What changed in this filing

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Item 1. Financial Statements

2026-08-07 compared with 2026-05-08 · 525 added, 359 removed, 1372 unchanged (39% of the section changed)

31 unchanged sentences

Other assets 24,116 18,292

Assets held for sale 8,930 9,806

$ 919,606 $ 1,009,955

8 unchanged sentences

Senior notes, net 175,049 174,402

Liabilities held for sale 401 662

Total liabilities

7 unchanged sentences

Additional paid-in capital 180,153 177,534

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

(Accumulated deficit) retained earnings ( 14,316 ) 1,197

12 unchanged sentences

dollars, except per share data)

For the Three Months Ended March 31,

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

2026 2025 2026 2025

Gross premiums written

$ 1,435 $ 1,096 $ 4,090 $ 1,096

Net premiums written

$ 1,436 $ 1,095 $ 4,090 $ 1,095

Change in unearned premiums

2,038 1,327 2,541 1,327

Net premiums earned

3,474 2,422 6,631 2,422

3,742 544 6,862 1,351

Net investment income

Net realized and unrealized investment gains

2,454 1,542 5,062 1,576

Net realized and unrealized investment (losses) gains

( 2,984 ) 1,058 ( 1,645 ) 1,058

Total revenues

6,686 5,566 16,910 6,407

Net loss and loss adjustment expenses

1,515 ( 5,961 ) 3,770 ( 5,961 )

Commission and other acquisition expenses

983 394 2,456 394

General and administrative expenses

10,493 5,493 22,737 6,636

Interest and amortization expenses

Foreign exchange and other gains

4,177 1,519 8,073 1,519

Change in fair value of earn out liability — 2,679 — 2,679

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

Foreign exchange and other (gains) losses

( 2,278 ) 5,102 ( 4,498 ) 5,102

Total expenses

Net loss before income taxes

14,890 ( 64,364 ) 32,538 ( 63,221 )

income tax expense

Interest in loss of equity method investments

Net loss from continuing operations

Net (loss) income before income taxes

( 8,204 ) 69,930 ( 15,628 ) 69,628

Loss from discontinued operations, net of income tax ( 478 ) —

income tax (benefit) expense

( 112 ) 3 ( 106 ) 95

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

Interest in income of equity method investments

Net (loss) income

$ ( 8,082 ) $ 69,927 $ ( 15,513 ) $ 69,533

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

Basic and diluted loss per share attributable to Kestrel common shareholders

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

$ ( 1.03 ) $ 15.05 $ ( 1.99 ) $ 18.80

2 unchanged sentences

KESTREL GROUP LTD

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

(in thousands of U.S.

For the Three Months Ended March 31,

Net loss $ ( 7,431 ) $ ( 394 )

Other comprehensive loss

Net unrealized holdings losses on AFS fixed maturities

Net unrealized losses on held for sale AFS fixed maturities ( 15 ) —

Adjustment for reclassification of net realized gains recognized in net loss

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

2026 2025 2026 2025

Net (loss) income $ ( 8,082 ) $ 69,927 $ ( 15,513 ) $ 69,533

Other comprehensive (loss) income

Net unrealized holdings (losses) gains on AFS fixed maturities

( 147 ) 485 ( 759 ) 485

Adjustment for reclassification of net realized losses recognized in net loss

Foreign currency translation adjustment ( 645 ) 74 ( 404 ) 74

Other comprehensive loss, before tax

Income tax expense related to components of other comprehensive loss

Other comprehensive loss, after tax

Comprehensive loss

Other comprehensive (loss) income, after tax

( 566 ) 559 ( 945 ) 559

Comprehensive (loss) income

$ ( 8,648 ) $ 70,486 $ ( 16,458 ) $ 70,092

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands of U.S.

For the Three Months Ended March 31,

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

2026 2025 2026 2025

Common shares

Beginning balance

$ 101 $ 27 $ 100 $ 27

Shares issued on Combination Agreement — 72 — 72

Issuance of common shares from vesting of stock based compensation — — 1 —

Ending balance

101 99 101 99

Additional paid-in capital

3 unchanged sentences

Share-based compensation expense 1,171 224 2,620 239

Shares issued as consideration for Combination — 166,539 — 166,539

Ending balance

180,153 176,885 180,153 176,885

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

Beginning balance

Change in net unrealized investment losses

Change in net unrealized investment gains (losses)

79 485 ( 541 ) 485

Foreign currency translation adjustment

( 645 ) 74 ( 404 ) 74

Ending balance

Retained earnings (accumulated deficit)

( 29 ) 559 ( 29 ) 559

Accumulated deficit

Beginning balance

( 6,234 ) ( 5,922 ) 1,197 ( 5,528 )

Net loss ( 7,431 ) ( 394 )

Net (loss) income ( 8,082 ) 69,927 ( 15,513 ) 69,533

Distribution to shareholders — ( 40,000 ) — ( 40,000 )

Ending balance

2 unchanged sentences

Beginning balance

( 51,949 ) — ( 51,463 ) —

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

Shares repurchased — — ( 486 ) —

Ending balance

( 51,949 ) ( 51,463 ) ( 51,949 ) ( 51,463 )

Total shareholders' equity

4 unchanged sentences

(in thousands of U.S.

For the Three Months Ended March 31, 2026 2025

For the Six Months Ended June 30, 2026 2025

Cash flows from operating activities

Net (loss) income

$ ( 15,513 ) $ 69,533

net loss from discontinued operations

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

Other non-cash expenses (credit losses, depreciation, amortization, leases) 9 18

Interest in loss of equity method investments

Net realized and unrealized investment gains

Adjustments to reconcile net (loss) income to net cash flows from operating activities:

Other non-cash (income) expenses including credit losses, depreciation, amortization, leases ( 427 ) 2,768

Gain on bargain purchase — ( 73,590 )

Interest in income of equity method investments

Net realized and unrealized investment (losses) gains

1,645 ( 1,058 )

Share-based compensation expense 2,620 239

Foreign exchange and other gains

Foreign exchange and other (gains) losses

( 4,498 ) 5,102

Changes in assets – (increase) decrease:

8 unchanged sentences

Accrued expenses and other liabilities 9,089 7,631

Net cash used in continuing operations ( 14,452 ) ( 876 )

Net cash used in discontinued operations ( 681 ) —

Net cash used in operating activities

7 unchanged sentences

Proceeds from sale and redemption of other investments 1,779 141

Proceeds from sale and redemption of equity method investments — 163

Cash acquired from purchase of business — 93,515

Net loan receivable from related party 19,567 —

1 unchanged sentence

Net cash provided by investing activities

39,154 102,041

Cash flows from financing activities:

Repurchase of common shares ( 486 ) —

Dividends paid – Kestrel equityholders — ( 40,000 )

Net cash used in financing activities

( 486 ) ( 40,000 )

Effect of exchange rate changes on foreign currency cash, restricted cash and cash equivalents ( 629 ) 661

Net increase (decrease) in cash, restricted cash and cash equivalents

Net (decrease) increase in cash, restricted cash and cash equivalents

( 2,912 ) 41,964

1 unchanged sentence

Cash, restricted cash and cash equivalents, end of period 26,278 46,250

change in cash and cash equivalents held for sale ( 754 ) —

Cash, restricted cash and cash equivalents, end of period, excluding held-for-sale $ 62,211 $ 3,410

Reconciliation of cash and restricted cash reported within Condensed Consolidated Balance Sheets:

34 unchanged sentences

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

As of March 31, 2026, Maiden Reinsurance Ltd.

As of June 30, 2026, Maiden Reinsurance Ltd.

(“Maiden Reinsurance”) owns approximately 22.2 % of the Company's total issued and outstanding common shares, which is eliminated for accounting and financial reporting purposes in our condensed consolidated financial statements.

11 unchanged sentences

Under the conditions stipulated in the Vermont DFR approval, Maiden Reinsurance is no longer permitted to include the intercompany 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, however the ratio remains sufficient to not only support the dividends related to the Combination with Kestrel and recurring annual dividends (and which require prior approval by the Vermont DFR) but the ability to selectively underwrite business in support of the Company's Program Services segment in the future.

As a result, Maiden Reinsurance's ratio of risk-based capital to total adjusted capital was significantly reduced, however the ratio remains sufficient to not only support the dividends related to the Combination with Kestrel and recurring quarterly dividends (and which require prior approval by the Vermont DFR) but the ability to selectively underwrite business in support of the Company's Program Services segment in the future.

KESTREL GROUP LTD

4 unchanged sentences

Accounting Treatment for the Combination

Maiden was the legal acquirer of Kestrel.

However, as a result of the terms of the Combination, for accounting purposes, the transaction is treated as a reverse acquisition and accounted for using the acquisition method in accordance with ASC Topic 805, Business Combinations .

Maiden was the legal acquirer of Kestrel LLC.

This determination is primarily based on the following factors:

34 unchanged sentences

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

The proposed acquirer whose application was denied by the SFSA and Maiden have subsequently entered into an amended sale agreement for the acquisition of only Maiden GF at the previously agreed valuation.

The proposed acquirer believes it will satisfactorily address the deficiencies identified by the SFSA in its June 2025 decision.

This amended transaction remains subject to customary regulatory approvals.

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

Maiden GF is not writing any new business and its non-insurance related assets and liabilities are represented as held-for-sale in our Condensed Consolidated Financial Statements.

Please refer to Note 14.

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

KESTREL GROUP LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands of U.S.

dollars, except share and per share data)

Basis of Presentation (continued)

In the wake of the June 2025 decision of the SFSA, management has further evaluated strategic alternatives for Maiden LF and on April 7, 2026 the Company has decided to proceed with the managed run-off of Maiden LF.

The held-for-sale assets and liabilities of Maiden LF at December 31, 2025 were reclassified as held and used in light of the recent decision to place Maiden LF into run off operations.

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

The proposed acquirer whose application was denied by the SFSA and Maiden subsequently entered into an amended sale agreement for the acquisition of Maiden GF at the previously agreed valuation.

In the wake of the June 2025 decision by the SFSA, management further evaluated strategic alternatives for Maiden LF and on April 7, 2026 the Company decided to proceed with the managed run-off of Maiden LF.

On May 20, 2026, the pending sale of Maiden GF was again rejected by the SFSA, thus the held for sale classification is no longer met.

The held-for-sale assets and liabilities of Maiden LF and Maiden GF as reported at December 31, 2025 have been reclassified to held and used in light of these recent regulatory decisions.

The Company presently expects to proceed with a managed run-off of Maiden GF.

The net loss from discontinued operations for the three and six months ended June 30, 2026 would have been $ 1,125 and $ 2,038 had Maiden LF and Maiden GF remained held-for-sale at June 30, 2026 compared to $ 495 in the three and six months ended June 30, 2025 , respectively.

