Kestrel Group Reports Third Quarter 2026 Financial Results
Program Services fee growth accompanied a wider quarterly net loss and lower book value per common share.
Sentiment and the balance of points
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Rhea-AI Summary
Kestrel Group (NASDAQ: KG) reported a third-quarter 2026 net loss of $16.355 million as Program Services growth accompanied Legacy Reinsurance losses. The loss widened from $5.053 million a year earlier, with loss per share increasing to $2.09 from $0.65. Revenue fell to $4.763 million from $17.538 million.
Program Services fee income rose 203% to $2.9 million, with a 71% margin on fee revenue. Fee revenue increased 151% to $4.1 million, and client premium produced rose 132% to $121.2 million. Legacy Reinsurance recorded a $6.412 million underwriting loss, versus $8.977 million a year earlier. Investment activities generated a $1.252 million loss.
Book value per common share fell to $12.44 at September 30 from $16.57 at December 31, 2025. Kestrel expects approximately $5 million in annualized expense savings, reaching the full run-rate within twelve months; additional separation and other non-recurring charges may follow.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Moderate pointProgram Services quarterly fee income rose 203% to $2.9 million, with a 71% fee-revenue margin.
- Moderate point. Forward-looking: it has not happened yet and may not happen.Kestrel targets approximately $5 million in annualized savings, with full run-rate expected within twelve months.
- Moderate pointCash and cash equivalents increased to $26.934 million from $20.044 million at December 31, 2025.
- Moderate pointNine-month net investment income increased to $7.406 million from $5.163 million year over year.
- Minor pointProgram Services quarterly fee revenue increased 151% to $4.1 million year over year.
7 minor points
- Minor pointClient premium produced increased 132% to $121.2 million in the third quarter.
- Minor pointNine-month Program Services fee income reached $6.9 million, versus $1.0 million a year earlier.
- Minor pointNine-month Program Services fee revenue reached $10.9 million, versus $3.0 million a year earlier.
- Minor pointNine-month client premium produced rose 244% to $325.0 million.
- Minor pointInformation technology infrastructure and support outsourcing was completed early in fourth-quarter 2026.
- Minor pointSegment administrative expenses fell to $3.448 million from $4.353 million year over year.
- Minor pointAmTrust net favorable prior-period loss-estimate adjustments totaled $1.4 million, or $2.7 million excluding foreign exchange.
Negative
- Major pointQuarterly net loss widened to $16.355 million, or $2.09 per share, from $5.053 million, or $0.65.
- Major pointQuarterly revenue fell to $4.763 million from $17.538 million year over year.
- Major pointNine-month results swung to a $31.868 million loss from $64.480 million income, including a prior-year bargain-purchase gain.
- Moderate pointNine-month revenue declined to $21.673 million from $23.945 million year over year.
- Moderate pointBook value per common share fell to $12.44 from $16.57 at December 31, 2025.
- Moderate pointShareholders' equity fell to $97.814 million from $128.284 million at December 31, 2025.
- Moderate pointLegacy Reinsurance underwriting loss was $6.412 million, narrowed from $8.977 million a year earlier.
- Moderate pointGerman Auto loss development totaled $3.1 million after contractual inflation adjustments increased Kestrel's exposure. 9.6% of market cap
- Moderate pointGenesis Legacy Solutions claim settlement cost $2.4 million during the quarter. 7.4% of market cap
- Moderate pointQuarterly net premiums earned fell to $1.947 million from $6.836 million year over year.
- Moderate pointQuarterly net investment income fell to $2.344 million from $3.587 million year over year.
- Moderate pointQuarterly investment valuation and realized results swung to a $3.596 million loss from $5.494 million gains.
- Moderate pointNine-month investment valuation and realized results swung to a $5.241 million loss from $6.552 million gains.
- Moderate pointNine-month interest and amortization expense increased to $12.330 million from $5.647 million year over year.
- Moderate pointNine-month administrative expenses rose to $34.182 million from $18.425 million year over year.
