Heritage Insurance Holdings, Inc. (HRTG)

CIK: 0001598665. SIC: 6331 Fire, Marine & Casualty Insurance. Latest 10-K as of: 2026-03-12.

SIC breadcrumb: Finance, Insurance, And Real Estate > Insurance Carriers > SIC 6331 Fire, Marine & Casualty Insurance

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1598665. Latest filing source: 0001193125-26-103715.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-19. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001598665.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-08. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001598665.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001193125-26-214067.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-08. Report date: 2026-03-31.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with our condensed consolidated financial statements and related notes and other information included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025 (as amended, the “2025 Form 10-K”). Unless the context requires otherwise, as used in this Form 10-Q, the terms “we”, “us”, “our”, “the Company”, “our Company”, and similar references refer to Heritage Insurance Holdings, Inc., a Delaware corporation, and its subsidiaries.

Overview

We are a super-regional property and casualty insurance holding company that primarily provides personal and commercial residential insurance products across our multi-state footprint. We provide personal residential insurance in Alabama, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, and Virginia and commercial residential insurance in Florida, Hawaii, New Jersey, and New York. We provide personal residential insurance in Florida, Hawaii, and South Carolina on both an admitted and non-admitted basis and in California on a non-admitted basis only. As a vertically integrated insurer, we control or manage substantially all aspects of risk management, underwriting, claims processing and adjusting, actuarial rate making and reserving, customer service, and distribution. Our financial strength ratings are important to us in establishing our competitive position and can impact our ability to write policies.

Recent Developments

Economic and Market Factors

We continue to monitor the effects of general changes in economic and market conditions on our business. As a result of general inflationary pressures, we have experienced, and may continue to experience, increased cost of materials and labor needed for repairs and to otherwise remediate claims throughout all states in which we conduct business. We mitigate the impact of inflation by implementation of rate increases and the use of inflation guard, which ensures appropriate replacement cost values for our business to reflect the inflationary impact on costs to repair properties. Use of inflation guard impacts both premium and total insured value ("TIV"). Rising reinsurance costs may be mitigated through exposure management as well as recouping the cost of reinsurance in future rate filings.

Supplemental Information

The Supplemental Information table below provides insight on our personal lines, commercial lines, and other business by providing policy count, premiums-in-force and total insured value for those product lines.

Policies-in-force:

Q1 2026

Q1 2025

% Change

Personal Residential

341,843

364,781

(6.29

)

 %

Commercial Residential

3,069

2,908

5.54

 %

Other

8,997

10,132

(11.20

)

 %

Total

353,909

377,821

(6.33

)

 %

Premiums-in-force:

Personal Residential

1,161,078,115

1,144,698,410

1.43

 %

Commercial Residential

256,415,766

278,158,021

(7.82

)

 %

Other

9,632,637

9,796,388

(1.67

)

 %

Total

1,427,126,518

1,432,652,819

(0.39

)

 %

Total Insured Value:

Personal Residential

317,090,936,074

320,649,423,206

(1.11

)

 %

Commercial Residential

48,009,340,202

42,995,169,737

11.66

 %

Other

N/A

N/A

—

 %

Total

365,100,276,276

363,644,592,943

0.40

 %

26

Strategic Profitability Initiatives

The Company has focused on three main strategic initiatives aimed at achieving consistent long-term quarterly earnings and driving shareholder value, including:

•
Generating underwriting profit through rate adequacy and more selective underwriting

•
Allocating capital to products and geographies that maximize long-term returns

•
Targeting a balanced and diversified portfolio

In continuing to implement these three strategic initiatives, we plan to target the following profitability initiatives in 2026:

•
Target geographies open for new business, while closely managing risk and exposure

•
Continue persistent underwriting discipline and focus on rate adequacy while driving prudent top line growth

•
Enhance data driven analytics using AI and other technology tools.

•
Continue the refinement of customer service and claims capabilities.

•
Leverage infrastructure and capabilities to foster further growth, which includes our plan to enter the State of Texas on an excess and surplus lines basis

•
Act as opportunities emerge which will continue our diversification and expansion over the next several years

•
Expand our relationship with reinsurance partners to expand capacity, manage volatility while pursuing growth

Trends

Inflation, Underwriting and Pricing

We address reinsurance and loss cost trends in the property insurance sector through rates and inflation guard factors. Over the last several years, we have filed and been approved by state regulators for rate increases to achieve rate adequacy. Our rates are now adequate in over 90% of our territories, which are currently open for new business. We experienced intentional growth of our commercial residential business during 2025, with in-force premium in that line of business decreasing in the first quarter of 2026, driven primarily by competitive market conditions. To the extent that reinsurance and loss cost trends decline, our rates may be adjusted downward in the future. New rates, which are subject to approval by our regulators, become effective when a policy is written or renewed, and the premium is earned pro rata over the policy period of one year. As a result of this timing, it can take up to twenty-four months for the complete impact of a rate change to be fully earned and impact our financial statements.

We invest in data analytics, using software and experienced personnel, to continuously evaluate our underwriting criteria and manage exposure to catastrophe and other losses. Our policy retention has remained consistent in the upper 80’s to low 90’s. While we believe our rates are generally competitive with private market insurers operating in our space, we are focused on prudent growth in 2026 while managing exposure and ensuring rate adequacy throughout our book of business as well as providing high levels of customer service to our agents and policyholders.

We may experience rising inflation in the form of increased labor and material costs, which drive up claim costs throughout all states in which we conduct business. However, inflation is increasing at a lower rate than what we have experienced in the last several years. We adjust for changes in inflation by increasing or decreasing the inflation factor used in our pricing. Florida personal lines claim costs associated with litigated claims have decreased over the last several years due to favorable legislation aimed to curtail claims abuse and stabilize the Florida property insurance market. This has had the intended impact and has resulted in better margins and better rates for Florida policyholders. Accordingly, we have a positive outlook for Florida and the other rate adequate states.

We have a solid, consistent panel of reinsurance partners that provide reinsurance capacity at competitive pricing and sufficient levels to support our growth objectives. Additionally, we may leverage our captive reinsurer to assume risks from our insurance company affiliates.

27

Overview of Financial Results

In the following section, we discuss our financial condition and results of operations for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

The discussion of our financial condition and results of operations that follows provides information that will assist the reader in understanding our consolidated financial statements, the changes in certain key items in those financial statements from quarter to quarter, including certain key performance indicators such as net combined ratio, ceded premium ratio, net expense ratio and net loss ratio, and the primary factors that accounted for those changes, as well as how certain accounting principles, policies and estimates affect our consolidated financial statements. This discussion should be read in conjunction with our consolidated financial statements and the related notes included under Item 1 of this Quarterly Report on Form 10-Q.

•
First quarter ended 2026 net income was $36.5 million or $1.19 per diluted share, compared to net income of $30.5 million or $0.99 per diluted share in the prior year quarter, primarily driven by higher investment income and a reduction in losses, partly offset by higher general and administrative expenses. The reduction in losses is attributable to a slightly lower net attritional loss ratio resulting from the positive impact of rate actions, underwriting actions, and targeted exposure management taken over the last several years, which continue to favorably impact results, as well as lower weather losses. Additionally, favorable prior year loss development increased from the prior year quarter. Policy acquisition costs were lower from the prior year quarter by 1.0%, driven mostly by lower costs associated with premium processing. General and administrative costs increased 4.4% from the prior year quarter driven primarily by human capital costs, with the net general and administrative expense ratio at 12.5% compared to 11.9% for the prior year quarter.

•
Gross premiums written of $346.7 million were down 2.6% from $356.0 million in the prior year quarter, primarily driven by a reduction in commercial residential business which was partly offset by higher gross premiums written for personal lines business. The Florida commercial residential market has become increasingly competitive and management is committed to maintaining adequate margins; as such Heritage will only write business that meets our underwriting and pricing standards. Management is also leveraging the expertise of our commercial residential team to expand this product to other states, the most recent of which is Hawaii. Overall, management believes we have achieved rate adequacy in over 90% of our territories and each of those territories were open for new business as of March 31, 2026. Our catastrophe excess of loss program this year will be completed with higher coverage than previously purchased but also at risk adjusted cost decreases. To the extent our cost of doing business decreases, our policyholders would benefit with reduced pricing, while we maintain adequate margins.

•
Gross premiums earned were $353.6 million, consistent with $353.8 million earned in the prior year quarter, as commercial residential business declined due to the market conditions described above, but were largely offset by higher gross premiums earned for the personal residential business.

•
Net premiums earned were $199.7 million, consistent with $200.0 million earned in the prior year quarter, given a small reduction in gross premiums earned described above, with relatively flat ceded premiums for the quarter.