KESTREL GROUP LTD

59 unchanged sentences

Segment Information (continued)

The following tables summarize the results of our reportable segments and the reconciliation of our reportable segments' results to the condensed consolidated net loss from continuing operations for the three months ended March 31, 2026 and 2025, respectively:

For the Three Months Ended March 31, 2026 Legacy Reinsurance Program Services Total

The following tables summarize the results of our reportable segments and the reconciliation of our reportable segments' results to the condensed consolidated net (loss) income for the three months ended June 30, 2026 and 2025, respectively:

For the Three Months Ended June 30, 2026 Legacy Reinsurance Program Services Total

Gross premiums written

12 unchanged sentences

$ ( 1,346 ) $ 2,393 $ 1,047

Reconciliation to net loss from continuing operations

Net investment income and net realized and unrealized investment gains

Reconciliation to net loss

Net investment income and net realized and unrealized investment losses

Interest and amortization expenses

1 unchanged sentence

Other general and administrative expenses

Income tax expense

Interest in loss of equity method investments

Net loss from continuing operations

For the Three Months Ended March 31, 2025 Legacy Reinsurance Program Services Total

Income tax benefit

Interest in income of equity method investments

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

Program Services Total

Gross premiums written

$ 1,096 $ — $ 1,096

Net premiums written

$ 1,095 $ — $ 1,095

Net premiums earned

$ 2,422 $ — $ 2,422

Net loss and LAE

5,961 — 5,961

Commission and other acquisition expenses

( 394 ) — ( 394 )

General and administrative expenses

( 2,156 ) ( 767 ) ( 2,923 )

Underwriting income and fee loss

$ 5,833 $ ( 223 ) $ 5,610

Reconciliation to net loss from continuing operations

Net investment income 34

Reconciliation to net income

Net investment income and net realized and unrealized investment gains

Interest and amortization expenses

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

Gain on bargain purchase 73,590

Foreign exchange and other losses, net

Other general and administrative expenses

Income tax expense

Net loss from continuing operations

For the Three Months Ended March 31, 2026 Legacy Reinsurance (1)

(1) Legacy Reinsurance underwriting results only include the post-combination period from May 27, 2025 to June 30, 2025.

KESTREL GROUP LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands of U.S.

dollars, except share and per share data)

Segment Information (continued)

The following tables summarize the results of our reportable segments and the reconciliation of our reportable segments' results to the condensed consolidated net (loss) income for the six months ended June 30, 2026 and 2025, respectively:

For the Six Months Ended June 30, 2026 Legacy Reinsurance Program Services Total

Gross premiums written

$ 4,090 $ — $ 4,090

Net premiums written

$ 4,090 $ — $ 4,090

Net premiums earned

$ 6,631 $ — $ 6,631

— 6,862 6,862

Net loss and LAE

( 3,770 ) — ( 3,770 )

Commission and other acquisition expenses

( 2,456 ) — ( 2,456 )

General and administrative expenses

( 5,536 ) ( 2,861 ) ( 8,397 )

Underwriting loss and fee income

$ ( 5,131 ) $ 4,001 $ ( 1,130 )

Reconciliation to net loss

Net investment income and net realized and unrealized investment losses

Interest and amortization expenses

Foreign exchange and other gains, net

Other general and administrative expenses

Income tax benefit

Interest in income from equity method investments

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

Program Services Total

For the Three Months Ended March 31, 2025 Legacy Reinsurance Program Services Total

Gross premiums written

$ 1,096 $ — $ 1,096

Net premiums written

$ 1,095 $ — $ 1,095

Net premiums earned

$ 2,422 $ — $ 2,422

— 1,351 1,351

Net loss and LAE

5,961 — 5,961

Commission and other acquisition expenses

( 394 ) — ( 394 )

General and administrative expenses

( 2,156 ) ( 1,339 ) ( 3,495 )

Underwriting income and fee income

$ 5,833 $ 12 $ 5,845

Reconciliation to net income

Net investment income and net realized and unrealized investment gains

Interest and amortization expenses

Change in earn out liability ( 2,679 )

Gain on bargain purchase 73,590

Foreign exchange and other losses, net

Other general and administrative expenses

Income tax expense

(1) Legacy Reinsurance underwriting results only include the post-combination period from May 27, 2025 to June 30, 2025.

KESTREL GROUP LTD

3 unchanged sentences

Segment Information (continued)

The following tables summarize the financial position of the Company's reportable segments including a reconciliation to the Company's condensed consolidated total assets at March 31, 2026 and December 31, 2025:

March 31, 2026 Legacy Reinsurance Program Services Total

June 30, 2026 Legacy Reinsurance Program Services Total

Reinsurance balances receivable, net

13 unchanged sentences

Corporate assets

Assets held for sale

$ 650,175 $ 5,877 $ 919,606

16 unchanged sentences

Corporate assets

Assets held for sale

$ 733,101 $ 5,642 $ 1,009,955

5 unchanged sentences

Other assets also includes estimated amounts due from Programs when there is a contractual lag in reporting from the balance sheet date.

The financial information relating to net premiums written by major line of business within the Legacy Reinsurance segment for the three months ended March 31, 2026 are detailed below:

For the Three Months Ended March 31, 2026

Net premiums written

Diversified Legacy Reinsurance $ 775

AmTrust Legacy Reinsurance 1,879

Legacy Reinsurance Segment $ 2,654

KESTREL GROUP LTD

3 unchanged sentences

Segment Information (continued)

The financial information for net premiums earned by major line of business within the Legacy Reinsurance segment for the three months ended March 31, 2026 are detailed below:

For the Three Months Ended March 31, 2026

The financial information relating to net premiums written by major line of business within the Legacy Reinsurance segment for the three and six months ended June 30, 2026 and 2025 are detailed below:

For the Three Months Ended June 30, 2026 2025

Net premiums written

Total % of Total Total (1)

Diversified Legacy Reinsurance $ 514 35.8 % $ 1,380 126.0 %

AmTrust Legacy Reinsurance 922 64.2 % ( 285 ) ( 26.0 ) %

Legacy Reinsurance Segment $ 1,436 100.0 % $ 1,095 100.0 %

For the Six Months Ended June 30, 2026 2025

Net premiums written Total % of Total Total (1)

Diversified Legacy Reinsurance $ 1,289 31.5 % $ 1,380 126.0 %

AmTrust Legacy Reinsurance 2,801 68.5 % ( 285 ) ( 26.0 ) %

Legacy Reinsurance Segment $ 4,090 100.0 % $ 1,095 100.0 %

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

The financial information for net premiums earned by major line of business within the Legacy Reinsurance segment for the three and six months ended June 30, 2026 and 2025 are detailed below:

For the Three Months Ended June 30, 2026 2025

Net premiums earned

Total % of Total Total (1)

Diversified Legacy Reinsurance $ 571 16.4 % $ 1,390 57.4 %

1 unchanged sentence

Legacy Reinsurance Segment $ 3,474 100.0 % $ 2,422 100.0 %

For the Six Months Ended June 30, 2026 2025

Net premiums earned Total % of Total Total (1)

Diversified Legacy Reinsurance $ 1,438 21.7 % $ 1,390 57.4 %

AmTrust Legacy Reinsurance 5,193 78.3 % 1,032 42.6 %

Legacy Reinsurance Segment $ 6,631 100.0 % $ 2,422 100.0 %

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

KESTREL GROUP LTD

8 unchanged sentences

a) Fixed Maturities

The amortized cost, gross unrealized gains and losses, and fair value of AFS fixed maturity investments at March 31, 2026 and December 31, 2025 are as follows:

March 31, 2026 Original or amortized cost Gross unrealized gains Gross unrealized losses Fair value

The amortized cost, gross unrealized gains and losses, and fair value of AFS fixed maturity investments at June 30, 2026 and December 31, 2025 are as follows:

June 30, 2026 Original or amortized cost Gross unrealized gains Gross unrealized losses Fair value

treasury bills $ 35,027 $ — $ ( 1 ) $ 35,026

agency bonds – mortgage-backed

6 unchanged sentences

December 31, 2025 Original or amortized cost Gross unrealized gains Gross unrealized losses Fair value

treasury bonds

$ 43,662 $ 11 $ — $ 43,673

treasury bills $ 43,662 $ 11 $ — $ 43,673

agency bonds – mortgage-backed

6 unchanged sentences

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

The amount of accrued interest receivable on AFS securities was $ 644 at March 31, 2026 (December 31, 2025:

The amount of accrued interest receivable on AFS securities was $ 419 at June 30, 2026 (December 31, 2025:

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

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

There was no write-off recognized on the accrued interest receivable for the three months ended March 31, 2026.

The contractual maturities of our fixed maturities at March 31, 2026 are shown below.

There was no write-off recognized on the accrued interest receivable for the three and six months ended June 30, 2026 and 2025.

The contractual maturities of our fixed maturities at June 30, 2026 are shown below.

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

March 31, 2026 Amortized cost Fair value

June 30, 2026 Amortized cost Fair value

Due in one year or less

15 unchanged sentences

Less than 12 Months 12 Months or More Total

March 31, 2026 Fair

June 30, 2026 Fair

value Unrealized

1 unchanged sentence

value Unrealized

treasury bills $ 35,026 $ ( 1 ) $ — $ — $ 35,026 $ ( 1 )

agency bonds – mortgage-backed

5 unchanged sentences

Total temporarily impaired AFS fixed maturity investments $ 114,268 $ ( 272 ) $ — $ — $ 114,268 $ ( 272 )

At March 31, 2026, there were 26 securities in an unrealized loss position with a fair value of $ 90,756 and unrealized losses of $ 484 , all of which have been in an unrealized loss position for less than twelve months.

At June 30, 2026, there were 30 securities in an unrealized loss position with a fair value of $ 114,268 and unrealized losses of $ 272 , all of which have been in an unrealized loss position for less than twelve months.

Less than 12 Months 12 Months or More Total

22 unchanged sentences

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

Based on the Company's analysis at March 31, 2026, net unrealized gains on the Company’s AFS fixed maturity securities were due to non-credit factors and were expected to be recovered as the related securities approach maturity.

At March 31, 2026, the Company did not intend to sell the securities in an unrealized loss position and it is not more likely than not that the Company will be required to sell these securities before the anticipated recovery of their amortized costs.

Therefore, no allowance was recorded for expected credit losses on AFS securities for the three months ended March 31, 2026.

Based on the Company's analysis at June 30, 2026, net unrealized gains on the Company’s AFS fixed maturity securities were due to non-credit factors and were expected to be recovered as the related securities approach maturity.

At June 30, 2026, the Company did not intend to sell the securities in an unrealized loss position and it is not more likely than not that the Company will be required to sell these securities before the anticipated recovery of their amortized costs.

Therefore, no allowance was recorded for expected credit losses on the Company's portfolio of AFS fixed maturity securities for the three and six months ended June 30, 2026 and 2025, respectively.

KESTREL GROUP LTD

3 unchanged sentences

Investments (continued)

The following tables summarize the credit ratings of our fixed maturities as at March 31, 2026 and December 31, 2025:

March 31, 2026 Amortized cost Fair value % of Total

The following tables summarize the credit ratings of our fixed maturities as at June 30, 2026 and December 31, 2025:

June 30, 2026 Amortized cost Fair value % of Total

treasury bills $ 35,027 $ 35,026 24.2 %

agency bonds – mortgage-backed

8 unchanged sentences

December 31, 2025 Amortized cost Fair value % of Total

treasury bonds

$ 43,662 $ 43,673 26.5 %

treasury bills $ 43,662 $ 43,673 25.8 %

agency bonds – mortgage-backed

14 unchanged sentences

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

The collateralized investments in direct lending entities of $ 52,687 at March 31, 2026 (December 31, 2025:

The collateralized investments in direct lending entities of $ 53,127 at June 30, 2026 (December 31, 2025:

$ 53,275 ) are carried at fair market value.