- Moderate pointForeign exchange and other quarterly gains decreased to $0.675 million from $2.802 million year over year.
8 minor points
- Minor pointNine-month earnings per share fell to a $4.08 loss from $12.70 earnings.
- Minor pointAmTrust current-accident-year underwriting loss totaled $1.4 million as remaining multiple-year policies ran off.
- Minor pointNine-month net premiums earned declined to $8.578 million from $9.258 million year over year.
- Minor pointCorporate administrative expenses rose to $7.997 million from $7.436 million year over year.
- Minor pointQuarterly interest and amortization expense increased to $4.257 million from $4.128 million year over year.
- Minor pointQuarterly annualized return on average equity deteriorated to negative 61.3% from negative 13.6%.
- Minor pointNine-month annualized return on average equity fell to negative 37.7% from positive 116.2%.
- Minor point. Forward-looking: it has not happened yet and may not happen.Further cost-reduction actions may incur additional employee separation and other non-recurring charges.
News Explained
Kestrel says it completed outsourcing a substantial portion of IT infrastructure and support early in the fourth quarter; other cost measures remain under evaluation.
Kestrel Group has reported third-quarter 2026 results; common shares outstanding were 8,737,137 at
Management says it has reduced costs associated with professional and advisory services, completed outsourcing a substantial portion of IT infrastructure and support early in the fourth quarter, and streamlined internal functions with related headcount reductions; additional measures remain under evaluation.
Details
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Key Figures
- Program Services fee income
- $2.9 million; up 203% year over year
- Third quarter 2026
- Program Services fee revenue
- $4.1 million; up 151% year over year
- Third quarter 2026
- Premium produced
- $121.2 million; up 132% year over year
- Program Services client programs, third quarter 2026
- Fee revenue margin
- 71%
- Program Services fee revenue, third quarter 2026
- Total revenues
- $4.8 million
- Third quarter 2026
- Net loss
- $16.4 million
- Third quarter 2026
- Loss per share
- $2.09
- Third quarter 2026
- Legacy Reinsurance underwriting loss
- $6.4 million
- Third quarter 2026
Previous Earnings Reports
-
Program Services fee revenue and premium produced grew, while the company reported a net loss.
-
Program Services reported fee income and premium produced alongside a company net loss.
-
The quarter included a company net loss and a Legacy Reinsurance underwriting loss.
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Key Terms
prior period development financial
net operating loss financial
loss adjustment expenses technical
AI-generated analysis. How Rhea-AI works. Not financial advice.
Key Highlights – Third Quarter 2026 Financials
- Program Services fee income of
$2.9 million 203% year over year with a71% margin on fee revenue - Program Services fee revenue of
$4.1 million 151% year over year - Premium produced(1) by Program Services clients was
$121.2 million 132% year over year - Total revenues were
$4.8 million - Net premiums earned were
$1.9 million - As of September 30, 2026, the Company's book value per common share(2) was
$12.44 - Net loss was
$16.4 million $2.09
Commenting on the results, Kestrel's Chief Executive Officer, Luke Ledbetter, stated, "Our Program Services segment continues to demonstrate strong sequential growth, with fee income, fee revenue and premium produced up once again, both from the second quarter of 2026 and year-over-year. This marks improvement in each quarter of 2026, driven by solid execution and our expanding pipeline of opportunity, and we are encouraged by the positive momentum within this segment. As we focus on the areas of our business with the greatest potential return for shareholders, we remain committed to optimizing our cost structure. Toward that end, we are pursuing broad-based expense reduction initiatives which have made significant progress during the third quarter, and we are targeting approximately
Program Services Segment
The Program Services segment provides fronting services to general agents and insurance carriers to leverage Kestrel's trusted reputation to provide access to the
Program Services' fee income for the third quarter of 2026 was
For the nine months ended September 30, 2026, Program Services' fee income was
Legacy Reinsurance Segment
The Legacy Reinsurance segment consists of the AmTrust Reinsurance and Diversified Reinsurance segments previously reported by Maiden Holdings, Ltd. ("Maiden") prior to the Combination with Kestrel. The AmTrust portion of this segment includes all business ceded to Maiden Reinsurance Ltd. by AmTrust. The Diversified portion of this segment consists of a run-off portfolio of predominantly third-party property and casualty reinsurance business focusing on regional and specialty property and casualty insurance companies located primarily in
