American Integrity Insurance Group, Inc. (AII) Business

Item 1. Business

Who We Are

We are a profitable and growing insurance group headquartered in Tampa, Florida. Through our insurance carrier

subsidiary, American Integrity Insurance Company (“AIIC”), we provide personal residential property insurance for single-

family homeowners and condominium owners, as well as coverage for vacant dwellings and investment properties,

predominantly in Florida. Florida represented 93.7% of our policies in-force as of December 31, 2025 and 96.5% of our in-

force premium as of December 31, 2025. We were the sixth largest writer of residential property insurance in Florida based

on policies in-force (fifth excluding Citizens and national carriers) as of December 31, 2025 and wrote the seventh most

residential policies in Florida (third excluding Citizens and national carriers) during the year ended December 31, 2025

according to data compiled by the Florida Office of Insurance Regulation (“FLOIR”), making us a leading specialty

residential property insurer in the state.

We have been a stable, disciplined provider of residential insurance coverage in Florida for more than 20 years. Our

management team founded our company in 2006 to capitalize on dislocation in the Florida residential property insurance

market following the 2004 and 2005 hurricane seasons, in which a number of severe hurricanes resulted in record insured

property losses and caused a number of national insurance companies to retreat from writing residential property insurance

in the state. As of December 31, 2025, our policies in-force were 421,866, and for the year ended December 31, 2025, our

gross premiums written were $944.6 million.

PIF Count (000s)

GPW ($MM)

10.4 % CAGR

14.0 % CAGR

Florida has a large and growing population with a growing residential property insurance market. According to the U.S.

Census Bureau, Florida was the third most populous state in the United States, with 23.4 million residents as of July 1,

2025, and recorded the second fastest population growth rate of all states in the United States from 2024 to 2025.

Population growth supports growth in the property insurance market, which creates opportunity for insurance carriers with

specialized expertise to profitably underwrite property insurance in the Florida market. Florida is a complex property

insurance market with a distinct regulatory environment and risk profile due to its geographic location, population centers

concentrated along the coast, and elevated threat of property damage from catastrophic weather events including

hurricanes, requiring a tailored approach to providing insurance coverage. We believe that consistently delivering

underwriting profits in this market requires a high level of focus and specialization. This level of specialization requires

localized knowledge, market-specific expertise, granular and analytical underwriting and claims management, extensive

historical data, effective use of technology, and a deep understanding of Florida’s regulatory environment - all of which we

believe we have developed over our 20-year history writing residential property insurance in Florida. We believe this

expertise is transferable and repeatable in other Southeastern coastal states, including South Carolina, North Carolina and

2

Georgia. For example, in January 2026, we announced that we began offering our homeowners insurance product to North

Carolina residents, representing a strategic extension of our footprint beyond Florida, Georgia, and South Carolina.

Through active monitoring of local market conditions and prudent risk selection and capital allocation, we seek to be a

stable and reliable insurance market for our policyholders and distribution partners, and to consistently deliver best-in-class

profitability and value creation for our stockholders.

As of December 31, 2025, we had 421,866 policies in-force. For the year ended December 31, 2025 we produced gross

premiums written of $944.6 million, net premiums written of $270.9 million, net income of $99.6 million, and adjusted net

income of $105.2 million. At December 31, 2025, we had total shareholders’ equity of $337.0 million. For a reconciliation

of adjusted net income to the most directly comparable GAAP measure, see “Management’s Discussion and Analysis of

Financial Condition and Results of Operations - Non-GAAP Financial Measures.”

Our history of profitability and prudent exposure management is matched by our commitment to innovation. We have built

a technology-forward platform that we believe augments the expertise of our underwriting and claims teams, enhances our

access to risk and claims data, accelerates and improves our underwriting and claims decision making, and improves our

distribution partner and policyholder interface. Our use of advanced technology solutions covers the insurance process end-

to-end, from risk selection and underwriting to streamlined quoting, policy management and claims handling. Our

technology and data capture are critical to our ability to monitor our underwriting results at a granular level, timely modify

our underwriting criteria and pricing to respond to changing market conditions, and effectively navigate Florida’s

historically volatile property insurance market cycles.

We believe the current Florida residential property insurance market presents substantial attractive opportunities for

carriers with specialized underwriting and claims expertise, established distribution relationships, advanced technology,

and entrepreneurial leadership. Despite historical market-related disruptions and challenges caused by increasing hurricane

catastrophe activity and other severe weather events, a general tort environment related to property insurance that led to

increased litigation, and reduced insurance capacity as a result of multiple large national insurance carrier exits, we believe

the legislative reforms in Florida enacted in late 2022, in addition to Assignment of Benefit (“AOB”) reform, which began

in 2019, are proving effective at combating historically rampant property insurance legal system abuse and claims fraud,

paving the way for a more stable and resilient property insurance market and greater opportunities for us to profitably

underwrite residential property insurance in Florida.

Our Business

We seek to leverage our experience, proprietary technology, underwriting expertise and robust claims management

capabilities to provide a stable and reliable residential property insurance market for our distribution partners and

policyholders and offer competitive residential property insurance coverages that are appropriately priced for the risk we

are taking. All of our insurance policies are written on an admitted basis, meaning our rates and policy forms have been

approved by the insurance department of each state in which we sell our policies and our policies are backed by state

guaranty funds. Since our founding, we have sought to develop strong relationships with our regulators, which we believe

help us better navigate and adapt to changing market conditions and maintain our targeted profitability levels.

We employ a vertically integrated operating model whereby we control or manage substantially all aspects of insurance

underwriting, actuarial analysis, pricing, distribution, and claims processing and adjudication. While some Florida

residential property insurance companies have built their business in large part by assuming policies written by state-owned

insurers such as Citizens and rely on these assumptions to generate new business, we primarily distribute our products

through the “Voluntary Market,” meaning we directly underwrite and sell residential property insurance coverage to single

family homeowners and condominium owners. We offer our insurance coverages through multiple distribution channels in

the Voluntary Market, including independent insurance agents, new construction home builder agents, and national

insurance carriers that have restricted their writing of residential homeowners insurance policies in Florida and refer

business to us.

In addition to our Voluntary Market business, we also selectively and opportunistically assume policies from Citizens when

we believe there is an opportunity to assume policies that fit our underwriting and profitability criteria. From 2014 through

2023, we did not assume policies from Citizens. The Florida legislative reforms in 2022 removed one-way attorneys’ fees,

tightened bad faith standards and eliminated excessive AOB, which have led to a decrease in the frequency of non-

catastrophe claims in the state. As the legislative reforms impacting the Florida residential property insurance market have

taken hold and created what we believe to be a more favorable operating environment for insurance carriers writing in the

state, coupled with Citizens raising its rates to be more comparable to the Voluntary Market and our pricing requirements,

3

we have recently capitalized on opportunities to selectively assume policies from Citizens that we believe to be attractive.

While we will continue to primarily be a Voluntary Market underwriter and we believe other carriers may choose to re-

enter or expand their business in Florida in light of potential attractive take-out opportunities and generally improving

market conditions on the back of the legislative reforms in 2022, we believe selectively assuming policies from Citizens in

the current market environment can be an attractive opportunity to augment our growth and profitability. However, while

we expect there will be continued opportunities to assume policies from Citizens in the future, we expect that the number

of policies we assume will decrease in the future, as the number of policies available with Citizens that fit our profitability

criteria has decreased and continues to decrease. As of December 31, 2025, 77.5% of our in-force policies were from the

Voluntary Market and 22.5% were assumed from Citizens.

We utilize proprietary technology, our deep knowledge of the Florida residential property insurance market, our specialized

underwriting expertise and a sophisticated risk management strategy to differentiate ourselves in the market, profitably

underwrite attractive property insurance risks and prudently grow our business. We have thoughtfully constructed our

portfolio of insurance policies with (i) geographically diverse property exposures within Florida to manage our exposure to

catastrophic hurricane and severe weather events impacting particular locations and (ii) risks for which we believe the

pricing and terms adequately reflect the catastrophe and attritional non-catastrophe loss potential and present us with the

opportunity to earn an attractive underwriting profit. As of December 31, 2025, the geographic distribution of our policies

in-force, net in-force premium and total insured values in Florida were as follows:

Writings by Florida County

(1)Consists solely of policies in-force in Florida.

(2)Total Insured Value (TIV) amounts are presented in millions of U.S. dollars.

Our business is supported by a comprehensive exposure and risk management framework - the cornerstone of which is our

robust reinsurance program - that we believe increases the consistency and predictability of our earnings and protects our

capital against hurricane and other severe weather-related events. We purchase excess of loss, quota share, per risk and

facultative reinsurance from highly rated third-party reinsurers. We have strong relationships with third-party reinsurers,

which we believe are a result of our industry experience and reputation for selective and disciplined underwriting. We have

historically purchased reinsurance in-line with, and occasionally in excess of, what regulators and rating agencies require

and in amounts that we believe are conservative in an effort to minimize the volatility of our earnings and protect our

capital.

We closely manage all aspects of our claims adjustment process and strive to adjudicate and settle all non-catastrophe

claims with our in-house claims professionals. In the case of catastrophic events, we supplement our internal claims

handling resources by contracting with six large national claims adjusting firms to assist our adjusters with the increased

volume of claims and ensure timely responses to our policyholders.

4

We believe our history of profitability operating in the complex, nuanced and historically volatile Florida property

insurance market, as illustrated by our GAAP net income since 2008 as set forth below, is the result of our specialized risk

selection, pricing strategies and claims management capabilities:

Our Competitive Strengths

We believe that our competitive strengths include:

Florida residential property insurance market expertise

Since our founding in 2006, we have principally focused on serving the Florida residential property insurance market.

Florida represented 93.7% of our policies in-force as of December 31, 2025 and 96.5% of our in-force premium as of

December 31, 2025. Throughout our 20-year history, we have maintained a consistent market presence with independent

agents and policyholders in Florida, prudently adjusting our underwriting criteria (whether that be based on sub-

geographies, home age, or types of home construction, among other factors) and pricing to consistently generate attractive

underwriting margins and profits across multiple property and casualty insurance (“P&C”) cycles and Florida property

insurance cycles. We were the sixth largest writer of residential property insurance in Florida based on policies in-force

(fifth excluding Citizens and national carriers) as of December 31, 2025 and wrote the seventh most residential policies in

Florida (third excluding Citizens and national carriers) during the year ended December 31, 2025 according to data

compiled by the FLOIR, making us a leading specialty residential property insurer in the state. We believe we have

developed a deep understanding of the risks inherent with underwriting residential property insurance in Florida, cultivated

strong relationships with distribution partners, reinsurance partners and regulators, and accumulated robust, proprietary

underwriting, claims and loss data over our 20-year history to inform our risk selection and pricing.

