share reinsurance agreement (“AmTrust Quota Share”) between Maiden Reinsurance and AmTrust’s wholly owned subsidiary, AmTrust International Insurance, Ltd. (“AII”) and the European hospital liability quota share reinsurance contract ("European Hospital Liability Quota Share") with AmTrust’s wholly owned subsidiaries, AEL and AIU DAC, both of which are in run-off effective as of January 1, 2019, as discussed in Note 10. Related Party Transactions of the Notes to Condensed Consolidated Financial Statements included in Part I Item 1. "Financial Information" . In addition, the Company has a retroactive reinsurance agreement and a commutation agreement that further reduces its exposure and limits the potential volatility related to AmTrust liabilities, which are discussed in Note 8. Reinsurance of the Notes to Condensed Consolidated Financial Statements included in Part I Item 1. "Financial Information" . 
 Diversified Reinsurance legacy business comprises a run-off portfolio of predominantly property and casualty reinsurance business focusing on regional and specialty property and casualty insurance companies located primarily in Europe, as well as transactions entered into by Genesis Legacy Solutions ("GLS") as described in Note 1. Basis of Presentation under Legacy Reinsurance Operations. 
 The Company does not presently underwrite prospective reinsurance risks but may consider selectively deploying underwriting capacity to optimize shareholder returns in support of the Company's Program Services operations. 
 Business Strategy 
 Our strategic focus centers on growing the fee income component of our Program Services business, which will increase our earnings before interest, taxes, depreciation and amortization ("EBITDA") while effectively managing the continuing run- 
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 off of the legacy Maiden alternative asset and reinsurance portfolios. Our focus on growing our fee business may consider selectively deploying underwriting capacity to optimize shareholder returns in support of this business. 
 We continue to actively pursue with our existing partners reinsurance mechanisms that would selectively deploy the Company’s underwriting capacity and facilitate and accelerate the growth of our Program Services segment. 
 We believe this will create the greatest risk-adjusted shareholder returns in order to increase EBITDA and book value for our common shareholders, both near and long-term. Our assessment is that these areas of strategic focus would enhance our profitability through increased returns, which would also increase the likelihood of fully utilizing the significant net operating loss ("NOL") carryforwards, as described further below, which would increase both GAAP book value and create additional common shareholder value. The recognition of the deferred tax asset on our Condensed Consolidated Balance Sheet remains a leading priority for the Company to increase its GAAP book value. 
 As a result of the Combination, as of March 31, 2026 , we hold $221.0 million in alternative investments which include equity securities, equity method investments and other investments in a wide variety of asset classes. Please refer to the "Liquidity and Capital Resources" section on " Other Investments, Equity Method Investments and Equity Investments" for further information on these alternative asset classes and a detailed discussion of their investment returns. Recent developments and trends in financial markets, particularly as regards private assets, indicate that it may take longer than expected to achieve those returns and we have factored that into future capital allocation decisions. 
 Prior to the Combination, Maiden had determined that this asset management strategy did not serve its longer-term strategic goals, which had shifted to a focus on developing or acquiring fee income oriented insurance operations and had ceased making commitments to these alternative asset classes and had begun to dispose of these investments. Subsequent to the Combination, we have continued to pursue this objective and seek to find appropriate opportunities to dispose of these assets and believe this is a high priority in support of focusing our efforts on growing our Program Services business. 
 Accordingly, we expect our alternative investment portfolio to be reduced in future periods as we believe it is critical to reposition our balance sheet and increase our liquidity in support of the current initiatives being pursued. We have not made, and do not expect to make any such new commitments to alternative investments at this time. 
 While we believe that the Combination will increase the likelihood of achieving our stated objectives, there can be no assurance that the run-off of its insurance liabilities will run-off at levels that will allow us to achieve those goals. As a result, we continue to pursue finality solutions to resolve the AmTrust liabilities not covered by the LPT/ADC Agreement, including through third-parties. There can be no guarantee that we will execute such finality solutions and these solutions could involve significant charges to execute and we are actively evaluating the potential costs and benefits of such solutions, to the extent they are available to the Company. 
 NOL Carryforwards 
 We believe the Combination and our ability to increase EBITDA will create opportunities to utilize Maiden's NOL carryforwards that totaled $466.7 million at March 31, 2026. Approximately $387.6 million of NOL carryforwards expire in various years beginning in 2029. As of March 31, 2026, $79.1 million or 16.9% of the Company's NOL carryforwards have no expiry date under the relevant U.S. tax law. The NOL carryforwards combined with additional net deferred tax assets ("DTA") primarily related to Maiden's insurance liabilities result in net U.S. DTA (before valuation allowance) of $138.7 million or $17.73 per common share at March 31, 2026. 
 Maiden's net U.S. DTA of $138.7 million is not presently recognized on the Company's Condensed Consolidated Balance Sheets as a full valuation allowance is carried against it. Additionally, Kestrel's DTA of $11.0 million, which relates to tax basis intangibles, is not presently recognized on the Company's Condensed Consolidated Balance Sheets as a full valuation allowance is carried against it. At this time, the Company believes it is necessary to maintain a full valuation allowance against both net DTA balances as more evidence is needed regarding the utilization of these losses. As circumstances further develop, we will continuously evaluate the amount of the valuation allowance held against the net DTA. 
 For further details on the NOL carryforwards, please see Note 13. Income Taxes included under Part 1 Item 1 " Financial Information " of the Quarterly Report on Form 10–Q for the three months ended March 31, 2026. 
 
 
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 Three Months Ended March 31, 2026 and 2025 Financial Highlights 
 
 For the Three Months Ended March 31, 2026 2025 Change 
 Summary Consolidated Statement of Income Data (unaudited): ($ in thousands except per share data) 
 Net loss from continuing operations 
 $ (6,953) $ (394) $ (6,559) 
 Net loss from discontinued operations 
 (478) — (478) 
 Net loss 
 (7,431) (394) (7,037) 
 
 
 Basic and diluted loss per common share: 
 
 Net loss attributable to common shareholders (2) 
 (0.96) (0.14) (0.82) 
 
 Gross premiums written 2,655 — 2,655 
 Net premiums earned 3,157 — 3,157 
 Fee revenue 3,120 807 2,313 
 Underwriting and fee (loss) income (3) 
 (1,676) 235 (1,911) 
 Net investment results (9) 
 3,915 34 3,881 
 
 Non-GAAP measures: 
 Non-GAAP operating loss (1) 
 (10,354) (394) (9,960) 
 Non-GAAP basic and diluted operating loss per common share (1) 
 (1.34) (0.14) (1.20) 
 Annualized non-GAAP operating return on average shareholders' equity (1) 
 (33.6) % (36.2) % 2.6 % 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 March 31, 2026 December 31, 2025 Change 
 Consolidated Financial Condition ($ in thousands except per share data) 
 Total investments and cash and cash equivalents (4) 
 $ 401,548 $ 408,299 $ (6,751) 
 Total assets 964,227 1,009,955 (45,728) 
 Reserve for loss and LAE 593,350 637,169 (43,819) 
 Senior notes - principal amount 262,361 262,361 — 
 Common shareholders' equity 121,437 128,284 (6,847) 
 
 Total capital resources (5) 
 383,798 390,645 (6,847) 
 Ratio of debt to total capital resources (8) 
 68.4 % 67.2 % 1.2 % 
 Book Value calculations: 
 Book value per common share (6) 
 $ 15.52 $ 16.57 $ (1.05) 
 
 
 
 Diluted book value per common share (7) 
 14.32 16.28 (1.96) 
 
 
 
 
 
 

 
 
 (1) Non-GAAP operating earnings (loss), non-GAAP operating earnings (loss) per common share, and annualized non-GAAP operating return on average common shareholders' equity are non-GAAP financial measures. See " Key Financial Measures " for additional information. 
 (2) Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 12. Earnings per Common Share " for the calculation of basic and diluted income (loss) per common share. 
 (3) Underwriting and fee income or loss is a non-GAAP measure and is calculated as net premiums earned plus fee revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities. See " Key Financial Measures " for additional information. 
 (4) Total investments and cash and cash equivalents includes both restricted and unrestricted amounts of these assets. 
 (5) Total capital resources is the sum of the Company's principal amount of debt and shareholders' equity. See " Key Financial Measures " for additional information. 
 (6) Book value per common share is calculated using shareholders’ equity divided by the number of common shares outstanding. See " Key Financial Measures " for additional information. 
 (7) Diluted book value per common share is calculated by dividing shareholders' equity, adjusted for assumed proceeds from the exercise of dilutive options, by the number of outstanding common shares plus dilutive options and restricted shares (assuming exercise of all dilutive share based awards). See " Key Financial Measures " for additional information. 
 (8) Ratio of debt to total capital resources is calculated using the total principal amount of debt divided by the sum of total capital resources. 
 (9) Net investment results include the sum of net investment income, net realized and unrealized gains (losses), and interest in income (loss) of equity method investments. 
 
 
 