During the third quarter of 2026, the Legacy Reinsurance segment reported an underwriting loss of
The AmTrust business reported a current accident year underwriting loss of
The Diversified business' results largely reflect the ongoing run-off of the Company's international operations. Its
Investment Activities and Other Gains
The Company reported a net loss from investment activities of
The Company also recognized foreign exchange and other gains of
General and Administrative Expenses
Total general and administrative expenses were
Segment G&A expenses for the quarter included
The Company is carrying out broad-based initiatives to reduce its operating cost structure. It expects these actions to produce annualized run-rate savings of approximately
- significantly reducing costs associated with a broad range of professional and advisory services;
- outsourcing a substantial portion of the Company's information technology infrastructure and support functions, completed early in the fourth quarter of 2026; and
- streamlining certain internal functions, including related headcount reductions and the selective use of third-party service providers.
The Company continues to evaluate and implement a range of additional measures and may incur additional employee separation and other non-recurring charges as these initiatives are completed.
Balance Sheet
Total assets were
As of September 30, 2026, the Company has available net operating loss ("NOL") carryforwards of
Investor Presentation
The Company has posted an investor presentation on its website in connection with this earnings release. The presentation, dated November 2026, can be found at https://kestrelgroup.gcs-web.com/events-and-presentations/presentations.
Non-GAAP Reconciliations
Please see "Non-GAAP Financial Measures" at the end of this earnings release for additional information on non-GAAP financial measures and reconciliations of these measures to their most directly comparable financial measures calculated and presented in accordance with GAAP.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the Company's current expectations and are subject to risks and uncertainties that may cause actual results to differ materially. Factors that could cause differences are discussed in the Company's SEC filings, including the Company's Annual Report on Form 10-K for the year ended December 31, 2025, and subsequent quarterly reports on Form 10-Q.
Various statements contained in this press release are forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include projections, assumptions, and estimates concerning the business combination and integration of Maiden and Kestrel, our future results of operations and financial position, business strategy, and plans and objectives of management for future operations, the anticipated savings from our expense reduction initiative, the timing and success of specific projects and strategies for growth, and our future production, revenues, income, expenses, capital spending, and reserves. Our forward-looking statements are generally, but not always, accompanied by words such as "estimate," "believe," "expect," "will," "plan," "target," "could" or other words that convey the uncertainty of future events or outcomes.
There can be no assurance that actual developments will be those anticipated by us. Actual results may differ materially from those expressed or implied in these statements as a result of significant risks and uncertainties, including, but not limited to, our ability to recover from our capacity providers, the cost and availability of reinsurance coverage, challenges to our use of issuing carrier or fronting arrangements by regulators or changes in state or federal insurance or other statutes or regulations, our dependence on a limited number of business partners, our ability to compete effectively, a downgrade in the financial strength ratings of insurance carriers utilized for fronting arrangements, our ability to accurately underwrite and price our products and to maintain and establish accurate loss reserves, opportunities to expand our ability and capacity to write fee-based business, our ability to implement reinsurance mechanisms to selectively deploy underwriting capacity, our ability to manage our legacy business and ongoing run-off of our international operations, changes in interest or foreign exchange rates or other changes in the financial markets, availability and sources of liquidity, timing and amount of expenditures, measures to contain or reduce operating expenses, the effects of emerging claim and coverage issues, changes in the demand for our products, outcomes of ongoing litigation or other legal matters, our competitive position in the industry and markets in which we operate, the effect of general economic conditions, breaches in data security or other disruptions with our technology, changes in pricing or other competitive environments, and the development and success of strategies or other initiatives.