•
Losses and loss adjustments expenses incurred of $91.6 million, a 7.9% improvement from $99.4 million in the prior year quarter. The decrease primarily stems from lower catastrophe losses and lower attritional losses, as well as higher favorable net loss development. Net weather and catastrophe losses for the current year quarter were $36.7 million, a decrease of $6.8 million from $43.5 million in the prior year quarter. Net losses in the current year quarter include non-hurricane catastrophe losses of $24.4 million from winter storms in the northeast, a decrease of $7.3 million compared to $31.8 million of non-hurricane catastrophe losses from the California wildfires in the prior year quarter. Other weather losses totaled $12.3 million, an increase of $600,000 from the prior year quarter amount of $11.7 million. Net

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-03-12. Report date: 2025-12-31.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are a super-regional property and casualty insurance holding company that primarily provides personal and commercial residential insurance products across our multi-state footprint. We provide personal residential insurance in Alabama, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, and Virginia and commercial residential insurance in Florida, Hawaii, New Jersey, and New York. We provide personal residential insurance in Florida, Hawaii and South Carolina on both an admitted and non-admitted basis and in California on a non-admitted basis. As a vertically integrated insurer, we control or manage substantially all aspects of risk management, underwriting, claims processing and adjusting, actuarial rate making and reserving, customer service, and distribution. Our financial strength ratings are important to us in establishing our competitive position and can impact our ability to write policies.

Recent Developments

Economic and Market Factors

We continue to monitor the effects of general changes in economic and market conditions on our business. As a result of general inflationary pressures, we have experienced, and may continue to experience, increased cost of materials and labor needed for repairs and to otherwise remediate claims throughout all states in which we conduct business. We mitigate the impact of inflation by implementation of rate increases and the use of inflation guard, which ensures appropriate replacement cost values for our business to reflect the inflationary impact on costs to repair properties. Use of inflation guard impacts both premium and total insured value ("TIV"). To the extent that reinsurance costs rise, we may seek to recoup the cost of reinsurance in future rate filings as well as mitigate the cost through exposure management.

Supplemental Information

The Supplemental Information table below demonstrates progress on our initiatives by providing policy count, premiums-in-force, and total insured value for Florida and all other states as of December 31, 2025 and comparing those metrics to December 31, 2024. One of our strategies had been to reduce personal lines exposure in Florida, given historical abusive claims practices. Since 2022, several legislative changes have been implemented to positively impact the Florida property insurance market by curtailing assignment of benefits and litigated claims abuses. The positive impact of the legislative changes is reflected in our loss trends, which favorably impact the cost of insurance to our policyholders. Our strategy has been to obtain rate adequacy throughout our portfolio. Through various underwriting, rate making and other actions over the last several years, we believe we have achieved rate adequacy in over 90% of our portfolio, with each of those rate adequate territories being currently open for writing new business. During 2025, we concluded our exposure management initiatives from previous years and began deployment of our managed growth initiative. We anticipate growing our portfolio during 2026 while maintaining our disciplined underwriting standards.

At December 31,

Policies in force:

2025

2024

% Change

Florida

123,437

133,775

(7.7

)

%

Other States

233,838

255,700

(8.5

)

%

Total

357,275

389,475

(8.3

)

%

Premiums in force:

(In thousands)

Florida

$

679,079

$

707,197

(4.0

)

%

Other States

752,738

726,048

3.7

%

Total

$

1,431,817

$

1,433,245

(0.1

)

%

Total Insured Value:

(In thousands)

Florida

$

105,997,817

$

102,661,095

3.3

%

Other States

257,533,142

264,950,914

(2.8

)

%

Total

$

363,530,959

$

367,612,009

(1.1

)

%

38

Table of Contents

Policies-in-force decreased from the prior year, driven primarily by the final stages of our continued strategy to re-underwrite our existing personal lines book of business and gradually open territories for new business written where rates are adequate. At the same time, the policies-in-force specific to our commercial residential business grew during 2025, which drove an increase in our Florida TIV. As rates for our personal lines business became more adequate during 2025, the Company embarked upon a managed growth strategy. New business premium production for the fourth quarter of 2025 increased over 60% compared to new business production for the fourth quarter of 2024. Premiums in force for our personal lines business grew year over year but was offset by a larger decline in premiums in force for our commercial residential business. The decline in premium in force for commercial residential business was driven mostly by the current competitive market in Florida for this product. We have a substantial book of commercial business at December 31, 2025 with $265.0 million of in-force premium and will maintain our established pricing and underwriting discipline.

Florida policies-in-force declined from the prior year by 7.7% and Florida premiums-in-force decreased by 4.0%, while Florida TIV increased over the prior year. The decrease in Florida premiums-in-force was driven mostly by a reduction in premium for commercial residential business related to the current competitive market in the state. However the in-force policies for the commercial residential product grew resulting in higher Florida TIV. Compared to the year ended December 31, 2024, the policy count for markets outside of Florida decreased 8.5% due to underwriting actions and intentional exposure management, resulting in a TIV decrease of 2.8% while premiums-in-force increased by 3.7% due to rating actions.

Strategic Profitability Initiatives

The Company has focused on three main strategic initiatives aimed at achieving consistent long-term quarterly earnings and driving shareholder value including:

•
Generating underwriting profit through rate adequacy and more selective underwriting.

•
Allocating capital to products and geographies that maximize long-term returns.

•
Targeting a balanced and diversified portfolio

Fulfilled Strategic Profitability Initiatives in 2025

•
Re-opened profitable geographies and allocated capital to sustain profits and margin on a measured basis

•
Persistent underwriting discipline and focus on rate adequacy

•
Continued data driven analytics

•
Enhanced customer service and claims capabilities

•
Leveraged infrastructure and capabilities to foster future growth

Strategic Profitability Initiatives for 2026

•
Target geographies open for new business, while closely managing risk and exposure

•
Continue persistent underwriting discipline and focus on rate adequacy while driving prudent growth of the top line

•
Enhance data driven analytics using AI and other technology tools

•
Continue the refinement of customer service and claims capabilities

•
Leverage infrastructure and capabilities to foster future growth, which includes our plan to enter the State of Texas to offer products on an excess and surplus lines basis

39

Table of Contents

Trends

Inflation, Underwriting and Pricing

We address reinsurance and loss costs trends in the property insurance sector through rates and inflation guard factors which resulted in an increase in the average premium per policy of 8.9% at December 31, 2025, as compared to the prior year . The higher average premium is driven by rate changes, inclusion of inflation guard, and by the mix of business written. We experienced intentional growth of our commercial residential business during 2024, with in-force premium in that line of business decreasing during 2025, driven primarily by competitive market conditions as described above. New rates, which are subject to approval by our regulators, become effective when a policy is written or renewed, and the premium is earned pro rata over the policy period of one year. As a result of this timing, it can take up to twenty-four months for the complete impact of a rate change to be fully earned in our financial statements. For that reason, we account for inflation in our rate indications and filings with our regulators.

We invest in data analytics, using software and experienced personnel, to continuously evaluate our underwriting criteria and manage exposure to catastrophe and other losses. Our policy retention has remained steadily in the range of 90.0%. While we believe our rates are generally competitive with private market insurers operating in our space, we are focused on managing exposure and achieving rate adequacy throughout our book of business as well as providing high levels of customer service to our agents and policyholders.

We experience rising inflation in the form of increased labor and material costs, which drive up claim costs throughout all states in which we conduct business. However, inflation is increasing at a lower rate than what we have experienced in the last several years. We adjust for changes in inflation by increasing or decreasing the inflation factor used in our pricing. Florida personal lines claim costs associated with litigated claims have decreased over the last several years due to favorable legislation aimed to curtail claims abuse and stabilizing the Florida property insurance market. This is reflected in our rates and as the legislation appears to have achieved its intended impact, our outlook on conducting business in Florida has improved.

We have experienced a sufficient supply of catastrophe excess of loss reinsurance and believe our cost of reinsurance to be competitive. In contrast, our industry had experienced significantly higher reinsurance costs and more constrained availability for catastrophe excess of loss reinsurance in 2022 and 2023.

Key Components of our Results of Operations

Revenue

Gross premiums written represent, with respect to a period, the sum of direct premiums written (premiums from policies written during the period, net of any midterm cancellations and renewals of voluntary policies) and assumed premiums written (primarily premiums from state fair plan policies), in each case prior to ceding premiums to reinsurers.

Gross premiums earned represent the total premiums earned during a period from policies written. Premiums associated with new and renewal policies are earned ratably over the twelve-month term of the policy and premiums associated with assumed policies are earned ratably over the remaining term of the policy.