As market conditions evolve, we use our market knowledge and experience to adjust our underwriting appetite to increase

exposure to risks and market opportunities we believe are most attractive within the Florida market and reduce exposure

where we believe competition is irrational or where we are not receiving appropriate premium for the risk we are assuming.

We believe our established, multi-channel distribution relationships in the Florida market are a differentiator in a market

where a number of our peers principally, or in some cases almost exclusively, have relied on assuming policies from

Citizens to generate new business as opposed to writing business in the Voluntary Market. We believe our distribution

relationships position us to maintain and increase our market share as the residential property market in Florida continues

to grow and as the improved regulatory and litigation environment provides attractive new market opportunities. We also

believe our expertise from operating in Florida is transferable to other Southeastern coastal states.

5

Disciplined, analytical and tech-enabled underwriting

We believe our underwriting processes and systems support a dynamic underwriting model and exposure management

framework that have allowed us to produce attractive financial results in the complex Florida residential property insurance

market, as evidenced by our long-term track record of profitability and increasing shareholders’ equity through retained

earnings.

We utilize proprietary historical and third-party data to underwrite risks to the rate, terms and conditions that we believe are

appropriate. Our granular, risk-level data down to the census block (the smallest geographic unit used by the U.S. Census

Bureau for tabulation of 100-percent data) allow for fast, accurate rate determinations and real-time quoting, including

catastrophe loss estimates, to quote individual premium rates on high value homes. In addition to this granularity, our

systems and processes support rapid regulatory approval and internal rate implementation during our quarterly rate

adequacy assessments, enabling us to adjust pricing to protect margins. This has been particularly important in recent years

in the face of inflation, the litigation crisis in the Florida property insurance market, and increasing property reinsurance

costs.

We believe our investment in technology sets us apart from our competitors and positions us to identify emerging loss

trends and to quickly and effectively adapt to changing market conditions. As an example, through enhancements to our

data warehouse, we captured and were able to analyze data that identified a “roof crisis” in Central Florida in 2018, in

which “roofing scams” significantly increased as contractors sought to file fraudulent damage claims in order to receive

insurance payouts. We responded quickly to limit our writings and non-renew policies we believed to be at an elevated risk

of loss. By shrinking our business in Central Florida from approximately 60,000 policies in-force at December 31, 2019 to

approximately 35,000 at December 31, 2022, we were able to minimize the negative impact of these losses.

Our proprietary technology platform integrates policy issuance, document management, ratemaking, underwriting, billing

and data collection into a single system. The system is configurable by our internal technology team, which allows for

rapid modifications, and seamlessly integrates APIs from third-party data sources, including BuildFax, LexisNexis, Verisk,

Cape Analytics, etc. We believe that our technology footprint, data fidelity and data capture and analysis capabilities are

critical to our ability to consistently generate attractive risk-adjusted underwriting margins in the market we serve.

Fully integrated in-house claims management to rapidly identify and respond to emerging trends

We have a robust in-house claims management function that is responsible for all aspects of our claims adjudication

process. All non-catastrophe claims in Florida are handled entirely by our in-house claims team. We believe handling

claims in-house allows us to better coordinate between claims and underwriting departments, collect more granular claims

data, quickly respond to claims, deliver a consistent agent and insured experience, better control loss and loss adjustment

expenses (“LAE”), and implement claims strategies and pursue rate, form, and underwriting actions we believe to be

appropriate. We believe our data-driven approach to claims has allowed us to profitably navigate historical loss trends

unique to the Florida market, such as losses related to sinkholes, AOBs, roof claims and cast-iron pipe claims. In the case

of claims outside of Florida or a catastrophic event in Florida, we supplement internal claims resources by contracting with

six large national claims adjusting firms to assist our adjusters with the increased volume of claims to ensure timely

responses to our policyholders and to manage claim costs.

When we contract with claims adjusting firms, our in-house claims department oversees and manages the work performed

by these firms to ensure claims are being handled to our standards. We believe that our people, systems and organizational

structure around our claims management have been a key contributor to our underwriting performance.

Deep relationships with independent insurance agents, national insurance carriers and homebuilder-affiliated

insurance agents

We employ a multi-channel distribution strategy in the Voluntary Market to distribute our insurance policies through

various channels, including independent insurance agents, national insurance carriers, and homebuilder-affiliated insurance

agents. Independent insurance agents represent our largest distribution channel, as measured by gross premiums written

production for the year ended December 31, 2025. We have methodically developed our independent agent distribution

partnerships in an effort to align the interests of our distribution partners with our desire to write profitable business. We

appoint only those independent insurance agents that we believe can consistently produce targeted volumes of quality

business for us, and we seek to maintain excellent relationships with this group of agents by being a consistent market for

Florida homeowners risks that meet our underwriting appetite, presenting clear underwriting criteria and pricing, paying

6

competitive commissions, ensuring rapid speed to quote, offering consistently high-quality service and expertise, and

maintaining financial stability. We carefully allocate capacity to our independent agents to ensure they benefit from our

franchise value and do not experience a cannibalizing level of competition from other independent agents with an

American Integrity appointment. In return, we expect our agents to work with us to develop business plans and incentive

programs that align with our underwriting goals. This relationship has allowed us to be a reliable, consistent partner to our

agents over time and aligns their incentives with our business objectives. Independent agents have the ability to write

business with other insurance carriers, and we compete for their services with other carriers based on a variety of factors,

including quality of service, responsiveness to policy submissions and claims, tenure and reputation in the market and

financial strength, as well as the products, pricing and commissions that we offer. We believe the strength of our

independent insurance agent relationships are a differentiating factor in the Florida market, where we believe a number of

carriers have relied - in some cases exclusively - on assuming policies from Citizens as their primary source of new

business and have made limited investment in independent agent distribution or other distribution channels. We believe our

distribution relationships position us for more predictable policy and premium growth, stronger policy retention rates, and

superior underwriting results across P&C insurance and Florida property market cycles.

We have developed partnerships with national insurance carriers who restrict their writing of residential homeowners

policies in Florida, including Allstate, American Family, Farmers, Liberty Mutual, The Hartford (AARP), Progressive and

USAA, to offer residential property insurance to their customers who are also seeking Florida residential property

insurance coverage. We recently added partnerships with affiliates of Horace Mann Educators Corporation and South

Carolina Farm Bureau Insurance. We handle all underwriting, pricing and claims management of these policies, and all

policies are offered on our policy forms and are solely adjudicated by us. We believe these relationships provide attractive

new business growth opportunities incremental to our writings through the independent agency channel. The national

carriers benefit from our partnership due to their enhanced ability to service their existing policyholders in need of

homeowners insurance in Florida, creating strong and strategic alignment.

We also have developed strong relationships with retail insurance agents affiliated with homebuilders to increase our

access to the new home construction market, which has seen substantial growth in Florida in recent years. These new

homes are required to comply with the latest building codes and standards, allowing us to generally offer more competitive

risk-adjusted rates while maintaining our targeted profitability in our book of business. We have completed technology

integrations with new construction builder agencies in order to better integrate into their business and serve their needs. We

believe this distribution channel will continue to grow as a result of continued strong population growth within Florida, a

lack of available existing home supply, and the resulting increase in new home building. Many of our homebuilder

partnerships operate in additional Southeastern coastal states, and we look to leverage these relationships as we selectively

expand our geographic footprint.

Sophisticated risk transfer program with high-quality third-party reinsurers

We purchase third-party reinsurance to help manage our exposure to catastrophic weather events. Our relationships with

our reinsurers, all of whom have a financial strength rating of “A-” or better by A.M. Best or for which we hold collateral

equal to 100% of the reinsurance limit or recoverable, have been developed over time as a result of our extensive

experience and reputation for selective underwriting in the Florida market. Our financial strength, underwriting results and

the long-term relationships between our organization and our reinsurance partners have resulted in consistent reinsurance

capacity across P&C insurance and Florida property insurance cycles. We regularly assess and adjust our reinsurance

structure as we see necessary to optimize the effectiveness of our reinsurance program. We currently utilize quota share,

facultative, property per-risk and excess of loss reinsurance to provide significant levels of balance sheet and earnings

protection, and to support the size of our in-force premium and insured exposure relative to our capital base.

Strong balance sheet and capital position

Since our inception, we supported the capital needs of our business and grew our shareholders’ equity to $206.7 million at

our IPO on May 7, 2025 through consistent profitability and the accumulation of retained earnings. During that period, we

achieved this growth without raising outside equity capital beyond our initial capitalization of an aggregate of $10.3 million

in 2006 and 2007, while also paying $75 million in aggregate profit distributions to our equity owners.

As of December 31, 2025, we have grown shareholders’ equity to $337.0 million with a debt to equity ratio on our balance

sheet of less than 1%. Debt to equity ratio is calculated as total long-term debt divided by shareholders’ equity.

7

We have conservative investment portfolios managed by Goldman Sachs Asset Management, LP that are focused on

highly-rated, short-duration investment grade fixed income securities, a strong reinsurance program and conservatively

booked reserves.

Our strong capitalization is a critical component to our relationships with our policyholders, distribution partners, and

reinsurance partners who value our financial strength and the stability of our balance sheet. We endeavor to maintain and

continue to enhance our strong capital position through the accumulation of retained earnings, our utilization of third-party

reinsurance, and our conservative investment strategy and reserving strategy.

Experienced, entrepreneurial and financially aligned management team with a track record of success in the Florida

homeowners insurance market

We have a deep and experienced management team with expertise spanning underwriting, claims, technology and

insurance operations that we believe has been integral to our past performance and will help drive our long-term success.

Our management team has remained largely consistent since our founding in 2006, with an average of more than 10 years

with the Company, and has deep expertise in the Florida property insurance market. Our team is led by industry veteran

Robert Ritchie, who has served as Chief Executive Officer since our founding in 2006, along with our Chairman, David

Clark. Jon Ritchie, our President, has been with us since 2009, and Ben Lurie, our Chief Financial Officer, has served in a

variety of different roles, including Director, Vice President and Secretary, with us since 2017. Many of our employees and

members of our senior management team have worked together to build our Company from a start-up to one of the largest

personal residential insurance writers in Florida. Our management team members have a significant equity ownership

interest in our business, aligning their financial interests with stockholders. As of December 31, 2025, management owned

15.8% of the Company’s Common Stock.