Forward-looking statements involve inherent risks and uncertainties that are difficult to predict, many of which are beyond our control. Additional information about these risks and uncertainties is contained in our filings with the Securities and Exchange Commission. The forward-looking statements in this press release speak only as of the date of this release, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
Kestrel Group
Kestrel Group Ltd specializes in providing fronting services to insurance program managers, managing general agents (MGAs), reinsurers, and reinsurance brokers. Kestrel Group facilitates insurance transactions utilizing its exclusive management contracts with four insurance carriers, all of which are rated A- "Excellent" by A.M. Best. These contracts enable Kestrel Group to offer both admitted and surplus lines in all
Contact:
Kestrel Group Investor Relations
Ken Dennard / Zach Vaughan
KG@dennardlascar.com
|
KESTREL GROUP LTD CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of
|
||||
|
|
|
September 30, |
|
December 31, 2025 |
|
|
|
(Unaudited) |
|
(Audited) |
|
ASSETS |
||||
|
Investments: |
|
|
|
|
|
Fixed maturities: available-for-sale, at fair value (Amortized cost: 2026: |
|
$ 141,114 |
|
$ 169,665 |
|
Equity securities: at fair value (Cost: 2026: |
|
9,755 |
|
11,748 |
|
Equity method investments |
|
33,922 |
|
33,532 |
|
Other investments |
|
171,766 |
|
173,358 |
|
Total investments |
|
356,557 |
|
388,303 |
|
Cash and cash equivalents |
|
26,934 |
|
20,044 |
|
Restricted cash and cash equivalents |
|
9,113 |
|
9,146 |
|
Accrued investment income |
|
5,255 |
|
5,063 |
|
Reinsurance balances receivable, net |
|
374 |
|
724 |
|
Reinsurance recoverable on unpaid losses |
|
391,094 |
|
461,197 |
|
Net loan receivable from related party |
|
64,054 |
|
86,883 |
|
Intangible assets |
|
7,008 |
|
9,347 |
|
Funds withheld receivable |
|
4,542 |
|
10,956 |
|
Other assets |
|
14,715 |
|
18,292 |
|
Total assets |
|
$ 879,646 |
|
$ 1,009,955 |
|
LIABILITIES |
||||
|
Reserve for loss and loss adjustment expenses |
|
$ 524,685 |
|
$ 637,169 |
|
Unearned premiums |
|
11,744 |
|
17,406 |
|
Accrued expenses and other liabilities |
|
70,013 |
|
52,694 |
|
Senior notes - principal amount |
|
262,361 |
|
262,361 |
|
Less: unamortized fair value adjustment |
|
86,971 |
|
87,959 |
|
Senior notes, net |
|
175,390 |
|
174,402 |
|
Total liabilities |
|
781,832 |
|
881,671 |
|
Commitments and Contingencies |
|
|
|
|
|
EQUITY |
||||
|
Common shares |
|
110 |
|
100 |
|
Additional paid-in capital |
|
181,695 |
|
177,534 |
|
Accumulated other comprehensive (loss) income |
|
(1,327) |
|
916 |
|
(Accumulated deficit) retained earnings |
|
(30,671) |
|
1,197 |
|
Treasury shares, at cost |
|
(51,993) |
|
(51,463) |
|
Total Equity |
|
97,814 |
|
128,284 |
|
Total Liabilities and Equity |
|
$ 879,646 |
|
$ 1,009,955 |
|
|
|
|
|
|
|
Book value per common share(2) |
|
$ 12.44 |
|
$ 16.57 |
|
|
|
|
|
|
|
Common shares outstanding |
|
8,737,137 |
|
7,878,140 |
|
KESTREL GROUP LTD CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands of
|
||||||||