Ceded premiums represent the cost of our reinsurance during a period. We recognize the cost of our reinsurance program ratably over term of the arrangement, which is typically twelve months. Our catastrophe excess of loss reinsurance generally commences on June 1 and runs through May 31 of the following year. Our net quota share treaty commences on December 31. Our other reinsurance programs may be purchased on a calendar or fiscal year basis.

Net premiums earned reflect gross premiums earned less ceded premiums during the period.

Net investment income represents interest earned on fixed maturity securities, short term securities and other investments, dividends on equity securities.

Net realized and unrealized gains or losses represent gains or losses on investment sales and unrealized gains or losses on equity securities.

40

Table of Contents

Other revenue is primarily comprised of policy and pay-plan fees and also includes rental income due under non-cancelable leases for space at the Company’s commercial property in Clearwater, Florida, which was sold in the third quarter of 2025. Our regulators have approved a policy fee on each policy written for certain states; to the extent these fees are not subject to refund, the Company recognizes the income immediately when collected. The Company also charges pay-plan fees to policyholders that pay premiums in more than one installment and record the fees as income when collected.

Expenses

Losses and loss adjustment expenses (“LAE”) reflect losses paid, expenses paid to resolve claims, such as fees paid to adjusters, attorneys and investigators, and changes in our reserves for unpaid losses and loss adjustment expenses during the period, in each case net of losses ceded to reinsurers. Our reserves for unpaid losses and loss adjustment expenses represent the estimated ultimate cost of resolving all reported claims plus all losses we incurred related to insured events that we assume have occurred as of the reporting date, but that policyholders have not yet reported to us (which are commonly referred to as incurred but not reported, or “IBNR”). We estimate our reserves for unpaid losses using individual case-based estimates for reported claims and actuarial estimates for IBNR losses. We continually review and adjust our estimated losses as necessary based on our evolving claims experience, new information obtained and industry development trends. If our unpaid losses and loss adjustment expenses are considered deficient or redundant, we increase or decrease the liability in the period in which we identify the difference and reflect the change in our current period results of operations.

Policy acquisition costs (“PAC”) consist of: (i) commissions paid to outside agents at the time of policy issuance, (ii) policy administration fees paid to a third-party, (iii) premium taxes and (iv) inspection fees. We recognize policy acquisition costs ratably over the term of the underlying policy. We earn ceding commissions on our net quota share reinsurance contract and certain other reinsurance contracts, which are reported as a reduction to policy acquisition costs and general and administrative expenses based upon the proportion these costs bear to production of new business. Ceding commission income is deferred and earned over the contract period. The amount and rate of ceding commissions earned on the net quota share contract can slide within a prescribed minimum and maximum, depending on loss performance and how future losses develop. Refer to Note 11 “Deferred Policy Acquisition Costs” to our consolidated financial statements under Item 8 of this Annual Report on Form 10K.

General and administrative expenses (“G&A”) include compensation and related benefits, professional fees, office lease and related expenses, information system expenses, corporate insurance, and other general and administrative costs. As noted above, a certain portion of our ceding commissions are allocated to general and administrative expenses.

Provision for income taxes consists of federal and state corporate level income taxes. The effective tax rate can fluctuate throughout the year as estimates used in the quarterly tax provision are updated with additional information throughout the year and updated with actual amounts in the fourth quarter. The effective tax rate can vary from the 25.8% statutory federal and state blended rate depending on the amount of pretax income in proportion to permanent tax differences as well as state tax apportionment.

Ratios

Ceded premium ratio represents ceded premiums earned as a percentage of gross premiums earned.

Net loss ratio represents net losses and LAE as a percentage of net premiums earned.

Net expense ratio represents PAC and G&A expenses as a percentage of net premiums earned. Ceding commission income is reported as a reduction of policy acquisition costs and G&A expenses.

Net combined ratio represents the sum of the net loss and expense ratio. The net combined ratio is a key measure of underwriting performance traditionally used in the property and casualty insurance industry. A net combined ratio under 100% generally reflects profitable underwriting results.

41

Table of Contents

Overview of 2025 Financial Results

In the following section, we discuss our financial condition and results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please Refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 13, 2025.

The discussion of our financial condition and results of operations that follows provides information that will assist the reader in understanding our consolidated financial statements, the changes in certain key items in those financial statements from year to year, including certain key performance indicators such as net combined ratio, ceded premium ratio, net expense ratio and net loss ratio, and the primary factors that accounted for those changes, as well as how certain accounting principles, policies and estimates affect our consolidated financial statements. This discussion should be read in conjunction with our consolidated financial statements and the related notes included under Part II, Item 8 of this Annual Report on Form 10-K.

•
Net income for the year ended December 31, 2025 was $195.6 million or $6.32 per diluted share, compared to a net income of $61.5 million or $2.01 diluted loss per share in the prior year. The increase was primarily driven by higher net premiums earned, higher investment income, a significant decrease in losses and LAE, and lower operating expenses. The improvement in net income is attributable to the positive impact of rate actions, underwriting actions, and exposure management taken during the last several years, which favorably impacted results for the year ended December 31, 2025. These actions resulted in growth of 3.4% in net premiums earned, with a 29.9% decrease in net losses and LAE. The decrease in net losses and LAE is attributable to lower weather and attritional losses as described below. Policy acquisition costs decreased 9.0%, driven by higher ceding commission income on the net quota share reinsurance contracts. General and administrative costs increased 9.2% driven primarily by human capital and systems costs as described below.

•
Gross premiums written of $1.44 billion, an improvement of 0.2% from $1.43 billion in the prior year, reflecting rating actions and deployment of our managed growth initiative, while ending exposure management initiatives from prior years. These actions resulted in growth of our personal lines premium over the prior year. A reduction of written premium for commercial residential business, driven by competitive market conditions, mostly offset the growth in the personal lines gross written premium. Management believes we have achieved rate adequacy in over 90% of our territories and each of those territories were open for new business as of December 31, 2025.

•
Gross premiums earned of $1.43 billion, an improvement of 1.8% from $1.41 billion in the prior year, reflecting higher gross premiums written over the last twelve months.

•
Net premiums earned of $794.2 million, an improvement of 3.4% from $767.9 million in the prior year, reflecting the higher gross earned premium coupled with a reduction in ceded premiums compared to the prior year.

•
Losses and loss adjustment expenses incurred of $313.2 million, a 29.9% improvement from $447.0 million in the prior year. The decrease primarily stems from significantly lower catastrophe losses and lower attritional losses as well as favorable net loss development. Net weather and catastrophe losses for the current accident year were $77.5 million, a decrease from $146.7 million in the prior year. Catastrophe losses in the current year were $33.2 million, down from $104.6 million in the prior year. Other weather losses totaled $44.3 million, up from the prior year amount of $42.1 million. Net favorable prior year loss development was $13.5 million for the current year compared to net unfavorable loss development of $25.4 million for the prior year.

42

Table of Contents

•
Ceded premium ratio of 44.5%, a 0.9 point improvement over the prior year ratio of 45.4%, driven by growth in gross premiums earned, coupled with less ceded premium compared to the prior year as described below.

•
Net loss ratio of 39.4%, an 18.8 point improvement over the prior year ratio of 58.2%, driven by the reduction of losses and LAE as described above coupled with higher net premiums earned.

•
Net expense ratio of 33.6%, down 2.4 points from the prior year amount of 36.0%, driven by lower operating expenses coupled with higher net earned premium. The decrease in policy acquisition costs is primarily driven by higher ceding commission associated with the net quota share reinsurance program while the increase in general and administrative expenses relates to higher human capital and systems costs, both of which are described below.

•
Net combined ratio of 73.1%, a 21.1 point improvement from 94.2% in the prior year, primarily driven by lower net loss ratio and a lower net expense ratio as described above.

•
Effective tax rate was 24.6% compared to 25.7% in the prior year. The effective tax rate for 2025 was slightly lower than the statutory rate, driven primarily by higher pretax income which had a dilutive effect on permanent tax differences.

