Mount Logan Capital (MLCI) risk factors, FY2025 10-K

Risks Related to the Business – General

1. 01A portion of our revenues, earnings and cash flow is highly variable, which may make it difficult for us to achieve steady earnings growth on a quarterly basis and may cause the price of shares of our common stock to be volatile
2. 02We operate in highly competitive industries, which could limit our ability to achieve our growth strategies and could materially and adversely affect our businesses, financial condition, results of operations, cash flows and prospects
3. 03Our business, financial condition, results of operations, liquidity and cash flows will depend on the accuracy of our management’s assumptions and estimates, and we could experience significant gains or losses if these assumptions and estimates differ significantly from actual results
4. 04We rely on the financing markets for the operation of our business
5. 05We, and particularly our insurance business, may acquire various financial instruments for purposes of “hedging” or reducing its risks, which may be costly and ineffective and could reduce its cash available for distribution to its shareholders
6. 06Difficult political, market or economic conditions may adversely affect our businesses in many ways, which could materially reduce our revenue, net income and cash flow and adversely affect our financial prospects and condition
7. 07Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy
8. 08interpretations, rulings or regulations could be adopted, including those governing the types of reinsurance products in which Ability deals, any of which could harm us and our shareholders, potentially with retroactive effect
9. 09Any changes in tax regulations or tax reform may have an adverse impact on investors and policyholders
10. 10There can be no guarantee as to the timing or amount of dividends, and shareholders may not receive dividends
11. 11We will be subject to changes in accounting policies or accounting standards
12. 12We have and will continue to incur increased costs as a result of operating as a U.S. public company
13. 13If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired
14. 14Litigation filed against 180 Degree Capital, Legacy MLC and/or Mount Logan in connection with the Business Combination could result in substantial costs

Risks related to the Business – Our Relationship with BCPA

1. 15We rely on BCPA and Key BCPA Personnel
2. 16Our relationship with BCPA has and will continue to result in significant actual and potential conflicts of interest that could impact our business
3. 17may result in additional costs and time delays that may materially adversely affect our business, results of operations or financial condition
4. 18BCPA’s liability is limited under the Servicing Agreement and Staffing and Resource Agreement, and we are required to indemnify BCPA against certain liabilities, which may lead BCPA to act in a riskier manner on our behalf than it would when acting for our own account
5. 19Our financial condition and results of operations depend in large part on BCPA’s ability to effectively support our business
6. 20Because our business model depends upon relationships with various counterparties, the inability of BCPA to maintain or develop these relationships, or the failure of these relationships to generate business opportunities, could adversely affect our business

Risks Related to the Business – Asset Management

1. 21The asset management business is competitive
2. 22These and other competitive pressures could adversely affect ML Management, which in turn may adversely impact our business, results of operations and financial condition
3. 23Our Asset Management segment derives revenues from fees generated from advisory and other services such business provides
4. 24ML Management, receive management fees and other revenue from investment advisory agreements that are subject to the foregoing requirements, there can be no assurance that such agreements will remain in place, which could result in a loss of revenue
5. 25We may be subject to focus by certain current or prospective clients or other stakeholders on environmental, social and governance matters
6. 26Valuations for illiquid assets under management entail significant complications
7. 27We, through ML Management, may only manage a limited number of funds and investments

Risks Related to the Business – Insurance

1. 28Our insurance business is heavily regulated and changes in regulation could reduce our profitability
2. 29Ability operates in a highly competitive industry that includes a number of companies, many of which are larger and more well-known, which could limit Ability’s capacity to increase or maintain market share and/or margins
3. 30Differences between Ability’s policyholder behavior estimates, reserve assumptions and actual claims experience, in particular with respect to the timing and magnitude of claims and surrenders, may adversely affect Ability’s results of operations or financial condition
4. 31including assumptions as to the levels and/or timing of receipt or payment of premiums, benefits, claims, expenses, interest credits, investment results (including equity and other market returns), mortality, morbidity, longevity and persistency
5. 32Estimates used in the preparation of financial statements and models for insurance products may differ materially from actual experience
6. 33Ability’s historical growth rates may not be indicative of its future growth, and Ability may not be able to identify attractive insurance markets, reinsurance opportunities or investments with returns that are as favorable as Ability’s historical returns and grow new business volumes at historical levels
7. 34Interest rate fluctuations could negatively affect the income Ability derives from the difference between the interest rates it earns on its investments and interest it pays under its reinsurance contracts
8. 35Ability faces risks associated with business it reinsures and business it cedes to reinsurers and which could cause a material adverse effect on Ability’s business, results of operations and financial condition
9. 36The determination of the amount of impairments and allowances for credit losses recognized on Ability’s investments is highly subjective and could materially affect its results of operations or financial condition
10. 37Ability’s liabilities for insurance products may prove to be inadequate, requiring Ability to increase liabilities which results in reduced net income and shareholders’ equity
11. 38Ability is subject to regulatory capital requirements in the United States
12. 39Ability faces risks associated with credit
13. 40Ability faces due diligence risks
14. 41Ability faces risks from borrower clients
15. 42Ability faces risks from prepayments by borrower clients
16. 43Ability faces risk of default by and bankruptcy of a borrower client
17. 44Second priority liens on collateral securing debt investments that Ability makes may be subject to control by senior creditors with first priority liens. If there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and Ability
18. 45Ability is subject to additional risks associated with investments in the form of loan participation interests
19. 46Ability faces risk on the collateral securing Ability’s loans
20. 47Ability may not be able to exercise control over borrower clients
21. 48Ability faces risks related to securities of borrower clients
22. 49Use of leverage and changes in interest rates may affect Ability’s cost of capital and net investment income

General Risks

1. 50The market price and trading volume of our common stock may be volatile, which could result in rapid and substantial losses for our stockholders
2. 51Climate change-related risks and regulatory and other efforts to address climate change could adversely affect our business
3. 52We will be subject to risks associated with pandemics, epidemics, disease outbreaks and other public health crises, which could impact our business, financial condition and results of operations in the future
4. 53Delaware law, our amended and restated certificate of incorporation and our amended and restated bylaws contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable
5. 54These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our board of directors or management
6. 55Our amended and restated certificate of incorporation could prevent us from benefiting from corporate opportunities that might otherwise have been available to us