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
||||
|
|
|
2026 |
|
2025 |
|
2026 |
|
2025 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
Gross premiums written |
|
$ (1,171) |
|
$ 3,760 |
|
$ 2,919 |
|
$ 4,856 |
|
Net premiums written |
|
$ (1,146) |
|
$ 3,895 |
|
$ 2,944 |
|
$ 4,990 |
|
Change in unearned premiums |
|
3,093 |
|
2,941 |
|
5,634 |
|
4,268 |
|
Net premiums earned |
|
1,947 |
|
6,836 |
|
8,578 |
|
9,258 |
|
Fee revenue |
|
4,068 |
|
1,621 |
|
10,930 |
|
2,972 |
|
Net investment income |
|
2,344 |
|
3,587 |
|
7,406 |
|
5,163 |
|
Net realized and unrealized investment (losses) gains |
|
(3,596) |
|
5,494 |
|
(5,241) |
|
6,552 |
|
Total revenues |
|
4,763 |
|
17,538 |
|
21,673 |
|
23,945 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
Net loss and loss adjustment expenses |
|
5,948 |
|
10,406 |
|
9,718 |
|
4,445 |
|
Commission and other acquisition expenses |
|
128 |
|
1,718 |
|
2,584 |
|
2,112 |
|
General and administrative expenses |
|
11,445 |
|
11,789 |
|
34,182 |
|
18,425 |
|
Interest and amortization expenses |
|
4,257 |
|
4,128 |
|
12,330 |
|
5,647 |
|
Change in fair value of earn out liability |
|
— |
|
(2,679) |
|
— |
|
— |
|
Gain on bargain purchase |
|
— |
|
— |
|
— |
|
(73,590) |
|
Foreign exchange and other (gains) losses |
|
(675) |
|
(2,802) |
|
(5,173) |
|
2,300 |
|
Total expenses |
|
21,103 |
|
22,560 |
|
53,641 |
|
(40,661) |
|
Net (loss) income before income taxes |
|
(16,340) |
|
(5,022) |
|
(31,968) |
|
64,606 |
|
Less: income tax expense (benefit) |
|
11 |
|
7 |
|
(95) |
|
102 |
|
Interest in (loss) income of equity method investments |
|
(4) |
|
(24) |
|
5 |
|
(24) |
|
Net (loss) income |
|
$ (16,355) |
|
$ (5,053) |
|
$ (31,868) |
|
$ 64,480 |
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss) earnings per share attributable to Kestrel common shareholders |
|
$ (2.09) |
|
$ (0.65) |
|
$ (4.08) |
|
$ 12.70 |
|
Annualized return on average shareholders' equity |
|
(61.3) % |
|
(13.6) % |
|
(37.7) % |
|
116.2 % |
|
Weighted average number of common shares - basic and diluted |
|
7,834,025 |
|
7,741,943 |
|
7,803,789 |
|
5,053,828 |
|
KESTREL GROUP LTD SUPPLEMENTAL FINANCIAL DATA - SEGMENT INFORMATION (Unaudited) (in thousands of
|
||||||
|
For the Three Months Ended September 30, 2026 |
|
Legacy |
|
Program |
|
Total |
|
Gross premiums written |
|
$ (1,171) |
|
$ — |
|
$ (1,171) |
|
Net premiums written |
|
$ (1,146) |
|
$ — |
|
$ (1,146) |
|
Net premiums earned |
|
$ 1,947 |
|
$ — |
|
$ 1,947 |
|
Fee revenue |
|
— |
|
4,068 |
|
4,068 |
|
Net loss and loss adjustment expenses ("loss and LAE") |
|
(5,948) |
|
— |
|
(5,948) |
|
Commission and other acquisition expenses |
|
(128) |
|
— |
|
(128) |
|
Segment G&A expenses(3) |
|
(2,283) |
|
(1,165) |
|
(3,448) |
|
Underwriting loss and fee income(4) |
|
$ (6,412) |
|
$ 2,903 |
|
(3,509) |
|
Reconciliation to net loss |
|
|
|
|
|
|
|
Net investment income and net realized and unrealized investment losses |
|
|
|
|
|
(1,252) |
|
Interest and amortization expenses |
|
|
|
|
|
(4,257) |
|
Foreign exchange and other gains, net |
|
|
|
|
|
675 |
|
