Mount Logan Capital Inc. ($MLCI)

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Mount Logan Capital's Fourth Quarter and Full Year 2025 Results Conference Call. Before we begin, I would like to remind listeners that today's discussion will include forward-looking statements. These statements discuss our current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance and business. These statements and other comments are not guarantees of future performance, but rather are subject to risk and uncertainty, some of which are beyond our control. These forward-looking statements apply as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. For a description of the risks associated with Mount Logan Capital's business, please see our most recent filings with the SEC. In addition, we will be referring to certain non-GAAP financial measures during this call. Additional details and reconciliations of GAAP to non-GAAP financial measures are in today's earnings release. This afternoon's conference call is hosted by Mount Logan's Chairman and Chief Executive Officer; Ted Goldthorpe, President, Henry Wang, Chief Financial Officer; Nikita Klassen and Head of Investor Relations, Scott Chan. As a reminder, all references to dollar amounts on this call are in U.S. dollars, unless otherwise stated. I will now turn the call over to Mr. Goldthorpe. You may begin.

Thank you. Good afternoon, everyone. Thank you for joining us today. 2025 was an active year across Mount Logan's platform, so I wanted to start by stepping back and telling you what this past year has represented because the significant actions we took over the last year can get lost in a single quarter's results. A year ago, Mount Logan Capital was a Canadian domiciled, IFRS reporting company traded on the Cboe in Canada. Today, we are a U.S. domiciled, NASDAQ-listed, GAAP reporting and investment-grade alternative asset management and insurance solutions platform with $2.1 billion in assets under management. We are one of the very small number of public companies to combine asset management and insurance solutions businesses into a complementary platform at scale with a focus on credit investing. This foundational structure of our business did not happen by accident. It was a product of an extraordinary team effort across every function of our organization during 2025 as well as the many years leading up to it. While there's volatility in the financial results during 2025, including onetime costs to complete our business combination with 180 Degree Capital, we believe the successful execution of our strategic priorities in 2025 sets the foundation for what we expect to be a much cleaner compounding earnings profile going forward. With the combination of 180 Degree Capital behind us, our team immediately got to work on focusing on the next phase of our growth journey. This morning's announcement of the Yieldstreet transaction that, once closed, is expected to drive material AUM growth in one of our managed funds and thus increase FRE for Mount Logan. This is the first proof point of what our platform can produce. Concurrent with release of our earnings, we announced that one of our core asset management vehicles, the Opportunistic Credit Interval Fund, or SOFIX, has entered into a definitive agreement to acquire the assets of the Yieldstreet Alternative Income Fund managed by Willow Wealth. This is Mount Logan's first strategic AUM acquisition since the closing of 180 Degree Capital as a direct expression of the growth strategy we've outlined at the time of that transaction. The deal will nearly double SOFIX net assets, adding over $100 million to the fund. Scale in permanent and semipermanent capital vehicles is an important competitive advantage in the retail marketplace. Low expense ratios, increased portfolio diversity with limited overlap in investments and a larger fund size to support distributions, this transaction delivers all 3. The acquired portfolio is also an excellent fit within our broader credit investing framework. The assets are heavily weighted towards specialty finance and asset-based credit, cash aligned, diversified and complementary to SOFIX existing holdings. This is exactly the credit exposure we want to grow within SOFIX to continue to grow the fund. We estimate the transaction will increase Mount Logan's FRE by at least $2.8 million annually, more than 30% growth for our 2025 FRE. The transaction is expected to be immediately accretive to our earnings per share once closed. I also want to note how we structured the consideration. A portion of the acquisition value will be a newly issued MLCI common stock that was subject to lockup for 2 years from closing of the transaction. This reflects something we think is important for our company -- important asset for our company, our NASDAQ listing and our equity currency. The ability to use our stock in a disciplined manner as consideration in accretive and strategic transactions is a component for how we intend to grow efficiently going forward, and this transaction is the first example of that action. We expect the transaction to close in late Q2 or Q3 2026, subject to regulatory and Yieldstreet AAF shareholder approvals. As we look at future M&A opportunities, we expect the recent headlines around private credit will provide disciplined, well-capitalized companies like Mount Logan with the potential to add highly strategic assets at attractive valuations. We believe volatility and uncertainty create additional opportunities for our platform. These trends are supported by our experienced management team, the strong backing and alignment of BC Partners and a proven ability to pursue and close highly accretive, permanent and semipermanent capital acquisitions to scale our AUM book base while unlocking fund level synergies. We've been leaders in executing these type of opportunities since