Our Strategies

We believe that we will be able to continue to successfully leverage our strengths to execute the following business

strategies:

Capitalize on historic recent regulatory reform in Florida by profitably growing new business

We believe we are well-positioned to take advantage of favorable trends in our existing primary market of Florida to grow

the amount of new premiums we write and generate additional revenue. We believe the significant regulatory reform bills

passed in December 2022 by the Florida legislature are significantly improving the property insurance underwriting

environment in the state, allowing us to pursue additional new business opportunities that in the past did not meet our

underwriting and profitability criteria. We have started - and expect to continue - to judiciously broaden our risk appetite as

a result of these reforms, including underwriting older properties and middle-aged homes where we believe the pricing and

terms adequately reflect the risk we are assuming and broadening our presence in certain counties where we have

significantly limited our writings in the past due to the historical litigation environment. For example, we recently began

writing policies in the Tri-County region of Florida (Miami-Dade, Broward and Palm Beach counties), which accounts for

28% of Florida’s population according to the U.S. Census Bureau and therefore provides a substantial opportunity to grow

our business in Florida. We expect to achieve our growth primarily with our existing distribution partners with whom we

have built strong relationships to access business that we believe is desirable and profitable. We expect to continue to

deepen our penetration of the Florida market by leveraging and growing these strong distribution relationships and

employing sophisticated technology to select and underwrite risks that meet our underwriting and profitability criteria. We

will continue to be thoughtful and opportunistic in our pursuit of market opportunities and growth in Florida, without

compromising on our commitment to, and unwavering focus on, profitability.

Consistently deliver profitability across P&C market cycles

We are a disciplined, underwriting-driven company with an unwavering focus on profitability. Despite many years of

costly catastrophe events and periods of elevated attritional losses for the P&C industry as a whole, and particularly the

Florida property insurance market where we principally operate, we have produced a positive return on equity in every year

since our inception except two: 2018 and 2020. We have always sought to effectively manage the P&C insurance cycle and

Florida property cycle since our inception to consistently deliver best-in-class underwriting results and profitability. We

utilize the data we collect and analyze from our operations, combined with our view of the current P&C market and

residential property insurance cycle dynamics, to adjust rates, forms, and various other underwriting criteria to optimize our

new business writings.

8

We believe we identified and addressed Florida-wide residential insurance litigation trends earlier than many of our

competitors, which has contributed to multiple years of strong underwriting outperformance compared to the broader

Florida residential property insurance industry. While the industry experienced over $6.9 billion in underwriting losses

between 2017 and 2024, and nearly a dozen insurance companies focusing on the Florida residential property market failed

during that time period, we were profitable in every year except two, generated cumulative net income of $121.2 million,

and maintained a strong, stable balance sheet with no decreases in statutory surplus. We believe these results are a

testament to our disciplined approach and primary focus on stability and profitability, with a secondary focus on growth.

Retain more of the profitable premium we underwrite

In addition to our comprehensive catastrophe reinsurance program, we have historically purchased quota share reinsurance

covering all business we write. Under our current Non-Catastrophe Quota Share Reinsurance (“NCQSR”) arrangements,

which we re-negotiated for the start of 2026, we cede 25% of our gross premiums written, net of premium ceded under our

catastrophe excess of loss reinsurance agreements but prior to other reinsurance agreements. We reduced this percentage

from 40% in the 2025 fiscal year to 25% for the 2026 fiscal year through the re-negotiation of our NCQSR arrangements at

no additional cost to the Company, and this reduction allows us to retain more of the premiums we currently write on a net

basis. Our NCQSR arrangements were established to allow us to increase our gross premiums written at a time when we

believed other forms of capital were less attractive. Over time, the benefit we received from the quota share has diminished

as reinsurance costs have increased industry-wide, non-catastrophe weather losses we have incurred have declined,

magnifying the lost net investment income on premium we cede under the quota share. Any decision to retain more

premium would be based on various factors including P&C market conditions, our capital position, the cost of reinsurance

and interest rates, among others. Under our current quota share reinsurance agreement, we are able to reduce the amount of

business we cede, or eliminate the quota share entirely, at no cost. We believe retaining additional premium we already

underwrite can be an attractive and profitable use of capital given our extensive existing knowledge of this business and its

historical underwriting performance.

Continue to purchase conservative third-party catastrophe reinsurance coverage

We intend to continue to purchase an appropriate level of catastrophe reinsurance as we seek to reduce the volatility of our

earnings and protect our balance sheet from the impact of potential weather-related catastrophe events. Our current

catastrophe reinsurance program is indicative of the type of conservative catastrophe protection that we believe to be

appropriate. Using multiple FLOIR-approved models and as a result of management’s internal practices and the

requirements of rating agencies, we have historically sought to buy to a 1-in-130 year probable maximum loss (“PML”)

level, meaning we buy the amount of reinsurance necessary to protect us in the event of the occurrence of a storm of a

severity expected to occur only once in a 130-year period.

Over our 20-year history, we have developed strong relationships with reinsurers rated “A-” or better by A.M. Best. We

have been rewarded by our reinsurers for our disciplined underwriting and consistent profitability with consistent capacity,

including in reinsurance markets in which it has been challenging for many of our peers to obtain adequate reinsurance

coverage. We view our reinsurers as long-term partners and seek to maintain positive relations with them to ensure we have

adequate reinsurance capacity in future years. Historically, we have prioritized the consistency and sustainability of our

earnings over the long term above maximizing earnings in any particular year when constructing our reinsurance program,

and we intend to maintain this strategy going forward.

Continue to invest in and leverage data and technology that we believe enhance our decision making, increase our

profitability, and strengthen our competitive advantages

Our integrated technology infrastructure and data capture capabilities allow us to efficiently manage various processes

across our platform, improve real-time visibility into market trends, lower costs, and realize operating leverage as we scale.

Our platform is purpose-built to cohesively integrate each of our technology solutions with one another, creating a

proprietary full-stack insurance platform that allows us to balance and integrate the complete insurance process from

underwriting and quoting through claims management and adjudication.

We intend to continue to develop our technology platform and capture additional data that we believe will allow us to

continue to identify, price, and write the risks that meet our underwriting and risk management criteria. This entails

utilizing real-time proprietary and third-party data integrations in both the ratemaking and front-end underwriting process

to make efficient, data-driven underwriting and management decisions. We believe our advanced technology is a

differentiator in the markets where we operate and positions us well for profitable growth.

9

Deepen distribution relationships to increase Voluntary Market writings

We intend to continue to execute on our multi-channel distribution strategy partnering with independent insurance agents,

national insurance carriers and homebuilder-affiliated insurance agents. We have built our business and technology with

the critical importance of our distribution partners in mind, and we believe that creating strong alignment with our

distribution partners drives better growth, profitability, and a stronger operating model.

As an insurer committed to the independent agency distribution model, we seek to offer meaningful insurance capacity

within the confines of our underwriting guidelines to a select group of agents. In each market we serve, we seek to align

ourselves with selected agents that provide us a meaningful portion of their overall business.

This allows us to manage these distribution relationships based on key corporate priorities and performance indicators,

including volume of new business writings, loss ratio, and policy retention. We believe that working with our agency

partners to achieve these goals is critical to our growth and continued underwriting success. At the same time, we recognize

that it is important to have a balanced source of distribution. We expect to continue to selectively expand our distribution

relationships to new independent agents, national insurance carriers and homebuilder-affiliated agents.

We believe our strong distribution relationships in the Voluntary Market have provided us access to superior risks and

enable us to produce more sustainable growth across P&C insurance market cycles.

Selectively assume policies from Citizens

Citizens is one of the largest homeowners insurers in the state of Florida as measured by premium in-force and acts as the

state-owned insurer of last resort. It is incentivized by the state to transfer policies from its books to the private market in

order to reduce systemic risk to the insurance market. See “Business - Citizens Depopulations” for more information. Over

the 10 years leading up to 2024, we did not believe that there were opportunities to assume policies from Citizens, also

referred to as “depopulations” or “take-outs,” that met our underwriting and profitability criteria. The last take-out we

pursued prior to 2024 was in 2014. We believe the combination of Citizens raising its rates, an improved level of

underwriting data disclosed by Citizens on its in-force portfolio, and the legislative reforms passed in 2022 and 2023 have

significantly changed the Citizens depopulation economics based on our experience and understanding of the Florida

market, and created opportunities for us to assume policies that fit our underwriting and profitability criteria. We are

selective when we pursue policy assumptions from Citizens, and each policy we consider assuming from Citizens is run

through our rigorous underwriting and profitability criteria, including assessing the county and location of the underlying

risk, to determine its attractiveness, a process which is similar to our underwriting in the Voluntary Market. While we

measure the attractiveness of “take-out” opportunities based on our long-term profitability expectations of the policies we

assume, take-outs can generate significant near-term earnings because (i) the cost of policy acquisition is lower than in the

Voluntary Market, as we do not pay upfront agent commissions on policies assumed from Citizens, as compared to writing

business in the Voluntary Market where we also have to pay commissions (generally 12%) to our distribution partners

upfront, and (ii) we are not required to purchase reinsurance on the policies we assume until our reinsurance program

renews on the subsequent June 1st. Generally, we are able to price take-out policies above the price we would offer in the

Voluntary Market. Because the policies we assume from Citizens go through our underwriting processes, we expect them

to have a similar risk-return profile to the policies that we write in the Voluntary Market. We participated in four take-out

opportunities in 2024, assuming 68,844 policies and assumed an additional 33,867 policies during the year ended

December 31, 2025, that fit our underwriting and profitability criteria, and we believe provide an attractive opportunity in

light of recent legislative reforms. As of December 31, 2025, 22.5% of our policies in-force were assumed from Citizens

representing 30.9% of our premiums in-force. We will continue to selectively pursue Citizens take-out opportunities if we

feel there is an opportunity to assume policies that align with our underwriting and profit criteria based on the profile of the

underlying risk. While we expect there will be continued opportunities to assume policies from Citizens in the future, we

expect that the number of policies we assume will decrease as the number of policies available with Citizens that fit our

profitability criteria has decreased and continues to decrease.

Our History

AIIG was founded in 2006 as an insurance holding company by our Chief Executive Officer, Robert Ritchie, in partnership

with our Chairman, David Clark, to capitalize on the Florida homeowners insurance market dislocation following the 2004

and 2005 hurricane seasons.

10

Sowell & Co. capitalized us with an aggregate of $10.3 million in equity investments in 2006 and 2007, which remains the

only equity investment that has been made into the business prior to the IPO in May 2025. Sowell & Co. is a family office

founded in 1972 by James E. Sowell to pursue real estate, oil and gas, and private equity investments. The firm invests the

capital of its principals and does not have a drawdown fund structure with a finite life, enabling it to have a longer-term

investment horizon and aligning its interests with those of management. On May 7, 2025, immediately prior to our IPO,

our members’ equity had increased to $206.7 million. Our growth in members’ equity was generated entirely through

retained earnings, representing a compound annual growth rate of approximately 16.8% over 19 years. Additionally, since

our formation in 2006 through our IPO in May 2025, we paid our members $75 million of aggregate profit distributions,

excluding distributions related to flow-through tax liabilities. The compound annual growth rate of our members’ equity

inclusive of cumulative profit distributions was 20.2% over the same 19-year period. As of December 31, 2025, we have

grown shareholders’ equity to $337.0 million while maintaining a debt to equity ratio on our balance sheet of less than 1%.