Consolidated Results of Operations

The following table summarizes our results of operations for the years indicated:

Year Ended December 31,

2025

2024

$ Change

% Change

(in thousands, expect per share amounts)

REVENUE:

Gross premiums written

$

1,436,346

$

1,432,942

$

3,404

0.2

%

Change in gross unearned premiums

(5,243

)

(26,836

)

21,593

80.5

%

Gross premiums earned

1,431,103

1,406,106

24,997

1.8

%

Ceded premiums

(636,946

)

(638,246

)

1,300

0.2

%

Net premiums earned

794,157

767,860

26,297

3.4

%

Net investment income

37,156

36,631

525

1.4

%

Net realized gains (losses) on debt securities and other investments

2,713

(705

)

3,418

NM

Other revenue

13,304

13,199

105

0.8

%

Total revenue

847,330

816,985

$

30,345

3.7

%

OPERATING EXPENSES:

Losses and loss adjustment expenses

$

313,246

$

447,048

$

(133,802

)

(29.9

%)

Policy acquisition costs

173,961

191,189

(17,228

)

(9.0

%)

General and administrative expenses

92,972

85,138

7,834

9.2

%

Total operating expenses

580,179

723,375

(143,196

)

(19.8

%)

Operating income

267,151

93,610

173,541

185.4

%

Interest expense, net

7,887

10,934

(3,047

)

(27.9

%)

Income before taxes

259,264

82,676

176,588

213.6

%

Income tax expense

63,670

21,136

42,534

201.2

%

Net income

$

195,594

$

61,539

$

134,054

217.8

%

Basic net income per share

$

6.33

$

2.01

$

4.32

214.9

%

Diluted net income per share

$

6.32

$

2.01

$

4.31

214.4

%

Total revenue

Total revenue was $847.3 million for the year ended December 31, 2025, up 3.7% compared to $817.0 million in the prior year. The increase primarily stems from higher net premiums earned and net investment income, which includes a realized gain on a building sale, as described below.

43

Table of Contents

Gross premiums written

Gross premiums written were $1.44 billion, up 0.2% from $1.43 billion in the prior year, reflecting rating actions and deployment of our managed growth initiative, while ending our exposure management initiatives from prior years. These actions resulted in growth of our personal lines premium over the prior year. A reduction of written premium for commercial residential business, driven by competitive market conditions, was mostly offset the growth in the personal lines gross written premium. We believe we have achieved rate adequacy in over 90% of our territories and each of those territories were open for new business as of December 31, 2025.

Premiums-in-force were $1.43 billion as of December 31, 2025, representing a 0.1% decrease from the prior year due to a reduction in commercial residential in-force premium that offset growth in personal lines in-force premium throughout the book.

Gross premiums earned

Gross premiums earned were $1.43 billion for the year ended December 31, 2025, up 1.8% compared to $1.41 billion in the prior year reflecting higher gross premiums written over the last twelve months.

Ceded premiums

Ceded premiums were $636.9 million for the year ended December 31, 2025, down 0.2% compared to $638.2 million in the prior year. The decrease is primarily attributable to a favorable adjustment recorded in the fourth quarter to reflect a TIV true up on the catastrophe excess of loss reinsurance program and lower catastrophe loss reinstatement premium compared to the prior year, which was partly offset by higher ceded premium on the net quota share program from higher subject premium for that program.

Net premiums earned

Net premiums earned were $794.2 million for the year ended December 31, 2025, up 3.4% compared to $767.9 million in the prior year. The increase primarily stems from higher gross premiums earned coupled with lower ceded premiums as described above.

Net investment income, inclusive of net realized gains on debt securities and other investments

Net investment income, inclusive of net realized gains on debt securities and other investments was $39.9 million for the year ended December 31, 2025, up 11.0% compared to $35.9 million in the prior year. The increase is primarily due to a gain on a building sale during the third quarter as well as higher investment yields driven by higher cash and invested assets balances which are moving out on the yield curve, which was partly offset by lower yields on money market funds and our bank sweep accounts as a result of the current interest rate environment.

EXPENSE

Year Ended December 31,

2025

2024

$ Change

% Change

(in thousands)

OPERATING EXPENSES:

Losses and loss adjustment expenses

$

313,246

$

447,048

$

(133,802

)

(29.9

%)

Policy acquisition costs

173,961

191,189

(17,228

)

(9.0

%)

General and administrative expenses

92,972

85,138

7,834

9.2

%

Total operating expenses

$

580,179

$

723,375

$

(143,196

)

(19.8

%)

Total operating expenses

Total operating expenses were $580.2 million, an improvement of 19.8% from $723.4 million in the prior year. As described below, the decrease in operating expenses was driven by a decrease in losses and loss adjustment expenses and policy acquisition costs offset by higher general and administrative expenses.

44

Table of Contents

Losses and loss adjustment expenses (LAE)

Losses and LAE were $313.2 million for the year ended December 31, 2025, an improvement of 29.9% compared to $447.0 million in the prior year. The decrease primarily stems from lower catastrophe losses, lower attritional losses and favorable loss development, which was partly offset by slightly higher weather losses compared to the prior year. Net current accident year weather and wildfire losses were $77.5 million, up from $146.7 million in the prior year. Current year catastrophe losses were $33.2 million compared to catastrophe weather losses of $104.6 million in the prior year. Other weather losses were $44.3 million compared to $42.1 million in the prior year. Additionally, attritional losses were lower than the prior year. Net favorable prior year loss development was $13.5 million for the year 2025 compared to net unfavorable loss development of $25.4 million for the prior year. The 2024 net unfavorable loss development stemmed primarily from losses associated with Hurricane Irma, for which the losses were fully retained.

Policy acquisition costs

Policy acquisition costs were $174.0 million for the year ended December 31, 2025, an improvement of 9% compared to $191.2 million in the prior year. The decrease is primarily attributable to higher ceding commission earned on the net quota share reinsurance contract, the income of which offsets other policy acquisition costs. The increase in ceding commission income is due to changes in the program which incepted December 31, 2024 and included a higher ceded premium rate and more written premium applicable to the program, as well as a higher ceding commission rate driven by favorable loss experience during 2025 for that program.

General and administrative expenses

General and administrative expenses were $93.0 million for the year ended December 31, 2025, up 9.2% compared to $85.1 million in the prior year. The increase was driven largely by human capital costs and higher costs associated with the implementation of a new claims, billing and policy system, which were partly offset by higher ceding commission and certain lower costs associated with the non-recurrence of 2024 expenses. The policy, billing and claims system was placed in service on a pilot basis late in the third quarter of 2024. Certain costs associated with the system are currently being capitalized as development is still in progress and the previously capitalized costs are now being amortized, while other costs associated with the system are being expensed as incurred. The Company’s implementation of enhanced and updated claims, policy, and billing systems is expected to enhance customer service, and improve the timeliness and quality of data analytics used to drive underwriting income, as well as the ability to leverage current and developing technology.

INCOME

Year Ended December 31,

2025

2024

$ Change

% Change

(in thousands, expect per share amounts)

Operating income

$

267,151

$

93,610

$

173,541

185.4

%

Interest expense, net

7,887

10,934

(3,047

)

(27.9

%)

Income before taxes

259,264

82,676

176,588

213.6

%

Income tax expense

63,670

21,136

42,534

201.2

%

Net income

$

195,594

$

61,539

$

134,054

217.8

%

Basic net income per share

$

6.33

$

2.01

$

4.32

214.9

%

Diluted net income per share

$

6.32

$

2.01

$

4.31

214.4

%

Net income

Net income for the year ended December 31, 2025 was $195.6 million or $6.32 per diluted share, an improvement of 217.8% from net income of $61.5 million or $2.01 per diluted share in the prior year. The increase was driven by higher net premiums earned, higher investment income, a significant decrease in losses and LAE, and lower operating expenses. The improvement in net income is also attributable to the positive result of rate actions, underwriting discipline, and exposure management undertaken during the last several years. These and other actions resulted in growth of 3.4% in net premiums earned and a 29.9% decrease in net losses and LAE, as described above. Policy acquisition costs decreased 9.0%, primarily related to an increase in ceding commission income on the net quota share reinsurance contracts. General and administrative costs increased 9.2% driven primarily by costs associated with software, including a new claims, billing and policy system as well as an increase

45

Table of Contents

in human capital costs as described above. As described below, a lower effective tax rate amplified the benefit of these items on an after tax basis.

Interest expense, net

Interest expense was $7.9 million for the year ended December 31, 2025, a reduction from the prior year amount of $10.9 million by 27.9%. The decrease was attributable to the impact from the reduction of debt obligations accompanied with a lower interest rate environment for our variable rate debt.

Income tax expense

The expense for income taxes was $63.7 million for the year ended December 31, 2025 compared to $21.1 million for the year ended December 31, 2024. The effective tax rate for the year ended December 31, 2025 was 24.6%, which is slightly lower than the statutory rate, compared to 25.6% in the prior year. The effective tax rate for 2025 was slightly lower than the statutory rate, driven primarily by higher pretax income which had a dilutive effect on permanent tax differences.

RATIOS

Year Ended December 31,

2025

2024

Ceded premium ratio

44.5

%

45.4

%

Net loss and LAE ratio

39.4

%

58.2

%

Net expense ratio

33.6

%

36.0

%

Net combined ratio

73.1

%

94.2

%

Net combined ratio

The net combined ratio was 73.1% for the year ended December 31, 2025, a 21.1 point improvement from 94.2% in the prior year. The improvement stems primarily from a significantly lower net loss and LAE ratio coupled with a lower net expense ratio, as described below.