Mount Logan's founding in 2018, and we believe we are viewed as an ideal partner in the private credit consolidation marketplace. Returning to our 2025 business achievements, I want to walk through the key milestones to provide a clear picture on what our platform looks like as we exited the year. In addition, there have been several subsequent items after the fourth quarter, which further demonstrate the unique nature and embedded value within our platform and the positive tailwinds we are experiencing. First, during 2025, we completed the transformational combination with 180 Degree Capital. This transaction took approximately 9 months from signing to closing. It included a conversion to U.S. GAAP from IFRS, proxy processes in the U.S. and Canada, redomiciliation to the U.S. and a transition of our listing to the NASDAQ under the ticker MLCI. Following the closing of the combination, Mount Logan entered into a new staffing agreement with BC Partners, created a true asset-light entity that is fully aligned with BC Partners, a $40 billion global alternative asset manager. Secondly, we focused on scaling our BDC ecosystem. This included the January 2025 closing of a minority investment in Runway Growth Capital LLC, giving us exposure to a $1 billion-plus permanent capital vehicle focused on venture lending, an area where we previously held limited expertise. In October, it was announced that Runway would be merging with SWK Holdings, significantly increasing the AUM and FRE of Runway while providing further diversification into health care and life sciences lending. During July 2025, Portman Ridge and Logan Ridge, the 2 other BDCs within our ecosystem, merged to create BCP Investment Corporation, or BCIC. Today, BCIC is a larger, more efficient vehicle with Sierra Crest Investment Management now advising a significantly scaled BDC. Mount Logan economics through a minority stake and profit-sharing interest in Sierra Crest are expected to accrete to the benefit of our FRE base in 2026. These examples demonstrate our focus on consolidation across our funds to benefit shareholders of Mount Logan and the managed vehicles themselves. And finally, we made significant investments into our organic growth engine, Ability Insurance Company. We invested a meaningful portion of the proceeds received from the turnover in the legacy 180 Degree Capital portfolio to enhance Ability's capital base in support of our efforts to expand our suite of insurance capabilities during 2026. This investment was both strategic and financial, positions Ability to take on additional volume and underpins our longer-term ambition to move Ability towards direct insurance writing not just reinsurance. We believe this strategy will be more capital efficient and accretive to margin over time. It will benefit investors via improved spread earnings and drive AUM growth that we control. During 2025, we also continued to add new reinsurance business by new treaty relationship and are constantly evaluating additional reinsurance partners and product diversification opportunities to benefit policyholders. The long-term care block remained stable, although we wrote down a meaningful portion of this legacy part of the business at year-end as the value of our insurance business is now oriented around our growing retirement solutions business. 2026 has seen a continuation of the momentum from 2025. We took advantage of the variable market conditions and executed a $40 million bond offering, helping extend our maturity profile at an attractive rate of 8%, reducing our secured indebtedness and lowering our cash interest expense, while providing financial flexibility as we accessed a new source of capital. We believe diverse sources of capital are integral to fueling growth, and as such, we are incredibly pleased with the market's reception to our inaugural U.S. listed notes offering, and view our access to the capital markets as another differentiating factor for our business. Additionally, and in line with our stated capital allocation framework, we closed a $15 million tender offer at a meaningful premium to where market prices were. And our Board has subsequently authorized a new $10 million share repurchase program through December 2027. This authorization provides us with ongoing flexibility to opportunistically repurchase shares, which accretes to the benefit of all of our shareholders. With respect to our dividend, we are excited to announce that our Board has approved a dividend of $0.03 per share for the quarter. Our dividend policy is built on the belief that our investors should receive the benefit of our stable fee-paying earnings model, and we hope today's declaration and our historic track record -- historical track record demonstrates our focus on returning capital to shareholders. Lastly, we finalized an agreement to add approximately $125 million of assets under management to our platform. This agreement became effective in March 2026. We expect these additional managed assets will contribute approximately $500,000 of incremental FRE in 2026, with the potential to eclipse $1 million of incremental FRE for the full year 2027. This is further proof of our investors' trust in the Mount Logan platform and offers another example of the organic growth momentum we are seeing. These events taken together, organic and inorganic, in 2025 and thus far in 2026, reflect compounding output of the platform we've built. I'm proud of the team for executing on each of these strategic initiatives. These accomplishments demonstrate the efficiency of our platform with the benefit of BC Partners' resources and support. The organization we are operating today is leaner, more focused and better aligned than at any point in my experience. I will now turn the call over to Nikita to walk through our financial results for the fourth quarter and full year 2025.