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

The Company has elected the fair value option for its investments in direct lending entities, and these investments are reported at fair value as of March 31, 2026 and December 31, 2025.

The Company has elected the fair value option for its investments in direct lending entities, and these investments are reported at fair value as of June 30, 2026 and December 31, 2025.

Please see Note 5(d).

Fair Value Measurements for additional information regarding this investment.

Fair Value Measurements for information regarding this investment.

Other investments

The table shows the composition of the Company's other investments at fair value as of March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

The table shows the composition of the Company's other investments at fair value as of June 30, 2026 and December 31, 2025:

June 30, 2026 December 31, 2025

Fair value % of Total Fair Value % of Total

21 unchanged sentences

There is no active market for these investments.

The following table provides the cost and fair values of the equity securities held at March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

The following table provides the cost and fair values of the equity securities held at June 30, 2026 and December 31, 2025:

June 30, 2026 December 31, 2025

Cost Fair Value Cost Fair Value

2 unchanged sentences

Total equity securities $ 11,145 $ 11,748 $ 11,145 $ 11,748

All privately held securities held at March 31, 2026 are subject to contractual sale restrictions.

All privately held securities held at June 30, 2026 are subject to contractual sale restrictions.

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

11 unchanged sentences

Generally, the maximum exposure to loss on these interests is limited to the amount of commitment made by the Company as more fully described in "Note 11 - Commitments, Contingencies and Guarantees" in these condensed consolidated financial statements.

The table below shows the total value of the Company's equity method investments as of March 31, 2026 and December 31, 2025 including those classified as other investments under the fair value option:

March 31, 2026 December 31, 2025

The table below shows the total value of the Company's equity method investments as of June 30, 2026 and December 31, 2025 including those classified as other investments under the fair value option:

June 30, 2026 December 31, 2025

Carrying Value % of Total Carrying Value % of Total

9 unchanged sentences

Investments (continued)

The table below shows the carrying/fair values and beneficial ownership percentage of the Company's equity method investments, including those measured using the fair value option and reported in other investments, as of March 31, 2026, the summarized financial data of each equity method investment at December 31, 2025 and the Company's realized and unrealized gains (losses) or interest in income (loss) of equity method investments on these investments for the three months ended March 31, 2026:

March 31, 2026 For the Year Ended December 31, 2025

For the Three Months Ended March 31, 2026

The table below shows the carrying/fair values and beneficial ownership percentage of the Company's equity method investments, including those measured using the fair value option and reported in other investments, as of June 30, 2026, the summarized financial data of each equity method investment at March 31, 2026 and the Company's realized and unrealized gains (losses) or interest in income (loss) of equity method investments on these investments for the six months ended June 30, 2026:

June 30, 2026 For the Three Months Ended March 31, 2026

For the Six Months Ended June 30, 2026

Carrying Value Beneficial Ownership Investee Revenue (1)

8 unchanged sentences

Total equity method investments $ 110,283 $ ( 1,300 )

The Company inclu ded summarized financial data of its equity method investees as reported at December 31, 2025 as this period represents the most recent audited financial statements available at the time of filing the Company's Form 10-Q for the three months ended March 31, 2026.

The Company inclu ded summarized financial data of its equity method investees as reported at March 31, 2026 as this period represents the most recent audited financial statements available at the time of filing the Company's Form 10-Q for the three and six months ended June 30, 2026.

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

Seiden LP and Seiden MGMT LP are measured using equity method accounting at March 31, 2026.

The interest in loss of equity method investments has been recorded on its own line item on the statements of operations instead of through realized and unrealized gains (losses).

Seiden LP and Seiden MGMT LP are measured using equity method accounting at June 30, 2026.

The interest in income of equity method investments has been recorded on its own line item on the statements of operations instead of through realized and unrealized gains (losses).

c) Net Investment Income

Net investment income was derived from the following sources for the three months ended March 31, 2026 and 2025:

For the Three Months Ended March 31,

Net investment income was derived from the following sources for the three and six months ended June 30, 2026 and 2025:

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

2026 2025 2026 2025

Fixed maturities

$ 827 $ 616 $ 1,712 $ 616

Income on funds withheld 27 20 55 20

2 unchanged sentences

Cash and cash equivalents 268 166 718 200

2,468 1,545 5,129 1,579

Investment expenses

( 14 ) ( 3 ) ( 67 ) ( 3 )

Net investment income

$ 2,454 $ 1,542 $ 5,062 $ 1,576

KESTREL GROUP LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands of U.S.

dollars, except share and per share data)

Investments (continued)

d) Net Realized and Unrealized Investment Gains (Losses)

Realized gains or losses on the sale of investments are determined on the basis of the specific identification method.

The following tables show the net realized and unrealized investment gains (losses) included in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2026:

For the Three Months Ended March 31, 2026 Gross gains Gross losses Net

The following tables show the net realized and unrealized investment gains (losses) included in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2026 and 2025:

For the Three Months Ended June 30, 2026 Gross gains Gross losses Net

Fixed maturities

2 unchanged sentences

Net realized and unrealized investment gains (losses) $ 807 $ ( 3,791 ) $ ( 2,984 )

For the Three Months Ended March 31, 2026

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

Fixed maturities

$ 875 $ ( 111 ) $ 764

Equity securities 46 — 46

Other investments

512 ( 264 ) 248

Net realized and unrealized investment gains (losses) $ 1,433 $ ( 375 ) $ 1,058

For the Six Months Ended June 30, 2026 Gross gains Gross losses Net

Fixed maturities

$ 215 $ ( 98 ) $ 117

Other investments

4,321 ( 6,083 ) ( 1,762 )

Net realized and unrealized investment gains (losses) $ 4,536 $ ( 6,181 ) $ ( 1,645 )

For the Six Months Ended June 30, 2025 Gross gains Gross losses Net

Fixed maturities

$ 875 $ ( 111 ) $ 764

Equity securities 46 — 46

Other investments

512 ( 264 ) 248

Net realized and unrealized investment gains (losses) $ 1,433 $ ( 375 ) $ 1,058

Realized and unrealized investment gains and losses from equity securities detailed in the table above include realized gains from sales and distributions of equity securities and unrealized gains and losses coming from fair value changes.

Net unrealized gains recognized for equity securities held at reporting date of June 30, 2026 and 2025 were as follows:

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

2026 2025 2026 2025

Net gains recognized for equity securities

$ — $ 46 $ — $ 46

Net gains recognized for equity securities divested

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

$ — $ 46 $ — $ 46

Proceeds from sales of AFS fixed maturity investments were $ 10,365 and $ 48,482 for the three and six months ended June 30, 2026 (2025:

$ 7,312 for both respective periods).

Net unrealized gains included in accumulated other comprehensive income ("AOCI") at June 30, 2026 and December 31, 2025 were as follows:

June 30, 2026 December 31, 2025

Net unrealized gains on fixed maturity investments

Deferred income tax

Net unrealized gains, net of deferred income tax

Change, net of deferred income tax

$ ( 541 ) $ 679

KESTREL GROUP LTD

3 unchanged sentences

Investments (continued)

Proceeds from sales of AFS fixed maturity investments were $ 38,117 for the three months ended March 31, 2026.

Net unrealized gains included in accumulated other comprehensive income ("AOCI") at March 31, 2026 and December 31, 2025 were as follows:

March 31, 2026 December 31, 2025

Net unrealized gains on fixed maturity investments

Net unrealized losses on held for sale AFS investments

Net unrealized gains, net of deferred income tax

Change, net of deferred income tax

$ ( 620 ) $ 679

e) Restricted Cash and Cash Equivalents and Investments

1 unchanged sentence

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

The fair values of the Company's restricted assets at March 31, 2026 and December 31, 2025 are as follows:

March 31, 2026 December 31, 2025

The fair values of the Company's restricted assets at June 30, 2026 and December 31, 2025 are as follows:

June 30, 2026 December 31, 2025

Restricted cash – third party agreements $ 7,155 $ 7,767

5 unchanged sentences

88,280 102,368

Restricted investments – receivable for investments sold under related party agreements 566 —

Total restricted investments

14 unchanged sentences

Examples of assets and liabilities utilizing Level 1 inputs include:

Treasury bonds;

Treasury bonds, U.S.

Treasury bills;

and publicly traded equity securities;

26 unchanged sentences

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

The following describes the valuation techniques used by the Company to determine the fair value of financial instruments that are measured at fair value on a recurring basis held at March 31, 2026.

The following describes the valuation techniques used by the Company to determine the fair value of financial instruments that are measured at fair value on a recurring basis held at June 30, 2026.

government and U.S.

42 unchanged sentences

The fair value of publicly traded common and preferred stocks is primarily priced by pricing services, reflecting the closing price quoted for the final trading day of the period.

These investments are carried at fair value using observable market pricing data and is included in the Level 1 fair value hierarchy.

These investments are carried at fair value using observable market pricing data and are included in the Level 1 fair value hierarchy.

Any unrealized gains or losses on the investment is recorded in net income in the reporting period in which it occurs.

The privately held common and preferred stocks are valued using significant inputs that are unobservable where there is little or no market activity.

Unadjusted third party pricing sources or management's assumptions and internal valuation models may be used to determine the fair values, therefore, these investments are classified as Level 3 in the fair value hierarchy.

Privately held common and preferred stocks are valued using significant inputs that are either observable using quoted prices for identical or similar assets in markets that are not active, or unobservable where there is little or no market activity.

For those investments where significant observable inputs are used in valuation such as unadjusted third party pricing sources, they are classified as Level 2 in the fair value hierarchy.

Where management's assumptions and internal valuation models may be used to determine the fair values, these investments are classified as Level 3 in the fair value hierarchy.

For investments without a readily determinable fair value, the measurement alternative can be elected to report the qualifying investment at cost, less impairment if any, plus or minus observable price changes in orderly transactions for an identical or similar investment of the same issuer.

22 unchanged sentences

Under ASC 805, the earn out consideration for this receivable is adjusted to fair value at each reporting period with any changes in fair value reported immediately in income through foreign exchange and other gains (losses) on the condensed consolidated statement of operations.

KESTREL GROUP LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands of U.S.

dollars, except share and per share data)

Fair Value of Financial Instruments (continued)

Derivative Instruments:

4 unchanged sentences

In subsequent measurement periods, the fair value of this derivative was determined using internally developed discounted cash flow models using appropriate discount rates.

The selection of an appropriate discount rate is judgmental and is the most significant unobservable input used in the valuation of this derivative.

The derivative liability on retroactive reinsurance is presented as part of accrued expenses and other liabilities.

A significant increase (decrease) in this input in isolation may result in a significantly lower (higher) fair value measurement for the derivative contract.

As the significant inputs used to price these derivatives are unobservable, the fair values of this contract is classified as Level 3 in the fair value hierarchy.

