KESTREL GROUP LTD

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except share and per share data)

March 31,
2026

December 31,
2025

(Unaudited)

(Audited)

ASSETS

Investments:

Fixed maturities, available-for-sale, at fair value (Amortized cost 2026 - $118,298; 2025 - $164,352)

$          118,376

$          165,035

Equity securities, at fair value (Cost:2026 - $11,145; 2025 - $11,145)

11,748

11,748

 Equity method investments

33,543

33,532

   Other investments

175,670

173,358

Total investments

339,337

383,673

Cash and cash equivalents

15,052

15,480

Restricted cash and cash equivalents

47,159

9,146

Accrued investment income

4,872

5,003

Reinsurance balances receivable, net

297

724

Reinsurance recoverable on unpaid losses

436,381

461,197

Net loan receivable from related party

78,606

86,883

Intangible assets

8,509

9,347

Funds withheld receivable

7,448

10,956

Other assets

17,636

17,740

Assets held for sale

8,930

9,806

Total assets

$          964,227

$       1,009,955

LIABILITIES

Reserve for loss and loss adjustment expenses

$          593,350

$          637,169

Unearned premiums

16,891

17,406

Accrued expenses and other liabilities

57,426

52,032

Senior notes - principal amount

262,361

262,361

Less: unamortized fair value adjustment

87,639

87,959

Senior notes, net

174,722

174,402

Liabilities held for sale

401

662

Total liabilities

842,790

881,671

Commitments and Contingencies

EQUITY

Common shares

101

100

Additional paid-in capital

178,982

177,534

Accumulated other comprehensive income

537

916

(Accumulated deficit) retained earnings

(6,234)

1,197

Treasury shares, at cost

(51,949)

(51,463)

Total Equity

121,437

128,284

Total Liabilities and Equity

$          964,227

$       1,009,955

Book value per common share⁽²⁾

$              15.52

$              16.57

Common shares outstanding

7,824,030

7,741,943

KESTREL GROUP LTD

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands of U.S. dollars, except share and per share data)

For the Three Months Ended
March 31,

2026

2025

Revenues:

Gross premiums written

$         2,655

$               —

Net premiums written

$         2,654

$               —

Change in unearned premiums

503

—

Net premiums earned

3,157

—

Fee revenue

3,120

807

Net investment income

2,577

34

Net realized and unrealized investment gains

1,339

—

Total revenues

10,193

841

Expenses:

Net loss and loss adjustment expenses

2,255

—

Commission and other acquisition expenses

1,473

—

General and administrative expenses

11,743

1,143

Total expenses

15,471

1,143

Other expenses

Interest and amortization expenses

3,896

—

Foreign exchange and other gains

(2,228)

—

Total other expenses

1,668

—

Net loss before income taxes

(6,946)

(302)

Less: income tax expense

6

92

Interest in loss of equity method investments

(1)

—

Net loss from continuing operations

(6,953)

(394)

Loss from discontinued operations, net of income tax

(478)

—

 Net loss

$        (7,431)

$           (394)

Basic and diluted loss per share from continuing operations

$          (0.90)

$          (0.14)

Basic and diluted loss per share from discontinued operations

(0.06)

—

Basic and diluted loss per share attributable to Kestrel common shareholders

$          (0.96)

$          (0.14)

Annualized return on average common equity

(24.1) %

(36.2) %

Weighted average number of common shares - basic and diluted

7,752,415

2,749,996

KESTREL GROUP LTD

SUPPLEMENTAL FINANCIAL DATA - SEGMENT INFORMATION (Unaudited)

(in thousands of U.S. dollars)

Legacy
Reinsurance

Program
Services

Total

Gross premiums written

$              2,655

$                   —

$              2,655

Net premiums written

$              2,654

$                   —

$              2,654

Net premiums earned

$              3,157

$                   —

$              3,157

Fee revenue

—

3,120

3,120

Net loss and loss adjustment expenses ("loss and LAE")

(2,255)

—

(2,255)

Commission and other acquisition expenses

(1,473)

—

(1,473)

General and administrative expenses⁽³⁾

(2,713)

(1,512)

(4,225)

Underwriting loss and fee income⁽⁴⁾

$            (3,284)

$              1,608

(1,676)

Reconciliation to net loss from continuing operations

Net investment income and net realized and unrealized investment gains

3,916

Interest and amortization expenses

(3,896)

Foreign exchange and other gains, net

2,228

Other general and administrative expenses⁽³⁾

(7,518)

Income tax expense

(6)

Interest in loss of equity method investments

(1)

Net loss from continuing operations

$            (6,953)

For the Three Months Ended March 31, 2025

Legacy
Reinsurance

Program
Services

Total

$                   —

$                 807

$                 807

General and administrative expenses⁽³⁾

—

(572)

(572)

Fee income⁽⁴⁾

$                   —

$                 235

235

Reconciliation to net loss

Net investment income

34

Other general and administrative expenses⁽³⁾

(571)

Income tax expense

(92)

Net loss from continuing operations

$               (394)

KESTREL GROUP LTD

NON-GAAP FINANCIAL MEASURES (Unaudited)

(In thousands of U.S. dollars, except share and per share data)

For the Three Months Ended
March 31,

2026

2025

Non-GAAP operating loss⁽⁵⁾

$      (10,354)

$           (394)

Non-GAAP basic and diluted operating loss per common share attributable to Kestrel common
shareholders⁽⁵⁾