Thanks, Ted. Good afternoon, everyone. As Ted mentioned, 2025 was a transformational year for Mount Logan, following the completion of our business combination and renewed focus on building a durable core earnings base across both asset management and insurance. It also has been a year in which we deliberately front-loaded investments in capital, in infrastructure and in strategic transactions, with a clear expectation that the recurring earnings benefit would materialize from 2026 onwards. The financial results we are reporting today reflect this sequencing. We want to be transparent about what is structural versus intentional and transitory. While our GAAP results reflect several onetime items, the underlying business made important progress, particularly in establishing a foundation for recurring fee earnings and improving the long-term earnings power of the insurance platform. I'll focus my remarks today on 3 areas: consolidated performance, segment results and our core earnings metrics. For the full year 2025, total revenue was $53.6 million, up approximately 8% year-over-year. We reported a post-tax net loss of $60.8 million for the period. These results were primarily driven by nonrecurring and mostly noncash items, including transaction and integration costs related to the business combination, impairment of legacy intangible assets within the Asset Management segment, goodwill impairment within insurance and certain legal expenses. Excluding these items, the underlying performance of the business was significantly more stable. Moving on to segment results. In our Asset Management segment, fourth quarter 2025 revenue, including investment income, was $2.6 million, compared to $3.8 million in the prior year. The decline is largely due to declines in management and incentive fees in noncore vehicles and some accounting noise created by the merger of Logan Ridge and Portman Ridge, which occurred in the third quarter of 2025. Mount Logan now receives distributions from BCIC through its minority stake in Sierra Crest and the profit-sharing interest. However, the distributions do not directly flow through the income statement, which accounts for a large component of the decline in revenues. Overall, we anticipate this merger will result in greater fees and distributable earnings going forward as synergies are realized in the combined vehicle. In our Asset Management segment, full year revenues, including investment income, was $21.5 million, up 44% year-over-year. This top line increase was mainly driven by 2 onetime items: a $4.5 million gain on acquisition of 180 Degree Capital and the $1.4 million unrealized gain on our minority stake in Runway. Turning to our management fees. Management fees were down 14% year-over-year, primarily related to noncore fee vehicles, specifically, the AIF fund and CLOs have continued to wind down. Similarly, incentive fees were down 50%, which relates to the AIF funds continued wind down and management's decision to voluntarily waive fees at SOFIX as we continue to invest in the growth of the fund. Overall, our performance reflects the continued wind down of legacy strategies and transition to a more scalable and recurring revenue base. Importantly, we are beginning to replace those fees with new fee streams, including the aforementioned profit sharing arrangement with the parent entity of Sierra Crest and transaction and advisory fees, which contributed approximately $800,000 in 2025. Turning to Insurance Solutions. Net investment income was $14.8 million in the fourth quarter of 2025, down 21% from the fourth quarter of 2024. When we exclude funds withheld, net investment income was $13.4 million for the same period. The investment portfolio generated a 6.3% yield for this period or 7.3% excluding funds withheld, and our asset management or insurance AUM increased to approximately $1.1 billion. These yields are compared to yields of 8.6% and 8.7%, respectively, in 2024. Full year net investment income was $79 million, down 15% year-over-year. Excluding funds withheld, net investment income was $55 million, down 5% year-over-year. The decrease was driven by a declining interest rate environment, which has reduced yields on our investment portfolio, increased interest expense driven by the interest rate swap, which we started paying on in 2025, and higher investment expenses and certain credit-related impacts within the portfolio. For the full year, the investment portfolio generated a 6.9% yield or 7.7% excluding funds withheld. These yields are compared to yields of 8.5% and 8.8%, respectively, in 2024. During the fourth quarter, we also recognized a $25 million goodwill impairment related to the legacy long-term care block. Importantly, we do not view this impairment as indicative of the underlying performance or long-term value of the broader insurance platform. Rather, it reflects updated assumptions specific to that legacy business, which is not central to our growth strategy. From a strategic standpoint, 2025 was focused on repositioning the insurance platform, including rotating out of underperforming assets and contributing capital to support future growth. Additionally, the significant equity contributions into Ability in 2025 was a key enabler and expanded Ability's capital base supporting our reinsurance growth and positions us for the longer-term direct rating goals Ted described. Looking at core earnings, fee-related earnings, or FRE, were $8.5 million for the full year, down modestly year-over-year as the decline reflects the fee waivers at SOFIX and changes in our overall revenue mix as we focus the core earnings power of the Asset Management segment. Spread related earnings, or SRE, were approximately breakeven compared to 13.7% in 2024. The decline was driven by lower investment income and higher cost of funds, particularly within the long-term care, or LTC block as assumption updates unfavorably impacted the cost of funds. The breakeven SRE-led segment income to be $8.5 million, down from $22.8 million in the prior year. Importantly, both FRE and SRE reflects businesses that are being actively repositioned rather than steady state earnings power. We ended the year with a solid capital position, reporting total capital of approximately $185 million, a decrease of $11.9 million compared to fiscal 2024. Our balance sheet is well positioned entering 2026. As Ted noted, the investment-grade rating and $40 million bond issuance completed subsequent to year-end, provide meaningful incremental financial flexibility and reflects the quality of our platform. We ended the year with $15 million in cash and cash equivalents within our Asset Management and Corporate segments and total debt across the company stood at $93.5 million, consistent with our internal targets. The $15 million tender and the $10 million share repurchase authorization are both part of the coherent capital allocation framework, return capital when it creates value for investors, invest when the economics of growth are compelling and maintain the balance sheet flexibility to do both. We believe we have the right balance today, and the post quarter milestones Ted has outlined reinforce that. The Board has also approved a dividend of $0.03 per share for the quarter, continuing our 26th consecutive quarter dividend track record spanning both our Canadian and U.S. listing history. Overall, we view this as a floor that grows as our FRE and SRE scale. Looking forward to 2026, expense discipline and operational efficiency are priority. Recurring revenues are building, onetime headwinds are behind us and the pipeline of upgrowth initiative is incredibly strong. The directional picture for FRE and SRE is clearly improved versus where we exited 2025. Now before I hand the call back to Ted, I did want to take a brief personal moment. As many of you are aware, this will be my last earnings call as Chief Financial Officer of Mount Logan Capital. It has genuinely been a privilege to be part of this team through what has been the most consequential period in the company's history, the domiciling, relisting, transitioning to U.S. GAAP and completing the 180 Degree Capital foundation, laying the foundation for what I believe to be a very exciting next chapter. I leave feeling proud of what we have accomplished together. I wish Ted, Henry and the entire team every success. It has been an honor.