KESTREL GROUP LTD

3 unchanged sentences

Fair Value of Financial Instruments (continued)

The selection of an appropriate discount rate is judgmental and is the most significant unobservable input used in the valuation of this derivative.

The derivative liability on retroactive reinsurance is presented as part of accrued expenses and other liabilities.

A significant increase (decrease) in this input in isolation may result in a significantly lower (higher) fair value measurement for the derivative contract.

As the significant inputs used to price these derivatives are unobservable, the fair values of this contract is classified as Level 3 in the fair value hierarchy.

(b) Fair Value Hierarchy

2 unchanged sentences

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

At March 31, 2026 and December 31, 2025, the Company classified its financial instruments measured at fair value on a recurring basis in the following valuation hierarchy:

March 31, 2026 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value Based on NAV Practical Expedient Total Fair Value

At June 30, 2026 and December 31, 2025, the Company classified its financial instruments measured at fair value on a recurring basis in the following valuation hierarchy:

June 30, 2026 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value Based on NAV Practical Expedient Total Fair Value

Fixed maturities

treasury bills $ 35,026 $ — $ — $ — $ 35,026

agency bonds – mortgage-backed — 20,346 — — 20,346

11 unchanged sentences

Fixed maturities

treasury bonds $ 43,673 $ — $ — $ — $ 43,673

treasury bills $ 43,673 $ — $ — $ — $ 43,673

agency bonds – mortgage-backed — 21,618 — — 21,618

14 unchanged sentences

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

The Pricing Service was utilized to estimate fair value measurements for 100.0 % of our fixed maturities at June 30, 2026 and December 31, 2025, respectively.

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

KESTREL GROUP LTD

2 unchanged sentences

dollars, except share and per share data)

Fair Value Measurements (continued)

The Pricing Service was utilized to estimate fair value measurements for 100.0 % of our fixed maturities at March 31, 2026 and December 31, 2025, respectively.

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

Fair Value of Financial Instruments (continued)

Since fixed maturities other than U.S.

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

At March 31, 2026 and December 31, 2025, no securities in our fixed maturity investment portfolio were priced using a non-binding quotation from a broker and/or custodian as opposed to the Pricing Service.

At March 31, 2026 and December 31, 2025, the Company did not adjust any pricing provided to it based on the review performed by its investment managers.

There were no transfers to or from Level 3 during the three months ended March 31, 2026.

treasury bonds and U.S.

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

At June 30, 2026 and December 31, 2025, no securities in our fixed maturity investment portfolio were priced using a non-binding quotation from a broker and/or custodian as opposed to the Pricing Service.

At June 30, 2026 and December 31, 2025, the Company did not adjust any pricing provided to it based on the review performed by its investment managers.

There were no transfers to or from Level 3 during the three and six months ended June 30, 2026.

At March 31, 2026, the Company holds Level 3 financial instruments including investments of $ 152,840 (December 31, 2025:

$ 151,883 ), a contingent investment receivable of $ 10,159 (December 31, 2025:

$ 9,955 ) included in other assets, and an underwriting-related derivative liability of $ 3,984 (December 31, 2025:

$ 3,984 ) on a reinsurance contract written by GLS which is included in accrued expenses and other liabilities.

The Level 3 investments include collateralized investments in direct lending entities of $ 52,687 at March 31, 2026 (December 31, 2025:

At June 30, 2026, the Company holds Level 3 financial assets of $ 151,662 (December 31, 2025:

and Level 3 financial liabilities of $ 9,236 (December 31, 2025:

The Level 3 financial assets include collateralized investments in direct lending entities of $ 53,127 at June 30, 2026 (December 31, 2025:

$ 53,275 ) which are carried at fair market value using significant unobservable inputs.

2 unchanged sentences

Due to significant unobservable inputs required in its valuation, investments in direct lending entities are classified as Level 3 in the fair value hierarchy.

The fair values for privately held equity investments of $ 9,742 at March 31, 2026 (December 31, 2025:

$ 9,742 ) are estimated using quarterly unaudited capital and financial statements provided by the investee, option pricing models or market comparable transactions where applicable.

The Level 3 financial assets include privately held equity investments of $ 9,742 at June 30, 2026 (December 31, 2025:

$ 9,742 ) and their fair values are estimated using quarterly unaudited capital and financial statements provided by the investee, option pricing models or market comparable transactions where applicable.

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

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

Due to significant unobservable inputs in these valuations, the fair values of these assets are classified as Level 3 in the fair value hierarchy .

The Company elected the fair value option for certain of its equity method investments at the acquisition date.

The fair values of $ 80,252 at March 31, 2026 (December 31, 2025:

$ 78,911 ) are presented in other investments and estimated using quarterly unaudited capital and financial statements provided by the investee, discounted cash flows and option pricing models, where applicable.

The fair values of these equity method investments were $ 76,870 at June 30, 2026 (December 31, 2025:

$ 78,911 ) and are presented in other investments and estimated using quarterly unaudited capital and financial statements provided by the investee, discounted cash flows and option pricing models, where applicable.

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

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

The Company holds a contingent receivable related to a prior private equity investment in the insurance distribution industry where the Company will receive a series of distributions under terms of the asset purchase agreement.

The net present value of these potential distributions is $ 10,159 at March 31, 2026 (December 31, 2025:

Due to significant unobservable inputs in valuations, the fair values of these assets are classified as Level 3 in the fair value hierarchy.

The Level 3 financial assets include a contingent receivable related to a prior private equity investment in the insurance distribution industry where the Company will receive a series of distributions under terms of the asset purchase agreement.

The net present value of potential distributions is $ 11,923 at June 30, 2026 (December 31, 2025:

$ 9,955 ) which was reported in Other Assets on the Condensed Consolidated Balance Sheets.

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

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

The fair value of underwriting-related derivative instruments of $ 3,984 at March 31, 2026 and December 31, 2025 was determined using a discounted cash flow model in which the Company examines current market conditions, historical results as well as contract specific information that may impact future cash flows in order to assess the reasonableness of inputs used in the valuation model .

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

The following table shows the reconciliation of beginning and ending balances for investments measured at fair value on a recurring basis using Level 3 inputs for the three months ended March 31, 2026.

Due to significant unobservable inputs in its valuation, the fair values of these assets are classified as Level 3 in the fair value hierarchy.

The Level 3 financial liability includes an underwriting-related derivative liability of $ 9,236 at June 30, 2026 (December 31, 2025:

$ 3,984 ) for a reinsurance contract written by GLS which is included in accrued expenses and other liabilities as discussed in Note 11.

Commitments and Contingencies.

Its fair value was determined using a discounted cash flow model in which the Company examines current market conditions, historical results as well as contract specific information that may impact future cash flows in order to assess the reasonableness of inputs used in the valuation model .

Due to significant unobservable inputs in these valuations, the fair values are classified as Level 3 in the fair value hierarchy .

The following table shows the reconciliation of beginning and ending balances for investments measured at fair value on a recurring basis using Level 3 inputs for the three and six months ended June 30, 2026 and 2025.

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

For the Three Months Ended March 31, 2026

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

2026 2025 2026 2025

Balance - beginning of period $ 152,840 $ — $ 151,883 $ —

Acquired Level 3 investments — 137,188 — 137,188

Purchases 860 1,723 1,886 1,723

Sales ( 505 ) ( 163 ) ( 1,723 ) ( 163 )

Net realized and unrealized gains during the period

Net realized and unrealized losses during the period

( 1,533 ) 171 ( 384 ) 171

Total Level 3 investments - end of period $ 151,662 $ 138,919 $ 151,662 $ 138,919

4 unchanged sentences

Fair Value Measurements (continued)

The following table provides a summary of quantitative information regarding the significant unobservable inputs used in determining the fair value of other investments measured at fair value on a recurring basis under the Level 3 classification at March 31, 2026:

Financial Instrument Fair Value Valuation Technique Significant Unobservable Valuation Inputs Range of Unobservable Inputs (Low/High/Weighted Average) Impact of Increases in Inputs

19 unchanged sentences

EBITDA & Commission Equity Volatility Rate 25.0 % 25.0 % 25.0 % Lower fair value

Underwriting-related derivative liability $ 3,984 Discounted cash flows Duration matched discount rates 5.5 % 5.5 % 5.5 % Lower fair value

Underwriting-related derivative liability $ 9,236 Discounted cash flows Duration matched discount rates & arbitration decision 5.5 % 5.5 % 5.5 % Lower fair value

KESTREL GROUP LTD

5 unchanged sentences

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

At March 31, 2026, the carrying values of cash equivalents (including restricted amounts), accrued investment income, reinsurance balances receivable and certain other assets and liabilities approximate fair values due to their inherent short duration.

At June 30, 2026, the carrying values of cash equivalents (including restricted amounts), accrued investment income, reinsurance balances receivable and certain other assets and liabilities approximate fair values due to their inherent short duration.

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

At March 31, 2026, the carrying value of the net loan receivable from related party approximates fair value.

At June 30, 2026, the carrying value of the net loan receivable from related party approximates fair value.

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

2 unchanged sentences

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

The following table presents the respective principal amount and fair values for the Senior Notes as at March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

Principal Amount Fair Value Carrying Value Fair Value

The following table presents the respective principal amount and fair values for the Senior Notes as at June 30, 2026 and December 31, 2025:

June 30, 2026 December 31, 2025

Principal Amount Fair Value Principal Amount Fair Value

Senior Notes - MHLA – 6.625 %

16 unchanged sentences

Kestrel Group common shareholders are entitled to receive dividends.

For the three months ended March 31, 2026, the Company's Board of Directors did not declare any dividends to common shareholders.

For the three and six months ended June 30, 2026, the Company's Board of Directors did not declare any dividends to common shareholders.

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

2 unchanged sentences

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

At March 31, 2026, the aggregate authorized share capital of the Company is 42,500,000 shares of which 10,108,600 common shares were issued.

At June 30, 2026, the aggregate authorized share capital of the Company is 42,500,000 shares of which 10,108,600 common shares were issued.

This includes 7,824,030 common shares outstanding, and 2,284,570 treasury shares as discussed further below.

The remaining 32,391,400 shares are undesignated at March 31, 2026 which include 655,643 common shares that will be issued and outstanding upon vesting of restricted shares.

The remaining 32,391,400 shares are undesignated at June 30, 2026 which include 737,943 common shares that will be issued and outstanding upon vesting of restricted shares and performance shares.

b) Common Shares issuable under Incentive Plans

5 unchanged sentences

• 1,205,000 common shares are issuable under the Kestrel Group Ltd 2025 Equity Incentive Plan (“Kestrel Group Plan”).

During the three months ended March 31, 2026, there were 648,569 restricted share awards granted to employees under the Kestrel Group Plan.

During the three and six months ended June 30, 2026, a total of 61,753 and 710,322 restricted share awards were granted to employees under the Kestrel Group Plan (2025:

During the three and six months ended June 30, 2026, a total of 184,764 performance awards ("Performance Award") were issued to senior officers of the Company on May 13, 2026 for fiscal year 2026 pursuant to the Kestrel Group Plan.

The Performance Award is subject to a one-year performance period beginning on January 1, 2026 and ending on December 31, 2026, during which the designated performance goal must be achieved.

