Fundamental Global Inc

FG FINANCIAL GROUP, INC.

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

Fundamental Global Inc.

Mooresville, North Carolina

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Fundamental Global Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years then ended**,** in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Loss and Loss Adjustment Expense Reserves (Loss Reserves)

As described in Note 2 and Note 5 to the Company’s consolidated financial statements, loss and loss adjustment reserve estimates are based primarily on estimates derived from reports the Company has received from the Company’s cedants and their actuarial teams. As of December 31, 2023, the Company’s loss and loss adjustment expense reserve was $9.0 million. The Company also engages an independent actuarial specialist in order to assist management in establishing reasonable reserves. The estimate of loss reserves relies on significant key inputs, assumptions, and methodologies, including (1) the types of exposures and projected ultimate premium to be written by cedents; (2) expected loss ratios by type of business; (3) actuarial methodologies which leverage loss reporting and payment experience, reports from ceding companies and historical trends; and (4) general economic conditions.

We identified the actuarial methodologies and significant assumptions used in the estimation of the Company’s loss and loss adjustment expense reserves as a critical audit matter. The principal considerations for this determination were (i) the significant assumptions and inputs used by management when developing their estimate, (ii) the significant auditor subjectivity and judgment involved in evaluating the audit evidence related to the actuarial methodologies used, and (iii) the extent of specialized skills and knowledge needed from our actuarial specialist.

The primary procedures we performed to address this critical audit matter included:

Valuation of Equity Method Investments

As described in Note 2 and Note 4 to the consolidated financial statements, the Company has certain equity method investments that hold underlying investments in private placement investments held in sponsor shares and warrants for special purpose acquisition companies. The Company recognizes the income or loss from these equity method investments based on its percentage ownership of the investment, so changes in fair value of the investments that underly these equity method investments flow through to the Company. The fair value of these private placement investments are estimated using complex valuation methods (e.g., Monte-Carlo simulation and option pricing models) and involves significant assumptions.

We identified the valuation methodologies and significant assumptions utilized in the estimation of the fair value of these private placement investments as a critical audit matter. The principal considerations for this determination were the subjective and complex auditor judgment, including the involvement of our valuation specialist in evaluating the (i) relevant valuation methodologies and (ii) significant assumptions used in determining the fair value of these investments.

The primary procedures we performed to address this critical audit matter included:

/s/BDO USA, P.C.

We have served as the Company’s auditor since 2012.

Grand Rapids, Michigan

March 14, 2024