Thank you, Nikita, and thank you again for your contributions to the company, and we wish you all the best. Before we open for questions, I want to leave you with a clear picture of how we think about the opportunity in front of us. Mount Logan today has 3 engines powering the flywheel of our business. The first is our private credit asset management business, scalable, fee generating, anchored in permanent and semipermanent capital with a robust pipeline of organic and inorganic growth opportunities. The Yieldstreet transaction is the first inorganic step and will not be the last. The second is our insurance platform. Ability is well capitalized and positioned for meaningful expansion, which we envision will include a transition away from reinsurance and into direct writing in the near term. As we make investments in Ability, Mount Logan benefits from the corresponding increase in AUM, FRE and SRE. Third is our approach to private credit, origination and investing. We employ a rigorous and disciplined process around the underwriting of investments we manage on behalf of our investors and policyholders. We maintain expansive credit and product capabilities that support our differentiated origination funnel, ensuring Mount Logan is not overly reliant or correlated to any single product or market. Today, we have a diverse expertise that spans the credit spectrum, enabling us to be opportunistic as we seek attractive risk-adjusted returns across market environments. We've built a scaled public alternative asset manager with insurance and in compounding fee earnings and owned liability origination, this model that we believe will trade at a meaningful premium to where Mount Logan is valued today. To close that valuation gap requires strong execution, which we expect to demonstrate in 2026 and beyond. This concludes our prepared remarks. We'll now transition the call to a Q&A session if the operator please coordinate.

