Business Combination

9 Months Ended

Sep. 30, 2025

Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]

Business Combination

On May 27, 2025, Kestrel LLC completed the business combination with Maiden, pursuant to the terms of the Combination Agreement. The equityholders of Kestrel LLC at the closing date received an aggregate of $40.0 million in upfront cash and 2,749,996 common shares of the combined company. In addition, the former equityholders of Kestrel LLC remain entitled to receive contingent consideration up to the lesser of (x) $45.0 million payable in common shares of Kestrel Group upon the achievement of certain financial milestones, and (y) 2.75 million common shares of Kestrel Group. After the closing of the Combination Agreement, the group was rebranded as Kestrel Group and is the successor company to Maiden. The Company’s authorized share capital consists of 42,500,000 shares.

The Combination was accounted for as a business combination in accordance with ASC 805, which requires assets acquired and liabilities assumed to be measured at their acquisition date fair value. The Company also adopted ASU 2021-08, effective as of January 1, 2025, to record contract liabilities at their carrying value as of the acquisition date. Although Maiden was the legal acquirer, Kestrel LLC was determined to be the accounting acquirer and the legal acquiree. As a result, Kestrel LLC and its subsidiaries’ net assets were carried at historical value, acquired net assets of Maiden and its subsidiaries were measured at fair value except contract liabilities being recorded at carrying value at the acquisition date, and results of operations of Maiden and its subsidiaries were included in the Company’s Condensed Consolidated Financial Statements from May 27, 2025.

Purchase Price and Purchase Price Allocation

Management performed an estimation of fair values of Maiden and its subsidiaries' assets and liabilities as of May 27, 2025. The estimated fair values of the assets and liabilities are based on discussions with Maiden’s management, valuation studies, the transaction due diligence, and information presented in Maiden’s SEC filings. The final purchase price and estimated purchase price allocation herein may be different than the information previously filed with the SEC, and such differences could be material.

The Company is continuing its review of these matters during the measurement period, and if new information obtained about facts and circumstances that existed at the acquisition date identifies adjustments to the liabilities initially recognized, as well as any additional liabilities that existed at the acquisition date, the acquisition accounting will be revised to reflect the resulting adjustments to the provisional amounts initially recognized. The Company will finalize the purchase price allocation during the twelve-month period following the acquisition date.

Purchase Price

The final purchase price was based on the fair value of the issued and outstanding common shares at the closing of the Combination on May 27, 2025. The following table summarizes the final purchase price as of May 27, 2025:


Kestrel Group Ltd shares issued at Closing	7,221,621
Kestrel Group Ltd share price	$	23.00
Gross equity portion of consideration transferred at Closing	$	166,097

Kestrel Group Ltd shares retained as treasury shares by Maiden Reinsurance at Closing	(2,237,534)
Kestrel Group Ltd share price	$	23.00
Equity portion of consideration transferred to Maiden Reinsurance	$	(51,463)

Net equity portion of consideration transferred at Closing	$	114,634
Cash consideration paid to shareholders at Closing for fractional shares	1
Portion of the Maiden awards attributable to pre-combination service	514
Intercompany settlement	388
Total consideration effectively transferred	$	115,537

15. Business Combination (continued)

Estimated Purchase Price Allocation

The following table summarizes allocation of the estimate of the purchase price to the assets acquired and liabilities assumed as of May 27, 2025:


Fixed maturities, available-for-sale, at fair value	$	208,855
Equity securities, at fair value	11,144
Equity method investments	32,326
Other investments	160,439
Cash and cash equivalents	68,358
Restricted cash and cash equivalents	11,449
Accrued investment income	4,108
Reinsurance balances receivable, net	10,133
Reinsurance recoverable on unpaid losses	517,028
Net loan receivable from related party	107,110
Intangible assets	11,864
Funds withheld receivable	11,048
Other assets	19,876
Assets held for sale	20,698
Reserve for loss and loss adjustment expenses	(738,137)
Unearned premiums	(23,903)

Accrued expenses and other liabilities	(68,453)
Senior notes - at fair value	(173,669)
Liabilities held for sale	(1,147)
Net assets	189,127
Bargain purchase gain	(73,590)
Total consideration effectively transferred	$	115,537

At the closing date on May 27, 2025, the fair value of Maiden's net assets acquired were $189,127 which exceeded the consideration effectively transferred of $115,537, resulting in a bargain purchase gain of $73,590 as shown in the table above. This gain was recognized immediately in the condensed consolidated statement of income of Kestrel for the nine months ended September 30, 2025.

As discussed in Note 11. Commitments, Contingencies and Guarantees, Kestrel Equityholders are entitled to receive in contingent consideration up to the lesser of (x) an aggregate number of Kestrel Group Ltd common shares equal to $45.0 million divided by certain volume weighted average prices of such shares, subject to the achievement of certain EBITDA milestones by the businesses that Kestrel conducted immediately prior to closing and any extensions of such businesses or related or ancillary businesses existing thereafter, subject to other terms and conditions as set forth in the combination agreement and (y) 2.75 million common shares of Kestrel Group. On September 30, 2025, the fair value of this contingent consideration was reduced to $0 as the business subject to the earnout computatiom continues to be re-evaluated. The fair value of the earn out liability decreased by $2,679 and $0 for the three and nine months ended September 30, 2025, respectively, and recognized in the condensed consolidated statement of income on its own line item.

In connection with the Combination on May 27, 2025, the assets and liabilities of Maiden were recorded at fair value measured as of the acquisition date. Therefore, the net reserves for losses and LAE were remeasured at fair value, and based on discounted cash flow valuation techniques, a discount to net loss reserves was required which was recorded in intangible assets. At the closing date of May 27, 2025, the intangible assets acquired also consist of VOBA, as defined in Note 2. Significant Accounting Policies. The following table presents the components of intangible assets acquired at May 27, 2025 and September 30, 2025:


	May 27, 2025		September 30, 2025
Value of Business Acquired	$	2,207	$	1,832
Fair value discount on acquired net reserves for losses and LAE	9,657		8,538
Total Intangible Assets at acquisition	$	11,864	$	10,370

- Definition

The entire disclosure for business combination.

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+ Details

Kestrel Group Ltd 10-Q