($ in millions)

= Book Value

= Cumulative Profit Distributions(2)

CAGR: 20.2%

(1)Pre-IPO

(2)Excludes tax distributions made to members

In March 2007, we commenced operations and were approved to assume up to 165,000 policies from Citizens, of which we

assumed a select portion based on a number of criteria including historical performance and our expectations for future

profitability, geographic spread of risk and prospects for retention. This initial “depopulation” allowed us to gain scale in

the Florida market immediately and in a cost-efficient manner while also providing us time to establish relationships with

distribution partners to write in the Voluntary Market. We have participated in additional depopulations from Citizens in

each of 2007-2010, 2012-2014, and 2024-2025.

In 2008, we began writing business in the Voluntary Market and have since principally focused our efforts in expanding

our volume of policies written through the Voluntary Market. As of December 31, 2025, 77.5% of our policies in-force

were originated by us in the Voluntary Market representing 69.1% of our premiums in-force.

Since our founding in 2006, we have grown profitably to become a leading provider of residential property insurance in the

state of Florida. Throughout our history, we have introduced new products or expanded into additional products relevant to

our market in response to policyholder demand and based on our existing underwriting expertise, which have strengthened

our market presence and relationships with our distribution partners. As an example, in 2010, we began offering insurance

for vacant properties in the wake of the global financial crisis, and we were the first admitted carrier in Florida to do so. In

2014, we began to underwrite high-value homeowners and condominium owner’s policies in Florida. In 2018, we began to

underwrite coverage for small watercraft in Florida. In October 2025, we launched our commercial residential property

program. We assumed 149 commercial wind policies in November 2025 and began writing voluntary commercial policies

in December 2025. Our commercial residential property program is designed to deliver comprehensive and reliable

protection for Florida’s condominium associations, townhome associations and residential homeowners associations. We

may introduce new products and/or expand into additional products in the future.

11

Corporate Structure

As a holding company, we wholly own six subsidiaries, which include AIIG, AIIC, which is our admitted insurance

company, and four subsidiaries that provide various services exclusively to AIIC. We established each of these subsidiaries

in conjunction with our formation in 2006. While our statutory capital and all insurance policies reside at AIIC, our core

operations relating to risk selection, underwriting, claims, brokerage and reinsurance are performed by our other

subsidiaries. This structure provides enhanced profit opportunities and capital flexibility for our holding company, which

we believe benefit our stockholders.

Our subsidiaries include the following:

American Integrity Insurance Group, LLC (AIIG) operates as a holding company for our other subsidiaries and was formed

in Texas in 2006.

American Integrity Insurance Company (AIIC) is a corporation that operates as a Florida-domiciled admitted insurance

company with licenses to write business in Florida, Georgia, North Carolina and South Carolina. AIIC is regulated by the

FLOIR. While most of our core operations are performed by our other subsidiaries, our accounting employees are

employed by AIIC.

American Integrity MGA, LLC (AIMGA) operates as a Texas domiciled managing general agency to produce, underwrite,

negotiate, bind and administer policies on an exclusive basis for AIIC. Most of our employees, including our sales,

underwriting, product development and marketing employees, are employed by AIMGA.

American Integrity Claims Services, LLC (AICS) manages all non-catastrophe claims for AIIC and, on an as needed basis,

contracts with third-party claims services providers to manage and oversee catastrophe claims. Our claims employees are

employed by AICS.

Pinnacle Analytics, LLC (Pinnacle) is responsible for performing ongoing reinsurance related analytical and modeling

work for the benefit of AIIC. Using proprietary tools and technology, Pinnacle monitors, updates and assesses data and

information that is available to us in connection with recent events (e.g., storms and other related weather events,

regulatory changes and impacts, etc.) to analyze their potential impact on AIIC’s results of operations, including its various

reinsurance programs.

Pinnacle Insurance Consultants, LLC (PIC) acts as the agent of record of policies that are assumed from Citizens and are

not already affiliated with an independent insurance agent.

Seasonality

Our business is seasonal as hurricanes and other named storms typically occur in the geographies where we operate

between June 1st and November 30th of each year. This may result in significant variability in our losses and LAE

depending on the number, location and strength of hurricanes and other named storms during these months as compared to

other months. In addition, because our catastrophe reinsurance program renews on June 1st each year, the ceded premiums

written recorded in the second quarter are typically substantially higher than any other quarter during a fiscal year. In some

instances, this will cause our reported net premiums written to be negative (or substantially lower than other quarters) in the

second quarter of each year.

Products

We offer a broad set of homeowners and related P&C products that we believe provide us attractive premium growth and

profit opportunities. Our diversified product set provides coverage for homeowners, condominium owners, manufactured

homeowners, landlords and investors principally in Florida, but also in Georgia, North Carolina and South Carolina, and

we insure perils including wind and hail events, water damage, fire and liability.

Our primary product is homeowners insurance where we focus on owner-occupied single family homes, high value homes

and condominium units that fit our target underwriting profitability hurdles. Our dwelling policies insure rental, seasonal,

investment and other non-owner-occupied properties. We are one of the select few carriers in Florida that offers a specific

policy for vacant homes, a policy which we developed in 2010. We also offer coverage for manufactured homes with a

focus on newer model homes that are in gated communities.

12

The following charts represent our product mix as of December 31, 2025:

MH = Manufactured Home. DP = Dwelling Property. HO = Homeowners. RCAP = Commercial Residential.

Other = Watercraft, Golf Cart and Other(1).

(1)  “Other” includes Umbrella policies, which are no longer written and represent legacy Umbrella policies underwritten by AIIC

We issue these products on 11 distinct policy forms, which are as detailed as follows:

In addition, we provide a variety of endorsements and supplemental products that provide policyholders with value-added

coverage enhancements. We offer optional endorsements on our HO-3 and HO-6 policies that provide higher levels of

standard coverage and optional coverages such as personal injury, animal liability, identity recovery and golf cart physical

damage and liability. We also offer access to flood insurance through a partnership with Wright National Flood Insurance

Company as well as Tokio Marine Highland in connection with our flood endorsement coverage, and home systems and

equipment breakdown protection through a strategic alliance with Hartford Steam Boiler. We receive a fee for marketing

these supplemental products and do not assume underwriting risk.

13

Our product team assesses our product offering on a quarterly basis to continuously monitor our products’ positioning and

the value proposition of our product portfolio. As an admitted carrier, in the markets where we currently operate, all rate

filings are made public, enabling our product team to closely track competitive trends by our peers across geographies on a

monthly basis. We use this information, in conjunction with actuarial analysis, to adjust our pricing strategy and identify

classes of business we believe are attractive and which we may want to enter. By using sophisticated data capture and

business intelligence, we can implement ratemaking decisions based on various underwriting, behavioral and loyalty

considerations to respond quickly to competitive trends and profitable market opportunities.

On an ongoing basis, we evaluate the development of new products that may provide attractive growth opportunities and

meet our target underwriting profitability hurdles. We seek to introduce new products that complement our existing product

offering, seamlessly integrate into our existing operations and enable our distribution partners to better serve their clients.

For example, we launched our commercial residential property product focused on condominium associations, townhome

associations and residential homeowners associations. We began writing commercial residential business in Florida in

October 2025, and we are leveraging our previous condominium expertise and distribution relationships in order to expand

into this complementary and underserved market.

Marketing and Distributions

Our multi-channel approach to marketing and distribution is a cornerstone of our success. By strategically investing in

preferred distribution relationships and leveraging our expertise in Florida’s niche homeowners insurance market, we have

built a differentiated business model that drives growth and profitability.

We distribute our products primarily through the Voluntary Market, which includes partnerships with independent agents,

national and regional insurance companies, homebuilder-affiliated agents, and direct-to-consumer channels.

Additionally, we selectively assume policies from Citizens that fit our underwriting and profitability criteria. Our

diversified distribution strategy mitigates risks, reduces reliance on any single channel, and enables us to reach more

potential policyholders. Of our $948.6 million total premium in-force as of December 31, 2025, $655.6 million in-force

premium comes from the Voluntary Market representing approximately 69.1% of our total premium in-force.

Channels of Distribution

Independent Agents

Independent agents represent our largest source of new policy origination. These agents are carefully selected based on

criteria such as geographic focus, expertise, and alignment with our underwriting priorities. Our internal sales force uses a

data-driven approach to incentivize agents to align their business goals with ours by setting performance targets related to

loss ratio, retention, volume and other key underwriting metrics. We have approximately 1,300 independent agent partners

through which we source business. These agents have been carefully chosen and capacity is selectively offered by

geography, among other criteria, to ensure we do not saturate any particular geographic market with our capacity. Overall,

policies produced by independent agents represented $479.4 million of in-force premium, or approximately 50.5% of our

total in-force premiums as of December 31, 2025. Our largest agency relationship represented approximately 7.3% of our

of in-force premiums. Our growth strategy includes focusing on growing high-potential strategic accounts in Florida, which

represented nearly $205.0 million of in-force premiums as of December 31, 2025.

Homebuilder Affiliated Agents

We have partnered with insurance agencies affiliated with national homebuilders such as D.R. Horton, Homefirst, KB

Home, Lennar, Toll Brothers and Pulte. These partnerships allow us to capture a growing market for new-construction

homes, which are particularly attractive due to their higher safety standards and technologically advanced risk-mitigation

features, such as smart home systems. Our builder-affiliated agencies represented $87.5 million of in-force premium, or

approximately 9.2% of total in-force premiums as of December 31, 2025, which has grown by 705.9% since 2021. We

offer quotes to purchasers of single-family homes within days of purchase contracts, which creates a competitive

advantage. Additionally, we aim to leverage our homebuilder agent relationships to support our growth in South Carolina,

North Carolina and Georgia.

14

Insurance Companies

We have developed partnerships with national and regional personal lines carriers in the United States, especially those

carriers that limit the amount of homeowners insurance they write in Florida due to elevated risk of losses from hurricanes

and A.M. Best’s negative treatment of catastrophe exposure. We have developed strategic relationships with insurers such

as Allstate, American Family, Farmers, Liberty Mutual, The Hartford (AARP), Progressive and USAA and regional

carriers such as Horace Mann Educators Corporation and South Carolina Farm Bureau Insurance. These partnerships allow

insurers to provide homeowners coverage for their policyholders in Florida on our paper while cross-selling private

passenger auto and other insurance on their paper. Policies generated through insurance company partnerships accounted

for approximately $52.0 million of in-force premiums, representing approximately 5.5% of total in-force premiums as of

December 31, 2025, which has increased by 191.6% since 2021. As we grow, we aim to maintain mutually beneficial

relationships with a focus on long-term profitability; utilize in-house systems, products, and underwriting guidelines to

ensure seamless integration with these partners’ agencies; and enter into new company alliances.