Ceded premium ratio

The ceded premium ratio was 44.5% for the year ended December 31, 2025, a 0.9 point improvement from 45.4% to the prior year, reflecting the growth in gross premiums earned as well as lower reinsurance costs as described above.

Net loss and LAE ratio

The net loss and LAE ratio was 39.4% for the year ended December 31, 2025, an 18.8 point improvement from 58.2% in the prior year, primarily driven by the benefit of higher net premiums earned coupled with lower losses and LAE as described above.

Net expense ratio

The net expense ratio was 33.6% for the year ended December 31, 2025, a 2.4 point improvement from 36.0% in the prior year primarily driven by growth in net premiums earned coupled with lower policy acquisition costs which were partly offset by higher net general and administrative expenses as described above.

Financial Condition – December 31, 2025 compared to December 31, 2024

Cash and Cash Equivalents

At December 31, 2025, cash and cash equivalents increased by $106.6 million to $559.3 million from $452.7 million at December 31, 2024. The increase was primarily a result of net cash provided by operations, which was held in money market funds for liquidity.

46

Table of Contents

Fixed Maturity Securities

At December 31, 2025, fixed income securities increased by $57.7 million to $713.2 million from $655.6 million at December 31, 2024. The increase primarily relates to purchases of fixed income securities to lock in interest rates.

Premiums Receivable, net

At December 31, 2025, premiums receivable, net decreased by $6.8 million to $95.3 million from $102.1 million at December 31, 2024. The decrease is primarily due to timing of issuance of policies as well as a smaller population of policyholders using pay plans for their premium payment. When premiums are paid upfront rather than using pay plans, the impact on premiums receivable is to decrease the balance.

Deferred Income Tax Asset, net

At December 31, 2025, the net deferred tax asset decreased by $8.0 million to $5.9 million from $13.9 million at December 31, 2024. The decrease is driven primarily by a reduction of net capitalized software costs as those costs were amortized during 2025. Additionally, the reduction in unrealized losses on investments contributed to a lower net deferred tax asset compared to the prior year.

Reinsurance Recoverable on Paid and Unpaid Claims

At December 31, 2025, reinsurance recoverable on paid and unpaid claims decreased by $421.6 million to $318.6 million from $740.2 million at December 31, 2024. The decrease is primarily due to reinsurance recoveries collected during 2025 for losses associated with Hurricanes Ian and Milton as well as a reduction in ultimate losses for certain catastrophic events which reduced reinsurance recoverable on unpaid claims as hurricane claims developed favorably during 2025.

Other Assets

At December 31, 2025, other assets increased by $22.2 million to $33.8 million from $11.6 million at December 31, 2024. A portion of the increase is driven by an $11.0 million loan to the buyer of a building sold during 2025 which was repaid in full to the Company in January 2026. Another portion of the increase is driven by an amount due from the Florida Department of Revenue associated with a premium tax credit provided by the Company to its policyholders, which was mandated by Florida law and will be credited against the Company's 2025 Florida premium tax on its return to be filed in March 2026.

Unpaid Losses and Loss Adjustment Expenses

At December 31, 2025, unpaid losses and loss adjustment expenses decreased by $463.2 million to $579.5 million from $1.0 billion at December 31, 2024. This balance represents unpaid loss and loss adjustment expenses gross of reinsurance. The decrease was primarily due to payment of claims for Hurricanes Milton and Ian during the year ended 2025, as well as a reduction in ultimate losses for certain catastrophic events as hurricane claims developed favorably during 2025.

Long-term debt, net

At December 31, 2025, long-term debt, net decreased by $37.9 million to $78.4 million from $116.3 million at December 31, 2024. The decrease is driven by a payoff of the FHLB loan coupled with a payoff of the mortgage on the building that was sold during 2025, as well as principal payments on the term loan.

Total Shareholders’ Equity

At December 31, 2025, total shareholders’ equity increased by $214.5 million to $505.3 million from $290.8 million at December 31, 2024. The increase is primarily due to net income of $195.6 million for the year ended December 31, 2025, coupled with a reduction in unrealized losses on our fixed income portfolio from $37.2 million at December 31, 2024 to $13.5 million at December 31, 2025 driven by lower interest rates during 2025, partly offset by the repurchase of stock during 2025.

47

Table of Contents

Liquidity and Capital Resources

Our principal sources of liquidity include cash flows generated from operations, our cash and cash equivalents, our marketable securities balances and borrowings available under our credit facilities. As of December 31, 2025, we held $559.3 million in cash and cash equivalents and $715.6 million in investments, compared to $452.7 million in cash and $663.4 million in investments as of December 31, 2024. The increase in cash and cash equivalents was primarily driven by cash from operations including collection of premiums and reinsurance recoveries, funds used for payment of claims, as well as timing of reinsurance premium payments. The increase in investments was driven by re-investment of proceeds from investment maturities and short term funds.

We generally hold substantial cash balances to meet seasonal liquidity needs including amounts to pay quarterly reinsurance installments as well as meet the collateral requirements of Osprey, our captive reinsurance company, which is required to maintain a collateral trust account equal to the risk that it assumes from our insurance company affiliates.

We believe that our sources of liquidity are adequate to meet our cash requirements for at least the next twelve months.

We may continue to pursue the acquisition of complementary businesses and make strategic investments. We may increase capital expenditures consistent with our investment plans and anticipated growth strategy. Cash and cash equivalents may not be sufficient to fund such expenditures. As such, in addition to the use of our existing Credit Facilities, we may need to utilize additional debt to secure funds for such purposes.

Statement of Cash Flows

The net increases (decreases) in cash and cash equivalents are summarized in the following table:

For the Year Ended December 31,

2025

2024

2023

2025 vs 2024

Change

2024 vs 2023

Change

Net cash provided by (used in):

(in thousands)

Operating activities

$

182,238

$

87,095

$

70,415

$

95,143

$

16,680

Investing activities

(32,673

)

(91,599

)

100,806

58,926

(192,405

)

Financing activities

(40,629

)

(5,190

)

14,546

(35,439

)

(19,736

)

Net change in cash, cash equivalents,

   and restricted cash

$

108,936

$

(9,694

)

$

185,767

$

118,630

$

(195,461

)

Operating Activities

Net cash provided by operating activities for the years ended December 31, 2025 and 2024 was $182.2 million and $87.1 million, respectively. The increase was primarily driven by cash from operations including timing of receipt of premiums and reinsurance recoveries, and timing of cash flows associated with claim and reinsurance payments.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2025 was $32.7 million compared to net cash used of $91.6 million in the prior year. The change in cash used in investing activities relates primarily to timing of investment maturities and use of proceeds as well as availability of existing cash to invest in longer duration fixed income securities to lock in current interest rates, as well as proceeds from the sale of investment property, net of costs and commission expenses.

Financing Activities

Net cash used in financing activities for the year ended December 31, 2025 was $40.6 million, as compared to cash used in financing activities of $5.2 million for the comparable period in 2024. The change in net cash from financing activities relates primarily to the repayments of the FHLB-ATL loan and the mortgage loan agreements for $19.2 million and $10.6 million during 2025, respectively, as well as stock repurchases. In comparison, we reported $5.5 million of proceeds in the first quarter of 2024 from a FHLB Des Moines loan.

48

Table of Contents

Credit Facilities

On July 22, 2025, the Company and its subsidiary guarantors entered into the Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) with lenders from time to time party thereto and Regions Bank, as administrative agent and collateral agent. The Amended and Restated Credit Agreement amended and restated in its entirety the Credit Agreement dated as of December 14, 2018 (as amended to date, the “Prior Credit Agreement”).

The Amended and Restated Credit Agreement provides for senior secured credit facilities in the aggregate principal amount of up to $200.0 million, consisting of (1) a five-year senior secured term loan facility in an aggregate principal amount of $75 million with a maturity of July 2030 (the “Term Loan Facility”), (2) a $75 million committed delayed draw term loan that may be advanced to finance specified permitted acquisitions and investments with a maturity of July 2030 (the “Delayed Draw Term Loan Facility”) and (3) a senior secured revolving credit facility in an aggregate principal amount of $50 million with a maturity of July 2030 (inclusive of a sublimit for the issuance of letters of credit equal to the unused amount of the revolving credit facility and a sublimit for swingline loans equal to the lesser of $25 million and the unused amount of the revolving credit facility) (the “Revolving Credit Facility” and together with the Term Loan Facility and the Delayed Draw Term Loan Facility, the “Credit Facilities”).