 
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 Key Financial & Operating Measures 
 In addition to our key financial measures presented in accordance with GAAP in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations and Comprehensive Loss, management uses certain non-GAAP financial measures to evaluate the Company's financial performance and the overall growth in value generated for the Company’s common shareholders. Management believes that these measures, which may be defined differently by other companies, explain the Company’s results to investors in a manner that allows for a more complete understanding of the underlying trends in the Company’s business. The non-GAAP measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. The calculation of these key financial measures including the reconciliation of non-GAAP measures to the nearest GAAP measure and relevant discussions are found within Item 2 - "Management's Discussion and Analysis of Financial Condition - Results of Operations and Non-GAAP Measures" and are summarized as follows: 
 Non-GAAP operating earnings (loss) and non-GAAP diluted operating earnings (loss) per common share : Management believes that the use of non-GAAP operating earnings and non-GAAP diluted operating earnings per common share enables investors and other users of the Company’s financial information to analyze its performance in a manner similar to how management analyzes performance. Management also believes that these measures generally follow industry practice therefore allowing the users of financial information to compare the Company’s performance with its industry peer group, and that the equity analysts and certain rating agencies which follow the Company, and the insurance industry as a whole, generally exclude these items from their analyses for the same reasons. Non-GAAP operating earnings (loss) should not be viewed as a substitute for U.S. GAAP net income (loss). 
 Non-GAAP operating earnings (loss) is an internal performance measure used by management as these measures focus on the underlying fundamentals of the Company's operations by excluding, on a recurring basis: (1) net realized and unrealized investment gains (losses); (2) foreign exchange and other gains (losses); (3) interest in income (loss) of equity method investments; and (4) amortization of intangible assets. It also excludes on a non-recurring basis: (1) loss from discontinued operations, net of income tax and; (2) restructuring and severance costs; and (3) costs incurred due to the Combination on May 27, 2025. We excluded net realized investment gains (losses), interest in income (loss) of equity method investments and foreign exchange and other gains (losses) as we believe these are influenced by market opportunities and other factors. We do not believe amortization of intangible assets, the net loss from our discontinued operations; restructuring and severance costs; and costs incurred due to the Combination on May 27, 2025 are representative of our ongoing and future business. We believe all of these amounts are substantially independent of our business and any potential future underwriting process, therefore their inclusion would distort the analysis of underlying trends in our operations. 
 Underwriting loss and fee income is a non-GAAP measure and is calculated as net premiums earned plus fee revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities. For purposes of these non-GAAP operating measures, the fee-generating business which is included in our Program Services segment, is considered part of the underwriting operations of the Company. Management believes that this measure is important in evaluating the underwriting performance of the Company and its segments. This measure is also a useful tool to measure the profitability of the Company separately from the investment results and is also a widely used performance indicator in the insurance industry. A reconciliation of the Company's underwriting results can be found in the Condensed Consolidated Financial Statements in the " Notes to Condensed Consolidated Financial Statements (unaudited) Note 3. Segment Information " under Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q. 
 The Company does not present certain non-GAAP measures such as combined ratio and its related components in this Quarterly Report on Form 10-Q for the three months ended March 31, 2026, as it believes that as the run-off of our reinsurance portfolios progresses, such ratios are increasingly not meaningful and of little value to readers as they evaluate the financial results of the Company. While an important metric of success, underwriting and fee income does not reflect all components of profitability, as it does not recognize the impact of investment income earned on premiums between the time premiums are received and the time loss payments are ultimately paid to clients. Because we do not manage our cash and investments by segment, investment income and interest expense are not allocated to the reportable segments. Certain general and administrative expenses are generally allocated to segments based on actual costs incurred. 
 Non-GAAP Operating Return on Average Shareholders' Equity ("Non-GAAP Operating ROACE"): Management uses non-GAAP operating return on average shareholders' equity as a measure of profitability that focuses on the return to common shareholders. It is calculated using non-GAAP operating earnings (loss) available to common shareholders (as defined above) divided by average shareholders' equity. 
 Book Value per Common Share and Diluted Book Value per Common Share: Book value per common share and diluted book value per common share are non-GAAP measures. Management uses growth in both of these metrics as a prime measure of the value we are generating for our common shareholders, because management believes that growth in each metric ultimately results in growth in the Company’s common share price. These metrics are impacted by the Company’s net income and external factors, such as interest rates, which can drive changes in unrealized gains or losses on our fixed income investment portfolio, as well as common share repurchases. 
 Ratio of Debt to Total Capital Resources: Management uses this non-GAAP measure to monitor the financial leverage of the Company. This measure is calculated using the total principal amount of debt divided by the sum of total capital resources. 
 Alternative investments is the total of the Company's holdings of equity securities, other investments and equity method investments as reported on the Company's Condensed Consolidated Balance Sheets. 
 Operating Metrics 
 Premium produced is an operating metric determined by management as a byproduct of the program services fees it earns and is paid by clients. Premium produced is equal to the premium written by an MGA or capacity provider, and management believes this measure is important in understanding the underlying production trends of its Program Services business and the 
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 fees it earns. Where available, the Company utilizes underlying premium produced as reported by its clients. Where the premium produced was not directly observable, the Company derived the premium produced by grossing up the known fee component using the applicable contractual fee percentage, including its arrangements with its insurance carrier partners. 
 Critical Accounting Policies and Estimates 
 It is important to understand our accounting policies in order to understand our financial position and results of operations. The Company’s Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company's critical accounting policies and estimates are disclosed in " Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations " included in our Annual Report Form 10-K filed on March 13, 2026. 
 The critical accounting policies and estimates should also be read in conjunction with Notes to Consolidated Financial Statements: Note 2. Significant Accounting Policies included under Part II, Item 8 "Financial Statements and Supplementary Data" of our Annual Report Form 10-K filed on March 13, 2026 for a full understanding of the Company’s accounting policies. There have been no changes during the three months ended March 31, 2026 to those critical accounting policies and estimates disclosed in our Annual Report. 
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 Results of Operations 
 As a result of the Combination on May 27, 2025, the Company acquired Maiden's operations, which includes significant underwriting and investment activities, along with operating expenses and interest expense associated with Maiden's senior notes outstanding. Maiden's results of operations are reported for the three months ended March 31, 2026 only and because the prior period results of operations do not include the operations of Maiden, the year-over-year comparisons are generally not directly comparable. The following table sets forth our selected unaudited Condensed Consolidated Statement of Operations data for the three months ended March 31, 2026 and 2025: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2026 2025 
 Gross premiums written 
 $ 2,655 $ — 
 Net premiums written 
 $ 2,654 $ — 
 Net premiums earned 
 $ 3,157 $ — 
 Fee revenue 3,120 807 
 Net loss and LAE 
 (2,255) — 
 Commission and other acquisition expenses 
 (1,473) — 
 General and administrative expenses (1) 
 (4,225) (572) 
 Underwriting loss & fee income (2) 
 (1,676) 235 
 Other general and administrative expenses (1) 
 (7,518) (571) 
 Net investment income 
 2,577 34 
 Net realized and unrealized investment gains 1,339 — 
 
 
 
 Foreign exchange and other gains 
 2,228 — 
 Interest and amortization expenses (3,896) — 
 Income tax expense 
 (6) (92) 
 Interest in loss of equity method investments 
 (1) — 
 Net loss from continuing operations 
 (6,953) (394) 
 Loss from discontinued operations, net of income tax (478) — 
 Net loss $ (7,431) $ (394) 
 
 
 
 
 
 
 
 
 

 (1) Underwriting loss and fee income related general and administrative expenses is a non-GAAP measure. Please refer to "General and Administrative Expenses" below for additional information related to these corporate expenses and the reconciliation to those presented in our unaudited Condensed Consolidated Statements of Operations. 
 (2) Underwriting loss and fee income is a non-GAAP measure and is calculated as net premiums earned plus fee revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting activities. 
 (3) The Company does not present certain non-GAAP measures such as combined ratio and its related components in its results of operation, as it believes that as the run-off of its reinsurance portfolios progresses, such ratios are increasingly not meaningful and of less value to readers as they evaluate our financial results. 
 
 
 Results for the three months ended March 31, 2026 
 Net loss for the three months ended March 31, 2026 was $7.4 million compared to a net loss of $0.4 million for the same respective period in 2025. An underwriting loss from the Legacy Reinsurance segment combined with higher operating and interest expenses was partially offset by increased Program Services fee income, net investment income, unrealized gains from investment activities as well as net foreign exchange and other gains. 
 • The Legacy Reinsurance segment underwriting loss of $3.3 million for the three months ended March 31, 2026 largely due to: 
 • On a current accident year basis, the underwriting loss for the Legacy Reinsurance segment was $3.0 million for the three months ended March 31, 2026. 
 • Our Legacy Reinsurance segment experienced adverse prior year loss development ("PPD") of $0.3 million in the first quarter of 2026, which included AmTrust Reinsurance Legacy adverse PPD of $0.6 million partly offset by Diversified Reinsurance Legacy favorable PPD of $0.3 million. 
 • The underwriting loss includes amortization of $0.8 million for the fair value adjustment on the discount on acquired net loss reserves due to the Combination which is recurring and amortized over the remaining claims settlement period. 
 • Program Services segment produced net fee income of $1.6 million for the three months ended March 31, 2026 compared to net fee income of $0.2 million for the same respective period in 2025. Fee revenue increased to $3.1 million for the three months ended March 31, 2026 compared to $0.8 million for the same period in 2025 derived from fees from both new and existing client programs. 
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 • combined income from investment activities totaled $3.9 million for the three months ended March 31, 2026 compared to $0.0 million for the same period in 2025 primarily due to the following: 
 • net investment income increased to $2.6 million for the three months ended March 31, 2026 compared to $34.0 thousand that was earned for the same respective period in 2025; 
 • realized and unrealized investment gains of $1.3 million for the three months ended March 31, 2026 compared to net investment losses of $0.0 million for the same respective period in 2025; and 
 • interest in loss of equity method investments was $1.0 thousand for the three months ended March 31, 2026 compared to $0.0 million for the same respective period in 2025. 
 • corporate general and administrative expenses increased to $7.5 million for the three months ended March 31, 2026 compared to $0.6 million for the same period in 2025 largely due to the inclusion of Maiden operating costs; and 
 • foreign exchange and other gains of $2.2 million for the three months ended March 31, 2026, compared to foreign exchange and other losses of $0.0 million for the same period in 2025, primarily due to appreciation of the U.S dollar on the re-measurement of net loss reserves and insurance related liabilities denominated in the British pound and euro. 
 Net Premiums Written 
 Net premiums written by our reportable segment, reconciled to the total consolidated net premiums written for the three months ended March 31, 2026 and 2025 are detailed below: 
 
 For the Three Months Ended March 31, 2026 2025 Change in 
 ($ in thousands) Total Total $ 
 Diversified Legacy Business $ 775 $ — $ 775 
 AmTrust Reinsurance Legacy Business 1,879 — 1,879 
 Total Legacy Reinsurance Segment $ 2,654 $ — $ 2,654 
 
 
 
 
 
 
 
 
 
 

 Net premiums written for the three months ended March 31, 2026 increased to $2.7 million which was split as follows: 
 • Premiums written in Diversified Reinsurance legacy business was $0.8 million for the three months ended March 31, 2026. As discussed in Note 14. Assets Held for Sale of the Notes to Condensed Consolidated Financial Statements in Part I Item 1. "Financial Information", Maiden LF and Maiden GF are no longer writing new business and the non-underwriting related assets and liabilities of Maiden GF are presented as held-for-sale in our condensed consolidated financial statements. Maiden LF has been recently placed into run-off operations and its assets and liabilities are no longer considered as held for sale at March 31, 2026. 
 • Premiums written in AmTrust Reinsurance legacy business was $1.9 million for the three months ended March 31, 2026, which emanated from premium adjustments to the AmTrust Quota Share, terminated effective January 1, 2019. 
 Please refer to the analysis below of our Diversified Reinsurance and AmTrust Reinsurance Legacy Business in the Legacy Reinsurance segment for further details. 
 Net Premiums Earned 
 Net premiums earned for the three months ended March 31, 2026 were $3.2 million. Net premiums earned by our reportable segment, reconciled to the total consolidated net premiums earned, for the three months ended March 31, 2026 and 2025 are detailed as follows: 
 
 For the Three Months Ended March 31, 2026 2025 Change in 
 ($ in thousands) Total Total $ 
 Diversified Reinsurance Legacy Business $ 867 $ — $ 867 
 AmTrust Reinsurance Legacy Business 2,290 — 2,290 
 Total Legacy Reinsurance Segment $ 3,157 $ — $ 3,157 
 
 
 
 
 
 
 
 
 
 

 Net premiums earned under Diversified Reinsurance legacy business for the three months ended March 31, 2026 were $0.9 million. Maiden LF and Maiden GF continue to earn premiums but are no longer writing new business and the non-underwriting related assets and liabilities of Maiden GF are presented as held-for-sale in our condensed consolidated financial statements as discussed above. Maiden LF has been placed into run-off operations and its assets and liabilities are no longer considered as held for sale at March 31, 2026. 
 Net premiums earned under AmTrust Reinsurance legacy business for the three months ended March 31, 2026 were $2.3 million. This was earned entirely under the AmTrust Quota Share. Please refer to the analysis below of our Diversified Reinsurance and AmTrust Reinsurance under the Maiden Legacy segment further below for further details. 
 Fee Revenue 
 Fee Revenue is primarily produced by our Program Services segment. Revenue is measured as the amount of consideration Kestrel expects to receive in exchange for providing services to its customer and is generally governed by its managed service agreement. This agreement outlines the structure of the Authorized Program for which Kestrel oversees the placement of 
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 effective insurance policies in exchange for a fee. These agreements may also include other provisions, such as minimum fee arrangements or cancellation provisions, which may impact revenue recognition. 
 Capacity distribution fees are collected from program managers or MGAs for the placement of effective insurance policies on behalf of our customer, which is considered a single performance obligation. Support services provided for these insurance and reinsurance brokerage arrangements include compliance and regulatory reporting and administrative support which culminate in the placement of bound insurance coverage. 
 Fee revenue earned for the three months ended March 31, 2026 was $3.1 million, compared to $0.8 million for the same period in 2025. The increase was primarily due to increased premium volume from both new and existing client programs. Premium produced by client programs for the three months ended March 31, 2026 was $94.2 million, compared to $23.3 million for the same period in 2025. Premium produced by client programs is an operating metric determined by management as a byproduct of the program services fees it earns and is paid by clients; please see Key Financial & Operating Measures for further explanation. 
 Net Investment Income 
 Net investment income for the three months ended March 31, 2026 increased by $2.5 million, compared to the same period in 2025 due to the inclusion of Maiden's legacy fixed income and alternative investment portfolios in connection with the Combination. 
 Annualized average book yields increased to 3.6% for the three months ended March 31, 2026, compared to 3.5% for the same period in 2025. Net interest income from our loan receivable from related party was $1.1 million for the three months ended March 31, 2026. The net loan receivable from related party had an average balance of $82.7 million and carried a weighted average interest rate of 5.5% for the three months ended March 31, 2026. Floating rate investments comprised 40.2% of our total fixed income investments at March 31, 2026 compared to 52.0% at December 31, 2025. 
 The following table details our average aggregate fixed income assets (at cost) and annualized investment book yield for the three months ended March 31, 2026 and 2025: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2026 2025 
 Annualized income from fixed income assets (1) 
 $ 9,872 $ 136 
 Average aggregate fixed income assets, at cost (2) 
 276,690 3,848 
 Annualized investment book yield 3.6 % 3.5 % 
 