[Operator Instructions] And our first question comes from Matthew Lee with Canaccord Genuity.

FRE numbers have been running a bit lower than prior year levels. When do we get back to kind of growth on that front on the FRE side as well as the AUM side?

Yes. No, I appreciate your question. I mean I think last year, it was really a year of transition. So we were in the process of obviously doing a Portman and Logan management contract conversion. We had the Ovation wind down. We had certain fee waivers within SOFIX, which got us to growing again. And -- but -- and then we've entered into a bunch of new things that will grow earnings. So obviously, we expect Ability to kind of reignite growth this year. We entered into a Vista Life mandate that will give us another $125 million of assets. And obviously, the deal we announced this morning, we should close probably in the third quarter, should lead to additional FRE growth as well. So I think between everything we're doing between our BDCs and our -- kind of our core businesses, it should set us up for growth this year.

Okay. Great. And then maybe one on the deal. If we can dive into it a bit. It's definitely a bit complex. You kind of mentioned permanent capital here, but are there any things in the structure that allow the new assets to prevent distributions or redemptions rather? And is that similar or dissimilar to how SOFIX operates currently?

Yes. I mean it's a pretty synergistic acquisition for us. A huge part of our -- a huge part of the headlines right now are focused on big cap sponsor credit, which we don't really do. And the big growth area for us is really an asset-based finance, which is kind of what Yieldstreet does. So the asset fits us really well, we have expertise in it and it's really an asset purchase. To your point, that fund has the ability to redeem up to 5%. We have to honor 5% of redemptions every quarter. So it's not -- it's what I'd call like quasi permanent capital. So historically, it's rare that people over-redeem for what the 5% is. Obviously, the retail channel is challenged right now just given some of the headlines. So it gives us a growth in that vehicle, whereby we think we can kind of get it on to some of the wirehouses do some other things with it. But again, people do have the ability to get some liquidity out of those assets.

Our next question comes from Francis Lau with Lucida Capital.

Ted, a broader question. How are you thinking about the macro and competitive environment for private credit insurance in '26? And like how are you guys positioning to either benefit or face headwinds from the current conditions?

Yes. It's a good question. I mean there's just a big disconnect between what you're reading in the press and what we're seeing. Like our portfolio is actually in really good shape. We've had -- we don't have elevated defaults. Our companies are still doing well. We don't really have a lot of new watch list assets. And a lot of the things that people are talking about in the press, we -- our business is mostly exposed to nonsponsor specialty finance and other areas that are probably less topical. Again, like if you look at risk premium in the credit markets, which obviously correlated to some of these default metrics, obviously, high yields near all-time tights, investment-grade still at all-time tights, so the liquid markets are telling you that they're not expecting a massive default cycle. And even if it does, on the ground, private lending is still incredibly competitive. So spreads are wider, but maybe by like 25 basis points. So again, the big topical question is always around software. We're very underweight in software vis-a-vis the overall market. And again, I think we think that a lot of our software businesses will actually benefit, not be hurt by AI, but it's -- right now, it's been treated like every single software company is going to be a loser. And I think there's going to be some winners and some losers.