Term Loan Facility. The principal amount of the term loan facility under the Prior Credit Agreement amortized in quarterly installments, with a scheduled maturity date of July 28, 2026, which was refinanced in full in connection with the Amended and Restated Credit Agreement. The principal amount of the Term Loan Facility under the Amended and Restated Credit Facility amortizes in quarterly installments beginning with the close of the fiscal quarter ending December 31, 2025, in an amount equal to $937,500 per quarter, payable quarterly, and increasing to approximately $1.4 million per quarter commencing with the quarter ending September 30, 2028, with the remaining balance payable at maturity in July 2030. As of December 31, 2025, there was $74.1 million in aggregate principal amount outstanding under the Term Loan Facility and as of December 31, 2024, there was $70.1 million in aggregate principal outstanding under the term loan facility under the Prior Credit Agreement.

Revolving Credit Facility. The Revolving Credit Facility allows for borrowings of up to $50 million inclusive of a sublimit for the issuance of letters of credit equal to the unused amount of the Revolving Credit Facility and a sublimit for swingline loans equal to the lesser of $25.0 million and the unused amount of the Revolving Credit Facility. Immediately prior to entering into the Amended and Restated Credit Agreement the outstanding balance under the revolving credit facility under the Prior Credit Agreement was $10.0 million, which amount was repaid in connection with the Amended and Restated Credit Agreement. During 2024, the Company secured letters of credit in aggregate of $24.4 million with a maturity date of March 16, 2025. There were no draws on the letters of credit during 2025, which were cancelled effective on their maturity date of March 16, 2025. On December 3, 2025, the Company secured letters of credit in aggregate of $32.0 million with a maturity date of March 31, 2026, with no draws as of December 31, 2025. Immediately prior to entering into the Amended and Restated Credit Agreement the outstanding balance under the revolving credit facility under the Prior Credit Agreement was $10.0 million, which was repaid in connection with the Amendment and Restated Credit Agreement. At December 31, 2025, the Company had $32.0 million in outstanding letters of credit issued from the Revolving Credit Facility.

At our option, borrowings under the Credit Facilities, bear interest at rates equal to either (1) a rate determined by reference to SOFR, plus an applicable margin (described below) or (2) a base rate determined by reference to the highest of (a) the “prime rate” of Regions Bank, (b) the federal funds rate plus 0.50%, and (c) the adjusted term SOFR in effect on such day for an interest period of one month plus 1.00%, plus an applicable margin (described below).

The applicable margin for loans under the Credit Facilities, varies from 2.50% per annum to 3.00% per annum (for SOFR loans) and 1.50% to 2.00% per annum (for base rate loans) based on our consolidated leverage ratio ranging from less than or equal to 1-to-1 to greater than 1.5-to-1. Interest payments with respect to the Credit Facilities are required either on a quarterly basis (for base rate loans) or at the end of each interest period (for SOFR loans) or, if the duration of the applicable interest period exceeds three months, then every three months. As of December 31, 2025, the borrowings under the Term Loan Facility were accruing interest at a rate of 6.416% per annum, respectively.

In addition to paying interest on outstanding borrowings under the Revolving Credit Facility, we are required to pay a quarterly commitment fee based on the unused portion of the Revolving Credit Facility, which is determined by our consolidated

49

Table of Contents

leverage ratio. As of December 31, 2025, the Company paid in commitment fees in aggregate of $109,688 as it relates to the unused portion of the Revolving Credit Facility.

The Company may prepay the loans under the Credit Facilities, in whole or in part, at any time without premium or penalty, subject to certain conditions including minimum amounts and reimbursement of certain costs in the case of prepayments of SOFR loans. In addition, we are required to prepay the loan under the Term Loan Facility with the proceeds from certain financing transactions, involuntary dispositions or asset sales (subject, in the case of asset sales, to reinvestment rights).

All obligations under the Credit Facilities are or will be guaranteed by each existing and future direct and indirect wholly owned domestic subsidiary of the Company, other than all of the Company’s current and future regulated insurance subsidiaries (collectively, the “Guarantors”).

The Company and the Guarantors are party to a Pledge and Security Agreement, (as amended from time to time the “Security Agreement”), in favor of a collateral agent. Pursuant to the Security Agreement, amounts borrowed under the Credit Facilities are secured on a first priority basis by a perfected security interest in substantially all of the present and future assets of the Company and each Guarantor (subject to certain exceptions), including all of the capital stock of the Company’s domestic subsidiaries, other than its regulated insurance subsidiaries.

The Amended and Restated Credit Agreement contains, among other things, covenants, representations and warranties and events of default customary for facilities of this type. The Amended and Restated Credit Agreement requires the Company to maintain, as of each fiscal quarter (1) a maximum consolidated leverage ratio of 2.00 to 1.00, (2) a minimum consolidated fixed charge coverage ratio of 1.20 to 1.00 and (3) a minimum consolidated tangible net worth for the Company and its subsidiaries, which is required to be not less than the sum of 75% of consolidated tangible net worth measured as of the fiscal quarter ended September 30, 2025 plus 25% of positive consolidated net income (including its subsidiaries and regulated subsidiaries) plus the net cash proceeds of any equity transactions. Events of default include, among other events, (i) nonpayment of principal, interest, fees or other amounts; (ii) failure to perform or observe certain covenants set forth in the Credit Agreement; (iii) breach of any representation or warranty; (iv) cross-default to other indebtedness; (v) bankruptcy and insolvency defaults; (vi) monetary judgment defaults and material nonmonetary judgment defaults; (vii) customary ERISA defaults; (viii) a change of control of the Company; and (ix) failure to maintain specified catastrophe retentions in each of the Company’s regulated insurance subsidiaries or observe specified reinsurer concentration limits.

Convertible Notes

On August 10, 2017, the Company and Heritage MGA, LLC (the “Notes Guarantor”) entered into a purchase agreement (the “Purchase Agreement”) with the initial purchaser party thereto (the “Initial Purchaser”), pursuant to which the Company agreed to issue and sell, and the Initial Purchaser agreed to purchase, $136.8 million aggregate principal amount of the Company’s 5.875% Convertible Senior Notes due 2037 (the “Convertible Notes”) in a private placement transaction pursuant to Rule 144A under the Securities Act, as amended (the “Securities Act”). The net proceeds from the offering of the Convertible Notes, after deducting discounts and commissions and estimated offering expenses payable by the Company, were approximately $120.5 million. The offering of the Convertible Notes was completed on August 16, 2017.

The Company issued the Convertible Notes under an Indenture (the “Convertible Note Indenture”), dated August 16, 2017, by and among the Company, as issuer, the Notes Guarantor, as guarantor, and the trustee party thereto (the “Trustee”).

The Convertible Notes bear interest at a rate of 5.875% per year. Interest is payable semi-annually in arrears, on February 1 and August 1 of each year. The Convertible Notes are senior unsecured obligations of the Company that rank senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the Convertible Notes; equal in right of payment to the Company’s unsecured indebtedness that is not so subordinated; effectively junior to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness or other liabilities incurred by the Company’s subsidiaries other than the Notes Guarantor, which fully and unconditionally guarantee the Convertible Notes on a senior unsecured basis.

The Convertible Notes mature on August 1, 2037, unless earlier repurchased, redeemed or converted.

50

Table of Contents

Holders may convert their Convertible Notes at any time prior to the close of business on the business day immediately preceding February 1, 2037, under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2017, if the closing sale price of the Company’s common stock, for at least 20 trading days (whether or not consecutive) in the period of 30 consecutive trading days ending on the last trading day of the calendar quarter immediately preceding the calendar quarter in which the conversion occurs, is more than 130% of the conversion price of the Convertible Notes in effect on each applicable trading day; (2) during the ten consecutive business-day period following any five consecutive trading-day period in which the trading price for the Convertible Notes for each such trading day was less than 98% of the closing sale price of the Company’s common stock on such date multiplied by the then-current conversion rate; (3) if the Company calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the third business day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events.

On or after February 1, 2037 until the close of business on the second business day immediately preceding August 1, 2037, holders may surrender their Convertible Notes for conversion at any time, regardless of the foregoing circumstances.

Upon the occurrence of a fundamental change (as defined in the Convertible Note Indenture) (but not, at the Company’s election, a public acquirer change of control (as defined in the Convertible Note Indenture)), holders of the Convertible Notes may require the Company to repurchase for cash all or a portion of their Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

At any time prior to February 1, 2037, the Company may redeem for cash all or any portion of the Convertible Notes, at the Company’s option, at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Convertible Notes, which means that the Company is not required to redeem or retire the Convertible Notes periodically. Holders of the Convertible Notes are able to cause the Company to repurchase their Convertible Notes for cash on any of August 1, 2022, August 1, 2027 and August 1, 2032, in each case at 100% of their principal amount, plus accrued and unpaid interest to, but excluding, the relevant repurchase date.