National Agencies

This distribution channel represents agencies that operate at a national level, and include mortgage-related agencies,

national brokers and InsurTech agencies, such as Goosehead Insurance, Rate Insurance, Matic and Blend Insurance. Many

of these national agents focus on building relationships with mortgage companies and brokers to produce a point-of-sale

book of business. Premiums generated through national agencies represented $36.7 million of in-force premiums as of

December 31, 2025, representing approximately 3.9% of total in-force premiums as of December 31, 2025. This channel

has grown by 231.2% since 2021 and has helped support our growth into other Southeastern coastal states. We aim to

invest in partnerships with tech-enabled agencies to lower customer acquisition costs and streamline policy issuance at the

point of sale. The table below shows the diversification of our distribution for the periods indicated with our business that

we write in the Voluntary Market.

Since 2023, we have seen average in-force premiums decline moderately due to lower average rates per insurance policy as

a result of improving litigation trends and regulatory reform. In addition, the new states we are expanding into, including

South Carolina, North Carolina and Georgia, tend to have lower average rates than Florida. However, through our

continued expansion into the Tri-County region of Florida and into insuring middle-aged homes, we plan to capitalize on

higher average premiums.

Citizens Depopulations

We opportunistically review and, from time to time, may assume policies from Citizens through the depopulation process,

although this is not a primary focus of our policy acquisition efforts. We view pursuing depopulations as an opportunistic

strategy to grow our business so long as the policies we assume fit within our underwriting and profitability criteria. Most

recently, we pursued depopulations throughout 2025, as we determined that the policies we could assume through these

depopulations were attractive from a geographic, structural, underwriting and profitability perspective. Some of these

policies assumed in 2025 were assumed after the end of hurricane season, and we view these policies to have had minimal

15

near-term catastrophe risk, and some of these assumptions occurred after our reinsurance renewal date of June 1st, and

those policies are covered by our existing reinsurance program at no incremental cost, thereby providing an attractive near-

term profitability opportunity in addition to a longer-term opportunity to profitably grow and compound book value and

earnings. Overall, policies assumed from Citizens represented $293.0 million of in-force premiums as of December 31,

2025, representing 22.5% of our policies in-force and 30.9% of our premiums in-force as of December 31, 2025. As the

pricing gap between our policies and Citizens policies continues to narrow in part due to the new regulatory reform passed

at the end of 2022, we expect there to be additional opportunities to assume policies from Citizens. However, we expect

that the number of policies that we will assume in the future will decrease as the number of policies available with Citizens

that fit our profitability criteria decreases.

Underwriting

A disciplined underwriting focus, made possible by proprietary data and bespoke technology systems, is central to our

continued success. We continually optimize our rates, forms and point-of-sale underwriting guidelines based on real-time

market conditions. We rely on data derived from our technology, our internal processes and our experienced management

team to identify trends and modify these underwriting elements accordingly.

Policy Rates

We believe we have a differentiated capability to determine rates at a more localized and granular level than many of our

competitors. Our technology system enables us to set rates at the census block level, which we believe provides for highly

accurate rate setting and risk selection. We couple this with other attributes tracked in our technology system, including

structure characteristics, to enhance our underwriting capabilities. We collaborate with our technology team to implement

new rates quickly in response to changing market conditions. Our sophisticated technology system, premier reputation in

the market and longstanding relationships with preferred agencies result in our ability to charge rates above the average in

our market to ensure long-term profitability. We make pricing decisions that align to acceptable levels of rate adequacy

from a regulatory perspective and work effectively with regulators to get necessary filing approvals.

Policy Forms

Although we offer policies under an admitted form, we retain the ability to modify forms with the approval of the FLOIR.

We maintain good relations with the FLOIR and believe our track record of making timely, innovative form changes has

been a material contributor to our success. Selected examples include:

Roof Wear and Tear. After the Sebo v. American Home Assurance Company ruling in December 2016 determined that

claims alleging concurrent losses due to covered and excluded perils could be covered if the policy language did not

include language disallowing such claims, we gained approval for a “roof wear and tear” clause that returned our policy

contract to a pre-Sebo standard by specifying that damage from a non-insured cause would not be covered.

Cast Iron Pipes. In 2019, our claims department noticed a significant increase in the number of claims related to cast iron

pipes, which are particularly susceptible to corrosion in Florida due to the state’s high temperatures and humidity. While

low in frequency, these claims have the potential to be significant in severity. Our underwriting team promptly received

approval from the FLOIR to modify our policy contract to eliminate this uncovered exposure.

Roof Actual Cash Value. The historic reforms passed by the Florida legislature in December 2022 did not include a return

from a “replacement cost” to “actual cash value” standard, exposing us to the possibility of additional Sebo-type claims by

requiring us to cover replacement costs regardless of wear and tear occurring over time. Our underwriting team was able to

gain approval for a substantive policy form change which includes language to address this issue.

Binding Arbitration. In early 2022, the FLOIR approved our offering of a policy endorsement that offers policyholders a

discount of up to 20% in exchange for agreeing to a binding arbitration claims dispute resolution process outside of the

court system. The Florida legislature later codified this into law in Senate Bill 2A in December 2022, and it has prevailed

in numerous court challenges. We view this favorably as it benefits our customers with discounts, and settling disputes

outside of a court room with a jury partially insulates us from the uncertainty of potentially disproportionate verdicts

whereby courts award plaintiffs with compensation well in excess of amounts insurers are contractually obligated to pay

customers. Since we first enacted this endorsement, approximately 34.3% of our policyholders have signed up for it as of

December 31, 2025.

16

Underwriting Guidelines and Filters

Our distribution partners utilize our technology system to quote and bind policies. Our policy administration system

incorporates proprietary rating algorithms, underwriting criteria and filters, and third-party data sources to approve only

those risks that meet the rigorous underwriting standards of the Company. These standards also manage concentration risk

such as the number of residences we insure within the same county, census block, city, and zip code.

Our underwriting department consisted of 23 underwriters and 39 client services and billing specialists as of December 31,

2025. Underwriters are assigned to territories in order to specialize and better recognize geographical trends. Our

underwriting team uses rules-based algorithms to make an underwriting decision on a majority of policies, with only a

limited percentage of policies requiring a decision by an underwriter.

Our policy administration system generates automated quotes, which our underwriters have the authority to manually

modify if our distribution partner believes there to be an error in the quote.

Our underwriting team and field sales professionals work closely together, reviewing the portfolios of our independent

agent partners and communicating with these agents about any mix of business changes that are needed for achieving

profitable growth. We work on agency optimization plans in those cases that involve targeting non-renewals and

adjustments to new business mix. Occasionally, we will terminate an agency relationship based on performance standards.

Additionally, our underwriters, working in conjunction with our actuarial and product teams, constantly evaluate our in-

force renewal portfolio to ensure these risks continue to meet our current underwriting standards from a rate, guideline and

reinsurance perspective. We utilize multiple technology tools to analyze our book of business. Our proprietary data

warehouse feeds data into these platforms, which enables us to enhance our underwriting, predict the frequency and

severity of catastrophe events, and streamline our claims adjudication. We will target system wide non-renewals of

unprofitable business when needed.

Catastrophe Modeling

We incorporate sophisticated catastrophe modeling into our underwriting process and coordinate with our risk management

and actuarial departments to ensure our book of business is properly diversified. We are fully self-sufficient from a

catastrophe risk analysis perspective and perform these functions in house. Our risk management department regularly

analyzes our in-force portfolio to ensure the spread of risk is optimal and aligns with our current strategy. This team

leverages the software licensed including Touchstone from AIR (Verisk), Risk Modeler from RMS (Moody’s), RiskInsight

from Karen Clark & Company, and Opterrix for weather data along with policy concentration analysis. We also carefully

monitor catastrophe events in real time utilizing live event technology functionality, which aids in predicting both

frequency and severity of catastrophe events to assist with claim adjudication and proper notification to our reinsurance

partners.

Claims Management

Our claims department consisted of 62 employees as of December 31, 2025, who handle all non-catastrophe claims and a

portion of catastrophe claims. The claims department is fully integrated with our actuarial, underwriting and product teams

to ensure effective communication of any meaningful loss trends.

Our technology automatically assigns incoming claims to adjusters based upon skillset of the adjuster and characteristics of

the claim. This allows for the adjudication process to begin sooner and reduces the need to reassign claims in the future.

Settlement authority increases with seniority within the department, and our policy administration platform automatically

adjusts ownership of the claim as reserves thresholds are surpassed. This allows for streamlined service for the

policyholder while retaining control and oversight of the loss facts as severity increases.

Further, our technology allows for automation of letter creation to decrease the potential for human error when drafting

claim correspondence with policyholders. The system allows for the automated input of key claim characteristics,

applicable dates, and most importantly, underlying policy language and terms.

For large-scale loss events, such as hurricanes, we utilize third-party adjusting partners who are carefully selected through

an annual request-for-proposal, or RFP, process. Despite using third-party adjusting partners, these catastrophe claims are

still closely managed by the claims department to ensure consistency and accuracy of our claims handling.

17

Our litigation department consisted of an additional 29 employees, including eight licensed attorneys, as of December 31,

2025, which has decreased substantially since 2024 as the recent legislative reforms have reduced our frequency of non-

catastrophe claims. These employees and attorneys handle all litigated claims either internally or in conjunction with third-

party panel counsel partners. We seek to reduce our litigation expenses by settling claims for the amount that we believe

we owe. This department also manages all liability claims regardless of litigation status. We are able to manage most

claims in-house and only utilize assistance, at times, from third-party administrators following larger catastrophe storms.

We believe by maintaining in-house litigation and claims management teams, we can achieve synergies that would be

unavailable if these functions were outsourced to third parties.

Subrogation is a component of our total net reserves for losses and LAE. There has been an increase in our efforts to pursue

subrogation against third parties responsible for property damage losses to our policyholders. We have engaged a third

party to pursue additional subrogation recoveries since 2018 and are seeking to improve subrogation recoveries in the

future.

Technology

As a data-driven underwriting company, we rely heavily on our robust technology system. We believe that our technology

system differentiates us in the market from our competitors by allowing us to rapidly develop and program rates at a

granular level down to the census block, seamlessly integrate application programming interfaces from third-party data

providers to enable real-time, front-line underwriting, and produce actionable business intelligence for us to identify

emerging trends.

Our policy and claims administration system is Guidewire InsuranceNow, which integrates all of our business units so that

our producers, underwriters, claims adjusters and management can view the business through a consistent lens.