Corporate G&A expenses(3) |
|
|
|
|
|
(7,997) |
|
Income tax expense |
|
|
|
|
|
(11) |
|
Interest in loss of equity method investments |
|
|
|
|
|
(4) |
|
Net loss |
|
|
|
|
|
$ (16,355) |
|
|
||||||
|
For the Three Months Ended September 30, 2025 |
|
Legacy |
|
Program |
|
Total |
|
Gross premiums written |
|
$ 3,760 |
|
$ — |
|
$ 3,760 |
|
Net premiums written |
|
$ 3,895 |
|
$ — |
|
$ 3,895 |
|
Net premiums earned |
|
$ 6,836 |
|
$ — |
|
$ 6,836 |
|
Fee revenue |
|
— |
|
1,621 |
|
1,621 |
|
Net loss and LAE |
|
(10,406) |
|
— |
|
(10,406) |
|
Commission and other acquisition expenses |
|
(1,718) |
|
— |
|
(1,718) |
|
Segment G&A expenses(3) |
|
(3,689) |
|
(664) |
|
(4,353) |
|
Underwriting loss and fee income(4) |
|
$ (8,977) |
|
$ 957 |
|
(8,020) |
|
Reconciliation to net loss |
|
|
|
|
|
|
|
Net investment income and net realized and unrealized investment gains |
|
|
|
|
|
9,081 |
|
Interest and amortization expenses |
|
|
|
|
|
(4,128) |
|
Change in fair value of earn out liability |
|
|
|
|
|
2,679 |
|
Foreign exchange and other gains, net |
|
|
|
|
|
2,802 |
|
Corporate G&A expenses(3) |
|
|
|
|
|
(7,436) |
|
Income tax expense |
|
|
|
|
|
(7) |
|
Interest in loss of equity method investments |
|
|
|
|
|
(24) |
|
Net loss |
|
|
|
|
|
$ (5,053) |
|
KESTREL GROUP LTD SUPPLEMENTAL FINANCIAL DATA - SEGMENT INFORMATION (Unaudited) (in thousands of
|
||||||
|
For the Nine Months Ended September 30, 2026 |
|
Legacy |
|
Program |
|
Total |
|
Gross premiums written |
|
$ 2,919 |
|
$ — |
|
$ 2,919 |
|
Net premiums written |
|
$ 2,944 |
|
$ — |
|
$ 2,944 |
|
Net premiums earned |
|
$ 8,578 |
|
$ — |
|
$ 8,578 |
|
Fee revenue |
|
— |
|
10,930 |
|
10,930 |
|
Net loss and LAE |
|
(9,718) |
|
— |
|
(9,718) |
|
Commission and other acquisition expenses |
|
(2,584) |
|
— |
|
(2,584) |
|
Segment G&A expenses(3) |
|
(7,819) |
|
(4,026) |
|
(11,845) |
|
Underwriting loss and fee income(4) |
|
$ (11,543) |
|
$ 6,904 |
|
(4,639) |
|
Reconciliation to net loss |
|
|
|
|
|
|
|
Net investment income and net realized and unrealized investment losses |
|
|
|
|
|
2,165 |
|
Interest and amortization expenses |
|
|
|
|
|
(12,330) |
|
Foreign exchange and other gains, net |
|
|
|
|
|
5,173 |
|
Corporate G&A expenses(3) |
|
|
|
|
|
(22,337) |
|
Income tax benefit |
|
|
|
|
|
95 |
|
Interest in income from equity method investments |
|
|
|
|
|
5 |
|
Net loss |
|
|
|
|
|
$ (31,868) |
|
|
||||||
|
For the Nine Months Ended September 30, 2025 |
|
Legacy |
|
Program |
|
Total |
|
Gross premiums written |
|
$ 4,856 |
|
$ — |
|
$ 4,856 |
|
Net premiums written |
|
$ 4,990 |
|
$ — |
|
$ 4,990 |
|
Net premiums earned |
|
$ 9,258 |
|
$ — |
|
$ 9,258 |
|
Fee revenue |
|
— |
|
2,972 |
|
2,972 |
|
Net loss and LAE |
|
(4,445) |
|
— |
|
(4,445) |
|
Commission and other acquisition expenses |
|
(2,112) |
|
— |
|
(2,112) |
|
Segment G&A expenses(3) |
|
(5,432) |
|
(2,003) |
|
(7,435) |
|
Underwriting loss and fee income(4) |
|
$ (2,731) |
|
$ 969 |
|
(1,762) |
|
Reconciliation to net income |
|
|
|
|
|
|
|
Net investment income and net realized and unrealized investment gains |
|
|
|
|
|
11,715 |
|