 (1) Annualized income from fixed income assets includes annualized interest income from our available-for-sale ("AFS") portfolio, cash and restricted cash, funds withheld receivable, and net loan receivable from related party and is based on amounts disclosed in our quarterly U.S. GAAP consolidated financial statements. 
 (2) Average aggregate fixed income assets include AFS portfolio, cash and restricted cash, funds withheld receivable, and net loan receivable from related party and is computed as an average of the amounts disclosed in our quarterly U.S. GAAP consolidated financial statements. 
 Net Realized and Unrealized Investment Gains 
 Net realized and unrealized investment gains of $1.3 million were recognized for the three months ended March 31, 2026. Net realized and unrealized investment gains for the three months ended March 31, 2026 are summarized in the table below by investment category: 
 
 
 For the Three Months Ended March 31, 2026 
 
 
 
 
 
 
 
 Net realized gains: ($ in thousands) 
 Fixed maturity securities $ 52 
 
 
 Total net realized gains 52 
 
 Net unrealized gains: 
 Other investments 1,287 
 
 Total net unrealized gains 1,287 
 
 Net realized and unrealized investment gains 
 $ 1,339 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 Net unrealized gains for other investments in the three months ended March 31, 2026 reflect fair value adjustments in the Maiden legacy alternative investment portfolio during the reporting period. 
 Net Loss and LAE 
 Net loss and LAE incurred for the three months ended March 31, 2026 were $2.3 million. Net incurred losses were impacted by net adverse PPD of $0.3 million for the three months ended March 31, 2026. Excluding the impact of PPD, current year losses were $2.0 million for the three months ended March 31, 2026. The net PPD is discussed in greater detail in the Legacy Reinsurance segment discussion and analysis and is entirely associated with the run-off of unearned premium for terminated reinsurance contracts in the legacy reinsurance operations. The cessation of active reinsurance underwriting on prospective risks included the termination of the AmTrust Quota Share and European Hospital Liability Quota Share effective January 1, 2019. 
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 Commission and Other Acquisition Expenses 
 Commission and other acquisition expenses incurred for the three months ended March 31, 2026 were $1.5 million. Please see the Legacy Reinsurance segment analysis below for further information. 
 General and Administrative Expenses 
 General and administrative expenses include corporate expenses and segment expenses segregated for analytical purposes as a component of underwriting income. Total general and administrative expenses incurred for the three months ended March 31, 2026 increased by $10.6 million, compared to the same period in 2025 primarily due to the inclusion of Maiden's operations subsequent to May 27, 2025 as a result of the Combination. 
 General and administrative expenses for the three months ended March 31, 2026 and 2025 were comprised of: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2026 2025 
 General and administrative expenses – segments 
 $ 4,225 $ 572 
 General and administrative expenses – corporate 
 7,518 571 
 Total general and administrative expenses 
 $ 11,743 $ 1,143 

 Corporate expenses for the three months ended March 31, 2026 were driven by higher compensation costs, legal fees, and professional fees. Expenses incurred this period that will not be recurring through the remainder of 2026 include certain compensation costs of $1.6 million and the vesting of certain stock-based awards of $1.4 million for the three months ended March 31, 2026 compared to $0.0 million for the same period in 2025. 
 Interest and Amortization Expenses 
 Total interest and amortization expenses incurred for the three months ended March 31, 2026 were $3.9 million which included: 
 • Interest expense of $4.8 million on the outstanding senior notes issued by Maiden in 2016 and Maiden Holdings North America, Ltd. ("Maiden NA") in 2013 ("Senior Notes") in the three months ended March 31, 2026, that were acquired upon completion of the merger; and 
 • Amortization expense for the fair value adjustment on the Senior Notes was $0.3 million for the three months ended March 31, 2026. The difference between the principal amount of the acquired Senior Notes and their fair market value at closing of the Combination is being amortized over those securities' remaining life; which was partially offset by: 
 • Amortization income for the fair value adjustment of $1.2 million for the net loan receivable from related party for the three months ended March 31, 2026. 
 Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 7. Long Term Debt " for further details on the Senior Notes. The weighted average effective interest rate for the Senior Notes was 11.7% for the three months ended March 31, 2026. 
 Foreign Exchange and Other Gains 
 Foreign currency fluctuations are primarily driven by exposures to euro, British pound and other non-USD denominated net loss reserves and insurance related liabilities in excess of foreign currency assets in our Legacy Reinsurance segment. Net foreign exchange and other gains of $2.2 million were realized for the three months ended March 31, 2026, compared to net foreign exchange and other losses of $0.0 million for the same period in 2025. 
 Foreign exchange and other gains for the three months ended March 31, 2026 included a revaluation gain of $0.2 million on a contingent receivable held in relation to an equity investment in the insurance distribution industry that was sold prior to the Combination. Under ASC 805, the earn out consideration for this contingent receivable is adjusted to fair value at each reporting period with any changes in fair value reported immediately in net income through foreign exchange and other gains. 
 For the three months ended March 31, 2026, net foreign exchange gains of $2.0 million were attributable to appreciation of the U.S. dollar on the re-measurement of net loss reserves and insurance related liabilities denominated in the British pound and euro. Our non-USD denominated liabilities at March 31, 2026 included net loss reserves of $254.4 million. Our foreign currency asset exposures at March 31, 2026 included $97.4 million of fixed maturity euro denominated bonds managed by our investment managers who have the discretion to hold foreign currency exposures as part of their total return strategy, $33.5 million of real estate investments denominated in Canadian dollars, as well as $7.4 million of funds withheld receivable denominated in various non-USD currencies. 
 
 
 
 
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 Results by Reportable Segment 
 Program Services Segment 
 The segment results for Program Services for the three months ended March 31, 2026 and 2025 were as follows: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2026 2025 
 Premium produced (1) 
 $ 94,221 $ 23,343 
 
 
 Fee revenue $ 3,120 $ 807 
 
 
 General and administrative expenses 
 (1,512) (572) 
 Fee income 
 $ 1,608 $ 235 
 
 
 
 
 
 

 (1) Premium produced by client programs is an operating metric determined by management as a byproduct of the program services fees it earns and is paid by clients; please see Key Financial & Operating Measures for further explanation. 
 Program Services segment results for the three months ended March 31, 2026 increased by $1.4 million, compared to the same period in 2025 due to increased premium volume produced by both new and existing client programs. The general and administrative expenses increased due to higher compensation expenses subsequent to the Combination as well as higher legal and professional services expenses. 
 Program services revenue is presently highly concentrated due to capacity distribution agreements with two client programs representing 77.5% and 14.3% of total fee revenue earned in 2026, respectively. These two client programs represented 43.6% and 3.1% of fee revenue for the first quarter of 2025, respectively. The first program is a large, diversified capacity provider and our relationship with this client presently includes ten separate sub-programs (all of which produced revenue in 2026). No individual sub-program is greater than 35% of total earned fee revenue for the three months ended March 31, 2026. 
 Legacy Reinsurance Segment 
 The following details underwriting results for the two components of our Legacy Reinsurance segment which is comprised of Diversified Reinsurance Legacy Business and the AmTrust Reinsurance Legacy Business. The underwriting results for our Legacy Reinsurance segment for the three months ended March 31, 2026 were as follows: 
 
 
 For the Three Months Ended March 31, 2026 
 ($ in thousands) 
 Gross premiums written 
 $ 2,655 
 Net premiums written 
 $ 2,654 
 Net premiums earned 
 $ 3,157 
 
 Net loss and LAE 
 (2,255) 
 Commission and other acquisition expenses 
 (1,473) 
 General and administrative expenses 
 (2,713) 
 Underwriting loss 
 $ (3,284) 
 
 
 
 
 
 

 Diversified Reinsurance Legacy Business: The underwriting results for Diversified Reinsurance legacy business for the three months ended March 31, 2026 were as follows: 
 
 
 For the Three Months Ended March 31, 2026 
 ($ in thousands) 
 Gross premiums written 
 $ 776 
 Net premiums written 
 $ 775 
 Net premiums earned 
 $ 867 
 
 Net loss and LAE 
 302 
 Commission and other acquisition expenses 
 (727) 
 General and administrative expenses 
 (1,319) 
 Underwriting loss 
 $ (877) 
 
 
 
 
 
 

 
 
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 The underwriting loss for the Diversified Reinsurance Legacy business during the three months ended March 31, 2026 was principally the result of the continuing run off of the Company's International operations. Underwriting loss by business unit during the three months ended March 31, 2026 is detailed in the table below: 
 
 
 For the Three Months Ended March 31, 2026 
 ($ in thousands) 
 International $ (589) 
 GLS (115) 
 
 Other run-off lines (173) 
 Underwriting loss $ (877) 

 Premiums — As discussed in the "Overview" section, Maiden LF and Maiden GF are not writing any new business. Maiden LF and Maiden GF are presently the principal operating subsidiaries of the Company’s IIS platform; therefore we will continue to experience limited premium written for 2026 in the Diversified Reinsurance Legacy Business. Please refer to Note 14. Assets Held for Sale of the Notes to Condensed Consolidated Financial Statements under Part I Item 1. "Financial Information" for more details. 
 Net Loss and LAE — Net loss and LAE incurred in the three months ended March 31, 2026 were negative $0.3 million due to net favorable PPD of $0.3 million for the three months ended March 31, 2026 from International run-off business. 
 Commission and Other Acquisition Expenses — Commission and other acquisition expenses incurred in the three months ended March 31, 2026 were $0.7 million. This is driven by adjustments in premiums written and earned by Maiden LF and GF as they are not writing any new business with Maiden LF effectively placed in managed run-off operations. 
 General and Administrative Expenses — General and administrative expenses incurred in the three months ended March 31, 2026 were $1.3 million. This included $0.1 million of amortization on the fair value adjustment of the discount on acquired net reserves for losses and LAE due to reverse acquisition accounting for the Combination. 
 
 
 AmTrust Reinsurance Legacy Business: The underwriting results for AmTrust Reinsurance Legacy business for the three months ended March 31, 2026 were as follows: 
 
 
 For the Three Months Ended March 31, 2026 
 ($ in thousands) 
 Gross premiums written 
 $ 1,879 
 Net premiums written 
 $ 1,879 
 Net premiums earned 
 $ 2,290 
 Net loss and LAE 
 (2,557) 
 Commission and other acquisition expenses 
 (746) 
 General and administrative expenses 
 (1,394) 
 Underwriting loss 
 $ (2,407) 
 
 
 
 
 
 

 The written premiums for the three months ended March 31, 2026 reflect premium adjustments in the AmTrust Quota Share for Specialty Risk and Extended Warranty business. The AmTrust Quota Share and the European Hospital Liability Quota Share reinsurance agreements were terminated as of January 1, 2019 which has resulted in no new business written under these contracts. The table below provides detail on net premiums earned in the three months ended March 31, 2026: 
 
 For the Three Months Ended March 31, 2026 
 Net Premiums Earned ($ in thousands) 
 Small Commercial Business 
 $ (149) 
 Specialty Program 
 (2) 
 Specialty Risk and Extended Warranty 
 2,441 
 Total AmTrust Reinsurance 
 $ 2,290 
 
 
 
 
 
 
 
 

 
 
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 Net Loss and LAE — Net loss and LAE expenses incurred for the three months ended March 31, 2026 were $2.6 million. Net incurred losses for the three months ended March 31, 2026 were impacted by adverse PPD of $0.6 million. The table below shows total PPD for the AmTrust Reinsurance Legacy business for the three months ended March 31, 2026: 
 
 
 For the Three Months Ended March 31, 2026 
 Prior Year Loss Development adverse (favorable) ($ in thousands) 
 AmTrust Quota Share $ 370 
 LPT/ADC Agreement 179 
 European Hospital Liability Quota Share 2 
 Total AmTrust Prior Year Development $ 551 