InsuranceNow is an event-driven platform, with a new quote or first notice of loss initiating our underwriting or claims

adjudication processes. We operate under a perpetual license to the service, which we believe is attractive because it is

structured so that our internal IT resources can customize our instance of InsuranceNow and integrate several third-party

data sources into the platform. This optimizes and enhances the system to our unique specifications.

The ease-of-use of InsuranceNow gives us a competitive advantage with our distribution partners when they choose which

carriers to submit business. Our ability to build custom interfaces with our distribution partners, third-party data providers

and other stakeholders enhances the rating and underwriting functions of the platform. Lastly, our system’s ability to

produce reliable and clean data allows for the usage of our proprietary data warehouse to drive our data-driven decision

making.

Reinsurance and Risk Transfer

We strategically purchase reinsurance from third parties, which we believe enhances our business by protecting our capital

from the impact of severe events (including large single event losses and catastrophes), which reduces volatility in our

earnings. When an insurance company purchases reinsurance, it transfers or “cedes” all or a portion of its exposure on

policies it underwrites to another insurer (the “reinsurer”) in exchange for a premium. Ceding of insurance to the reinsurer,

however, does not legally discharge the insurance company from its primary liability of its policies. We remain liable for

the entire insured loss if the reinsurer fails to meet its obligations to us under the reinsurance agreement.

For the June 1, 2025 to May 31, 2026 catastrophe reinsurance year, our net retention is $35 million for a single event

(inclusive of $25 million retained via our segregated cell captive reinsurer), whether a named storm or a severe convective

storm, representing 10.4% of our shareholders’ equity at December 31, 2025. “Net retention” refers to our expected losses

retained in connection with our reinsurance program. We own a segregated cell captive reinsurer as an offshore segregated

cell, and funded it with an original deposit of capital from our holding company in 2023 in the amount of approximately

$1.6 million. For 2025, the segregated cell was funded with approximately $7.5 million of profits from the prior year and

approximately $41.3 million of ceded premiums from our insurance company. We believe the formation of the segregated

cell captive reinsurer was a capital efficient way to offset the rising cost of reinsurance for lower layer coverages, and we

believe our use of traditional reinsurance and the captive offers an optimal balance of risk, reward and cost.

Our reinsurance contracts are predominantly one year in length and renew annually throughout the year, primarily in

January and June. At each annual renewal, we consider several factors that influence any changes to our reinsurance

purchases, including any plans to change the underlying insurance coverage we offer, updated loss activity, the level of our

capital and surplus, changes in our risk appetite and the cost and availability of reinsurance.

18

We purchase catastrophe excess of loss (“XOL”), quota share reinsurance, per-risk excess of loss reinsurance and

facultative excess of loss reinsurance coverage in order to limit our exposure from losses. Our catastrophe XOL reinsurance

provides coverage for catastrophe events, subject to specified exclusions, in excess of a specified amount. This coverage in

particular significantly limits our net retained losses in a catastrophe event, provides coverage for multiple catastrophe

events and gives us substantial aggregate coverage for a given year. Our quota share reinsurance provides coverage for a

specified percentage of our retained liability of non-catastrophe losses. Our property per risk excess of loss and facultative

excess of loss reinsurance provide coverage for individual property losses in excess of a retained amount on a single loss

occurrence, which we use selectively to supplement limits or to cover risks or perils excluded from other reinsurance

contracts such as fire. Our reinsurance program serves to reduce underwriting volatility and increase our overall

underwriting capacity. We believe our mix of reinsurance coverage optimizes for efficiency, cost, our risk appetite and the

specific factors of the underlying risks we underwrite.

Catastrophe XOL Reinsurance Coverage

We purchase catastrophe XOL reinsurance coverage to mitigate an aggregation of property losses due to a single event or

series of events. We believe our current reinsurance program provides expansive coverage, and we believe it provides more

coverage compared to the reinsurance coverage purchased by many of our competitors. Despite the current “hard market”

in reinsurance of driving higher reinsurance costs, increased primary retentions, more exclusions and reduced capacity, we

have managed to retain “multi-peril coverage” which we believe is, in large part, due to our market position and tenure,

underwriting track record and reputation for selective underwriting and strong reinsurer relationships. “Multi-peril

coverage,” in contrast with named storm coverage that specifically protects against losses caused by named storms only

(such as hurricanes or tropical storms), provides us more comprehensive protection against a broad range of risks or perils

including, but not limited to, named storms, severe convective storms, earthquake, riots, freezes and firestorms.

To inform our purchase of catastrophe reinsurance, our risk management team uses third-party stochastic models to analyze

the risk of aggregation of losses from catastrophe events. These models provide a quantitative view of our PML, which is

an estimate of the level of loss we would expect to experience once in a given number of years, referred to as the return

period. Based upon our modeling, it would take an event beyond our 1-in-130 year PML of $1.9 billion, based on the AIR

model, to exhaust our approximately $1.9 billion property catastrophe reinsurance coverage, as of June 1, 2025.

The AIR model calculates our losses under multiple scenarios, taking into account potential increases in costs due to the

effects of inflation and increased development density (calculated as if the event had occurred on the date the analysis was

run), prior to the impact of any take-outs through Citizens, including if certain historical catastrophes were to reoccur. The

AIR model is updated on an annual basis. Under our current reinsurance program, because the modeled PML for each of

these historical events is less than approximately $1.9 billion, should an event equivalent to any of these historical events

reoccur our hypothetical net loss per event would be capped at our current net retention of $35 million as of June 1, 2025

(which includes the amount retained via our segregated cell captive) as demonstrated in the following table, which reflects

our gross losses before reinsurance and inclusive of a 20% LAE load, which we believe to be a conservative estimate of

our actual LAE on a large event:

(1)“Modeled PML” represents loss figures generated by the AIR model for historical events for exposure from our policies in-force as

of December 31, 2025 for the ended December 31, 2025.

We believe our current reinsurance program provides coverage well in excess of our theoretical losses from any recorded

historical event or season.

19

Catastrophe XOL Reinsurance Treaty

Our current catastrophe XOL reinsurance program, for the June 1, 2025 to May 31, 2026 catastrophe reinsurance year, has

six layers of coverage. For the first catastrophe event in a season, our reinsurance program would provide total coverage up

to approximately $1.9 billion after our total net retention of up to $35 million (inclusive of an initial net retention of $10

million and an additional $25 million retained via our segregated cell captive), and for the second catastrophe event, we

would have coverage up to $1.5 billion after our initial retention of $35 million (inclusive of an initial net retention of $10

million and an additional $25 million retained via a reinstatement from our segregated cell captive). We partner with over

40 traditional reinsurers for this coverage. For the third and subsequent catastrophe events, our reinsurance program would

provide coverage up to $85 million, after our initial retention of $10 million (our segregated cell captive does not retain any

liability for a third or fourth catastrophe event). To mitigate potential volatility in reinsurance market conditions, we have

prepaid reinstatement premiums or purchased reinstatement premium coverage for all layers that include reinstatement

provisions. Reinstatements, where included, provide coverage in the event more than one catastrophe event occurs within

one year.

We purchase XOL reinsurance coverage at a June 1st renewal date. At each reinsurance treaty renewal, we consider several

factors that influence any changes to our reinsurance purchases, including any plans to change the underlying insurance

coverage we offer, updated loss activity, the level of our capital and surplus, changes in our risk appetite and the cost and

availability of reinsurance.

We have two reinsurance contracts that include a no claims bonus feature, whereby we can accrue to our benefit the

amount of 20% of the original deposit premium in the event we have no or minimal losses to that layer. The maximum

benefit we would receive under this contract is $4.0 million, as of June 1, 2025, which would be reflected as lower ceded

premiums on our income statement.

We additionally have reinsurance from the Florida Hurricane Catastrophe Fund (“FHCF”) and a named storm inuring layer

which inure to all six layers of our coverage. Our FHCF coverage is mandated by the state of Florida and includes an

estimated maximum provisional limit of 90% of $485.4 million, or $436.9 million, in excess of our retention and private

reinsurance of $272.7 million. A panel of private reinsurers cover the remaining 10% of the $485.4 million loss and LAE.

The limit and retention of the FHCF coverage will be subject to upward or downward adjustment based on, among other

things, submitted exposures to FHCF by all participants. Our private reinsurance would generally adjust to fill in gaps in

the FHCF coverage, if any. Our named storm inuring layer, which was initially mandated by the state of Florida in our

2022-2023 treaty year reinsurance program and then carried over to the 2023 and 2024 programs on a named storm only

basis, has been removed. For the 2025-2026 treaty year, the previous named storm inuring layer has been converted back to

an all-perils coverage within the traditional reinsurance market and is assumed within our layer three coverage of $143.2

million in excess of $210 million of losses and LAE, providing 20% LAE coverage.

To supplement our reinsurance program, we have placed collateralized catastrophe bonds in the private markets to protect

against named storm events across all states in which we write insurance products, on an indemnity and cascading per-

occurrence basis. Our bonds include investments from prominent catastrophe bond investors which we view as a testament

to our strong underwriting results throughout our history. In February 2025, we successfully placed a multi-tranche $565

million catastrophe bond, the eighth bond issuance we have sponsored since 2017, having varying maturity dates of June

2027 and June 2028. In March 2024, we successfully placed a multi-tranche $305 million catastrophe bond, the seventh

bond issuance we have sponsored since 2017, expiring at the end of May 2026.

20

Our catastrophe XOL reinsurance is illustrated below:

In addition to the reinsurance purchased by the FHCF, we seek to purchase reinsurance from a high-quality panel of

reinsurers that are rated at least “A-” (Excellent) or better by A.M. Best as of our June 1, 2025 renewal or for which

we hold collateral up to 100% of the reinsurance recoverable. While we only select reinsurers whom we believe to have

acceptable credit and A.M. Best ratings, if our reinsurers are unable to pay the claims for which they are responsible, we

ultimately retain primary liability to our policyholders. Failure of the reinsurer to honor its obligations could result in losses

to us; therefore, we establish allowances for amounts considered uncollectible.

21

The following table sets forth our most significant reinsurers by amount of reinsurance recoverables and the amount of

reinsurance recoverables pertaining to each such reinsurer as well as A.M. Best rating as of December 31, 2025.

The FHCF is a tax-exempt state trust fund that provides reimbursements to residential property insurance companies for a

portion of their catastrophic hurricane losses in Florida. The FHCF is neither rated nor collateralized and is designed to be

self-supporting (except in extraordinary situations) and funded only with premium revenues paid by residential property

insurance companies, investment income, and in some circumstances, revenue bonds backed by emergency assessments on

most types of P&C premiums. Included in “All others” above are reinsurers that are not rated by A.M. Best but are fully

collateralized.

