PROASSURANCE CORP (PRA)

CIK: 0001127703. SIC: 6331 Fire, Marine & Casualty Insurance. Latest 10-K as of: 2026-02-23.

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=1127703. Latest filing source: 0001127703-26-000008.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-23. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001127703.json. Derived margins 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. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-05. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001127703.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: 0001127703-26-000019.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-05-05. Report date: 2026-03-31.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and Notes to those statements which accompany this report. Throughout the discussion we use certain terms and abbreviations, which can be found in the Glossary of Terms and Acronyms at the beginning of this report. In addition, a glossary of insurance terms and phrases is available on the investor section of our website. Throughout the discussion, references to "ProAssurance," "ProAssurance Group," "PRA," "Company," "we," "us" and "our" refer to ProAssurance Corporation and its consolidated subsidiaries. The discussion contains certain forward-looking information that involves significant risks, assumptions and uncertainties. As discussed under the heading "Caution Regarding Forward-Looking Statements," our actual financial condition and results of operations could differ significantly from these forward-looking statements.

ProAssurance Overview

ProAssurance Corporation is a holding company for property and casualty insurance companies. Our insurance subsidiaries provide medical professional liability insurance, liability insurance for medical technology and life sciences risks and workers' compensation insurance. Additional information on ProAssurance's four operating and reportable segments is included in Note 12 of the Notes to Condensed Consolidated Financial Statements, Note 15 of the Notes to Consolidated Financial Statements in our December 31, 2025 report on Form 10-K and in the Segment Results sections herein that follow.

Critical Accounting Estimates

Our Condensed Consolidated Financial Statements are prepared in conformity with GAAP. Preparation of these financial statements requires us to make estimates and assumptions that affect the amounts we report on those statements. We evaluate these estimates and assumptions on an ongoing basis based on current and historical developments, market conditions, industry trends and other information that we believe to be reasonable under the circumstances. We can make no assurance that actual results will conform to our estimates and assumptions; reported results of operations may be materially affected by changes in these estimates and assumptions. A detailed discussion of our critical accounting estimates is included in our Critical Accounting Estimates section in Item 7 of our December 31, 2025 report on Form 10-K.

Management considers the following accounting estimates to be critical because they involve significant judgment by management and those judgments could result in a material effect on our financial statements:

•Reserve for losses and loss adjustment expenses

•Reinsurance

•Valuation of investments and impairment of securities

•Income taxes

Estimation of Taxes

For interim periods, we generally utilize the estimated annual effective tax rate method under which we determine our provision (benefit) for income taxes based on the current estimate of our annual effective tax rate. For the three months ended March 31, 2026 and March 31, 2025, we utilized the estimated annual effective tax rate method. Under this method, items which are unusual, infrequent or that cannot be reliably estimated are considered in the effective tax rate in the period in which the item is included in income and are referred to as discrete items. See further discussion on this method in Note 4 of the Notes to Condensed Consolidated Financial Statements.

Liquidity and Capital Resources and Financial Condition

Overview

ProAssurance Corporation is a holding company and is a legal entity separate and distinct from its subsidiaries. As a holding company, our principal source of external revenue is our investment revenues. In addition, dividends from our operating subsidiaries represent another source of funds for our obligations, including debt service. We also charge our core domestic operating subsidiaries within our Specialty P&C and Workers' Compensation Insurance segments a management fee based on the extent to which services are provided to the subsidiary and the amount of gross premium written by the subsidiary. At March 31, 2026, we held cash and liquid investments of approximately $143 million outside our insurance subsidiaries that were available for use without regulatory approval or other restriction. As of May 1, 2026, we also have an additional $125 million in permitted borrowings available under our Revolving Credit Agreement as well as the possibility of a $50 million accordion feature, if successfully subscribed, as discussed in this section under the heading "Debt."

Our operating subsidiaries have not paid us any dividends during 2026. In the aggregate, our insurance subsidiaries are permitted to pay dividends of approximately $164 million over the remainder of 2026 without prior approval of state insurance regulators. However, the payment of any dividend requires prior notice to the insurance regulator in the state of domicile, and

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the regulator may reduce or prevent the dividend if, in its judgment, payment of the dividend would have an adverse effect on the surplus of the insurance subsidiary. We make the decision to pay dividends from an insurance subsidiary based on the capital needs of that subsidiary and may pay less than the permitted dividend or may also request permission to pay an additional amount (an extraordinary dividend). Currently we do not expect to pay dividends in 2026 prior to the closing of the proposed merger transaction with The Doctors Company.