 Net incurred losses for the three months ended March 31, 2026 included adverse PPD of $0.6 million. Total PPD was due to an adjustment for greater than expected amount of earned exposure in 2025 that was reported in the three months ended March 31, 2026 on Specialty Risk and Extended Warranty business in the AmTrust Quota Share, and a reduction in recoveries anticipated under the LPT/ADC Agreement. 
 Commission and Other Acquisition Expenses — Commission and other acquisition expenses incurred in the three months ended March 31, 2026 were $0.7 million. 
 General and Administrative Expenses — General and administrative expenses incurred in the three months ended March 31, 2026 were $1.4 million. This included $0.7 million of amortization on the fair value adjustment of the discount on acquired net reserves for losses and LAE due to reverse acquisition accounting for the Combination. 
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 Liquidity and Capital Resources 
 Liquidity 
 Kestrel Group is a holding company and transacts no business of its own. We therefore rely on cash flows in the form of dividends, advances, loans and other permitted distributions from our subsidiary companies to pay expenses and make dividend payments on our common shares. The jurisdictions in which our operating subsidiaries are licensed to write business impose regulations requiring companies to maintain or meet statutory solvency and liquidity requirements and also place restrictions on the declaration and payment of dividends and other distributions. 
 As of March 31, 2026, the Company had investable assets of $487.6 million compared to $506.1 million as of December 31, 2025. Investable assets include the combined total of our fixed maturity securities and other investments, cash and restricted cash including cash equivalents, net loan receivable from a related party and funds withheld receivable. Our investable assets decreased by $18.5 million during the three months ended March 31, 2026 due to the continued run-off of our reinsurance portfolio liabilities as claim payments were settled primarily from sales and maturities of AFS securities. 
 As discussed in "Overview" section, Maiden Reinsurance is regulated by the Vermont DFR. We are actively engaged with the Vermont DFR regarding Maiden Reinsurance's longer term business plan, including its investment policy, changes to which require prior regulatory approval as stipulated by Vermont law or the Vermont DFR for active underwriting, capital management or other strategic initiatives, including our Combination with Kestrel. Maiden Reinsurance has received all necessary approvals required to date by the Vermont DFR in respect of its business plan, including GLS activities and investment policy amendments made in 2025. 
 Maiden Reinsurance's Investment Policy, as approved and as amended by the Vermont DFR in the second quarter of 2025, maintains our established investment management and governance practices. The amended Investment Policy however includes significant modifications to this policy as follows: 1) Maiden Reinsurance will not purchase any additional affiliated securities, including common shares of the Company or senior notes issued by Maiden or Maiden NA; and 2) Maiden Reinsurance will make no new commitments for alternative assets, consistent with the practice it had already adopted ahead of this policy amendment. Maiden Reinsurance expects to fulfill its remaining commitments to existing investments, which totals $23.1 million in unfunded commitments as of March 31, 2026. 
 Under its license as an affiliated reinsurer under the captive licensing laws in the State of Vermont, Maiden Reinsurance requires the approval of the Vermont DFR for the payment of any dividends. In May 2025, the Vermont DFR approved: 1) an annual dividend program to be paid by Maiden Reinsurance to Maiden NA, which requires prior approval by the Vermont DFR prior to payment of dividends under the program; and 2) an extraordinary dividend of $40.0 million and this dividend formed the basis for the consideration received by the Company's shareholders pursuant to the terms of the Combination. To date, the Vermont DFR approved all dividend requests under the current dividend program. During the three months ended March 31, 2026, Maiden Reinsurance paid dividends of $7.5 million to Maiden NA as approved by Vermont DFR on February 25, 2026. During the three months ended March 31, 2026, Maiden NA did not pay any dividends to Maiden. 
 We may experience continued volatility in our results of operations which could negatively impact our financial condition and create a reduction in the amount of available distribution or dividend capacity from our regulated reinsurance subsidiaries, which would also reduce liquidity. Further, we and our insurance subsidiaries may need additional capital to maintain compliance with regulatory capital requirements and/or be required to post additional collateral under existing reinsurance arrangements, which could reduce our liquidity. 
 Operating, investing and financing cash flows 
 Our sources of funds may consist of fee revenue, premium receipts net of commissions and brokerage, investment income, net proceeds from capital raising activities, and proceeds from sales, maturities, pay downs and redemption of investments. Cash is used primarily to pay loss and LAE, ceded reinsurance premium, general and administrative expenses, and interest expense, with the remainder in excess of our operating requirements made available to our investment managers for investment in accordance with our investment policy as well as for potential capital management such as repurchasing our shares. 
 During the three months ended March 31, 2026, we experienced negative operating cash flows as we continue to run off the Legacy Reinsurance segment reserves as shown in the cash flows table further below. We currently expect a trend of positive investing cash flows through 2026, and expect to use funds from our cash and investment portfolios, fee revenue premiums, investment income and proceeds from investment sales and redemptions to meet our expected claims payments and operational expenses. Claim payments are principally from the run-off of existing reserves for loss and LAE. A significant portion of those liabilities are collateralized and claim payments will be funded by using this collateral which should provide sufficient funding to fulfill those obligations. 
 The Company’s management believes our current sources of liquidity are adequate to meet its cash requirements for the next twelve months as we generally expect negative operating cash flows to be sufficiently offset by positive investing cash flows. The cash consideration and related significant professional expenses associated with completing the Combination has however utilized substantial amounts of Maiden's unrestricted liquidity. While we continue to expect our cash flows to be sufficient to meet our cash requirements and to operate our business, as our reinsurance liabilities continue to run-off, our balance sheet increasingly consists of more illiquid investments which we are seeking to dispose of for more liquid assets. Our inability to monetize these illiquid assets on a timely basis while fulfilling our ongoing obligations may restrain our liquidity further and we may need to consider alternative measures to ensure we continue to fulfill those obligations. 
 Further, while we are no longer making new alternative asset commitments, Maiden's historical asset management strategy which was part of the Combination can be impacted by both investment specific and broader financial market conditions and may not produce the expected liquidity and cash flows these investments are designed to achieve, or the timing thereof may also be impacted by those factors. In addition, adverse outcomes or resolutions of ongoing legal disputes or proceedings, including 
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 those matters referenced in " Notes to Condensed Consolidated Financial Statements (unaudited) Note 11. Commitments, Contingencies and Guarantees " included under Part I Item 1. " Financial Information " of this Form 10-Q, could further negatively impact liquidity and cash flows, and thus our ability to meet our cash requirements for the next twelve months. 
 At March 31, 2026, unrestricted cash, cash equivalents and fixed maturity investments were $21.1 million compared to $25.8 million held at December 31, 2025, a decrease of $4.7 million during the three months ended March 31, 2026. Please see the related discussion on investing and financing cash flows below. The table below summarizes our operating, investing and financing cash flows for the three months ended March 31, 2026 and 2025: 
 
 For the Three Months Ended March 31, 2026 2025 
 ($ in thousands) 
 Operating activities 
 $ (15,133) $ (876) 
 Investing activities 
 52,998 — 
 Financing activities (486) — 
 Effect of exchange rate changes on foreign currency cash 
 (548) — 
 Total increase (decrease) in cash, restricted cash and cash equivalents 
 $ 36,831 $ (876) 
 
 

 Cash Flows used in Operating Activities 
 Cash flows used in operating activities for the three months ended March 31, 2026 was $15.1 million compared to cash flows used in operating activities of $0.9 million for the three months ended March 31, 2025. The higher cash used in operating activities for the three months ended March 31, 2026 was primarily due to claim payments for ongoing runoff of reinsurance liabilities related to the Legacy Reinsurance segment loss reserves acquired on May 27, 2025. 
 Cash Flows provided by Investing Activities 
 Cash provided by investing activities was $53.0 million for the three months ended March 31, 2026 compared to $0.0 million for the same period in 2025. Cash flows provided by investing activities for the three months ended March 31, 2026 was primarily due to maturities of US Treasury bills held in our AFS investment portfolio and the partial repayment of the net loan receivable from related party. 
 For the three months ended March 31, 2026, the proceeds from the sales, maturities and calls exceeded the purchases of fixed maturity securities by $45.0 million. The size of the fixed income investment portfolio will diminish as claims payments continue to be made in the runoff of existing loss reserves for the terminated AmTrust Quota Share and the European Hospital Liability Quota Share reinsurance agreements in our Legacy Reinsurance segment. 
 For the three months ended March 31, 2026, investing cash flows included purchases of alternative investments which exceeded proceeds from the sales and redemptions. There were net purchases of $1.5 million for alternative investments during the three months ended March 31, 2026. These net purchases were mainly due to pre-existing commitments for private equity fund investments for the three months ended March 31, 2026. 
 Cash Flows used in Financing Activities 
 Cash flows used in financing activities were $0.5 million for the three months ended March 31, 2026 compared to $0.0 million for the same period in 2025. This was due to the repurchase of common shares to settle tax payments upon the vesting of share-based compensation for certain employees. No dividends on common shares were paid during the three months ended March 31, 2026 and 2025. 
 Restrictions, Collateral and Specific Requirements 
 As previously noted, as a result of the completion of the Combination with Maiden on May 27, 2025, the Company has acquired significant investable assets and additional sources of investment income in addition to considerable loss reserves and unearned premiums under legacy reinsurance contracts as discussed in Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) "Note 4. Investments ", "Note 9. Reserve for Loss and Loss Adjustment Expenses" and "Note 15. Business Combination" included in this Form 10-Q. Pursuant to the terms of the underlying reinsurance contracts associated with these liabilities, Maiden Reinsurance is required in certain instances to provide collateral in various forms as security against performance to satisfy those obligations. Those collateral obligations remained with Maiden Reinsurance after completion of the Combination. 
 The Company's restrictions, collateral and specific requirements are discussed in " Management's Discussion and Analysis of Financial Condition and Results of Operations " section. Please also refer to " Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) included in this Form 10-Q for details of fair values for collateral requirements and restricted assets at March 31, 2026 particularly in these notes: Note 4.(e) Restricted Cash, Cash Equivalents and Investments; Note 8. Reinsurance; and Note 10. Related Party Transactions. 
 At March 31, 2026 and December 31, 2025, restricted cash and cash equivalents and fixed maturity investments used as collateral were $159.5 million and $163.9 million, respectively. This collateral represents 88.3% and 86.4% of the fair value of total fixed maturity investments, cash, restricted cash and cash equivalents at March 31, 2026 and December 31, 2025, respectively. 
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 Cash and Investments 
 As a result of the completion of the Combination on May 27, 2025, the Company has acquired significant investable assets and additional sources of investment income as discussed in Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) "Note 4. Investments " and "Note 15. Business Combination" included in this Form 10-Q. 
 As a result, the substantial majority of our current investments are held by Maiden Reinsurance, whose amended investment policy was approved by the Vermont DFR, as noted. As of March 31, 2026, Maiden Reinsurance owned 22.1% of our total outstanding common shares which is eliminated for accounting and financial reporting purposes on our condensed consolidated financial statements. 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 March 31, 2026. The market value of our common shares held by Maiden Reinsurance was $24.2 million at March 31, 2026. 
 The voting power of Maiden Reinsurance, with respect to its common shares, is no longer capped at 9.5% pursuant to a change in Maiden's bye-laws whereby Maiden's shareholders gave approval to remove the voting limitation on all shareholders at a Special Meeting that was held on April 29, 2025. 
 Accordingly, our fixed income investment portfolio is invested in liquid, investment-grade fixed maturity securities which are all designated as AFS at March 31, 2026. Further, prior to the Combination, Maiden Reinsurance’s investment policy had expanded to include a wide range of asset classes to enhance the income and total returns its investment portfolio produces, which had been approved by the Vermont DFR. We categorize these investments as alternative investments which include " Other Investments ", "Equity Method Investments" and "Equity Securities" on our Condensed Consolidated Balance Sheets. As of March 31, 2026 and December 31, 2025, our cash and investments consisted of: 
 