Non-Catastrophe Quota Share Reinsurance

We have a non-catastrophe quota share reinsurance arrangement with a group of seven major reinsurers, whereby 25% of

our gross premiums written (net of premium ceded to XOL reinsurers) and associated losses for the December 31, 2025 to

December 31, 2026 NCQSR reinsurance year are ceded to these counterparties. The quota share reinsurance provides

capital support for the gross premiums written ceded under the treaties and mitigates the negative income statement impact

of higher than expected attritional losses in a given year by ceding 25% of those unanticipated losses to the reinsurers. This

results in an increase in underwriting capacity as our premium to surplus leverage ratio improves given the ceding of these

anticipated losses to reinsurers.

We receive a ceding commission from our quota share reinsurers. The minimum ceding commission provides a mechanism

for the reinsurers to share in the downside risk of higher-than-expected losses. Additionally, the quota share reinsurance

treaties also provide coverage for a pro-rata share of our net retained losses from a catastrophe event subject to a limit of

approximately 2.5% of subject premium.

Flood Quota Share Reinsurance

We have a flood quota share agreement with two reinsurers. This represents a 100% quota share of our gross liability for

each risk classified as Primary Flood Business. We earn a flat ceding commission of 26% on the gross premiums written

ceded to our reinsurers.

Property Per Risk & Facultative XOL

Concurrent with offering high-value homeowners policies, beginning in 2013 we established a property per risk treaty that

provides up to $5 million of reinsurance coverage for non-catastrophe losses from individual policies in excess of $1

million. We then attach facultative reinsurance at a $6 million retention that offers coverage up to $12 million for an

individual property. This treaty also inures to the benefit of the quota share treaties. The treaty provides for three

reinstatements at no additional cost.

22

Investments

We collect premiums from our policyholders and hold a portion of these funds in reserves until claims are paid. We then

invest these reserves, alongside our net equity capital, primarily in investment-grade fixed income securities and cash and

cash equivalents to generate stable and predictable investment returns. The portfolio guidelines governing our investment

criteria are approved by AIIC’s Investment Committee and our Board of Directors, consistent with regulatory guidelines

for the state of Florida, and our investments are managed by a highly-regarded asset management firm.

Our fixed income portfolio at AIIC totaled $288.4 million as of December 31, 2025 with a weighted average effective

duration of 2.09 years and an average credit rating of “AA-” (Standard & Poor’s) as of December 31, 2025.

AIIC’s invested assets consist primarily of investment-grade and government fixed-maturity securities that we believe

provide desired preservation of our capital. These investments, as of December 31, 2025, were as follows:

Reserves

We take a conservative approach to establishing loss reserves and have historically experienced reserve redundancy

(“excess reserves”). When a claim is reported to us or when an event occurs, we establish loss reserves to cover our

estimated ultimate losses and LAE relating to the investigation and settlement of policy claims. These reserves include

estimates of the cost of the claims reported to us (“case reserves”) and estimates of the cost of claims that have been

incurred but not yet reported (“IBNR”) and are net of estimated related salvage, subrogation recoverables and reinsurance

recoverables. Reserves are estimates involving actuarial projections of the expected ultimate cost to settle and administer

claims at a given time but are not expected to precisely represent the ultimate liability. Estimates are based upon past loss

experience modified for current trends as well as prevailing economic, legal and social conditions. Such estimates will also

be based on facts and circumstances then known but are subject to significant uncertainty based on the outcome of various

factors, such as future events, future trends in claim severity, inflation and changes in the judicial interpretation of policy

provisions relating to the determination of coverage.

Reserve amounts for IBNR claims are determined based on actuarial analysis of our historical loss experience and claims

trends in the overall insurance industry, as well as other factors that could impact the expected frequency and severity of

claims. These other factors include lines of business, claims processing procedures, enacted legislation, judicial decisions

and other legal developments, and general economic conditions, including economic and social inflation.

Upon first notice of loss, we establish an initial case reserve for all claims. Starting in 2024, we increased the amount that

we establish for case reserves from $3,000 to $15,000 per claim for named storms in order to hedge against risk of loss.

The claims adjuster handling the claim may then adjust the case reserve up or down as necessary. Our case reserves for all

other claims remains at $3,000 per claim. Case reserve amounts are revised following further review of the claim based

upon the judgment of the assigned adjuster and following the estimate of damage based upon a physical inspection. As

claims mature, reserve estimates are updated as deemed necessary by our claims department based upon additional

23

information received regarding the loss, the results of additional on-site reviews and any other information gathered while

reviewing the claim.

We also have a comprehensive reserving program, which utilizes both internal resources and peer review from external

sources. We conduct full internal actuarial reviews each quarter and update actual versus expected reserve development on

the same basis. By utilizing various reserving methodologies and diagnostics including closing timelines and payment

patters, we are able to update the range of potential outcomes for our ultimate claim payouts. Our legal and claims leaders

work closely with our internal and external actuaries as they examine the data to ensure that significant patterns and trends

are incorporated into the analysis. For example, the modification of our case reserving methodology for catastrophes in

2024 was based on this analysis, which also included a review of historical reserving trends and recent inflation trends.

We are involved in claims-related legal actions that arise in the ordinary course of business and accrue estimated amounts

of the related unpaid losses and LAE during the period that we determine an unfavorable outcome becomes probable.

Aside from claims-related and ordinary course litigation, we are not aware of any pending litigation against us that would

have a material adverse effect on our operations.

Competition

The Florida homeowners insurance market is characterized by a distinctive competitive landscape, primarily influenced by

the limited presence of national carriers and the significant role of state-backed entities. As of December 31, 2025, national

insurance carriers collectively accounted for approximately 25.4% of the market share based on gross premiums written. In

contrast, Citizens held approximately 4.4% of the market share, positioning it as the largest individual insurer in Florida.

Within our targeted regions in Florida, we face competition from insurers including Tower Hill Insurance Group, Florida

Peninsula Insurance Company, Frontline Insurance Unlimited Company, Southern Oak Insurance Company and

Progressive. We have identified our competitors based upon geographical considerations, competition for independent

agents, key metrics such as policies in-force, and trends in the industry based on information from our internal sales team.

Ratings

As of December 31, 2025, our insurance entity, AIIC, maintains a Financial Stability Ratio of “A” (Exceptional) by

Demotech, a financial analysis firm that has been rating independent, regional and specialty insurance carriers since 1989,

and a BBB+ financial strength rating, with stable outlook, from the Kroll Bond Rating Agency, LLC. Additionally, the

Company maintains a BB+ rating, with stable outlook, from the Kroll Bond Rating Agency, LLC.

Intellectual Property

We have applied for various trademark registrations in the United States at both the federal and state levels. We will pursue

additional trademark registrations and other intellectual property protection to the extent we believe it would be beneficial

and cost effective. In addition, we monitor our trademarks and service marks regularly and protect them from unauthorized

use as necessary.

Employees

As of December 31, 2025, we had 313 employees, all of whom are full-time employees. We are not a party to any

collective bargaining agreement and have not experienced any work stoppages or strikes as a result of labor disputes. We

consider relations with our employees to be good.

We strive to be a leading employer in both our industry and local community. We cultivate a workplace culture centered

around our six core corporate values: integrity, commitment, teamwork, humility, passion and fun. Through this culture,

we foster a rich diversity of thought, background and perspective, leading to high employee retention and satisfaction. In

addition, we offer and maintain an attractive benefits package designed to support the well-being of our employees,

including, but not limited to, life, medical, dental and vision insurance, a 401(k) plan, paid time off, family leave, COBRA

coverage and employee assistance programs. Our employees are our most valuable asset, and we emphasize their training

and continuous personal and professional development and growth through various initiatives including programs run by

our Director of Training and potential education reimbursements.

We have been recognized as a leading employer in the insurance industry and our local community. We have been named

one of the “Best Places to Work” by Business Insurance from 2013 through 2025. We recently received “America’s Best

24

Workplaces” and “Best Places to Work in Florida” accolades from Best Companies Group in 2025. We have also been

named a “Top Workplace in Tampa” by the Tampa Bay Times for the past 10 years, and a “Top Workplace in the USA”

for the past six years. These awards are given based on employee feedback and compared against thousands of companies

across the country.

Regulation

The insurance industry is highly regulated by state insurance regulators. AIIC is subject to the laws and regulations of the

state of Florida and any other state where we may seek to do business. The regulatory structure in Florida and other states

provides for regulation of virtually all aspects of our business and is generally designed to protect the interests of

policyholders, not stockholders. These regulations relate to a variety of matters, both financial and otherwise, including

among other things:

•capital and surplus requirements;

•risk-based capital (“RBC”) requirements;

•dividend limitations;

•investment limitations;

•underwriting limitations;

•writing ratios;

•reserve requirements;

•approval of and restrictions on transactions between insurers and affiliates;

•approval of rates and forms;

•approval of changes in control;

•corporate governance;

•claims practices;

•market conduct;

•approval and sufficiency of reinsurance contracts;

•policyholder service;

•filing of required reports and data call submissions;

•approval of company officers and directors and 10% or more owners; and

•licensing and appointment of agents.

Florida, like many states, has adopted numerous model laws and regulations as promulgated by the National Association of

Insurance Commissioners (“NAIC”). State statutes and administrative rules generally require each insurance company that

is part of a holding company group to register with the department of insurance in its state of domicile and to furnish

25

information concerning the operations of the companies within the holding company system, which may materially affect

the operations, management or financial condition of the insurers within the group.

As part of its registration and ongoing regulation under the insurance holding company statutes, each insurance company

must identify material agreements, relationships and transactions with affiliates, including without limitation loans,

investments, asset transfers, transactions outside of the ordinary course of business, certain management, service, and cost

sharing agreements, reinsurance transactions, dividends and consolidated tax allocation agreements. Many of these

agreements or transactions require regulatory approval prior to being effectuated.

The Florida legislature is very active in assuring that the Florida Insurance Commissioner has the tools needed to strongly

regulate the industry. The 2023 Florida legislature enacted CS/SB 7052, an act related to insurer accountability. This new

law substantially increased financial penalties applicable to insurers that do not follow the law, increases the cadence of

financial and market conduct examinations, creating detailed standards to determine if an insurer is operating in a

hazardous condition and granting enhanced powers to regulate hazardous insurers, creating new unfair trade practices,

requiring insurers to develop detailed claims manuals, and granting authority to the Florida Insurance Commissioner to

review such manuals, and providing funds for regulators to hire more staff to regulate insurers.

Our failure to comply with applicable insurance laws, regulations or requirements in any state could have a material

adverse effect on our business, our reputation, our operational results and/or our financial condition.