Interest and amortization expenses |
|
|
|
|
|
(5,647) |
|
Gain on bargain purchase |
|
|
|
|
|
73,590 |
|
Foreign exchange and other losses, net |
|
|
|
|
|
(2,300) |
|
Corporate G&A expenses(3) |
|
|
|
|
|
(10,990) |
|
Income tax expense |
|
|
|
|
|
(102) |
|
Interest in loss from equity method investments |
|
|
|
|
|
(24) |
|
Net income |
|
|
|
|
|
$ 64,480 |
|
|
|
* Legacy Reinsurance underwriting results only include the post-combination period from May 27, 2025 to September 30, 2025. |
|
KESTREL GROUP LTD NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands of
|
||||||||
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
||||
|
|
|
2026 |
|
2025 |
|
2026 |
|
2025 |
|
Non-GAAP operating loss(5) |
|
$ (12,161) |
|
$ (12,023) |
|
$ (29,914) |
|
$ (7,189) |
|
Non-GAAP basic and diluted operating loss per common share attributable to Kestrel common shareholders(5) |
|
$ (1.55) |
|
$ (1.56) |
|
$ (3.83) |
|
$ (1.48) |
|
Annualized non-GAAP operating return on average shareholders' equity(6) |
|
(45.6) % |
|
(32.5) % |
|
(35.4) % |
|
(13.0) % |
|
Reconciliation of net (loss) income to non-GAAP operating loss: |
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ (16,355) |
|
$ (5,053) |
|
$ (31,868) |
|
$ 64,480 |
|
Add (subtract): |
|
|
|
|
|
|
|
|
|
Net realized and unrealized investment losses (gains) |
|
3,596 |
|
(5,494) |
|
5,241 |
|
(6,552) |
|
Amortization of intangible assets |
|
668 |
|
1,068 |
|
2,339 |
|
1,494 |
|
Foreign exchange and other (gains) losses |
|
(675) |
|
(2,802) |
|
(5,173) |
|
2,300 |
|
Interest in loss of equity method investments |
|
4 |
|
24 |
|
(5) |
|
24 |
|
Litigation costs from GLS related arbitration |
|
109 |
|
564 |
|
(775) |
|
569 |
|
Change in bargain purchase gain |
|
— |
|
— |
|
— |
|
(73,590) |
|
Restructuring and severance costs |
|
492 |
|
33 |
|
1,098 |
|
1,646 |
|
Costs incurred due to the Combination |
|
— |
|
2,316 |
|
(771) |
|
2,440 |
|
Change in fair value of earn out consideration |
|
— |
|
(2,679) |
|
— |
|
— |
|
Non-GAAP operating loss(5) |
|
$ (12,161) |
|
$ (12,023) |
|
$ (29,914) |
|
$ (7,189) |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares - basic and diluted |
|
7,834,025 |
|
7,741,943 |
|
7,803,789 |
|
5,053,828 |
|
Reconciliation of diluted (loss) earnings per share attributable to Kestrel common shareholders to non-GAAP diluted operating loss per share attributable to Kestrel common shareholders: |
|
|
|
|
||||
|
Diluted (loss) earnings per share attributable to common shareholders |
|
$ (2.09) |
|
$ (0.65) |
|
$ (4.08) |
|
$ 12.70 |
|
Add (subtract): |
|
|
|
|
|
|
|
|
|
Net realized and unrealized investment losses (gains) |
|
0.46 |
|
(0.71) |
|
0.67 |
|
(1.30) |
|
Amortization of intangible assets |
|
0.09 |
|
0.14 |
|
0.30 |
|
0.30 |
|
Foreign exchange and other (gains) losses |
|
(0.08) |
|
(0.36) |
|
(0.66) |
|
0.46 |
|
Interest in loss of equity method investments |
|
— |
|
— |
|
— |
|
— |
|
Litigation costs from GLS related arbitration |
|
0.01 |
|
0.07 |
|
(0.10) |
|
0.11 |
|
Change in bargain purchase gain |
|
— |
|
— |
|
— |
|
(14.56) |
|
Restructuring and severance costs |