 March 31, 2026 December 31, 2025 
 ($ in thousands) 
 Fixed maturities, available-for-sale, at fair value $ 118,376 $ 165,035 
 Equity securities, at fair value 11,748 11,748 
 Equity method investments 33,543 33,532 
 Other investments 175,670 173,358 
 Total investments 339,337 383,673 
 Cash and cash equivalents 15,052 15,480 
 Restricted cash and cash equivalents 47,159 9,146 
 Total Investments and Cash and Cash Equivalents $ 401,548 $ 408,299 

 In addition to the discussion on Cash and Cash Equivalents and Fixed Maturities that follows herein, please see the " Notes to Condensed Consolidated Financial Statements (unaudited) Note 4. Investments " included under Part I Item 1 " Financial Information" of this Form 10-Q for further discussion on our AFS fixed income securities. 
 The net purchases of other investments for the three months ended March 31, 2026 were related to pre-existing commitments for alternative investments made prior to the Combination. Other than purchases for these pre-existing commitments, we have not made and will not be making new commitments to alternative investments in the foreseeable future. Please see the " Notes to Condensed Consolidated Financial Statements (unaudited) Note 11. Commitments, Contingencies and Guarantees " included under Part I Item 1 " Financial Information" of this Form 10-Q for existing investment commitments on our alternative investments. 
 Under Maiden's approved investment policy, alternative investments could include, but are not limited to, privately held investments, private equities, private credit lending funds, fixed-income funds, equity funds, real estate (including joint ventures and limited partnerships) and other non-fixed-income investments. For further details on our alternative investments, in addition to the discussion of the investments herein, please see " Notes to Condensed Consolidated Financial Statements (unaudited) Note 4(b). Other Investments, Equity Securities and Equity Method Investments included under Part I Item 1 " Financial Information " of this Form 10-Q. 
 Our investment performance is subject to a variety of risks, including risks related to general economic conditions, market volatility, interest rate fluctuations, foreign exchange risk, liquidity risk and credit and default risk. Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. An increase in interest rates could result in significant losses, realized or unrealized, in the value of our investment portfolio. A portion of our portfolio consists of alternative investments that subject us to restrictions on redemption, which may limit our ability to withdraw funds for some period of time after the initial investment. The values of, and returns on, such investments may also be more volatile. 
 We believe the legacy Maiden alternative investment portfolio assumed in the Combination provides diversification against our fixed-income investments and an opportunity for improved risk-adjusted returns. However, we believe this portfolio is not suitable for our plans to expand our Program Services segment and in addition to changes in our investment policy as described above, we are actively looking to dispose of these assets to further improve our liquidity position and strengthen our ability to grow. Further, the returns of these investments may be more volatile and we may experience significant unrealized gains or losses in any particular quarter or year. While we believe the returns produced by these investments will exceed our cost of capital, in particular our cost of debt capital, it is too soon to determine if the actual returns will achieve this objective and it may be an extended period of time before that determination can be made. 
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 We may utilize and pay fees to various companies to provide investment advisory and/or management services related to these investments. These fees, which would be predominantly based upon the amount of assets under management, would be included in net investment income. In addition, costs associated with evaluating, analyzing and monitoring these investments may require additional expenditures than traditional marketable securities. 
 Cash & Cash Equivalents 
 At March 31, 2026, we consider the levels of cash and cash equivalents held to be within our targeted ranges. As noted previously, the cash consideration and related significant professional expenses associated with completing the Combination has utilized substantial amounts of Maiden's unrestricted liquidity. Ongoing legal disputes and proceedings may result in significant legal fees or adverse outcomes that could further utilize and negatively impact our unrestricted liquidity as well. In addition, during periods when interest rates experience greater volatility, we have periodically maintained more cash and cash equivalents to better assess current market conditions and opportunities within our defined risk appetite, and may do so in future periods. 
 
 
 Fixed Maturity Investments 
 The average yield and average duration of our fixed maturity investments, by asset class, and our cash and cash equivalents (restricted and unrestricted) are as follows at March 31, 2026 and December 31, 2025: 
 
 March 31, 2026 Original or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Average yield (1) 
 Average duration (2) 
 
 ($ in thousands) 
 
 U.S. agency bonds – mortgage-backed 
 $ 20,400 $ 549 $ (2) $ 20,947 4.7 % 6.2 
 
 Non-U.S. government bonds 62,685 — (377) 62,308 1.9 % 1.0 
 Collateralized loan obligations 28,479 13 (13) 28,479 3.1 % 0.3 
 Corporate bonds 
 6,734 — (92) 6,642 0.8 % 2.2 
 
 Total fixed maturity investments 118,298 562 (484) 118,376 2.6 % 1.8 
 Cash and cash equivalents 
 62,211 — — 62,211 2.1 % 0.1 
 Total 
 $ 180,509 $ 562 $ (484) $ 180,587 2.4 % 1.2 

 
 December 31, 2025 Original or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Average yield (1) 
 Average duration (2) 
 
 ($ in thousands) 
 U.S. treasury bonds 
 $ 43,662 $ 11 $ — $ 43,673 3.9 % 0.1 
 U.S. agency bonds – mortgage-backed 
 20,823 795 — 21,618 4.7 % 6.1 
 
 Non-U.S. government bonds 29,297 — (154) 29,143 1.4 % 1.1 
 Collateralized loan obligations 62,593 52 (21) 62,624 3.1 % 0.3 
 Corporate bonds 
 7,977 2 (2) 7,977 0.7 % 1.6 
 
 Total fixed maturity investments 164,352 860 (177) 165,035 3.0 % 1.2 
 Cash and cash equivalents 
 $ 24,626 $ — $ — $ 24,626 — % 0.0 
 Total 
 $ 188,978 $ 860 $ (177) $ 189,661 2.6 % 1.0 

 (1) Average yield is calculated by dividing annualized investment income for each sub-component of fixed maturity securities and cash and cash equivalents (including amortization of premium or discount) by amortized cost. 
 (2) Average duration in years. 
 During the three months ended March 31, 2026, the yield on the 10-year U.S. Treasury bond increased by 12 basis points to 4.30%. The 10-year U.S. Treasury rate is the key risk-free determinant in the fair value of many of the fixed maturity securities in our portfolio. The increase in risk-free rates during the three months ended March 31, 2026 generated net unrealized losses of $0.6 million on our fixed maturity investment portfolio which reduced our book value per common share by $0.08 during the period. Current outlooks for global monetary policy have become more uncertain in recent months, as a combination of significant changes in U.S. fiscal and trade policy while simultaneously, geopolitical circumstances and rapid technological advancements have created increased economic uncertainty. The impacts of these policies and conditions on both U.S. and global economic outlooks and inflation appear to be causing central banks to adopt a generally more neutral monetary policy stance currently. However, these conflicting economic indicators is also resulting in some uncertainty that this policy stance will be maintained. Should interest rates fall, the impact on our investment portfolios, particularly for our fixed maturity assets, is to produce less income and thus weaken our financial condition. Associated increases in the values of our fixed maturity investments may be more limited given that 24.1% of AFS fixed maturity investments that we hold that are floating rate securities. 
 Interest rate risk is the price sensitivity of a security to changes in interest rates. Credit spread risk is the price sensitivity of a security to changes in credit spreads. As noted, the fair value of our fixed maturity investments will fluctuate with changes in interest rates and credit spreads. 
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 We attempt to maintain adequate liquidity in our fixed maturity investments portfolio with a strategy designed to emphasize the preservation of our invested assets and provide sufficient liquidity for the prompt payment of claims and contract liabilities. Because we collateralize a significant portion of our insurance liabilities, unanticipated or large increases in interest rates could require us to utilize significant amounts of unrestricted cash and fixed maturity securities to provide additional collateral, which could impact our asset and capital management strategy described herein. 
 We also monitor the duration and structure of our AFS fixed maturity investment portfolio as discussed below. As of March 31, 2026, the aggregate hypothetical change in fair value from an immediate 100 basis points increase in interest rates, assuming credit spreads remain constant, in our fixed maturity investments portfolio would decrease the fair value of that portfolio by $2.5 million. Actual shifts in interest rates may not change by the same magnitude across the maturity spectrum or on an individual security and, as a result, the impact on the fair value of our fixed maturity securities may be materially different from the resulting change in value described above. To limit our exposure to unexpected interest rate increases which would reduce the value of our fixed income securities and reduce our shareholders' equity, we attempt to maintain the duration of our fixed maturity investment portfolio combined with our cash and cash equivalents, both restricted and unrestricted, within a reasonable range of the duration of our loss reserves. 
 At March 31, 2026 and December 31, 2025, these respective durations in years were as follows: 
 
 March 31, 2026 December 31, 2025 
 Fixed maturities and cash and cash equivalents 
 1.2 1.0 
 Fixed maturity investment portfolio (excluding cash) 1.8 1.2 
 Reserve for loss and LAE - gross of LPT/ADC Agreement reserves 6.2 6.2 
 Reserve for loss and LAE - net of LPT/ADC Agreement reserves 2.7 2.7 

 During the three months ended March 31, 2026, the weighted average duration of our fixed maturity investment portfolio increased by 0.2 years to 1.2 years while the duration for gross reserve for loss and LAE remained the same at 6.2 years. The differential in duration between these assets and liabilities may fluctuate over time and in the case of fixed maturities, historically has been affected by factors such as market conditions, changes in asset mix and prepayment speeds in the case of both our U.S. agency mortgage-backed securities ("Agency MBS") and commercial mortgage-backed securities held. 
 At March 31, 2026, the duration of our loss reserves net of the LPT/ADC Agreement was higher than the duration of our fixed maturity investment portfolio. To limit our exposure to unexpected interest rate increases that could reduce the value of our fixed maturity securities and reduce our shareholders' equity, the Company holds floating rate securities whose fair values are less sensitive to interest rates. At March 31, 2026, 40.2% (December 31, 2025: 52.0%) of our fixed maturity securities were comprised of floating rate securities which are detailed in the table below: 
 
 March 31, 2026 December 31, 2025 
 ($ in thousands) Fair Value % of Total Fair Value % of Total 
 Floating rate securities 
 Collateralized loan obligations $ 28,479 10.7 % $ 62,624 21.8 % 
 
 
 Total floating rate AFS fixed maturities at fair value 28,479 10.7 % 62,624 21.8 % 
 Loan to related party 78,606 29.5 % 86,883 30.2 % 
 Total floating rate securities $ 107,085 40.2 % $ 149,507 52.0 % 
 
 Total fixed income investments at fair value (1) 
 $ 266,641 $ 287,500 

 (1) Total fixed income investments at fair value include AFS fixed maturity securities, cash, restricted cash and cash equivalents, funds withheld receivable, and net loan receivable from related party. 
 
 
 At March 31, 2026 and December 31, 2025, 100.0% of the Company’s U.S. agency bond holdings are mortgage-backed. Total U.S. agency MBS comprise 17.7% of our fixed maturity investment portfolio at March 31, 2026. Given their relative size to our total investments, if faster prepayment patterns were to occur over an extended period of time, this could potentially limit the growth in our investment income in certain circumstances or reduce the total amount of investment income we earn. The fair value of our U.S. Agency MBS holdings at March 31, 2026 and December 31, 2025 were as follows: 
 
 March 31, 2026 December 31, 2025 
 ($ in thousands) Fair Value % of Total Fair Value % of Total 
 
 FNMA – fixed rate $ 12,821 61.2 % $ 13,184 61.0 % 
 
 FHLMC – fixed rate 5,590 26.7 % 5,951 27.5 % 
 GNMA – variable rate 1,898 9.1 % 1,965 9.1 % 
 FGLMC – fixed rate 638 3.0 % 518 2.4 % 
 Total U.S. Agency MBS $ 20,947 100.0 % $ 21,618 100.0 % 
 
 

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 At March 31, 2026 and December 31, 2025, 100.0% of our fixed maturity investments consisted of investment grade securities. We define a security as being below investment grade if it has an S&P credit rating of BB+ or equivalent, or less. Please see Part I, Item 1: Notes to Condensed Consolidated Financial Statements (unaudited) Note 4. Investments for additional information on the credit rating of our fixed maturity investment portfolio. Credit ratings in the table below are assigned by S&P, or an equivalent rating agency. 
 The security holdings by sector and financial strength rating of our corporate bond holdings at March 31, 2026 and December 31, 2025 were as follows: 
 
 Ratings 
 March 31, 2026 A+, A, A- BBB+, BBB, BBB- Fair Value % of Corporate bonds portfolio 
 Corporate bonds 
 ($ in thousands) 
 
 
 
 
 Financial Institutions 
 92.6 % 7.4 % $ 6,642 100.0 % 
 
 
 Total 
 92.6 % 7.4 % $ 6,642 100.0 % 

 
 
 
 Ratings (1) 
 
 December 31, 2025 A+, A, A- BBB+, BBB, BBB- Fair Value % of Corporate bonds portfolio 
 Corporate bonds 
 ($ in thousands) 
 
 
 
 
 Financial Institutions 
 93.6 % 6.4 % $ 7,977 100.0 % 
 
 
 Total 
 93.6 % 6.4 % $ 7,977 100.0 % 

 The table below includes the Company’s total corporate holdings at fair value and as a percentage of all AFS fixed maturity securities held as at March 31, 2026. The Company's corporate holdings are 100.0% euro denominated, and 100.0% held in the Financial Institutions sector. 
 