Cash Flows

Cash flows between periods compare as follows:

Three Months Ended March 31

(In thousands)

2026

2025

Change

Net cash provided by (used in):

Operating activities

$

(21,323)

$

(11,609)

$

(9,714)

Investing activities

4,391 

4,110 

281 

Financing activities

(5,508)

(3,841)

(1,667)

Increase (decrease) in cash and cash equivalents

$

(22,440)

$

(11,340)

$

(11,100)

The principal components of our operating cash flows are the excess of premiums collected and net investment income over losses paid and operating costs, including income taxes. Timing delays exist between the collection of premiums and the payment of losses associated with the premiums. Premiums are generally collected within the twelve-month period after the policy is written, while our claim payments are generally paid over a more extended period of time. Likewise, timing delays exist between the payment of claims and the collection of any associated reinsurance recoveries.

Operating cash flows decreased for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The change in operating cash flows was primarily due to:

•A decrease in net premium receipts of $15.5 million primarily driven by a lower volume of written premium due to competitive market conditions as some competitors have chosen to write at a lower price and, to a lesser extent, an increase in premiums paid for reinsurance due to the 100% quota share reinsurance agreement with the third party that purchased the renewal rights related to our legal professional liability book of business during the second quarter of 2025.

•An increase in paid losses of $14.7 million driven by our Specialty P&C segment which reflected a decrease in cash received from reinsurance recoveries due to the payment of four large claims in the first quarter of 2025 as well as an increase in the volume of mid-sized claims as compared to the prior year period.

•A $2.2 million gain on the sale of our Franklin, TN property to an unrelated third party during the first quarter of 2025.

The decrease in operating cash flows was partially offset by:

•A decrease in cash paid for operating expenses of $18.3 million driven by lower incentive based compensation and transaction-related costs associated with the proposed merger transaction with The Doctors Company (see Note 1 of the Notes to the Condensed Consolidated Financial Statements).

•An increase in cash received from investment income of $3.5 million driven by higher average book yields as we take advantage of the current interest rate environment as our portfolio matures and an increase in distributed earnings and redemptions from our portfolio of investments in LPs/LLCs.

The remaining variance in operating cash flows for the three months ended March 31, 2026 as compared to the same period of 2025 was composed of individually insignificant components.

We manage our investing cash flows to ensure that we will have sufficient liquidity to meet our obligations, taking into consideration the timing of cash flows from our investments, including interest payments, dividends and principal payments, as well as the expected cash flows to be generated by our operations as discussed in this section under the heading "Investing Activities and Related Cash Flows."

Our financing cash flows are primarily comprised of repayment of debt as well as capital contributions received from or return of capital to external SPC participants. See further discussion of debt in this section under the heading "Financing Activities and Related Cash Flows."

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Operating Activities and Related Cash Flows

Reinsurance

Within our Specialty P&C segment, we use insurance and reinsurance (collectively, “reinsurance”) to provide capacity to write larger limits of liability, to provide reimbursement for losses incurred under the higher limit coverages we offer and to provide protection against losses in excess of policy limits. Within our Workers' Compensation Insurance segment, we use reinsurance to reduce our net liability on individual risks, to mitigate the effect of significant loss occurrences (including catastrophic events), to stabilize underwriting results and to increase underwriting capacity by decreasing leverage. In both our Specialty P&C and Workers' Compensation Insurance segments, we use reinsurance in risk sharing arrangements to align our objectives with those of our strategic business partners and to provide custom insurance solutions for large customer groups. The discussion in our Liquidity section under the same heading in Item 7 of our December 31, 2025 report on Form 10-K includes additional information regarding our reinsurance agreements.

Excess of Loss Reinsurance Agreements

Our MPL and Medical Technology Liability treaties renew annually on October 1 and our workers' compensation treaty renews annually on May 1. The significant coverages provided by our current excess of loss reinsurance agreements are depicted in the following table.

Current Excess of Loss Reinsurance Agreements

Medical Professional Liability

Medical Technology & Life Sciences Products

Workers' Compensation - Traditional

(1) Effective October 1, 2025, total reinsured limits decreased to $19M from $24M. Since we were not writing policies with these higher limits of coverage, the reduction in limit is not significant. One prepaid limit reinstatement of $16M and a second limit reinstatement of up to $16M for the second layer, subject to reinstatement premium, which attaches after the first reinstatement has been completely exhausted. Historically, the prepaid limit reinstatement and second limit reinstatement ranged from $16M to $21M. All limit reinstatements thereafter require no additional premium. Effective October 1, 2021, limits can be reinstated a maximum of four times.