The performance goal for this performance period will be based upon the EBITDA of the Company's Program Services segment.

If the threshold level of performance is not met, the Performance Award will be forfeited immediately upon certification by the Committee.

c) Treasury Shares

Treasury shares include 2,237,534 common shares owned by Maiden Reinsurance which are not treated as outstanding common shares on the Condensed Consolidated Balance Sheets at March 31, 2026 and December 31, 2025, respectively.

During the three months ended March 31, 2026, the Company repurchased 47,036 common shares at an average price of $ 10.32 per share from employees, which represent tax withholding in respect of tax obligations on the vesting of non-performance-based restricted shares.

There were no share repurchases from employees during the same period in 2025.

The table below includes the total number of treasury shares outstanding at March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

During the six months ended June 30, 2026, the Company repurchased 47,036 common shares at an average price of $ 10.32 per share from employees, which represent tax withholding in respect of tax obligations on the vesting of non-performance-based restricted shares.

There were no share repurchases from employees during the three months ended June 30, 2026 and during the three and six months ended June 30, 2025.

The table below includes the total number of treasury shares outstanding at June 30, 2026 and December 31, 2025:

June 30, 2026 December 31, 2025

Number of common shares held by Maiden Reinsurance treated as treasury shares 2,237,534 2,237,534

1 unchanged sentence

Total number of treasury shares at the end of the reporting period 2,284,570 $ 2,237,534

d) Accumulated Other Comprehensive Income ("AOCI")

KESTREL GROUP LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands of U.S.

dollars, except share and per share data)

Shareholders' Equity (continued)

The following table sets forth financial information regarding the changes in the balances of each component of AOCI:

For the Three Months Ended March 31, 2026 Change in net unrealized gains on investment Foreign currency translation Total

For the Three Months Ended June 30, 2026 Change in net unrealized gains on investment Foreign currency translation Total

Beginning balance $ 59 $ 478 $ 537

Other comprehensive (loss) income before reclassifications ( 612 ) 241 ( 371 )

Other comprehensive loss before reclassifications

( 147 ) ( 645 ) ( 792 )

Amounts reclassified from AOCI to net loss, net of tax

Net current period other comprehensive income (loss)

79 ( 645 ) ( 566 )

Net current period other comprehensive (loss) income

Ending balance, Kestrel shareholders $ 138 $ ( 167 ) $ ( 29 )

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

Beginning balance $ — $ — $ —

Other comprehensive income before reclassifications

Net current period other comprehensive income

Ending balance, Kestrel shareholders $ 485 $ 74 $ 559

For the Six Months Ended June 30, 2026 Change in net unrealized gains on investment Foreign currency translation Total

Beginning balance

$ 679 $ 237 $ 916

Ending balance $ 59 $ 478 $ 537

Other comprehensive loss before reclassifications

( 759 ) ( 404 ) ( 1,163 )

Amounts reclassified from AOCI to net loss, net of tax

Net current period other comprehensive loss

( 541 ) ( 404 ) ( 945 )

Ending balance, Kestrel shareholders $ 138 $ ( 167 ) $ ( 29 )

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

Beginning balance

Other comprehensive income before reclassifications 485 74 559

Net current period other comprehensive income

Ending balance, Kestrel shareholders $ 485 $ 74 $ 559

KESTREL GROUP LTD

3 unchanged sentences

Long-Term Debt

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 Holdings North America, Ltd.

At June 30, 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 Holdings North America, Ltd.

("Maiden NA").

2 unchanged sentences

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

The following tables detail the issuances of Senior Notes outstanding at March 31, 2026 and December 31, 2025:

March 31, 2026 2016 Senior Notes 2013 Senior Notes Total

The following tables detail the issuances of Senior Notes outstanding at June 30, 2026 and December 31, 2025:

June 30, 2026 2016 Senior Notes 2013 Senior Notes Total

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

11 unchanged sentences

Effective interest rate 11.77 % 11.63 %

Total interest and amortization expense incurred on the Senior Notes for the three months ended March 31, 2026 was $ 5,096 ;

of which $ 1,342 was accrued as interest payable at March 31, 2026 and December 31, 2025, respectively.

Total interest and amortization expense incurred on the Senior Notes for the three and six months ended June 30, 2026 was $ 5,104 and $ 10,200 , respectively, compared to $ 1,899 for the three and six months ended June 30, 2025, respectively.

Accrued interest payable was $ 1,342 at June 30, 2026 and December 31, 2025, respectively.

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

The amortization for the fair value adjustment was $ 320 for the three months ended March 31, 2026.

The amortization for the fair value adjustment was $ 327 and $ 647 for the three and six months ended June 30, 2026, respectively, compared to $ 114 for the three and six months ended June 30, 2025, respectively.

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

13 unchanged sentences

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

The effect of ceded reinsurance on net premiums written and earned and on net loss and LAE for the three months ended March 31, 2026 was as follows:

For the Three Months Ended March 31, 2026

The effect of ceded reinsurance on net premiums written and earned and on net loss and LAE for the six months ended June 30, 2026 and 2025 was as follows:

For the Six Months Ended June 30, 2026 2025

Premiums written

$ 1,287 $ 1,379

2,804 ( 283 )

$ 4,090 $ 1,095

Premiums earned

$ 1,466 $ 1,384

$ 6,631 $ 2,422

Gross loss and LAE

$ 3,811 $ ( 6,171 )

Loss and LAE ceded

The Company's reinsurance recoverable on unpaid losses balance as at March 31, 2026 was $ 436,381 (December 31, 2025:

$ 3,770 $ ( 5,961 )

The Company's reinsurance recoverable on unpaid losses balance as at June 30, 2026 was $ 412,121 (December 31, 2025:

$ 461,197 ) presented in the Condensed Consolidated Balance Sheets.

As of March 31, 2026, the Company's total allowance for expected credit losses on its reinsurance recoverable balance was $ 1,930 (December 31, 2025:

The following table provides a reconciliation of the beginning and ending balances of the allowance for expected credit losses on reinsurance recoverable for the three months ended March 31, 2026:

For the Three Months Ended March 31, 2026

As of June 30, 2026, the Company's total allowance for expected credit losses on its reinsurance recoverable balance was $ 1,613 (December 31, 2025:

The following table provides a reconciliation of the beginning and ending balances of the allowance for expected credit losses on reinsurance recoverable for the three and six months ended June 30, 2026 and 2025, respectively:

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

2026 2025 2026 2025

Allowance for expected credit losses on reinsurance recoverable, beginning of period $ 1,930 $ — $ 1,740 $ —

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

Expected credit losses on acquired recoverables under the Combination — 1,655 — 1,655

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

( 317 ) — ( 127 ) —

Allowance for expected credit losses on reinsurance recoverable, end of period $ 1,613 $ 1,655 $ 1,613 $ 1,655

1 unchanged sentence

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

The reinsurance recoverable on unpaid losses due from Cavello under this retrocession agreement was $ 32,181 at March 31, 2026 (December 31, 2025:

The recoverable due from Cavello is net of an allowance for expected credit losses of $ 700 as at March 31, 2026 (December 31, 2025:

The reinsurance recoverable on unpaid losses due from Cavello under this retrocession agreement was $ 31,521 at June 30, 2026 (December 31, 2025:

The recoverable due from Cavello is net of an allowance for expected credit losses of $ 710 as at June 30, 2026 (December 31, 2025:

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

The $ 2,178,535 retention is subject to adjustment for paid losses subsequent to December 31, 2018.

The LPT/ADC Agreement provides Maiden Reinsurance with $ 155,000 in adverse development cover over its carried AmTrust Quota Share loss reserves at December 31, 2018.

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

As of March 31, 2026, the reinsurance recoverable on unpaid losses under the LPT/ADC Agreement was $ 403,037 (December 31, 2025:

$ 427,013 ) which was net of an allowance for expected credit losses of $ 1,227 as at March 31, 2026 (December 31, 2025:

KESTREL GROUP LTD

3 unchanged sentences

Reinsurance (continued)

The LPT/ADC Agreement provides Maiden Reinsurance with $ 155,000 in adverse development cover over its carried AmTrust Quota Share loss reserves at December 31, 2018.

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

As of June 30, 2026, the reinsurance recoverable on unpaid losses under the LPT/ADC Agreement was $ 379,391 (December 31, 2025:

$ 427,013 ) which was net of an allowance for expected credit losses of $ 901 as at June 30, 2026 (December 31, 2025:

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

1 unchanged sentence

Related Party Transactions.

As of March 31, 2026, the amount of collateral required was $ 362,501 (December 31, 2025:

As of June 30, 2026, the amount of collateral required was $ 351,466 (December 31, 2025:

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

Cavello's parent company, Enstar Group Limited, has credit ratings of BBB+ from both Standard & Poor's and Fitch Ratings at March 31, 2026.

Cavello's parent company, Enstar Group Limited, has credit ratings of BBB+ from both Standard & Poor's and Fitch Ratings at June 30, 2026.

On February 13, 2026, S&P Global Ratings affirmed the BBB+ issuer credit rating on Enstar, and affirmed the A issuer credit and financial strength ratings on its operating subsidiary, Cavello.

22 unchanged sentences

The reserve for loss and LAE consists of:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Reserve for reported loss and LAE

5 unchanged sentences

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

For the Three Months Ended March 31, 2026

For the Six Months Ended June 30, 2026 2025

Gross loss and LAE reserves, January 1

$ 637,169 $ —

reinsurance recoverable on unpaid losses, January 1

1 unchanged sentence

Net incurred losses related to:

2,208 ( 7,788 )

3,770 ( 5,961 )

Net paid losses related to:

( 134 ) ( 391 )

( 31,611 ) ( 22,115 )

( 31,745 ) ( 22,506 )

Net Maiden Legacy run-off business acquired — 221,109

Effect of foreign exchange rate movements

Net loss and LAE reserves, March 31 156,969

Reinsurance recoverable on unpaid losses, March 31 436,381

Gross loss and LAE reserves, March 31 $ 593,350

( 5,777 ) 10,270

Net loss and LAE reserves, June 30 142,220 202,912

Reinsurance recoverable on unpaid losses, June 30 412,121 520,520

Gross loss and LAE reserves, June 30 $ 554,341 $ 723,432

Actuarial Methods Used to Estimate Loss and LAE Reserves

41 unchanged sentences

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

The following table summarizes total PPD for our Legacy Reinsurance segment for the three months ended March 31, 2026:

For the Three Months Ended March 31, 2026

The following table summarizes total PPD for our Legacy Reinsurance segment for the three and six months ended June 30, 2026 and 2025:

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

2026 2025 2026 2025

Prior Year Loss Development (favorable) adverse

2 unchanged sentences

Total PPD for Legacy Reinsurance Segment $ 1,931 $ ( 7,788 ) $ 2,208 $ ( 7,788 )

Legacy Reinsurance Segment:

Diversified Business

In the Diversified Reinsurance legacy operations, favorable PPD was $ 274 for the three months ended March 31, 2026 primarily driven by favorable development in international run-off business.