|
0.06 |
|
— |
|
0.14 |
|
0.33 |
|
Costs incurred due to the Combination |
|
— |
|
0.30 |
|
(0.10) |
|
0.48 |
|
Change in fair value of earn out consideration |
|
— |
|
(0.35) |
|
— |
|
— |
|
Non-GAAP diluted operating loss per share attributable to common shareholders(5) |
|
$ (1.55) |
|
$ (1.56) |
|
$ (3.83) |
|
$ (1.48) |
|
KESTREL GROUP LTD NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands of
|
|||
|
|
September 30, |
|
December 31, |
|
Investable assets: |
|
|
|
|
Total investments |
$ 356,557 |
|
$ 388,303 |
|
Cash and cash equivalents |
26,934 |
|
20,044 |
|
Restricted cash and cash equivalents |
9,113 |
|
9,146 |
|
Net loan receivable from related party |
64,054 |
|
86,883 |
|
Funds withheld receivable |
4,542 |
|
10,956 |
|
Total investable assets(7) |
$ 461,200 |
|
$ 515,332 |
|
|
|
|
|
|
Capital: |
|
|
|
|
Total shareholders' equity |
$ 97,814 |
|
$ 128,284 |
|
2016 Senior Notes |
110,000 |
|
110,000 |
|
2013 Senior Notes |
152,361 |
|
152,361 |
|
Total capital resources(8) |
$ 360,175 |
|
$ 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 excluding unvested restricted and performance shares. 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) |
Segment G&A expenses and Corporate G&A expenses are non-GAAP measures based on specific allocations of total general and administrative expenses as presented in our unaudited Condensed Consolidated Statements of Operations. |
|
|
|
|
(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 measures 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) litigation costs related to the GLS Arbitration; (2) restructuring and severance costs; and (3) costs incurred due to the Combination; (4) Change in fair value of earn out consideration; and (5) Change in bargain purchase gain. 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 |
|
|
|
|
(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 (including restricted), 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. |
|
|
|
View original content:https://www.prnewswire.com/news-releases/kestrel-group-reports-third-quarter-2026-financial-results-302932395.html
SOURCE Kestrel Group Ltd
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were Kestrel Group's third-quarter 2026 earnings?
Kestrel reported a $16.355 million net loss, or $2.09 per share, compared with a $5.053 million loss, or $0.65 per share, a year earlier. Quarterly revenue was $4.763 million, down from $17.538 million.
How much expense savings does Kestrel Group expect?
Kestrel expects approximately $5 million in annualized run-rate savings, with the full run-rate expected within the next twelve months. Its initiatives include lower professional and advisory spending, information technology outsourcing and streamlined internal functions.
When do Kestrel Group's tax loss carryforwards expire?
Approximately $390.2 million of Kestrel's net operating loss carryforwards expire in various years beginning in 2029. At September 30, 2026, total carryforwards were $477.8 million; approximately $87.6 million, or 18.3%, had no expiry date under the relevant U.S. tax law.