$          (1.34)

$          (0.14)

Annualized non-GAAP operating return on average shareholders' equity⁽⁶⁾

(33.6) %

(36.2) %

Reconciliation of net loss to non-GAAP operating loss:

Net loss

$        (7,431)

$           (394)

Add (subtract):

  Net realized and unrealized investment gains

(1,339)

—

  Amortization of intangible assets

838

—

  Foreign exchange and other gains

(2,228)

—

  Interest in loss of equity method investments

1

—

  Net loss from discontinued operations

478

—

Restructuring and severance costs

24

—

  Costs incurred due to the Combination

(697)

—

Non-GAAP operating loss⁽⁵⁾

$      (10,354)

$           (394)

Weighted average number of common shares - basic and diluted

7,752,415

2,749,996

Reconciliation of diluted loss per share attributable to Kestrel common shareholders to
non-GAAP diluted operating loss per share attributable to Kestrel common shareholders:

Diluted loss per share attributable to common shareholders

$          (0.96)

$          (0.14)

Add (subtract):

  Net realized and unrealized investment gains

(0.17)

—

  Amortization of intangible assets

0.11

—

 Foreign exchange and other gains

(0.29)

—

Net loss from discontinued operations

0.06

—

Costs incurred due to the Combination

(0.09)

—

Non-GAAP diluted operating loss per share attributable to common shareholders⁽⁵⁾

$          (1.34)

$          (0.14)

KESTREL GROUP LTD

NON-GAAP FINANCIAL MEASURES (Unaudited)

(In thousands of U.S. dollars, except share and per share data)

March 31, 2026

December 31, 2025

Investable assets:

Total investments

$          339,337

$          383,673

Cash and cash equivalents

15,052

15,480

Restricted cash and cash equivalents

47,159

9,146

 Net loan receivable from related party

78,606

86,883

Funds withheld receivable

7,448

10,956

Total investable assets⁽⁷⁾

$          487,602

$          506,138

Capital:

Total shareholders' equity

$          121,437

$          128,284

2016 Senior Notes

110,000

110,000

2013 Senior Notes

152,361

152,361

Total capital resources⁽⁸⁾

$          383,798

$          390,645

(1) Premium produced is an operating metric determined by management as a byproduct of the program services fees it earns and is paid by clients. Premium produced is equal to the premium written by an MGA or capacity provider, and management believes this measure is important in understanding the underlying production trends of its Program Services business and the fees it earns. Where available, the Company utilizes underlying premium produced as reported by its clients. Where the premium produced was not directly observable, the Company derived the premium produced by grossing up the known fee component using the applicable contractual fee percentage, including its arrangements with its insurance carrier partners.

(2) Book value per common share is calculated using shareholders' equity divided by the number of common shares outstanding. Management uses growth in this metric as a prime measure of the value we are generating for our common shareholders, because management believes that growth in this metric ultimately results in growth in the Company's common share price. This metric is impacted by the Company's net income and external factors, such as interest rates, which can drive changes in unrealized gains or losses on our investment portfolio as well as share repurchases.

(3) Underwriting loss and fee income related general and administrative expenses is a non-GAAP measure and includes expenses which are segregated for analytical purposes as a component of underwriting loss and fee income.

(4) Underwriting loss and fee income is a non-GAAP measure and is calculated as net premiums earned plus fee revenue less net loss and LAE, commission and other acquisition expenses and general and administrative expenses directly related to underwriting and fee revenue activities. For purposes of these non-GAAP operating measures, the fee-generating business, which is included in our Program Services segment, is considered part of the underwriting and fee income operations of the Company. Management believes that this measure is important in evaluating the underwriting and fee income performance of the Company and its segments. This measure is also a useful tool to measure the profitability of the Company separately from the investment results and is also a widely used performance indicator in the insurance industry.

(5) Non-GAAP operating earnings (loss) and non-GAAP basic and diluted operating earnings (loss) per common share are non-GAAP financial measure defined by the Company as net income (loss) excluding realized investment gains and losses, foreign exchange and other gains and losses, interest in income (loss) of equity method investment, and amortization of intangible assets and should not be considered as an alternative to net income (loss). It also excludes on a non-recurring basis: (1) loss from discontinued operations, net of income tax; (2) restructuring and severance costs; and (3) costs incurred due to the Combination. The Company's management believes that the use of non-GAAP operating earnings (loss) and non-GAAP diluted operating earnings (loss) per common share enables investors and other users of the Company's financial information to analyze its performance in a manner similar to how management analyzes performance. Management also believes that these measures generally follow industry practice therefore allowing the users of financial information to compare the Company's performance with its industry peer group, and that the equity analysts and certain rating agencies which follow the Company, and the insurance industry as a whole, generally exclude these items from their analyses for the same reasons. Non-GAAP operating earnings should not be viewed as a substitute for U.S. GAAP net income.

(6) Non-GAAP operating return on average shareholders' equity is a non-GAAP financial measure. Management uses non-GAAP operating return on average shareholders' equity as a measure of profitability that focuses on the return to common shareholders. It is calculated using non-GAAP operating earnings divided by average shareholders' equity.

(7) Investable assets are the total of the Company's investments, cash and cash equivalents, net loan receivable from related party and funds withheld receivable.

(8) Total capital resources are the sum of the Company's principal amount of debt and shareholders' equity.