Mount Logan Capital to acquire Ability Insurance Company

Mount Logan Capital has entered into a non-binding agreement for the acquisition of 100 percent of the equity of Ability Insurance Company.

The purchase price of $20 million will be satisfied through the issuance of an unsecured promissory note in the amount of $15 million and $5 million of common shares of Mount Logan.

Mount Logan’s wholly-owned subsidiary, Mount Logan Management (ML Management) is proposed to manage a meaningful portion of Ability’s assets, significantly increasing ML Management’s assets under management.

Currently owned by Advantage Capital Holdings, Ability is a Nebraska domiciled insurer and reinsurer of long-term care policies with approximately $900 million of invested statutory assets as of December 31, 2020. Ability is unique in the insurance industry in that its long-term care portfolio’s morbidity risk has been largely re-insured to third parties, and Ability is no longer insuring or re-insuring new long-term care risk. The seller has also agreed to provide certain protections that increase the credit quality of Ability’s investment portfolio and limit risk associated with Ability’s long-term care liabilities. As part of the transaction, it is proposed that the purchase consideration will be retained by Ability on a contingent basis to support Ability’s investment portfolio. As part of the transaction, Mount Logan will further invest $10 million of capital into Ability to strengthen Ability’s balance sheet and launch a platform for the reinsurance of annuities, which is expected to reinsure $150 million of fixed annuities within six months following the completion of the transaction.

The acquisition of Ability by Mount Logan will combine two companies providing products and services that Mount Logan believes are, and will continue to be, in high demand – insurance solutions and asset management. It said the stronger capital base and alignment will allow Mount Logan to scale asset and liability origination for the benefit of Ability’s policy holders as well as Mount Logan and its shareholders.

Completion of the Transaction is subject to the final approval of definitive agreements by the parties, as well as a number of customary terms and conditions including final approval of the Nebraska Department of Insurance and approval of the Neo Exchange.

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