Okay. And then maybe the second question is following up on Matt's question. You guys are continuing to consolidate opportunities in the pipeline like CIF, BCPO, other BCC consolidation. How active is the pipeline, like right now? Are you seeing a lot of -- or are you seeing any kind of valuation opportunities that you can pick off because of whatever reason the seller has? Like how are you looking at that side of things?

M&A pipeline tend to be cyclical and it's actually almost like countercyclical. So the more choppy the market is, the bigger our pipeline is. So we have a really big pipeline now of inorganic opportunities. It's something that we're thinking about. It gives us scale. We've done it very effectively. As you know, we've made many, many acquisitions. So I would expect us to be very, very active on the M&A front. And so we think we have really good inorganic opportunity -- we have good organic growth opportunities, particularly of our insurance business. But we also think there's going to be a big opportunity for inorganic growth. So like, for example, in the retail channel, which obviously is very challenged today, the top 10 interval funds manage around $90 billion and the next 100 manage $30 billion. So there's a whole bunch of kind of $100 million to $500 million funds that look and feel a lot like the Yieldstreet transaction. And I think we'll be pretty active in that area on a go-forward basis.

Our next question comes from Whit Huguley with River Oaks Capital.

Congrats on the great acquisition. And thank you, Nikita, for all you did for us shareholders. I was just kind of diving back into what you've already talked about. But how much of the Yieldstreet deal impact Mount Logan's FRE -- from an FRE perspective and by when? Because just from reading the press release and by my own calculations, it's almost an immediate 30% accretion to FRE on a pretty small investment.

Yes. I mean, you're not far off on your numbers. Again, it's very -- we're able to buy this at a very accretive multiple. As you guys have read, most of it is through cash. And the assets fit us strategically very, very well. So to your point, like it will lead to a nice bump in our FRE on a run rate basis, and obviously, it won't close for probably 3 to 4 months. But on a runway basis, we expect to see the impact and a pretty material impact of this acquisition in the second half of this year.

Okay. And this is kind of already addressed, but as far as inorganic growth goes, does this type of deal with Yieldstreet reflect the kind of deals that you want to do in the future? And how plentiful is that pipeline? Are there other similar deals out there?

Yes, yes. No, good question. What I would say is we are currently evaluating lots of things. I mean, again, we're going to stick to our core business, which is credit and so -- our credit-related assets. So we are -- again, there's just a number of things we're looking at now. These transactions are very hard to get done because it's not just about price, there's a big social component too as well. And again, Boards want to make sure that whoever the buyer is just going to be a good steward of capital. So we would expect to announce maybe 2 or 3 more of these between now and the end of the year. And again, that should be a good tailwind for us in the second half of this year around earnings.

[Operator Instructions] And our next question comes from [ Ben Rosoff ] with [ Broodstock Capital ].

I was wondering if you could talk a little bit more about the capital contributed to Ability, and whether you will need to contribute more going forward? If you could just talk a little bit about -- I think in the 10-K, you have $37.2 million towards Ability. I'm not sure if that is over the entire life of owning it or this year. So if you can just provide a little clarification there, that would be great.

Yes. I mean I think -- I mean the Ability business model has been largely reinsuring other people's assets. And I think it's very strategically important for us that we have the ability to write our own annuity policies. So we've injected a lot of capital from the -- largely from the 180 Degree deal into our insurance company. We're in the process of getting rated and then soon afterwards, we'll be able the direct write business. So that should drive our liability costs lower, and we're less reliant on third parties for reinsurance. And so you should see -- there's this weird lull period where you've got to put the capital in before you see the benefits into SRE, but we should see an SRE benefit in the second half of this year. So again, like that cash, we need to put it in there first before we can kind of use it to run annuity business, and so expect to see the benefits of that flow through kind of second, third and fourth quarter of this year.