The Convertible Note Indenture contains customary terms and covenants and events of default. If an Event of Default (as defined in the Convertible Note Indenture) occurs and is continuing, the Trustee by notice to the Company, or the holders of at least 25% in aggregate principal amount of the Convertible Notes then outstanding by notice to the Company and the Trustee, may declare 100% of the principal of, and accrued and unpaid interest, if any, on, all the Convertible Notes to be immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization (as set forth in the Convertible Note Indenture) with respect to the Company, 100% of the principal of, and accrued and unpaid interest, if any, on, the Convertible Notes automatically become immediately due and payable.

As of December 31, 2025 and December 31, 2024, there was $885,000 principal amount of outstanding Convertible Notes, net of $21.1 million of Convertible Notes held by an insurance company subsidiary.

FHLB Loan Agreements

In December 2018, a subsidiary of the Company received a 3.094% fixed interest rate cash loan of $19.2 million from the Federal Home Loan Bank Atlanta (“FHLB-ATL”). On September 29, 2023, the Company restructured the December 2018 agreement to extend the maturity date to March 28, 2025, with a 5.109% fixed interest rate payable quarterly commencing on December 28, 2023. Membership in the FHLB-ATL required an investment in FHLB-ATL’s common stock which was purchased in December 2018 and valued at $1.4 million. In March 2025, the FHLB-ATL agreement was repaid and the securities were released from pledged collateral. As of December 31, 2025, the subsidiary continues to be a member in FHLB-ATL with its common stock valued at $570,000.

In December 2018, another subsidiary became a member of the Federal Home Loan Bank Des Moines ("FHLB-DM"). Membership in the FHLB-DM required an investment in FHLB-DM’s common stock which was purchased in December 2018 and valued at $133,200. In January 2024, the insurance subsidiary of the Company received a 4.23% fixed interest rate cash loan of $5.5 million from the FHLB-DM. Additionally, the transaction required the acquired FHLB-DM common stock and certain

51

Table of Contents

other investments to be pledged as collateral. As of December 31, 2025, the fair value of the collateralized securities was $4.2 million and the equity investment in FHLB-DM common stock was $316,300.

Contractual Obligations and Commitments

The following table summarizes our material contractual obligations and commitments as of December 31, 2025:

Contractual Obligations and

Commercial Commitments

Total

Less Than 1

Year

1-3 Years

3-5 Years

More than

5 - Years

(in thousands)

Term loans, notes and interest (1)

$

74,063

$

3,750

$

8,425

61,888

$

—

Convertible debt (1)

36,990

1,293

2,586

2,586

30,524

FHLB agreement (1)

6,221

236

472

5,512

—

Operating lease obligations

23,725

4,964

9,812

8,085

864

Total Contractual Obligations

$

140,998

$

10,243

$

21,297

$

78,071

$

31,388

(1)
Amounts represent principal and interest payments to debt obligations. Debt obligations are classified based on their stated maturity date. For further information on long-term debt, Refer to Note 14 “Long Term Debt” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

The expected timing of payments of the obligations in the preceding table is estimated based on current information. Timing of payments and actual amounts paid may be different due to changes to agreed-upon amounts for some obligations.

Market Sensitive Instruments and Risk Management

Our investment results are subject to a variety of risks, including risks related to changes in the business, financial condition or results of operations of the entities in which we invest, as well as changes in general economic conditions and overall market conditions. We are also exposed to potential loss from various market risks, including changes in equity prices and interest rates.

In accordance with the SEC's Financial Reporting Release No 48, we performed sensitivity analysis, also referenced as the hypothetical analysis (refer to Item 7A. Quantitative and Qualitative Disclosures About Market Risk) to determine the effects that market risk exposures could have on the Company's future portfolio's earnings, fair value or cash flow as of December 31, 2025. Market risk represents the risk of changes in the fair value of financial instrument and consists of several components, including liquidity, basis and price risks.

The sensitivity analysis performed as of December 31, 2025 presents hypothetical losses in cash flows, earnings and fair values of market sensitive instruments which were held by as of the year ended December 31, 2025 and are sensitive to changes in interest rates. This risk management discussion and the estimated amounts generated from the following sensitivity analysis represent forward-looking statements of market risk assuming certain adverse market conditions occur. Actual results in the future may differ materially from these projected results due to actual developments in the global financial markets. The analysis methods used by us to assess and mitigate risk should not be considered projections of future events of losses.

Exposure to market risk is managed and monitored by senior management of the parent company and its subsidiaries along with a nationally recognized asset manager. The investment committee, appointed by our board of directors approves the overall investment strategy and has responsibility to ensure that the investment positions are consistent with that strategy with an acceptable level of risk. Management of risk may include buying or selling instruments or entering into offsetting positions.

Fixed Income Securities

We invest in interest rate sensitive securities, primarily debt securities. We consider the effect of interest rate movements on the fair value of our fixed maturities, short-term investments and certain of our other investments, and investment funds accounted for using the equity method which invest in fixed income securities (collectively, “Fixed Income Securities”) and the corresponding change in unrealized appreciation. As interest rates rise, the fair value of our Fixed Income Securities falls, and the converse is also true.

The Company’s invested assets at December 31, 2025 were $715.6 million, of which 99.67% was invested in fixed maturity and short-term investments, 0.15% in equity securities, and 0.18% in other investments. Because the primary purpose of

52

Table of Contents

the investment portfolio is to fund future claims payments, the Company employs a thoughtful investment philosophy that focuses on appropriate risk-adjusted returns. A significant majority of funds available for investment are deployed in a widely diversified portfolio of high quality, liquid, taxable U.S. government, tax-exempt and taxable U.S. municipal and taxable corporate and U.S. agency mortgage-backed bonds.

Effects of Inflation

General economic inflation has increased in recent years and may continue to remain at elevated levels for an extended period of time. The potential also exists, after a catastrophe loss or pandemic events like COVID-19, for the development of inflationary pressures in a local economy. This may have a material effect on the adequacy of our reserves for losses and loss adjustment expenses, especially in longer-tailed lines of business, and on the market value of our investment portfolio through rising interest rates. The anticipated effects of inflation are considered in our pricing models, reserving processes and exposure management, across all lines of business and types of loss including natural catastrophe events. The actual effects of inflation on our results cannot be accurately known until claims are ultimately settled and will vary by the specific type of inflation affecting our business.

The carrying value of the Company’s fixed maturity portfolio at December 31, 2025 was $712.2 million. The Company closely monitors the duration of its fixed maturity investments, and investment purchases and sales are executed with the objective of having adequate funds available to satisfy the Company’s insurance and debt obligations. The weighted average credit quality of the Company’s fixed maturity portfolio, both including and excluding U.S. Treasury securities, was "A+" at December 31, 2025 and “A” at December 31, 2024. Below investment grade securities represented 0.01% of the total fixed maturity investment portfolio at both December 31, 2025 and 2024. The weighted average effective duration of fixed maturities and short-term securities was 3.17 (3.21 excluding short-term securities) at December 31, 2025 and 3.06 (3.07 excluding short-term securities) at December 31, 2024.

Critical Accounting Policies and Estimates

The following discussion and analysis presents the more significant factors that affected our financial condition as of December 31, 2025 and 2024 and results of operations for each of the years then ended. The preparation of financial statements in conformity with accounting principles of generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While we base estimates on historical experience, current information and other factors deemed to be relevant, actual results could differ from those estimates.

We consider accounting estimates to be critical to reported financial results if (i) the accounting estimate requires management to make assumptions about matters that are highly uncertain and (ii) different estimates that management reasonably could have used for the accounting estimates in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, could have a material impact on our consolidated financial statements. When we prepare our condensed consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles (GAAP), we must make estimates and assumptions about future events that affect the amounts we report. Certain of these estimates result from judgments that can be subjective and complex. As a result of that subjectivity and complexity, and because we continuously evaluate these estimates and assumptions based on a variety of factors, actual results could materially differ from our estimates and assumptions if changes in one or more factors require us to make accounting adjustments.

Premiums. We recognize direct and assumed premiums written as revenue, net of ceded amounts, on a daily pro rata basis over the contract period of the related policies that are in force. For any portion of premiums not earned at the end of the reporting period, we record an unearned premium liability.

53

Table of Contents

Premiums receivable represents amounts due from our policyholders for billed premiums and related policy fees. Our billing system is established in a manner to ensure that policies are canceled if the unpaid premium exceeds the amount of premium earned. When we receive payments on amounts previously charged off, we credit bad debt expense in the period we receive the payment. Balances in premiums receivable and the associated allowance account are removed upon cancellation of the policy due to non-payment. For December 31, 2025 and 2024 we recorded bad debt expense of approximately $390,200 and $51,500 respectively.