 March 31, 2026 Fair Value % of Holdings Rating (1) 
 
 ($ in thousands) 
 Chubb Ina Holdings Inc., 1.55%, Due 3/15/2028 $ 6,151 5.2 % A 
 
 
 American Tower Corp, 1.0%, Due 1/15/2032 491 0.4 % BBB+ 
 Total 
 $ 6,642 5.6 % 

 (1) Ratings as assigned by S&P, or equivalent 
 
 
 At March 31, 2026 and December 31, 2025, we held the following types of non-U.S. dollar denominated securities: 
 
 March 31, 2026 December 31, 2025 
 ($ in thousands) Fair Value % of Total Fair Value % of Total 
 Non-USD denominated collateralized loan obligations $ 28,479 29.2 % $ 62,624 62.8 % 
 Non-USD denominated corporate bonds 6,642 6.8 % 7,977 8.0 % 
 Non-U.S. government bonds 62,308 64.0 % 29,143 29.2 % 
 Total non-U.S. dollar denominated securities $ 97,429 100.0 % $ 99,744 100.0 % 

 At March 31, 2026 and December 31, 2025, 100.0% of non-U.S. dollar denominated securities were invested in euro denominated bonds. At March 31, 2026, the non-U.S. government issuers all have a rating of A or higher by Fitch Ratings. We do not employ any credit default protection against any of the fixed maturities held in non-U.S. dollar denominated currencies at March 31, 2026. For our non-U.S. dollar denominated corporate bonds, the following table summarizes the composition of the fair value of our fixed maturity investments at the dates indicated by ratings at March 31, 2026 and December 31, 2025, respectively: 
 
 Ratings (1) 
 March 31, 2026 December 31, 2025 
 ($ in thousands) Fair Value % of Total Fair Value % of Total 
 
 
 A+, A, A- $ 6,151 92.6 % $ 7,466 93.6 % 
 BBB+, BBB, BBB- 491 7.4 % 511 6.4 % 
 
 Total non-U.S. dollar denominated corporate bonds $ 6,642 100.0 % $ 7,977 100.0 % 

 (1) Ratings as assigned by S&P, or equivalent 
 
 
 66 

 

 Other Investments, Equity Securities and Equity Method Investments 
 The Company's alternative investments are categorized as other investments, equity securities and equity method investments as reported on our Condensed Consolidated Balance Sheets. These include private equity funds, private credit funds, investments in limited partnerships, as well as investments in direct lending entities and investments in technology-oriented insurance related businesses known as insurtechs. Private equity investments consist of direct investments in privately held entities, investments in private equity funds and private equity co-investments with sponsoring entities. Private credit investments consist of loans and other debt securities of privately held entities or investment sponsors. Our alternative investments as of March 31, 2026 and December 31, 2025 consisted of the following asset categories: 
 
 March 31, 2026 December 31, 2025 
 ($ in thousands) Carrying Value % of Total Carrying Value % of Total 
 
 Privately held common stocks $ 4,838 2.2 % $ 4,838 2.2 % 
 Privately held preferred stocks 6,910 3.1 % 6,910 3.2 % 
 
 Total equity securities $ 11,748 5.3 % $ 11,748 5.4 % 
 
 
 Real estate investments $ 33,543 15.2 % $ 33,532 15.3 % 
 
 Total equity method investments $ 33,543 15.2 % $ 33,532 15.3 % 
 
 Private equity funds $ 32,905 14.9 % $ 31,732 14.5 % 
 Private credit investments 308 0.2 % 192 0.1 % 
 Privately held equity investments 9,518 4.3 % 9,248 4.2 % 
 Equity method investments with fair value option elected 80,252 36.3 % 78,911 36.1 % 
 Investments in direct lending entities 52,687 23.8 % 53,275 24.4 % 
 Total other investments $ 175,670 79.5 % $ 173,358 79.3 % 
 
 Total alternative investments $ 220,961 100.0 % $ 218,638 100.0 % 

 Our allocation to alternative investments increased to 55.0% of our total cash and investments held as of March 31, 2026, compared to 53.5% as of December 31, 2025, partly due to additional funding of certain investments from pre-existing commitments made prior to the Combination. In addition to the categories described above, we also evaluate our alternative investments by the following asset classes: 
 
 March 31, 2026 December 31, 2025 
 ($ in thousands) Carrying Value % of Total Carrying Value % of Total 
 Private Equity $ 16,221 7.3 % $ 16,514 7.5 % 
 Private Credit 308 0.1 % 192 0.1 % 
 
 Alternatives 83,857 38.0 % 83,044 38.0 % 
 Venture Capital 29,346 13.3 % 27,940 12.8 % 
 Real Estate 91,229 41.3 % 90,948 41.6 % 
 Total alternative investments $ 220,961 100.0 % $ 218,638 100.0 % 

 For further details on these alternative investments, see " Notes to Condensed Consolidated Financial Statements: Note 4(b) Other Investments, Equity Securities and Equity Method Investments" included under Part I Item 1. "Financial Information" of this Report on Form 10-Q. Within these asset classes, our portfolio broadly consists of the following types of investments: 
 • Private Equity – this asset class consists of both fund investments with leading private equity sponsors and direct equity investments in private companies, sometimes in conjunction with our private equity fund sponsors. As of March 31, 2026, $4.3 million or 26.3% of investments in the private equity asset class consisted of investments in private equity funds and $12.0 million or 73.7% consisted of direct equity investments in private companies. 
 • Private Credit - this asset class consists of both fund investments with leading private credit sponsors and direct credit investments in private companies, sometimes in conjunction with our private credit fund sponsors. Private credit investments in both funds and on a direct basis will typically be secured lending arrangements with non-rated entities, often with additional protective provisions to enhance the security and returns of these investments. As of March 31, 2026, private credit asset class included $0.3 million or 100.0% in direct investments in private companies. 
 • Alternatives – this asset class consists of structured financing arrangements which typically have incentive features to enhance the Company’s returns. As part of these arrangements, the Company requires collateral or bankruptcy-remote structures to protect its investments. As of March 31, 2026, $81.9 million or 97.7% of investments 
 67 

 

 in the alternatives asset class were direct investments and $1.9 million or 2.3% of the alternatives asset class were invested in funds. One investment in a collateralized direct lending entity of $52.7 million represents 62.8% of this asset class and is discussed further in "Note 4. Investments" included in Part I Item 1. "Financial Information" in this Quarterly Report on Form 10-Q for the three months ended March 31, 2026. 
 • Venture Capital – this asset class consists of both fund investments with venture capital firms focused primarily on “insurtech” or “fintech” early-stage investments as well as direct investments in start-up companies in this sector, including equity investments in individual companies made in conjunction with our venture capital fund sponsors. As of March 31, 2026, $16.9 million or 57.5% of investments in the venture capital asset class consisted of investments in funds and $12.5 million or 42.5% consisted of direct equity investments in start-up companies. As of March 31, 2026, $14.3 million or 48.6% of our venture capital investments were invested in funds or companies that would be considered “insurtech” investments. 
 • Real Estate – this asset class consists of long-term equity investments in three real estate projects. Two are multi-family residential development projects near major urban centers where workforce housing demand continues to be strong. One investment is a minority stake as a limited partner with a leading property developer with a highly successful track record, where the Company will earn returns from both operating income from rentals and future sales of properties. As of March 31, 2026, the fair value of this project is $51.0 million and the Company expects investment returns to commence in earnest in 2026 and beyond. The first properties developed with this project have been recently completed with occupancies now underway. The second multi-family residential investment is a majority stake with general partner rights wherein the Company is providing the capital backing to an experienced and successful developer in the subject market, while also taking minority equity stakes in individual projects. To date, this development project has secured five properties in attractive locations and is currently in the zoning and planning stages. As of March 31, 2026, the Company has $33.5 million invested in this project and has commenced earning limited amounts of fee income from this project. As part of its investment, the Company has also provided certain loan guarantees which are discussed in more detail in Note 11. Commitments, Contingencies and Guarantees included in Part I Item 1. "Financial Information" . We expect fee and operating income and gains from future sales of properties to commence in earnest in 2027 and beyond. Finally, the Company has a minority equity stake in an iconic office building in a major city in the U.S., with an attractive and growing tenant roll. As of March 31, 2026, the Company has $6.7 million invested in this project and to date has earned preferred returns and received certain distributions. In addition to preferred returns, the Company expects to receive future distributions of operating income from this investment. 
 As noted, c ertain of the Company's investments in limited partnerships are related to real estate joint ventures with interests in multi-property projects with varying strategies ranging from the development of properties to the ownership of income-producing properties. In certain of these joint ventures, the Company has provided certain indemnities, guarantees and commitments to certain parties such that it may be required to make payments now or in the future. For further details on these financial guarantees, please see " Notes to Condensed Consolidated Financial Statements: Note 11 - Commitments, Contingencies and Guarantees" included under Part I Item 1. "Financial Information" of this Report on Form 10-Q. 
 
 
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 Investment Results 
 Our investment portfolio returns included in earnings increased to $3.9 million for the three months ended March 31, 2026 compared to $34.0 thousand for the same period in 2025. This was largely due to the acquisition of Maiden's AFS fixed income and alternative investment portfolios in connection with the Combination on May 27, 2025. The Company earned unrealized gains on the alternative investment portfolio, as well as interest income on the net loan receivable from related party and coupon income on the AFS fixed maturity investment portfolio. 
 The following table summarizes our investment results for the three months ended March 31, 2026 and 2025: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2026 2025 
 Net investment income: 
 Fixed income investments (1) 
 $ 2,022 $ — 
 Cash and restricted cash 446 34 
 Other investments, including equities (4) 
 161 — 
 Investment expenses (52) — 
 Total net investment income 2,577 34 
 
 Net realized gains: 
 
 Fixed income assets (1) 
 52 — 
 
 Total net realized gains 
 52 — 
 
 Net unrealized gains: 
 
 Other investments 1,287 — 
 Total net unrealized gains 
 1,287 — 
 
 Interest in loss of equity method investments: 
 
 Interest in loss of equity method investments 
 (1) — 
 Interest in loss of equity method investments 
 (1) — 
 
 Total investment return included in earnings (A) 
 $ 3,915 $ 34 
 
 Other comprehensive income: 
 Unrealized losses on AFS fixed maturity securities (B) 
 $ (605) $ — 
 
 Total investment return = (A) + (B) $ 3,310 $ 34 
 
 Annualized income from fixed income assets (2) 
 $ 9,872 $ 136 
 Average aggregate fixed income assets, at cost (2) 
 276,690 3,848 
 Annualized investment book yield 3.6 % 3.5 % 
 
 Average aggregate invested assets, at fair value (3) 
 $ 496,870 $ 3,848 
 Investment return included in net earnings 0.8 % 0.9 % 
 Total investment return 0.7 % 0.9 % 

 1. Fixed income investments include AFS fixed maturity securities as well as funds withheld receivable, and net loan receivable from related party. 
 2. Average aggregate fixed income assets include AFS portfolio, cash and restricted cash, funds withheld receivable, and net loan receivable from related party and is computed as an average of the amounts disclosed in our quarterly U.S. GAAP consolidated financial statements. 
 3. Average aggregate invested assets include all investments (AFS and alternative investments), cash and restricted cash, loan to related party and funds withheld receivable and is computed as an average of the amounts disclosed in our quarterly U.S. GAAP consolidated financial statements. 
 