And just adding on to that, the number you quoted, the $37 million, that's inclusive of the $19 million that was contributed this past year. And so you can see also just what the RBC of the company, or Ability's as well. So now it's well over [ 500 ], which really positions us well for the strategic initiatives Ted mentioned.

Our next question comes from [ Masa Song ] with TD Securities.

I just wanted to follow up on Francis' question earlier. I wanted to ask about the credit quality across SOFIX and then the broader managed portfolio? And you did mention the AI disruption risk in private credit. How should we think about the risk profile of what you manage? And how are you kind of seeing the current market dynamics play out in the field?

Yes. No, that's a good question. I mean I would say we run incredibly diversified portfolios. I would say we're very underweight software vis-a-vis others. And I would say, as of now, we really haven't seen weakness in our broader portfolio. So I'm pretty negative, generally speaking. But I would say, as of now, we just haven't seen it show up in our portfolios. So obviously, we're underwriting each of our assets with an eye towards AI. I would say that a lot of that stuff, we just don't have the answer to. But again, in debt world, we obviously attach at something like 30% to 35% loan to value. So even if there is destruction of value in software verticals, you need a pretty big destruction in value for us not to kind of get our money back. So -- and then we have hard maturities. We're not relying on selling businesses and everything else. So I actually think that the private credit industry is actually relatively well positioned despite all the headlines of negative press. And a lot of the things that people are pointing to as being indicative of weakness in private credit have largely been financial services businesses that impacted banks not private credit. So when people point to First Brands and Tricolor and some of these other big names that are -- have been very topical, most recently, MFS, by and large, product credit managers just haven't been that exposed to the situations.

That's helpful. And then maybe switching gears a bit. My first question is on the Ability and then the insurance platform. So you did mention that the intention to move toward more direct writing over time. Can you give us a sense of the time line and what that transition would look like? And then my second question -- sorry. Go ahead.

No, go ahead. Go ahead. I'm sorry.

My second question is just on the dividend. Can we -- how should we think about this $0.03 per quarter you announced? Would that be the right run rate going forward? Or can we expect growth as FRE scales from here?

Okay. So the second question, I would say, we want to have a dividend yield on our stock because I think it creates capital discipline. We have a lot of growth areas, and so we've had a lot of dialogue with our shareholders around dividend policy. And I think we feel pretty good about where our dividend is today. So we expect to see a pretty material FRE growth over the next 18 to 24 months, and then we can reassess where we are with our dividend. But we have a lot of very accretive uses of our cash right now, both on the insurance side and on the inorganic side, as we talked about earlier. So I think we're going to prioritize most likely growing FRE vis-a-vis returning capital to shareholders. Again, we've announced a buyback program. We obviously just did a $15 million tender and we pay a very competitive dividend yield. So I feel like we're striking a pretty good balance between trying to grow with returning capital to shareholders. On the insurance side, I mean, the timing is -- again, we're working through -- we had to recapitalized insurance company, which Nikita just walked you through some numbers. We're in the process of getting a rating, and we expect to get that over the next kind of like 4 to 6 weeks. And then from there, the plan would be to start direct writing in -- probably in the third quarter.

And I'm not showing any further questions. I would now like to turn the call back over to Ted Goldthorpe for any closing remarks.

Thank you. Thank you, everyone, for your time today, and I wanted to close the way we opened. We spent 2025 building and investing. The heavy lifting is done. And the week since December 31, we've already announced a transformative AUM acquisition, executed a $40 million bond issuance, completing a $15 million tender offer, authorized a $10 million share repurchase program and signed an expanded managed account. Despite the broader market volatility, Mount Logan is experiencing positive and strong momentum across our business. We look forward to continuing to execute for your benefit. And on behalf of the entire Mount Logan team, I want to say thank you to our shareholders for your continued support. We look forward to speaking with you when we report first quarter results in May. Have a good weekend, and thank you.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.