Insurance Holding Company Laws

The Company, as the ultimate parent company of AIIC, is subject to certain laws of the State of Florida governing

insurance holding company systems. These laws, among other things, (i) require us to file periodic information with the

FLOIR, including information concerning our capital structure, ownership, financial condition and general business

operations, (ii) regulate certain transactions between us and our affiliates, including the amount of dividends and other

distributions, the terms of surplus notes and amounts that our affiliates can charge the Insurance Entities for services such

as policy administration and claims administration, and (iii) restrict the ability of any one person to acquire certain levels of

our voting securities without prior regulatory approval.

The Florida Insurance Code prohibits any person from acquiring control of the Insurance Entities or their holding

companies unless that person has filed a notification with specified information with the FLOIR and has obtained the

FLOIR’s prior approval. Under the Florida Insurance Code, acquiring 10% or more of the voting securities of an insurance

company or its parent company is presumptively considered an acquisition of control of the insurance company, although

such presumption may be rebutted. Some state insurance laws require prior notification to state insurance regulators of an

acquisition of control of a non-domiciliary insurance company doing business in that state.

Insurance holding company regulations also govern the amount any affiliate of the holding company may charge AIIC for

services (e.g., claims adjustment, administration, management fees and commissions). Further, insurance holding company

regulations may also require prior approval of insurance regulators for amendments to or terminations of certain affiliate

agreements.

Own-risk Solvency Assessment and Model Audit Rule Compliance and Costs

Florida statutes require insurers to file Own-risk and Solvency Assessment Summary Report (“ORSA”) summary reports

annually. The ORSA is an internal assessment, tailored to the nature, scale, and complexity of an insurer or insurance

group, conducted by that insurer or insurance group, of the material and relevant risks associated with the business plan of

an insurer or insurance group and the sufficiency of capital resources to support those risks. Insurers that exceed $500

million in gross premiums written may be subjected to additional reporting and compliance requirements and costs.

In addition, the NAIC promulgated a Model Audit Rule, which places additional compliance duties and costs on insurers

that exceed $500 million in direct premiums written. This rule includes the establishment of additional internal controls,

disclosing unremediated material weaknesses and analysis of any limitations of internal control.

As AIIC grows, additional costs and duties under these statutes and rules must be implemented.

Capital Requirements

State insurance authorities monitor insurance companies’ solvency and capital requirements using various statutory

requirements and industry ratios. Initially, states require minimum capital levels based on the lines of business written by a

26

company and set requirements regarding the ongoing amount and composition of capital. Certain state regulators also

require state deposits in their respective states. As a company grows, additional capital measures and standards may be

implemented by a regulator. Regulatory authorities use an RBC model published by the NAIC to monitor and regulate the

capital adequacy and solvency of licensed property and casualty insurance companies. These guidelines measure three

major areas of risk facing property and casualty insurers: (i) underwriting risks, which encompass the risk of adverse loss

developments and inadequate pricing, (ii) declines in asset values arising from credit risk and (iii) other business risks.

Most states, including Florida, have enacted the NAIC guidelines as statutory requirements, and insurers having less

surplus than required by applicable statutes and ratios are subject to varying degrees of regulatory action depending on the

level of capital inadequacy.

Solvency Regulation

Solvency requirements are statutorily prescribed by each state and evaluated primarily according to the requirements of the

domiciliary (home) state of the insurer. Insurers are subject to specific accounting rules known as statutory accounting,

which is a conservative methodology designed to admit only those assets that can be quickly converted to cash to pay

insurance claims. As a result, there are significant limitations on asset classes and whether those assets can be counted on

the company’s balance sheet. Many assets that anchor the balance sheets of non-insurance companies, such as real estate,

goodwill, older receivables, intangible assets, etc., are excluded from an insurance company’s balance sheet.

Insurers are subject to ongoing financial analysis predominantly by their state of domicile but also to a more limited degree

by each state in which they conduct business. This includes the filing of quarterly and annual financial statements in a

prescribed format, compliance with RBC requirements which measure the insurer’s level of capital to determine if it is

adequate in proportion to its risk, the filing of holding company registration statements, and a host of other financial

solvency reporting requirements. Insurers are also subject to regularly scheduled or targeted financial examinations, which

may be conducted by the domiciliary state or any state in which the company is licensed. The results of financial

examinations are disclosed in a final report of examination, which is a public document.

Restrictions on Dividends and Distributions

As a holding company with no significant business operations of its own, we rely on dividend payments from our

subsidiaries as our principal source of cash to pay stockholder dividends, support subsidiary operations and development,

and meet our short-and long-term obligations. Dividends paid by our subsidiaries, other than AIIC, are not subject to the

statutory restrictions set forth in the Florida Insurance Code.

State insurance laws govern the payment of dividends by insurance companies. The maximum amount of dividends that

can be paid by Florida insurance companies such as AIIC without prior approval of the commissioner of the FLOIR is

subject to restrictions relating to statutory surplus. The maximum dividend that may be paid by AIIC to its immediate

parent company without prior approval is limited to the lesser of statutory net income from operations of the preceding

calendar year or statutory unassigned surplus as of the preceding year end.

Market Conduct Regulation

Insurers are also subject to market conduct examination in their home state or in any state in which they do business to

determine compliance with each state’s insurance laws and rules or regulations. These examinations focus on such areas as

claims payment practices, consumer complaints, marketing activities, rate and form issues, governance and other

compliance activities. These examinations may be regularly scheduled or targeted market conduct examinations. The

results of market conduct examinations are also disclosed in a final report, which is a public document.

Rate and Form Regulation

Most states regulate the content of policy forms to ensure that they comply with applicable statutory provisions and do not

contain unfair or deceptive provisions; Florida and most states require the policy forms to be filed and approved prior to

use. Florida and most states also regulate the rate that an insurer can charge for coverage to determine that the rates are “not

excessive, inadequate or unfairly discriminatory” and require that the rates be approved prior to use.

Florida’s Property Insurance Litigation Environment

Data contained in the NAIC’s 2021 Market Conduct Annual Statement (“MCAS”) report reflected that while Florida

accounted for 8% of homeowners insurance claims filed nationwide in 2019, Florida accounted for 76% of homeowners

litigation initiated nationwide. Florida lawmakers convened two special sessions in 2022 to address property insurance

reform, including measures to improve the litigation environment. Senate Bill 2-A (“SB 2A”), which passed in December

27

of 2022, included a provision which eliminated the right to attorneys’ fees under a residential or commercial property

insurance policy. The latest MCAS report as of 2022 reflected that Florida accounted for 14.9% of homeowners insurance

claims filed nationwide with 70.8% of homeowners litigation nationwide. The inordinate levels of litigation in Florida have

largely been driven by the historic requirement mandating attorneys’ fees be paid by the insurance company if a claimant

litigates and obtains even one dollar more than what the insurance company offered in its claim settlement. Policyholders

that litigate and lose, however, have not historically been bound to pay the insurer any attorneys’ fees, creating a perverse

incentive for individual plaintiffs lawyers to file hundreds, and many times thousands of cases netting small dollar awards

for consumers, but substantial attorneys’ fees for the lawyers. SB 2A eliminated these “one-way attorneys’ fees” bringing

Florida in line with most other states.

The 2023 Florida legislature clarified SB 2A by enacting a provision mandating that the elimination of the one-way

attorneys’ fees apply prospectively on policies that renewed after SB 2A’s effective date, and which also had a claim filed

on the renewed policy. As a result, plaintiffs’ lawyers have filed an unprecedented number of lawsuits on claims occurring

under the pendency of the old one-way attorneys’ fee law, including claims involving losses in Hurricane Ian, which made

landfall as a Category 5 storm in September 2022. Information provided by the Florida Department of Financial Services,

which must be provided service of process in all insurance related litigation, indicates that service of process accepted by

the Florida Department of Financial Services on behalf of insurance companies dropped 33% in 2024 to 24%, compared to

2023. In addition, AIIC experienced a decline in non-hurricane related claims lawsuits between December 2022 and

December 2023 of 70%, as each month during that 12-month period policies renewed and new claims occurring during that

period were subjected to the new law. All policies are now subject to the new law for claims occurring from this point

forward.

Underwriting and Marketing Restrictions

From time to time, regulatory and legislative bodies in Florida and in other states have adopted or proposed new laws or

regulations to address the cyclical nature of the insurance industry, catastrophic events and insurance capacity and pricing.

These regulations (i) restrict certain policy non-renewals or cancellations and require advance notice on certain policy non-

renewals and (ii) from a practical standpoint, limit or delay rate changes for a specified period during or after a catastrophe

event. Most states, including Florida, also have insurance laws requiring that rate schedules and other information be filed

for review by the insurance regulatory authority. The insurance regulatory authority may disapprove a rate filing if it finds

that the proposed rates would be inadequate, excessive or unfairly discriminatory. Rates, which are not necessarily uniform

for all insurers, vary by many factors including class of business, hazard covered, risk location, reinsurance cost, incurred

losses and size of risk.

Most states, including Florida, require licensure or insurance regulatory authority approval prior to the marketing of new

insurance products. Typically, licensure review is comprehensive and includes a review of a company’s business plan,

solvency, reinsurance, character and experience of its officers and directors, rates, forms and other financial and non-

financial aspects of the company. The insurance regulatory authorities may prohibit entry into a new market by not

granting a license or by withholding approval for an insurer to write new lines of business.

The Company is subject to comprehensive regulatory oversight and regulations, which include periodic reporting to

regulators and regulatory examinations to assure the Company maintains compliance with statutory requirements, and the

payment of fees, premium taxes and assessments in order to maintain its licenses.

State legislatures may amend the laws regulating and governing the insurance industry with little notice, including laws

governing insurer rates, solvency, market conduct or other laws that could have a material adverse effect on our business,

operational results, or our financial condition.

Privacy and Information Security Regulation

Federal and state laws and regulations require certain business entities to protect the security and confidentiality of non-

public personal information and to notify policyholders and other individuals about their policies and practices relating to

their collection and disclosure of customer information and their practices relating to protecting the security and

confidentiality of that information. The NAIC issued a model law on cybersecurity, which is leading to adoption of the

same or similar provisions in the states where we do business. In addition, some states have adopted, and others might

adopt, cybersecurity regulations that differ from proposed model acts or from the laws enacted in other states. Federal and

state lawmakers and regulatory bodies may be expected to consider additional or more detailed regulation regarding these

subjects and the privacy and security of non-public personal information.

28

Available Information

Our internet address is www.aii.com, and our investor relations website is located at investors.aii.com. Our Annual Reports

on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports can be

found on our investor relations website, free of charge, as soon as reasonably practicable after we electronically file such

material with, or furnish it to, the Securities and Exchange Commission (the “SEC”). Information contained on our website

is not incorporated by reference into this Form 10-K. The SEC maintains a public website, www.sec.gov, which includes

information about and the filings of issuers that file electronically with the SEC.