 
 
 
 69 

 

 The following table details total investment returns for our fixed income investments for the three months ended March 31, 2026 and 2025: 
 
 Fixed Income Investments (1) 
 For the Three Months Ended March 31, 
 ($ in thousands) 2026 2025 
 Gross investment income $ 2,468 $ 34 
 Net realized gains 
 52 — 
 
 
 Change in AOCI (3) 
 (605) — 
 Gross investment returns $ 1,915 $ 34 
 
 Average invested assets, at fair value (4) 
 $ 277,071 $ 3,848 
 
 Gross Investment Returns 0.7 % 0.9 % 
 
 Less: Investment expenses $ 36 $ — 
 Net investment returns $ 1,879 $ 34 
 
 Net Investment Returns 0.7 % 0.9 % 

 Our net investment returns slightly decreased to 0.7% for the three months ended March 31, 2026, compared to 0.9% for the same period in 2025. Our portfolio includes floating rate investments that comprised 40.2% of our fixed income investments at March 31, 2026. The net loan receivable from related party had an average balance of $82.7 million at March 31, 2026 with an average yield of 5.5% for the three months ended March 31, 2026. 
 Please refer to " Notes to Condensed Consolidated Financial Statements - Note 4. Investments " included under Part I, Item 1 " Financial Information" of this Quarterly Report on Form 10-Q for further detail on investment returns from fixed income investments held by the Company at March 31, 2026 and 2025. 
 The following table details total investment returns for our alternative investments for the three months ended March 31, 2026: 
 
 Alternative Investments (2) 
 For the Three Months Ended March 31, 
 ($ in thousands) 2026 
 Gross investment income $ 160 
 
 Net unrealized gains 
 1,287 
 
 
 Gross investment returns $ 1,447 
 
 Average invested assets, at fair value (4) 
 $ 219,800 
 
 Gross Investment Returns
 0.7 % 
 
 Less: Investment expenses $ 16 
 Net investment returns $ 1,431 
 
 Net Investment Returns 0.7 % 

 1. Fixed income investments includes AFS securities as well as cash, restricted cash, funds withheld receivable, and net loan receivable from related party. 
 2. Alternative investments includes other investments, equity securities, and equity method investments. 
 3. Change in accumulated other comprehensive income ("AOCI") excludes unrealized foreign exchange gains and losses. 
 4. Average invested assets is the average of the amounts disclosed in our quarterly U.S. GAAP consolidated financial statements. 
 
 
 
 
 
 
 70 

 

 The following table details total investment returns for alternative investments by asset class for the three months ended March 31, 2026: 
 
 March 31, 2026 Private Equity Private Credit Alternative Assets Venture Capital Real Estate Total 
 ($ in thousands) 
 Gross investment income $ — $ — $ — $ — $ 160 $ 160 
 Net realized and unrealized gains 
 (280) 117 872 308 270 1,287 
 
 Total Investment Return $ (280) $ 117 $ 872 $ 308 $ 430 $ 1,447 
 
 Average Investments $16,368 $250 $ 83,451 $ 28,643 $ 91,089 $ 219,800 
 
 Gross Investment Returns (1.7) % 46.8 % 1.0 % 1.1 % 0.5 % 0.7 % 
 

 Other Balance Sheet Changes 
 The following table summarizes other material balance sheet changes at March 31, 2026 compared to December 31, 2025: 
 
 ($ in thousands) March 31, 2026 December 31, 2025 Change in $ Change % 
 
 Reinsurance recoverable on unpaid losses 
 $ 436,381 $ 461,197 $ (24,816) (5.4) % 
 Net loan receivable from related party 78,606 86,883 (8,277) (9.5) % 
 
 Funds withheld receivable 
 7,448 10,956 (3,508) (32.0) % 
 
 Reserve for loss and LAE 
 593,350 637,169 (43,819) (6.9) % 
 
 
 
 Accrued expenses and other liabilities 
 57,426 52,032 5,394 10.4 % 
 

 During the three months ended March 31, 2026, the Company's reinsurance recoverable on unpaid losses decreased by $24.8 million or 5.4% primarily due to the receipt of loss recoveries from Cavello under the LPT/ADC Agreement. 
 Net loan receivable from related party decreased by $8.3 million or 9.5% since regular repayment of the loan commenced on January 1, 2025 which continues to reduce the loan receivable on a quarterly basis. 
 The Company's reserve for loss and LAE decreased by $43.8 million or 6.9% primarily due to continuing settlement of loss reserves liabilities primarily for the legacy AmTrust Reinsurance contracts. The funds withheld receivable decreased by 32.0% due to settlement of amounts due under International contracts. Accrued expenses and other liabilities increased by $5.4 million or 10.4% for the three months ended March 31, 2026 primarily due to an increase in reinsurance losses payable under the legacy AmTrust reinsurance agreements. 
 NOL Carryforwards 
 We believe the Combination and our ability to increase pre-tax income will create opportunities to utilize Maiden's NOL carryforwards that totaled $466.7 million at March 31, 2026. Approximately $387.6 million of these NOL carryforwards expire in various years beginning in 2029. As of March 31, 2026, $79.1 million or 16.9% of Maiden's NOL carryforwards have no expiry date under the relevant U.S. tax law. The NOL carryforwards combined with additional net deferred tax assets ("DTA") primarily related to Maiden's insurance liabilities result in net U.S. DTA (before valuation allowance) of $138.7 million or $17.73 per common share at March 31, 2026. Maiden's net U.S. DTA of $138.7 million is not presently recognized on the Company's condensed consolidated balance sheet as a full valuation allowance is carried against it. 
 Kestrel LLC has NOL carryforwards of $9.6 million with no expiry date. Additionally, Kestrel LLC has net DTA of $11.0 million or $1.40 per common share at March 31, 2026 , which mainly relates to tax basis intangibles, which is not presently recognized on the Company's Condensed Consolidated Balance Sheet as a full valuation allowance is carried against it. At this time, the Company believes it is necessary to maintain a full valuation allowance against both net DTA's as more evidence is needed regarding the utilization of these losses. As circumstances further develop, we continuously evaluate the amount of the valuation allowance held against the net DTA. For further details on the NOL carryforwards, please see Notes to Condensed Consolidated Financial Statements: Note 13. Income Taxes under Part 1. Item 1. " Financial Information" of this Quarterly Report on Form 10-Q. 
 Capital Resources 
 During the three months ended March 31, 2026, book value per common share decreased to $15.52 and diluted book value per common share decreased to $14.32, compared to $16.57 and $16.28 at December 31, 2025, respectively. Total capital resources decreased by $6.8 million compared to December 31, 2025 due to the following items: 
 • retained earnings decreased by $7.4 million due to the net loss reported for the three months ended March 31, 2026; 
 • AOCI decreased by $0.4 million driven by: (1) net unrealized losses of $0.6 million on our AFS investment portfolio due to market price movements in the three months ended March 31, 2026, partly offset by: (2) an increase in foreign currency translation adjustment of $0.2 million in the three months ended March 31, 2026 due to appreciation of the U.S. dollar on the re-measurement of net liabilities denominated in British pound and euro; 
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 • treasury shares increased by $0.5 million due to common shares repurchases of $0.5 million which represent tax withholding in respect of tax obligations on the vesting of non-performance-based restricted shares; partly offset by: 
 • additional paid-in capital increased by $1.4 million due to stock based compensation expense incurred during the three months ended March 31, 2026; 
 The following table shows the movement in our capital resources at March 31, 2026 and December 31, 2025: 
 
 March 31, 2026 December 31, 2025 Change in $ 
 ($ in thousands) 
 
 Common shares at par value $ 101 $ 100 $ 1 
 Additional paid-in capital 178,982 177,534 1,448 
 Accumulated other comprehensive income 
 537 916 (379) 
 (Accumulated deficit) retained earnings (6,234) 1,197 (7,431) 
 Treasury shares, at cost (51,949) (51,463) (486) 
 
 Total Kestrel shareholders' equity 121,437 128,284 (6,847) 
 Senior notes - principal amount 262,361 262,361 — 
 Total capital resources 
 $ 383,798 $ 390,645 $ (6,847) 

 Please refer to " Notes to Consolidated Financial Statements Note 6. Shareholders' Equity " included under Part I Item 1. " Financial Information" of this Quarterly Report on Form 10-Q for a discussion of equity instruments issued by the Company. Book value and diluted book value per common share at March 31, 2026 and December 31, 2025 were as follows: 
 
 ($ in thousands except share and per share data) March 31, 2026 December 31, 2025 
 Ending common shareholders’ equity 
 $ 121,437 $ 128,284 
 Proceeds from assumed conversion of dilutive options 
 — — 
 Numerator for diluted book value per common share calculation 
 $ 121,437 $ 128,284 
 
 Common shares outstanding 
 7,824,030 7,741,943 
 Shares issued from assumed conversion of dilutive options and restricted shares 
 655,643 136,197 
 Denominator for diluted book value per common share calculation 
 8,479,673 7,878,140 
 
 Book value per common share 
 $ 15.52 $ 16.57 
 Diluted book value per common share 
 14.32 16.28 

 Senior Notes 
 At March 31, 2026, 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 NA, collectively referred to as the Company's outstanding senior notes ("Senior Notes"). The Senior Notes are unsecured and unsubordinated obligations of the Company. 
 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 Company did not enter into any short-term borrowing arrangements during the three months ended March 31, 2026. Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 7. Long Term Debt " included under Part I Item 1. " Financial Information" of this Form 10-Q for a discussion of the Company’s Senior Notes. Please refer to " Notes to Condensed Consolidated Financial Statements (unaudited) Note 11. Commitments, Contingencies and Guarantees " included under Part I Item 1. " Financial Information" of this Form 10-Q for ongoing litigation regarding the 2013 Senior Notes. 
 Maiden does not have any significant operations or assets other than ownership of the shares of our subsidiaries. The dividends and other permitted distributions from Maiden NA (and its subsidiaries) are our sole source of funds to meet ongoing cash requirements, including debt service payments. Factors that may affect payments to holders of the 2013 Senior Notes include restrictions on the payments of dividends by Maiden Reinsurance to Maiden NA which provides the sole source of income for interest payments on the 2013 Senior Notes. In 2025, the Vermont DFR approved an annual dividend program from Maiden Reinsurance to Maiden NA, but required prior approval of quarterly dividends before payment. 
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 To date the Vermont DFR has approved all dividend requests under this program. Subsequent to these approvals, plus the approval for the $40.0 million extraordinary dividend to provide for consideration to the Kestrel shareholders pursuant to the terms of the Combination Agreement, Maiden Reinsurance paid total dividends of $145.0 million to Maiden NA as of March 31, 2026. 
 The summarized financial information below has been presented on a combined basis for the issuer Maiden NA and the guarantor Maiden, excluding all other subsidiaries. Intercompany balances and transactions between Maiden NA and Maiden, whose information is presented above on a combined basis, were eliminated. Any investment by Maiden NA or Maiden in subsidiaries that are not issuers or guarantors is not presented in the financial information below. Intercompany balances with subsidiaries that are not issuers or guarantors and any related party transactions were separately disclosed below and are not included in the total assets and total liabilities presented for Maiden NA and Maiden. 
 The net loss for Maiden was due to interest and amortization expenses on the Senior Notes as well as general and administrative expenses and net loss in Maiden NA reflects general operating expenses for the period. Summarized financial information of Maiden NA and Maiden as of March 31, 2026 and for the three months ended March 31, 2026 were as follows: 
 
