Kestrel Group Ltd (NASDAQ: KG)

Kestrel Group Ltd is a specialty program group that provides fronting services and reinsurance capacity to insurance program managers managing general agencies reinsurers and brokers. The company operates through exclusive management contracts with four A rated insurance carriers to facilitate placement of property and casualty policies in the United States while earning fee income for access to those carriers. In addition Kestrel Group Ltd manages a run off legacy reinsurance portfolio that includes business formerly ceded by AmTrust and diversified reinsurance operations in Europe. The combination of these activities creates a fee based insurance platform that seeks to optimize shareholder returns through disciplined capital deployment.

The company generates revenue primarily through capacity distribution fees paid by program managers and MGAs for granting access to its insurance carrier network and for administrative support such as compliance reporting and claims administration. These fees are typically calculated as a percentage of gross written premium and are shared with the carrier partners. Kestrel Group Ltd also earns net premiums earned from its legacy reinsurance segment which consists of run off property and casualty treaties and income protection policies that are no longer underwritten on a prospective basis. Investment income from alternative investments and interest on cash balances contributes a smaller portion of total revenue. In 2025 the Program Services segment reported premium produced of 188 345 thousand dollars and fee revenue of 6 076 thousand dollars while the Legacy Reinsurance segment reported net premiums earned of 12 673 thousand dollars. The company’s strategic focus is to grow the fee income component of the Program Services segment to increase pre tax income while managing the run off of the legacy Maiden alternative asset and reinsurance portfolios. This approach is intended to enhance risk adjusted shareholder returns and to increase the likelihood of utilizing significant net operating loss carryforwards. The recognition of the deferred tax asset on the consolidated balance sheet remains a leading priority for the company to increase its GAAP book value. Kestrel Group Ltd may consider selectively deploying underwriting capacity to optimize shareholder returns in support of its business strategy. Such underwriting capacity would be used in conjunction with existing insurance carrier partners or via other reinsurance mechanisms that achieve the same objective.

The company operates through the following two reportable segments: Program Services and Legacy Reinsurance.

• Program Services – This segment provides fronting services that enable MGAs capacity providers and reinsurers to access the U. S. property and casualty market through Kestrel Group Ltd’s exclusive contracts with four A rated carriers. Revenue is derived from capacity distribution fees that are generally up to five percent of gross written premium and are shared with the carriers. The segment supports lines such as casualty workers compensation catastrophe exposed property and non catastrophe exposed property and does not assume significant underwriting risk. In 2025 the segment generated fee income of 2 830 thousand dollars after deducting general and administrative expenses. The company’s fee revenue is highly concentrated with two clients accounting for 72 point one percent and 21 point two percent of total fee revenue in 2025 respectively. Under the management contracts Kestrel Group Ltd shares the capacity distribution fees with AmTrust according to the agreed fee split. The segment also may charge minimum annual fees referred to as capacity fees for smaller programs or programs with uncertain premium volume. These arrangements are considered a single performance obligation and a single revenue stream for the company.

• Legacy Reinsurance – This segment consists of run off reinsurance business previously produced by Maiden comprising AmTrust Reinsurance Legacy Business and Diversified Reinsurance Legacy Business. The AmTrust portion includes quota share and European hospital liability treaties that are in run off while the Diversified portion comprises income protection policies written by Maiden Life Försäkrings AB and Maiden General Försäkrings AB as well as treaties from Maiden Reinsurance and Genesis Legacy Solutions. Revenue in this segment comes from net premiums earned on the existing treaties and from any commutations or settlements. In 2025 net premiums earned for the Diversified portion were 7 765 thousand dollars representing 61 point three percent of the segment total and for the AmTrust portion were 4 908 thousand dollars representing 38 point seven percent. The segment’s business is primarily focused on managing existing obligations rather than writing new risk. The Diversified Reinsurance Legacy Business includes short term income protection business written by Maiden Life Försäkrings AB and Maiden General Försäkrings AB in the Scandinavian and Northern European markets. Maiden Global Holdings Ltd a wholly owned subsidiary of Maiden Holdings operates as a licensed intermediary in the United Kingdom. On November 29 2024 Maiden entered into an agreement to sell Maiden Life Försäkrings AB and Maiden General Försäkrings AB to a group of international insurance and reinsurance companies headquartered in the United Kingdom. The Swedish Financial Supervisory Authority declined to approve the sale of Maiden General Försäkrings AB in June 2025 leading to an amended sale agreement for only Maiden General Försäkrings AB. The amendment remains subject to customary regulatory approvals which are pending.

Within the specialty program and fronting market Kestrel Group Ltd competes with firms such as State National Transverse Obsidian Palomar Trisura and Clear Blue Insurance Group. Its competitive advantages stem from the exclusive management contracts with A rated carriers the ability to offer admitted and surplus lines in all U. S. states and a fee based model that limits underwriting risk while leveraging the carrier’s capital and licenses. The company’s long standing relationships with MGAs and capacity providers further differentiate it from newer entrants. Kestrel Group Ltd also benefits from the capital light nature of its fee based business which allows it to scale premium volume with limited incremental expense. These factors help the company maintain a stable position in a competitive niche. The company’s management team has a long track record of success in the fronting market and maintains long standing relationships that are difficult for competitors to replicate. Adherence to underwriting standards that limit the amount of risk the A rated carriers are willing to take contributes to the longevity of the business model. Kestrel Group Ltd’s ability to offer both admitted and surplus lines in all U. S. states provides geographic coverage that rivals may lack. The firm’s focus on fee income rather than underwriting risk reduces earnings volatility compared to carriers that retain risk. These characteristics position Kestrel Group Ltd as a specialized niche player in the broader property and casualty insurance industry.

The company serves insurance program managers managing general agencies reinsurers and reinsurance brokers that seek fronting capacity and administrative support in the U. S. property and casualty market. In the legacy reinsurance segment the counterparties include European regional and specialty insurers income protection providers in Scandinavia and Northern Europe and counterparties to the AmTrust quota share and European hospital liability treaties. Specific customer names are not disclosed in the filing so the description reflects the types of clients served. The Program Services client base includes large diversified capacity providers as well as smaller MGAs that rely on Kestrel’s carrier network to place business. The legacy reinsurance counterparties consist of entities that have previously ceded risk to Maiden and are now in various stages of run off. This mix of clients provides the company with a diversified source of fee income and premium earnings. The Program Services segment works with capacity providers that either choose not to write certain business directly or lack the necessary licenses to do so independently. These capacity providers rely on Kestrel Group Ltd to provide access to the A rated carriers and to handle administrative functions such as premium collection and claims reporting. The MGAs that partner with the company are selected based on their experience capacity to provide necessary services reputation and financial stability. The company regularly monitors the performance of its MGAs to ensure there is no material deterioration in those factors over time. In the legacy reinsurance segment the run off portfolios include treaties that are in arbitration or subject to commutation agreements which affect the timing of cash flows. The company continues to pursue finality solutions to resolve outstanding reinsurance liabilities not covered by existing agreements.