When we receive premium payments from policyholders prior to the effective date of the related policy, we record an advance premium liability. On the policy effective date, we reduce the advance premium liability and record the premiums as described above.

Reserves for Unpaid Losses and Loss Adjustment Expenses. Reserves for unpaid losses and loss adjustment expenses, also referred to as loss reserves, represent the most significant accounting estimate inherent in the preparation of our financial statements. These reserves represent management’s best estimate of the amount we will ultimately pay for losses and loss adjustment expenses and we base the amount upon the application of various actuarial reserve estimation techniques as well as considering other material facts and circumstances known at the balance sheet date. We establish two categories of loss reserves as follows: Case reserves—When a claim is reported, we establish an initial estimate of the losses that will ultimately be paid on the reported claim. Our initial estimate for each claim is based upon the judgment of our claims professionals who are familiar with property and liability losses associated with the coverage offered by our policies. Then, our claims personnel perform an evaluation of the type of claim involved, the circumstances surrounding each claim and the policy provisions relating to the loss and adjust the reserve, as necessary. As claims mature, we increase or decrease the reserve estimates as deemed necessary by our claims department based upon additional information we receive regarding the loss, the results of on-site reviews and any other information we gather while reviewing the claims. IBNR reserves—Our IBNR reserves include true IBNR reserves plus “bulk” reserves. True IBNR reserves represent amounts related to claims for which a loss occurred on or before the date of the financial statements, but which have not yet been reported to us. Bulk reserves represent additional amounts that cannot be allocated to particular claims, but which are necessary to estimate ultimate losses on known claims. We estimate our IBNR reserves by projecting our ultimate losses using industry accepted actuarial methods and then deducting actual loss payments and case reserves from the projected ultimate losses. We review and adjust our IBNR reserves on a quarterly basis based on information available to us at the balance sheet date.

When we establish our reserves, we analyze various factors such as the evolving historical loss experience of the insurance industry as well as our experience, claims frequency and severity, our business mix, our claims processing procedures, legislative enactments, judicial decisions and legal developments in imposition of damages, and general economic conditions, including inflation. A change in any of these factors from the assumptions implicit in our estimates will cause our ultimate loss experience to be better or worse than indicated by our reserves, and the difference could be material. Due to the interaction of the foregoing factors, there is no precise method for evaluating the impact of any one specific factor in isolation, and an element of judgment is ultimately required. Due to the uncertain nature of any future projections, the ultimate amount we will pay for losses will be different from the reserves we record.

We determine our ultimate loss reserves by selecting an estimate within a relevant range of indications that we calculate using generally accepted actuarial techniques. Our selection of the point estimate is influenced by the analysis of our paid losses and incurred losses since inception.

Our external reserving actuaries evaluated the adequacy of our reserves as of December 31, 2025 and concluded that our reported loss reserves would meet the requirements of the insurance laws of the states in which our insurance subsidiaries are domiciled, be consistent with reserves computed in accordance with accepted loss reserving standards and principles, and make a reasonable provision for all unpaid loss and loss adjustment expense obligations under the terms of our contracts and agreements. In addition to $128.7 million of recorded case reserves, we recorded $450.8 million of IBNR reserves as of December 31, 2025 to achieve overall gross reserves of $579.5 million. At December 31, 2025, ceded IBNR and net IBNR were $203.1 million and $247.7 million, respectively.

The process of establishing our reserves is complex and inherently imprecise, as it involves using judgment that is affected by many variables. We believe a reasonably likely change in almost any of the factors we evaluate as part of our loss reserve analysis could have an impact on our reported results, financial position and liquidity.

54

Table of Contents

The following table quantifies the pro forma impact of hypothetical changes in our net loss reserves on our net income, stockholders’ equity, and liquidity as of and for the year ended December 31, 2025 (in thousands):

Actual

Low

Estimate

% Change

from

Actual

High

Estimate

% Change

from

Actual

Net Loss Reserves

$

310,109

$

220,586

28.9

%

$

333,059

(7.4

)%

Impact on:

Net income

$

195,594

$

261,394

33.6

%

$

178,726

(8.6

)%

Stockholders’ equity

$

505,251

$

571,051

13.0

%

$

488,383

(3.3

)%

Cash, cash equivalents and investments(1)

$

1,274,860

$

1,340,660

5.2

%

$

1,257,992

(1.3

)%

(1)
Estimated cash, cash equivalents and investments is intended to present a measure of future liquidity and consists of cash, cash equivalents, and investments, less the change in loss reserves, net of taxes.

Policy Acquisition Costs. We incur policy acquisition costs that vary with, and are directly related to, the production of new business. Policy acquisition costs consist of the following four items: (i) commissions paid to outside agents at the time of policy issuance, (ii) policy administration fees paid to a third-party administrator at the time of policy issuance, (iii) premium taxes and (iv) inspection fees. We capitalize policy acquisition costs to the extent recoverable, then we amortize those costs over the contract period of the related policy. We also earn ceding commission on our quota share reinsurance contracts, which is presented as a reduction of policy acquisition costs on the Consolidated Statements of Operations and Other Comprehensive Income, with any unearned ceding commission recognized as an offset to deferred policy acquisition costs on the Consolidated Balance Sheet and within the notes to the Consolidated Financial Statements described in Note 11. Deferred Policy Acquisition Costs. Ceding commission income is deferred and earned over the contract period. The amount and rate of ceding commissions earned on the net quota share contract can slide within a prescribed minimum and maximum, depending on loss performance and how future losses develop.

Our accounting policy is to allocate ceding commission income between policy acquisition costs and general and administrative expenses for financial reporting purposes based upon the proportion these costs bear to production of new business. For the years ended December 31, 2025, 2024 and 2023, we earned ceding commission income of $72.9 million, $50.3 million and $64.8 million of which $54.8 million, $37.8 million and $48.7 million was allocable to policy acquisition costs.

Deferred taxes. At December 31, 2025, we assessed our deferred tax position and hold no valuation against our net deferred tax assets as there is sufficient evidence to support the recorded net deferred tax asset.

Provision for Premium Deficiency. At each reporting date, we determine whether we have a premium deficiency. A premium deficiency would result if the sum of our expected losses, deferred policy acquisition costs and policy maintenance costs (such as costs to store records and costs incurred to collect premiums and pay commissions) exceeded our related unearned premiums plus investment income. Should we determine that a premium deficiency exists, we would write off the unrecoverable portion of deferred policy acquisition costs. No accruals for premium deficiency were considered necessary as of December 31, 2025 and 2024.

Reinsurance. We follow the industry practice of reinsuring a portion of our risks. Reinsurance involves transferring, or “ceding”, all or a portion of the risk exposure on policies we write to another insurer, known as a reinsurer. To the extent that our reinsurers are unable to meet the obligations they assume under our reinsurance agreements, we remain liable for the entire insured loss.

Our reinsurance agreements are prospective contracts. We record an asset, prepaid reinsurance premiums, and a liability, reinsurance payable, for the entire contract amount upon commencement of our new reinsurance agreements. We amortize our prepaid reinsurance premiums over the 12-month contract period.

55

Table of Contents

In the event that we incur losses recoverable under our reinsurance program, we record amounts recoverable from our reinsurers on paid losses plus an estimate of amounts recoverable on unpaid losses. The estimate of amounts recoverable on unpaid losses is a function of our liability for unpaid losses associated with the reinsured policies; therefore, the amount changes in conjunction with any changes to our estimate of unpaid losses. In the event that we incur losses recoverable under the reinsurance program, the estimate of amounts recoverable from reinsurers on unpaid losses may change at any point in the future because of its relation to our reserves for unpaid losses.

We estimate uncollectible amounts receivable from reinsurers based on an assessment of factors including the creditworthiness of the reinsurers and the adequacy of collateral obtained, where applicable. We had no uncollectible amounts under our reinsurance program or bad debt expense related to reinsurance for the years ended December 31, 2025, 2024, and 2023.

Recent Accounting Pronouncements Not Yet Effective

The Company describes the recent pronouncements that have had or may have a significant effect on its financial statements or on its disclosures. The Company does not discuss recent pronouncements that a) are not anticipated to have an impact on, or b) are unrelated to its financial condition, results of operations, or related disclosures. For accounting pronouncements not yet adopted, Refer to Note 1 “Basis of Presentation, Nature of Business and Significant Accounting Policies and Practices” to our consolidated financial statements included in this Annual Report on Form 10-K, for further information.

56

Table of Contents