KESTREL GROUP LTD

4 unchanged sentences

Legacy Reinsurance Segment:

Diversified Business

In the Diversified Reinsurance legacy operations, there was favorable PPD of $ 359 and $ 633 for the three and six months ended June 30, 2026, respectively, primarily driven by favorable loss development for international run-off business.

This compared to the adverse PPD of $ 125 for the three and six months ended June 30, 2025 which was primarily driven by adverse development in GLS business.

Legacy Reinsurance Segment:

AmTrust Business

The table below shows PPD for the AmTrust Reinsurance legacy operations for the three months ended March 31, 2026:

For the Three Months Ended March 31, 2026

The table below shows PPD for the AmTrust Reinsurance legacy operations for the three and six months ended June 30, 2026 and 2025:

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

2026 2025 2026 2025

Prior Year Loss Development (favorable) adverse

3 unchanged sentences

Total AmTrust Reinsurance PPD $ 2,290 $ ( 7,913 ) $ 2,841 $ ( 7,913 )

In the AmTrust Legacy Reinsurance operations, adverse PPD was $ 551 for the three months ended March 31, 2026.

Total PPD was due to 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 modest reduction in recoveries anticipated under the LPT/ADC Agreement.

In the AmTrust Legacy Reinsurance operations, adverse PPD of $ 2,290 and $ 2,841 was experienced during the three and six months ended June 30, 2026, respectively, compared to favorable PPD was $ 7,913 for the three and six months ended June 30, 2025.

Net adverse PPD for the three and six months ended June 30, 2026 and net favorable PPD for the three and six months ended June 30, 2025 was primarily experienced due to foreign currency fluctuations on loss reserves denominated in non-USD currencies.

The impact of adverse foreign exchange fluctuations was $ 2,310 for the three months ended June 30, 2026.

KESTREL GROUP LTD

12 unchanged sentences

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

The proportionate interest in these shares include 1,811,764 Common Shares issued to KILH for the benefit of Terry Ledbetter and Luke Ledbetter, constituting 18.0 % of the Company's issued Common Shares at March 31, 2026, and 776,040 Common Shares issued to AmTrust, constituting 7.7 % of the Company's issued Common Shares at March 31, 2026.

The proportionate interest in these shares include 1,811,764 Common Shares issued to KILH for the benefit of Terry Ledbetter and Luke Ledbetter, constituting 18.0 % of the Company's issued Common Shares at June 30, 2026, and 776,040 Common Shares issued to AmTrust, constituting 7.7 % of the Company's issued Common Shares at June 30, 2026.

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

11 unchanged sentences

As a result, Kestrel Group relies on its strategic partnership with AmTrust as a related party.

At March 31, 2026, the shares previously owned by KILH are now held indirectly by Terry Ledbetter and Luke Ledbetter.

At June 30, 2026, the shares previously owned by KILH are now held indirectly by Terry Ledbetter and Luke Ledbetter.

Terry Lee Ledbetter beneficially owns 1,038,921 common shares ( 133,039 common shares held directly and 905,882 common shares held indirectly by Terry Lee Ledbetter together with Reta Laurie Ledbetter, through his or her role as co-trustee of Terry Lee Ledbetter and Reta Laurie Ledbetter 2000 Revocable Trust).

1 unchanged sentence

2 and the Shari Ann Ledbetter Irrevocable 2019 Trust).

Together, these trusts hold approximately 20.6 % of total issued Kestrel Group common shares and through KILH hold the right to nominate (a) two non-independent directors to the Kestrel Group board of directors for so long as KILH and its affiliates own at least 25 % of the shares of Kestrel Group issued to them at the closing of the Combination, and (b) two independent directors to the Kestrel Group board of directors for so long as KILH and its affiliates own at least 5 % of the shares of Kestrel Group and at least 25 % of the shares of Kestrel Group issued to them at the closing of the Combination.

Together, Terry Ledbetter, Luke Ledbetter, and these trusts hold approximately 20.6 % of total issued Kestrel Group common shares and through KILH hold the right to nominate (a) two non-independent directors to the Kestrel Group board of directors for so long as KILH and its affiliates own at least 25 % of the shares of Kestrel Group issued to them at the closing of the Combination, and (b) two independent directors to the Kestrel Group board of directors for so long as KILH and its affiliates own at least 5 % of the shares of Kestrel Group and at least 25 % of the shares of Kestrel Group issued to them at the closing of the Combination.

Management Agreement with AmTrust

2 unchanged sentences

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

The Company incurred costs related to this agreement of $ 137 during the three months ended March 31, 2026 compared to $ 148 for the same respective period in 2025.

The Company incurred costs related to this agreement of $ 110 and $ 247 during the three and six months ended June 30, 2026, respectively, compared to $ 96 and $ 244 for the same periods in 2025.

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

8 unchanged sentences

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

All fee revenue earned during the three months ended March 31, 2026 and 2025 were based on the net premiums associated with this agreement.

All fee revenue earned during the three and six months ended June 30, 2026 and 2025 were based on the net premiums associated with this agreement.

Board of Directors of the Company

39 unchanged sentences

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

The table below shows the effect of both of these quota share arrangements with AmTrust on the Company's Condensed Consolidated Income Statements for the three months ended March 31, 2026:

For the Three Months Ended March 31, 2026

The table below shows the effect of both of these quota share arrangements with AmTrust on the Company's Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2026 and 2025:

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

2026 2025 2026 2025

Gross and net premiums written $ 922 $ ( 285 ) $ 2,801 $ ( 285 )

40 unchanged sentences

On December 31, 2025, Maiden Reinsurance and AmTrust entered into a Loan Agreement (the “Premium Repayment Loan Agreement”) by which Maiden Reinsurance will repay AII the principal amount of $ 24,259 representing settlement of a dispute over cessions of uncollectible ceded premiums written made by AII to Maiden Reinsurance, payable by Maiden Reinsurance in quarterly installments through the maturity date of December 31, 2032.

This settlement is netted against the loan receivable from related party on the Condensed Consolidated Balance Sheets at March 31, 2026.

This settlement is netted against the loan receivable from related party on the Condensed Consolidated Balance Sheets at June 30, 2026.

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

15 unchanged sentences

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

The outstanding net loan receivable was $ 78,606 at March 31, 2026 (December 31, 2025:

There was no allowance for expected credit losses recognized on the loan receivable at March 31, 2026 and December 31, 2025.

Net interest income on the net loan receivable was $ 1,137 for the three months ended March 31, 2026, with an effective yield of 5.5 %.

The outstanding net loan receivable was $ 69,443 at June 30, 2026 (December 31, 2025:

There was no allowance for expected credit losses recognized on the loan receivable at June 30, 2026 and December 31, 2025.

Net interest income on the net loan receivable was $ 1,015 and $ 2,152 for the three and six months ended June 30, 2026, respectively, with an effective yield of 5.5 % and 5.5 %, respectively.

This compared to net interest income of $ 659 for the three and six months ended June 30, 2025 with an effective yield of 5.8 %.

• The Company separately presents accrued interest on its net loan receivable on the Condensed Consolidated Balance Sheet under accrued investment income.

The accrued interest receivable on the net loan receivable was $ 1,137 at March 31, 2026 (December 31, 2025:

The accrued interest receivable on the net loan receivable was $ 1,053 at June 30, 2026 (December 31, 2025:

The Company elected the practical expedient under Topic 326 to exclude accrued interest for purposes of identifying and measuring any impairments under the allowance for expected credit losses standard.

1 unchanged sentence

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

For AEL, the amount of the collateral held in reinsurance trust accounts at March 31, 2026 was $ 95,606 (December 31, 2025:

For AEL, the amount of the collateral held in reinsurance trust accounts at June 30, 2026 was $ 85,799 (December 31, 2025:

$ 97,876 ) and the accrued interest was $ 350 (December 31, 2025:

8 unchanged sentences

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

The Company recorded $ 36 of investment management fees for the three months ended March 31, 2026 under this agreement.

The Company recorded $ 34 and $ 71 of investment management fees for the three and six months ended June 30, 2026 under this agreement compared to $ 3 of investment management fees for the three and six months ended June 30, 2025.

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

7 unchanged sentences

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

At March 31, 2026, Maiden LF and Maiden GF had substantially completed all the main contractual obligations as per the respective agreements.

At June 30, 2026, Maiden LF and Maiden GF had substantially completed all the main contractual obligations as per the respective agreements.

KESTREL GROUP LTD

4 unchanged sentences

There are no material changes from the commitments, contingencies and concentrations previously disclosed in the Company’s Form 10-K for the year ended December 31, 2025.

The following describes the Company's current commitments, contingencies and concentrations as of March 31, 2026:

The following describes the Company's current commitments, contingencies and concentrations as of June 30, 2026:

a) Concentrations of Credit Risk

At March 31, 2026, the Company’s assets where significant concentrations of credit risk may exist include total investments, cash and cash equivalents, net loan receivable from related party, reinsurance balances receivable, reinsurance recoverable on paid and unpaid losses and funds withheld receivable.

At June 30, 2026, the Company’s assets where significant concentrations of credit risk may exist include total investments, cash and cash equivalents, net loan receivable from related party, reinsurance balances receivable, reinsurance recoverable on paid and unpaid losses and funds withheld receivable.

Please refer to Note 8.

3 unchanged sentences

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

For the three months ended March 31, 2026 and 2025, this revenue stream is highly concentrated due to capacity distribution agreements with an individual customer.

For the three months ended March 31, 2026, fee revenue from this client accounted for $ 2,418 or 77.5 % of total fee revenue earned (2025:

$ 352 or 43.6 %).

For the three and six months ended June 30, 2026 and 2025, this revenue stream is highly concentrated with an individual customer.

For the three and six months ended June 30, 2026, fee revenue from this client accounted for $ 3,210 or 85.8 % and $ 5,628 or 82.0 % of total fee revenue earned compared to $ 182 or 33.5 % and $ 534 or 39.5 % for the three and six months ended June 30, 2025, respectively.

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

7 unchanged sentences

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

Best at March 31, 2026.

Best at June 30, 2026.

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

The Company believes these balances as at March 31, 2026 will be fully collectible.

The Company believes these balances as at June 30, 2026 will be fully collectible.

b) Investment Commitments and Related Financial Guarantees

The total unfunded commitments on other investments and equity method investments was $ 23,061 at March 31, 2026 (December 31, 2025:

The table below shows total unfunded commitments by type of investment as at March 31, 2026 and December 31, 2025, respectively:

March 31, 2026 December 31, 2025

The total unfunded commitments on other investments and equity method investments was $ 21,164 at June 30, 2026 (December 31, 2025:

The table below shows total unfunded commitments by type of investment as at June 30, 2026 and December 31, 2025, respectively:

June 30, 2026 December 31, 2025

Fair Value % of Total Fair Value % of Total

7 unchanged sentences

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

As discussed above, at March 31, 2026, guarantees of $ 72,175 (December 31, 2025:

As discussed above, at June 30, 2026, guarantees of $ 70,739 (December 31, 2025:

$ 73,170 ) were provided to lenders by the Company on behalf of real estate joint ventures, however, the likelihood of the Company incurring any losses pertaining to project level financing guarantees was determined to be remote.

