Company: KG
Filing Date: 2025-03-26
Form Type: 424B3
Source: 0001104659-25-028251
Chunk: 71

Company: Kestrel Group Ltd
Filing Date: 2025-03-26
Form: 424B3
Chunk 71
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 failure by them to properly handle these functions could result in liability to the AmTrust Insurance Companies, which may have an adverse impact on the financial condition of the combined company. Even though these capacity providers or general agents may be required to compensate the AmTrust Insurance Companies for any such liability, there are risks that any such failure could create regulatory or reputational issues for the AmTrust Insurance Companies, which could limit or restrict the combined company’s ability to continue to write business on behalf of its capacity providers. Any such limitations or restrictions could materially and adversely affect the business, financial condition, results of operations and prospects of the combined company.

The combined company may not be successful in building more direct relationships with general agents and capacity providers.

The combined company’s fronting capacity may be constrained by the size of its capital base, and it may rely on its relationship-driven channels to generate new fronting business. In addition, the combined company may rely on brokers to identify general agents in need of fronting. Although the combined company will build direct relationships with general agents and capacity providers and hire additional fully-dedicated sales staff, the combined company may not be successful in its efforts to expand its fronting business.

The combined company may face increased competition.

The combined company will compete primarily on the basis of price, customer service, geographic coverage, financial strength ratings, licenses, reputation, business model and experience. Its competitors will include State National, MS Transverse, Obsidian, Palomar and Trisura. Unlike the combined company, some of its competitors may offer policy administration or other services or be willing to take on significant underwriting risk. There is already active competition for business and any increase in competition could materially and adversely affect the business, financial condition, results of operations and prospects of the combined company.

Some of the combined company’s fronting arrangements may contain limits on the reinsurer’s obligations.

While the combined company will reinsure a substantial portion of the risks inherent in its fronting programs, the combined company will, in certain cases, enter into programs that contain limits on its reinsurers’ obligations, including exclusion of certain coverages, loss ratio caps, per occurrence or aggregate reinsurance limits or exclusion of the credit risk of general agents. To the extent losses under these programs exceed the prescribed limits, the combined company and/or the AmTrust Insurance Companies will be liable to pay the losses in excess of such limits, which could materially and adversely affect the business, financial condition, results of operations and prospects of the combined business.

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