 Maiden NA Maiden 
 ($ in thousands) 
 Total assets $ 12,766 $ 1,866 
 Total liabilities 111,465 78,503 
 Amounts due from subsidiaries (not included in total assets above) 37 6,385 
 Amounts due to subsidiaries (not included in total liabilities above) 12,865 6,171 
 Related party loan payable (not included in total liabilities above) — 336,206 
 
 
 Total revenue for year-to-date period 3 190 
 Net loss for year-to-date period 
 (3,071) (7,863) 

 With respect to the related party loan payable for Maiden above, under the conditions stipulated in the Vermont DFR approval for the Combination, Maiden Reinsurance (as the lender) is no longer permitted to include the corresponding related party loan receivable from Maiden (and related accrued interest) as an admitted asset for statutory capital and reporting purposes. As a result, Maiden Reinsurance's ratio of risk-based capital to total adjusted capital was significantly reduced, which remains sufficient to not only support the dividends related to the Combination and recurring annual dividends (which require prior approval by the Vermont DFR) but our ability to selectively underwrite business in support of our Program Services segment in the future. 
 The ratio of Debt to Total Capital Resources at March 31, 2026 and December 31, 2025 was computed as follows: 
 
 ($ in thousands) March 31, 2026 December 31, 2025 
 Senior notes - principal amount 
 $ 262,361 $ 262,361 
 Shareholders’ equity 121,437 128,284 
 Total capital resources 
 $ 383,798 $ 390,645 
 Ratio of debt to total capital resources 
 68.4 % 67.2 % 

 Off-Balance Sheet Arrangements 
 C ertain of the Company's investments in limited partnerships are related to real estate joint ventures with interests in multi-property projects with varying strategies ranging from the development of properties to the ownership of income-producing properties. In certain of these joint ventures, the Company has provided certain indemnities, guarantees and commitments to ce rtain parties such that it may be required to make payments now or in the future as further described in the " Notes to Condensed Consolidated Financial Statements (unaudited) Note 11. Commitments, Contingencies and Guarantees " included under Part I Item 1 " Financial Information" of this Form 10-Q. 
 Any loss for which the Company could be liable would be contingent on the default of a loan by the real estate joint venture entity for which the Company provided a financial guarantee to a lender. While the Company has committed to aggregate limits as to the amount of guarantees it will provide as part of its limited partnerships, guarantees are only provided on an individual transaction basis and are subject to the terms and conditions of each transaction mutually agreed by the parties involved. The Company is not bound to such guarantees without its express authorization. 
 As discussed above, at March 31, 2026, guarantees of $72.2 million have been provided to lenders by Maiden Reinsurance on behalf of the real estate joint venture, however, the likelihood of Maiden Reinsurance 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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 Non-GAAP Measures 
 Please refer to our Key Financial Measures presented in the " Overview to Critical Accounting Policies" section for financial measures in accordance with GAAP in the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations and Comprehensive Loss. In addition, management uses certain non-GAAP financial measures to evaluate the Company's financial performance and the overall growth in value generated for the Company’s common shareholders. Management believes that these measures, which may be defined differently by other companies, explain the Company’s results to investors in a manner that allows for a more complete understanding of the underlying trends in the Company’s business. These non-GAAP financial measures should not be viewed as a substitute for those determined in accordance with U.S. GAAP. 
 Non-GAAP operating earnings (loss) and non-GAAP diluted operating earnings (loss) per common share : Management believes that the use of non-GAAP operating earnings and non-GAAP diluted operating earnings per common share enables investors and other users of the Company’s financial information to analyze its performance in a manner similar to how management analyzes performance. Management also believes that these measures generally follow industry practice therefore allowing the users of financial information to compare the Company’s performance with its industry peer group, and that the equity analysts and certain rating agencies which follow the Company, and the insurance industry as a whole, generally exclude these items from their analyses for the same reasons. Non-GAAP operating earnings should not be viewed as a substitute for U.S. GAAP net income. 
 Non-GAAP operating earnings (loss) is an internal performance measure used by management as these measures focus on the underlying fundamentals of the Company's operations by excluding, on a recurring basis: (1) net realized and unrealized investment gains (losses); (2) foreign exchange and other gains (losses); (3) interest in income (loss) of equity method investments; and (4) amortization of intangible assets. It also excludes on a non-recurring basis: (1) loss from discontinued operations, net of income tax and; (2) restructuring and severance costs; and (3) costs incurred due to the Combination on May 27, 2025. We excluded net realized and unrealized investment gains (losses), interest in income (loss) of equity method investments and foreign exchange and other gains (losses) as we believe these are influenced by market opportunities and other factors. We do not believe amortization of intangible assets, the net loss from our discontinued operations; restructuring and severance costs; and costs incurred due to the Combination on May 27, 2025 are representative of our ongoing and future business. We believe all of these amounts are substantially independent of our business and any potential future underwriting process, therefore their inclusion would distort the analysis of underlying trends in our operations. 
 Non-GAAP operating loss was $10.4 million for the three months ended March 31, 2026 compared to a loss of $0.4 million for the same period in 2025. The non-GAAP operating loss increased by $10.0 million for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to higher corporate expenses of $6.9 million, an underwriting loss of $3.3 million in the Legacy Reinsurance segment and net interest and amortization expense on the Senior Notes of $3.9 million, partly offset by higher net investment income which increased by $2.5 million and Program Services segment net fee income which increased by $1.4 million. The calculation, reconciliation to nearest GAAP measure and discussion of relevant non-GAAP measures used by management are as follows: 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 For the Three Months Ended March 31, 2026 2025 
 ($ in thousands except per share data) 
 Net loss attributable to Kestrel common shareholders 
 $ (7,431) $ (394) 
 Add (subtract): 
 
 Net realized and unrealized investment gains 
 (1,339) — 
 Amortization of intangible assets 838 — 
 Foreign exchange and other gains 
 (2,228) — 
 Interest in loss of equity method investments 
 1 — 
 
 Net loss from discontinued operations 
 478 — 
 
 Restructuring and severance costs 24 — 
 Costs incurred due to the Combination (697) — 
 
 Non-GAAP operating loss 
 $ (10,354) $ (394) 
 
 Diluted loss per share attributable to common shareholders 
 $ (0.96) $ (0.14) 
 Add (subtract): 
 Net realized and unrealized investment gains (0.17) — 
 Amortization of intangible assets 0.11 — 
 Foreign exchange and other gains (0.29) — 
 
 
 Net loss from discontinued operations 
 0.06 — 
 
 
 Costs incurred due to the Combination (0.09) — 
 
 Non-GAAP diluted operating loss per share attributable to common shareholders 
 $ (1.34) $ (0.14) 

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 Non-GAAP Operating Return on Average Common Equity ("Non-GAAP Operating ROACE"): Management uses non-GAAP operating return on average common shareholders' equity as a measure of profitability that focuses on the return to common shareholders. It is calculated using non-GAAP operating income or loss available to common shareholders (as defined above) divided by average common shareholders' equity. Non-GAAP Operating ROACE for the three months ended March 31, 2026 and 2025 was as follows: 
 
 For the Three Months Ended March 31, 
 ($ in thousands) 2026 2025 
 Non-GAAP operating loss 
 $ (10,354) $ (394) 
 Opening adjusted shareholders’ equity 128,284 4,606 
 Ending adjusted shareholders’ equity 121,437 4,227 
 Average adjusted shareholders’ equity 124,861 4,417 
 Non-GAAP Operating ROACE 
 (33.6) % (36.2) % 

 
 
 
 
 
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 Currency and Foreign Exchange 
 We conduct business in a variety of foreign (non-U.S.) currencies, exclusively in our Legacy Reinsurance segment, the principal exposures being the euro and the British pound. Assets and liabilities denominated in foreign currencies are exposed to changes in currency exchange rates. Our reporting currency is the U.S. dollar, and exchange rate fluctuations relative to the U.S. dollar may materially impact our results and financial position. Our principal exposure to foreign currency risk is our obligation to settle claims in foreign currencies. In addition, in order to minimize this risk, we maintain and expect to continue to maintain a portion of our investment portfolio in investments denominated in currencies other than the U.S. dollar. We may employ various strategies (including hedging) to manage our exposure to foreign currency exchange risk. To the extent that these exposures are not fully hedged or the hedges are ineffective, our results of operations or equity may be adversely affected. 
 At March 31, 2026, no such hedges or hedging strategies were in force or had been entered into. We measure monetary assets and liabilities denominated in foreign currencies at period end exchange rates, with the resulting foreign exchange gains and losses recognized in the unaudited Condensed Consolidated Statements of Operations. Revenues and expenses in foreign currencies are converted at average exchange rates during the period. The effect of the translation adjustments for foreign operations is included in AOCI. 
 Net foreign exchange gains of $2.0 million were generated during the three months ended March 31, 2026, compared to net foreign exchange losses of $0.0 million for the three months ended March 31, 2025. For the three months ended March 31, 2026, net foreign exchange gains of $2.0 million were attributable to appreciation of the U.S. dollar on the re-measurement of net loss reserves and insurance related liabilities denominated in the British pound and euro. The foreign exchange gains for the three months ended March 31, 2026 were primarily unrealized and resulted from the effects of revaluation of our net insurance liabilities that are required to be remeasured in foreign currencies at each balance sheet date. 
 At March 31, 2026, the increase in foreign currency translation adjustments of $0.2 million for the three months ended March 31, 2026 was primarily driven by exposures to euro, British pound and other non-USD denominated net loss reserves and insurance related liabilities in excess of foreign currency assets. Our non-USD denominated liabilities at March 31, 2026 included reserve for net loss and LAE on our Legacy Reinsurance segment of $254.4 million. Our foreign currency asset exposures at March 31, 2026 include $97.4 million of fixed maturity securities managed by our investment managers who have the discretion to hold foreign currency exposures as part of their total return strategy, $33.5 million of real estate investments denominated in Canadian dollars, as well as $7.4 million of funds withheld receivable based in various non-USD currencies. 
 Effects of Inflation 
 The anticipated effects of inflation are considered explicitly in the pricing of the insured exposures, which are used as the initial estimates of reserves for loss and LAE. In addition, inflation is also implicitly accounted for in subsequent estimates of loss and LAE reserves, as the expected rate of emergence is in part predicated upon the historical levels of inflation that impact ultimate claim costs. To the extent inflation causes these costs, particularly medical treatments and litigation costs, to vary from the assumptions made in the pricing or reserving estimates, the Company will be required to change the reserve for loss and LAE with a corresponding change in its earnings in the period in which the variance is identified. The actual effects of inflation on the results of operations of the Company cannot be accurately known until claims are ultimately settled. 
 We continue to monitor inflationary impacts resulting from ongoing government deficits, fluctuations in demand and labor force along with supply chain and technological disruptions, among other factors, on our loss cost trends. Our reserves predominantly consist of workers’ compensation, general liability, and hospital liability business. These long tailed lines of business have been subject to the longer term trend of social inflation, but we have not observed significant impacts for the recently elevated levels of inflation. We proactively analyze available data and we incorporate trends into our loss reserving assumptions to ensure we are considerate of current and future economic conditions. 
 Governmental policy responses to inflation have increased interest rates in recent years which, in the short term, have contributed to unrealized gains on our fixed income investments, particularly on our fixed maturity securities. While general economic inflation has eased in recent quarters, persistently higher than target core inflation combined with geopolitical volatility have magnified the uncertainty around the rate and direction of inflation and interest rates and we continue to monitor our liquidity, capital and potential earnings impact of these changes but remain focused on our asset allocation decisions as described in our "Business Strategy" section of Item 2. " Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview ". 
 Inflation may also result in increased wage pressures for our operating expenses, as we remain focused on being a competitive employer in our market. Continuing inflation and tight labor conditions could have a material impact on our net operating results. 
 Off-Balance Sheet Arrangements 
 At March 31, 2026, we did not have any off-balance sheet arrangements as defined by Item 303(a) (4) of Regulation S-K. 
 Recent Accounting Pronouncements 
 See " Part I, Item 1 - Notes to Condensed Consolidated Financial Statements (unaudited) Note 2. Significant Accounting Policies " for a discussion on recently adopted accounting pronouncements. 
 
 
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
Kestrel Group Ltd 10-Q

Item 2. Management’s Discussion and Analysis