1 unchanged sentence

Other Contingent Commitments

As a result of the Combination Agreement, Kestrel Equityholders are entitled to receive in contingent consideration up to the lesser of (x) an aggregate number of Kestrel Group common shares equal to $ 45,000 divided by certain volume weighted average prices of such shares, subject to the achievement of certain EBITDA milestones by the businesses that Kestrel conducted immediately prior to closing and any extensions of such businesses or related or ancillary businesses existing thereafter, subject to other terms and conditions as set forth in the combination agreement and (y) 2,750,000 common shares of Kestrel Group.

As a result of the Combination Agreement, Kestrel Equityholders are entitled to receive in contingent consideration up to the lesser of (x) an aggregate number of Kestrel Group common shares equal to $ 45,000 divided by certain volume weighted average prices of such shares, subject to the achievement of certain EBITDA milestones by the businesses that Kestrel conducted immediately prior to closing and any extensions of such businesses or related or ancillary businesses existing thereafter subsequent to May 27, 2025 through May 31, 2028 ("Performance Period"), and (y) 2,750,000 common shares of Kestrel Group.

KESTREL GROUP LTD

3 unchanged sentences

Commitments, Contingencies and Guarantees (continued)

On March 31, 2026 and December 31, 2025, the fair value of this contingent consideration was $ 0 as business subject to the earn out consideration computation was re-evaluated based upon current estimates of the Kestrel business for the Performance Period, including performance of the Program Services business through March 31, 2026.

At March 31, 2026, the Company holds a contingent receivable in the insurance distribution industry.

On June 30, 2026 and December 31, 2025, the fair value of this contingent consideration was $ 0 as business subject to the earn out consideration computation was re-evaluated based upon current estimates of the Kestrel business for the Performance Period, including performance of the Program Services business through June 30, 2026.

There was no change in the fair value of the earn out liability for the three and six months ended June 30, 2026, compared to an increase of $ 2,679 for the three and six months ended June 30, 2025, respectively, which was recorded in the condensed consolidated statement of operations.

At June 30, 2026, the Company holds a contingent receivable in the insurance distribution industry.

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

The Company currently estimates that the net present value of these potential distributions is $ 10,159 which is classified as receivable and reported in Other Assets on the Condensed Consolidated Balance Sheets at March 31, 2026 (December 31, 2025:

Under ASC 805, the earn out consideration for this receivable is adjusted to fair value at each reporting period with gains of $ 203 for the three months ended March 31, 2026 reported immediately in net loss through foreign exchange and other gains.

The Company currently estimates that the net present value of these potential distributions is $ 11,923 which is classified as a receivable and reported in Other Assets on the Condensed Consolidated Balance Sheets at June 30, 2026 (December 31, 2025:

Under ASC 805, the earn out consideration for this receivable is adjusted to fair value at each reporting period with unrealized gains of $ 1,765 and $ 1,968 for the three and six months ended June 30, 2026, respectively, recorded in the condensed consolidated statement of operations through foreign exchange and other gains compared to $ 0 for the same respective periods in 2025.

c) Operating Lease Commitments

10 unchanged sentences

this created a right-of-use asset and lease liability upon completion of leasehold improvements for the ten-year operating lease.

This lease comprises a majority of the lease liabilty and right-of-use asset recognized on the Condensed Consolidated Balance Sheets at March 31, 2026 and December 31, 2025.

This lease comprises a majority of the lease liability and right-of-use asset recognized on the Condensed Consolidated Balance Sheets at June 30, 2026 and December 31, 2025.

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

At March 31, 2026, the Company's future lease obligations of $ 2,000 (December 31, 2025:

At June 30, 2026, the Company's future lease obligations of $ 1,945 (December 31, 2025:

$ 2,054 ) were calculated based on the present value of future annual rental commitments excluding taxes, insurance and other operating costs for non-cancellable operating leases discounted using its secured incremental borrowing rate.

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

At March 31, 2026, the Company's right-of-use lease asset was $ 1,972 (December 31, 2025:

The Company's weighted-average remaining lease term is approximately 8.0 years at March 31, 2026.

At June 30, 2026, the Company's right-of-use lease asset was $ 1,915 (December 31, 2025:

The Company's weighted-average remaining lease term is approximately 7.8 years at June 30, 2026.

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

The Company's total office lease expense was $ 111 for three months ended March 31, 2026 (2025:

$ 49 ) recognized within general and administrative expenses consistent with the prior accounting treatment under Topic 840.

At March 31, 2026, the scheduled maturity of the Company's operating lease liabilities are expected to be as follows:

March 31, 2026

The Company's total office lease expense was $ 155 and $ 284 for three and six months ended June 30, 2026, respectively (2025:

$ 91 and $ 151 , respectively) recognized in general and administrative expenses consistent with prior accounting treatment under Topic 840.

At June 30, 2026, the scheduled maturity of the Company's operating lease liabilities are expected to be as follows:

June 30, 2026

Thereafter 1,144

1 unchanged sentence

Total discounted operating lease liabilities $ 1,945

d) Legal Proceedings

Except as noted below, the Company is not a party to any material legal proceedings.

From time to time, the Company is subject to routine legal proceedings, including arbitration, arising in the ordinary course of business.

These legal proceedings generally relate to claims asserted by or against the Company in the ordinary course of insurance or reinsurance operations.

Based on the Company's opinion, the eventual outcome of these legal proceedings is not expected to have a material adverse effect on its financial condition or results of operations.

KESTREL GROUP LTD

3 unchanged sentences

Commitments, Contingencies and Guarantees (continued)

d) Legal Proceedings

Except as noted below, the Company is not a party to any material legal proceedings.

From time to time, the Company is subject to routine legal proceedings, including arbitration, arising in the ordinary course of business.

These legal proceedings generally relate to claims asserted by or against the Company in the ordinary course of insurance or reinsurance operations.

Based on the Company's opinion, the eventual outcome of these legal proceedings is not expected to have a material adverse effect on its financial condition or results of operations.

A putative class action complaint was filed against Maiden Holdings, Ltd., Arturo M.

35 unchanged sentences

On April 20, 2026, the Court issued an order denying the motion to dismiss and directing the defendants to submit an answer to the complaint by May 18, 2026.

Defendants filed their answer to the complaint on the May 18, 2026 deadline.

Discovery is now proceeding in the action.

Both plaintiffs and defendants have made productions of documents and served deposition notices.

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

2 unchanged sentences

It is currently uncertain as to the effect of such litigation on our business, operating results and financial condition.

Arbitration Proceedings

On November 26, 2025, the Company reported that a subsidiary of GLS, pursuant to the terms of the underlying reinsurance contract, demanded and participated in an arbitration with one of its ceding companies.

Under the subject reinsurance agreement, GLS provides the ceding company in question with (i) reinsurance premium protection (“RPP”) coverage with aggregate limits of approximately $ 25,000 , and (ii) adverse development coverage (“ADC”) with remaining aggregate limits of $ 25,500 .

KESTREL GROUP LTD

3 unchanged sentences

Commitments, Contingencies and Guarantees (continued)

GLS is asserting that the cedant has committed multiple breaches of the reinsurance agreement, along with other material misrepresentations.

Based on these assertions, GLS is seeking full rescission of the reinsurance agreement and related relief, including the ability to recoup losses previously paid, and has denied payment of certain invoices for contractual performance pending the outcome of this arbitration.

GLS previously paid net losses of $ 10,805 related to the RPP coverage.

GLS has not paid any losses subject to the ADC coverage of the reinsurance agreement in question.

As of March 31, 2026, GLS has liabilities of $ 3,984 subject to the RPP coverage and $ 7,500 in reserves for the ADC coverage.

GLS received premiums totaling $ 9,734 and $ 9,800 for the RPP and ADC coverages, respectively.

GLS is vigorously pursuing its claims for rescission and recovery of amounts previously paid.

The matter is currently proceeding in arbitration, and an arbitration hearing has now been completed with a decision likely in the second quarter of 2026.

The cedant disputes GLS assertions, denying that it breached the agreement, and seeks to continue the contract in full force.

The outcome of the arbitration is inherently uncertain.

If GLS is successful, it may be entitled to recover up to $ 10,000 in losses previously paid and may be relieved of its remaining obligations under the reinsurance agreement in addition to other requested relief.

If GLS is unsuccessful, GLS may be required to continue performing under the contract, including potentially paying additional amounts under the RPP coverage, subject to a cap, and being liable for additional amounts under the ADC coverage.

The Company's subsidiary Maiden Reinsurance Ltd.

has provided a parental guarantee to guarantee the performance and obligations of GLS as finally determined in connection with the arbitration.

At this time, the Company cannot reasonably estimate the amount or range of any gain or loss that may result from this matter.

Accordingly, no accrual or gain contingency has been recorded in the Company’s reserves and other liabilities.

An adverse outcome could be material to the Company’s results of operations or cash flows for a particular period.

GLS Arbitration Proceedings

The Company most recently reported on an arbitration proceeding involving a subsidiary of GLS in the Current Report on Form 8-K filed on June 8, 2026 (“June 8-K”), which disclosure is incorporated herein by reference.

Except as disclosed below, there have been no material changes to the proceeding as previously disclosed in the June 8-K.

As a result of the final award issued by the arbitration panel on June 2, 2026 ("Final Award"), there were required adjustments to amounts previously paid by GLS under the subject reinsurance agreement, including repayment of $ 5,253 of the $ 10,805 previously paid by GLS related to the reinsurance premium protection (“RPP”) coverage, as well as required adjustments to amounts held in trust as security related to the adverse development coverage (“ADC”) of the subject reinsurance agreement.

After effectuating implementation of the Final Award, the arbitration panel relinquished its jurisdiction during July 2026.

At June 30, 2026, the Company recorded $ 5,253 under reinsurance balances receivable with an offsetting amount accrued in the Company's underwriting-related derivative liability under accrued expenses and other liabilities as a result of the Final Award.

This amount was collected subsequent to June 30, 2026 and, along with amounts to be released from the trust supporting the ADC coverage, was settled pursuant to the terms of the Final Award and the panel decisions required in connection with its implementation.

The Company remains subject to its continuing obligations under the reinsurance agreement and is therefore exposed to the full limits of coverage thereunder.

At the end of certain periods specified in the Final Award, the billing, accounting, reserves and security are to be adjusted to reflect the actual amounts due and owing as set forth in the cedant's books and records.

The Company is awaiting updated information from the cedant to evaluate its exposure that may be due and payable under the terms of the Final Award.

Depending on its evaluation of information to be received from the cedant, it is possible that the Company may recognize additional losses which could be up to and including the full limits of its exposure, less amounts presently reserved.

The amount and timing of any such financial statement impacts remain subject to completion of these evaluations.

As of June 30, 2026, the maximum additional exposure to these losses is currently $ 28,230 .

GLS expects to fully enforce its rights and remedies under the terms of the reinsurance agreement .

KESTREL GROUP LTD

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Earnings per Common Share

The following shows a summary of the elements used in calculating basic and diluted earnings per common share for the three months ended March 31, 2026 and 2025, respectively:

For the Three Months Ended March 31,

Net loss from continuing operations

The following shows a summary of the elements used in calculating basic and diluted earnings per common share for the three and six months ended June 30, 2026 and 2025, respectively:

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

2026 2025 2026 2025

Net (loss) income

$ ( 8,082 ) $ 69,927 $ ( 15,513 ) $ 69,533

Amount allocated to participating common shareholders (1)

Net loss available to Kestrel common shareholders before discontinued operations

— ( 185 ) — ( 115 )

Loss from discontinued operations, net of income tax ( 478 ) —

Net loss attributable to Kestrel common shareholders $ ( 7,431 ) $ ( 394 )

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

Net (loss) income attributable to Kestrel common shareholders

$ ( 8,082 ) $ 69,742 $ ( 15,513 ) $ 69,418

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

Weighted average number of common shares – basic and diluted (1)(2)

7,824,030 4,635,406 7,788,420 3,692,701

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

Basic and diluted loss per share attributable to Kestrel shareholders:

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

$ ( 1.03 ) $ 15.05 $ ( 1.99 ) $ 18.80

(1) At March 31, 2025, there were 655,643 unvested restricted shares and 4,275 stock options that may be potentially dilutive in periods where income is reported.

These securities were not included in the loss per share calculations for the three months ended March 31, 2026.

(2) For the three months ended March 31, 2025, the number of common shares outstanding decreased as a result of the reverse stock split, therefore the computations of basic and diluted EPS was adjusted retroactively for all periods presented to reflect that change in capital structure.

(1) At June 30, 2026, there were 737,943 unvested restricted shares and performance shares and 3,375 stock options that may be potentially dilutive in periods where income is reported.

These securities were not included in the loss per share calculations for the three and six months ended June 30, 2026.

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

(2) For the three and six months ended June 30, 2025, the number of common shares outstanding decreased as a result of the reverse stock split, therefore the computations of basic and diluted EPS was adjusted retroactively for all periods presented to reflect that change in capital structure.

As discussed in Note 1.

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The equityholders of Kestrel LLC at the closing date received 2,749,996 common shares of the Kestrel Group.

The Company recognized income tax expense of $ 6 for the three months ended March 31, 2026 compared to income tax expense of $ 92 for the same period in 2025.

The Company recognized income tax benefit of $ 112 and $ 106 for the three and six months ended June 30, 2026 compared to income tax expense of $ 3 and $ 95 for the same respective periods in 2025.

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

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

At March 31, 2026, the Company has available net operating loss ("NOL") carry-forwards of $ 476,297 (December 31, 2025:

At June 30, 2026, the Company has available net operating loss ("NOL") carry-forwards of $ 471,645 (December 31, 2025:

$ 473,094 ) for income tax purposes.

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$ 388,724 ) of NOL carryforwards expire in various years beginning in 2029.

As of March 31, 2026, approximately $ 88,703 or 18.6 % of the Company's NOL carryforwards have no expiry date under the relevant U.S.

As of June 30, 2026, approximately $ 88,236 or 18.7 % of the Company's NOL carryforwards have no expiry date under the relevant U.S.

tax law (December 31, 2025:

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dollars, except share and per share data)

Assets Held for Sale

Pending Sale of Maiden GF

As discussed in Note 1.

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

Maiden GF was one of the principal operating subsidiaries of the Company’s IIS platform.

Maiden has entered into an amended sale agreement for the acquisition of only Maiden GF at the previously agreed valuation.

The proposed acquirer believes it will satisfactorily address deficiencies identified by the SFSA in its June 2025 decision.

This amended transaction remains subject to customary regulatory approval.

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

Maiden GF is not writing any new business and its non-insurance related assets and liabilities are represented as held-for-sale in our Condensed Consolidated Balance Sheets.

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

This transaction therefore met the relevant held for sale criteria at March 31, 2026 and accordingly, any non-insurance related assets and liabilities related to the sale consideration are classified as held-for-sale in the Condensed Consolidated Balance Sheets as at March 31, 2026 and December 31, 2025 The held-for-sale assets and liabilities and discontinued operations in the tables further below do not include any insurance related balances for Maiden GF.

Under the accounting guidance in ASC Topic 205, a business that, upon acquisition, meets the held-for-sale criteria is not analyzed under the strategic shift test.

Instead, it is reported in discontinued operations automatically based on its held-for-sale classification.

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

As the condensed consolidated statement of operations included the operations of Maiden GF, adjustments to exclude the discontinued non-insurance activities of Maiden GF were made for the three months ended March 31, 2026.

All underwriting related balances are excluded from held-for-sale assets and liabilities which consist of net insurance liabilities of $ 1,471 as at March 31, 2026 (December 31, 2025:

The Company estimated the fair value of the net assets held-for-sale to be based on the estimated selling price less costs to sell and these assets are classified as Level 2 within the fair value hierarchy as of March 31, 2026.

The assets and liabilities classified as held for sale on the Company's Condensed Consolidated Balance Sheets as at March 31, 2026 and December 31, 2025 include the following:

2026 December 31,

Fixed maturities, available-for-sale, at fair value $ 4,537 $ 4,630

Cash and cash equivalents 3,810 4,564

Accrued investment income 53 60

Other assets 530 552

Total assets held for sale $ 8,930 $ 9,806

Accrued expenses and other liabilities $ 401 $ 662

Total liabilities held for sale $ 401 $ 662

The following table summarizes the major classes of items constituting the net loss of Maiden GF from discontinued operations for the three months ended March 31, 2026 presented in the Condensed Consolidated Statements of Operations:

For the Three Months Ended March 31, 2026

Net investment income $ 31

General and administrative expenses ( 501 )

Foreign exchange and other losses ( 8 )

Net loss from discontinued operations

As discussed in Note 1.

Basis of Presentation , in the wake of the June 2025 decision of the SFSA, management has further evaluated strategic alternatives for Maiden LF and on April 7, 2026, the Company decided to proceed with the managed run-off of Maiden LF.

The held-for-sale assets and liabilities of Maiden LF at December 31, 2025 were reclassified as held and used in light of the recent decision to place Maiden LF into run off operations.

The net loss from discontinued operations for the three months ended March 31, 2026 would have been $ 437 had Maiden LF remained held-for-sale.

KESTREL GROUP LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands of U.S.

dollars, except share and per share data)

Business Combination

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The equityholders of Kestrel LLC at the closing date received an aggregate of $ 40,000 in upfront cash and 2,749,996 common shares of the combined company.

In addition, the former equityholders of Kestrel LLC remain entitled to receive contingent consideration up to the lesser of (x) $ 45,000 payable in common shares of Kestrel Group upon the achievement of certain financial milestones, and (y) 2,750,000 common shares of Kestrel Group.

In addition, the former equityholders of Kestrel LLC remain entitled to receive contingent consideration up to the lesser of (x) $ 45,000 payable in common shares of Kestrel Group upon the achievement of certain financial milestones during the Performance Period, and (y) 2,750,000 common shares of Kestrel Group.

After the closing of the Combination Agreement, the group was rebranded as Kestrel Group and is the successor company to Maiden.

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Total consideration effectively transferred $ 115,537

This gain was recognized immediately in the Consolidated Statement of Operations for Kestrel in the year ended December 31, 2025.

At the closing date on May 27, 2025, the fair value of Maiden's net assets acquired were $ 183,843 which exceeded the consideration effectively transferred of $ 115,537 , resulting in a final bargain purchase gain of $ 68,306 as shown in the table on the next page, and recognized in the Company's Consolidated Statement of Operations in the year ended December 31, 2025.

The gain on bargain purchase of $ 73,590 recognized in the three and six months ended June 30, 2025 was the differential between the estimated fair value of net assets of Maiden acquired on May 27, 2025 and the equity consideration effectively transferred to Maiden shareholders on that date based on the initial assessment of fair values acquired.

As discussed in Part II, Item 8.

Notes to Consolidated Financial Statements:

Business Combination included in the Company's Form 10-K filed on March 13, 2026, the fair value of net acquired assets of Maiden had a decrease of $5,284 from the provisional fair value on May 27, 2025 due to updated information for certain underlying investment assets and was recorded against the estimated gain on bargain purchase recognized for the year ended December 31, 2025.

As discussed in Note 11.

Commitments, Contingencies and Guarantees , Kestrel Equityholders are entitled to receive in contingent consideration up to the lesser of (x) an aggregate number of Kestrel Group common shares equal to $ 45,000 divided by certain volume weighted average prices of such shares, subject to the achievement of certain EBITDA milestones by the businesses that Kestrel conducted immediately prior to closing and any extensions of such businesses or related or ancillary businesses existing thereafter, subject to other terms and conditions as set forth in the combination agreement and (y) 2,750,000 common shares of Kestrel Group.

On March 31, 2026, the fair value of this contingent consideration was $ 0 as business subject to the earn out consideration computation continues to be re-evaluated based upon current estimates of the Kestrel business for the Performance Period, including performance of the Program Services business through March 31, 2026.

KESTREL GROUP LTD

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Business Combination (continued)

On June 30, 2026, the fair value of this contingent consideration was $ 0 as business subject to the earn out consideration computation continues to be re-evaluated based upon current estimates of the Kestrel business for the Performance Period, including performance of the Program Services business through June 30, 2026.

Final Purchase Price Allocation

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At the closing date of May 27, 2025, the intangible assets acquired also consist of the value of business acquired ("VOBA").

The following table presents the weighted average amortization period and other components of intangible assets acquired at May 27, 2025 and March 31, 2026.

Accumulated amortization for the intangible assets was $ 3,355 at March 31, 2026:

Weighted Average Amortization Period May 27, 2025 Accumulated Amortization at March 31, 2026

March 31, 2026

The following table presents the weighted average amortization period and other components of intangible assets acquired at May 27, 2025 and June 30, 2026.

Accumulated amortization for the intangible assets was $ 4,188 at June 30, 2026:

Weighted Average Amortization Period May 27, 2025 Accumulated Amortization at June 30, 2026

June 30, 2026

Value of Business Acquired 5.0 years $ 2,207 $ ( 806 ) $ 1,401

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Total Intangible Assets 27.3 years $ 11,864 $ ( 4,188 ) $ 7,676

The aggregate amortization expense for intangible assets was $ 838 for the three months ended March 31, 2026, including $ 799 of amortization for the fair value on net reserves acquired reported in general and administrative expenses and $ 39 of amortization on the fair value of business acquired reported in commission and other acquisition expenses (2025 - $ 0 ).

The following table presents the estimated aggregate amortization expense for the five succeeding fiscal years on intangible assets held at March 31, 2026:

The aggregate amortization expense for intangible assets was $ 833 and $ 1,671 for the three and six months ended June 30, 2026 (2025:

This included $ 646 and $ 1,445 of amortization for the fair value on net reserves acquired reported in general and administrative expenses (2025:

$ 302 ) and $ 187 and $ 226 of amortization on the fair value of business acquired reported in commission and other acquisition expenses (2025:

KESTREL GROUP LTD

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands of U.S.

dollars, except share and per share data)

Business Combination (continued)

The following table presents the estimated aggregate amortization expense for the five succeeding fiscal years on intangible assets held at June 30, 2026:

2026 2027 2028 2029 2030

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

What changed 10-Q

Item 1. Financial Statements