(2) Prior to October 1, 2020, retention was $1M.

(3) Historically, retention has ranged from 0% to 32.5%.

(4) Historically, retention has ranged from $1M to $2M.

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(5) Subject to a limit of $20M per individual claimant. If an individual loss were to exceed this level the Company would retain this excess exposure. Historically, the limit per individual claimant has ranged from $15M to $20M.

(6) Historically, retention has ran

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

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-23. Report date: 2025-12-31.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion generally focuses on the change in financial condition, results of operations and cash flows for the year ended December 31, 2025 as compared to the year ended December 31, 2024 and should be read in conjunction with the Consolidated Financial Statements and Notes to those statements which accompany this report. For a full discussion of the changes in the financial condition, results of operations and cash flows for the year ended December 31, 2024 as compared to the year ended December 31, 2023, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of ProAssurance's December 31, 2024 report on Form 10-K.

The discussion contains certain forward-looking information that involves significant risks, assumptions and uncertainties. As discussed under the heading "Caution Regarding Forward-Looking Statements," our actual financial condition and results of operations could differ significantly from these forward-looking statements.

ProAssurance Overview

ProAssurance Corporation is a holding company for property and casualty insurance companies. Our insurance subsidiaries provide medical professional liability insurance, liability insurance for medical technology and life sciences risks and workers' compensation insurance.

During the first quarter of 2025, we altered our internal management reporting structure and the financial results evaluated by our CODM; therefore, we changed the composition of our operating and reportable segments to align with how the CODM currently oversees the business, allocates resources and evaluates operating performance. As a result, we now report the financial results of our subsidiary IAO, Inc. d/b/a ProAssurance Agency in the Specialty P&C segment which were previously reported in the Corporate segment. We operate in four segments: Specialty P&C, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance and Corporate. All prior period segment information has been recast to conform to the current period presentation. The change in presentation had no impact on previously reported consolidated financial results.

Additional information on our four operating and reportable segments is included in Note 15 of the Notes to Consolidated Financial Statements, Part I and in the Segment Results sections herein that follow.

Growth Opportunities and Outlook

Given the cyclical nature of our insurance operations, our financial objectives span multiple years and we target a dynamic long-term ROE of 700 basis points above the 10-year U.S. Treasury rate, which at December 31, 2025 was approximately 11.2%. To achieve our long-term ROE target, we emphasize rate adequacy, selective underwriting, use of our proprietary data and predictive analytics, effective claims management, operational efficiency gained by leveraging our scope and scale, continued investment in technology-based solutions and prudent investment management. We may forego growth in favor of improving profitability, given our focus on rate adequacy and the competitive markets in which we operate. Our overall investment strategy is to focus on maximizing current income from our investment portfolio while maintaining appropriate credit risk, liquidity, duration and portfolio diversification.

On March 19, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with The Doctors Company, a California-domiciled reciprocal inter-insurance exchange, and Jackson Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of The Doctors Company (“Merger Sub”), pursuant to which, on the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into ProAssurance (the “Merger”). ProAssurance will continue as the surviving corporation in the Merger as a wholly owned subsidiary of The Doctors Company.

We believe that this transaction will deliver significant value to our shareholders. Both ProAssurance and The Doctors Company were founded by physicians in response to the medical liability crisis of the 1970s. Both companies have grown over the years through business combinations with other physician-founded companies. This shared history has helped both companies fulfill our shared mission to protect others and given us similar operating philosophies and cultures. Bringing the strengths and capabilities of our companies together will allow our teams to continue to serve today’s healthcare providers with the necessary scale and breadth of capabilities.

On June 24, 2025, ProAssurance held a special meeting of stockholders (the “ProAssurance Special Meeting”) at which holders of ProAssurance’s common stock approved each of the proposals voted on at the ProAssurance Special Meeting relating to the transactions contemplated by the Merger Agreement. On July 2, 2025, the U.S. Federal Trade Commission granted early termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976 with respect to the Merger.

The closing of the proposed Merger is subject to other customary closing conditions, including approval from insurance regulators in the jurisdictions where the Company’s operating subsidiaries are domiciled. As of February 23, 2026, The Doctors Company has received final approval from insurance regulators in Alabama, the District of Columbia, Illinois, Missouri, Texas

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and Vermont. Review of the proposed Merger by insurance regulators remains pending in California and Pennsylvania. The Company has also obtained final approval from Lloyd’s of London with respect to PRA Corporate Capital Ltd., and from the Cayman Islands Monetary Authority with respect to Inova Re and Eastern Re, each of which is a licensed entity in the Cayman Islands. The timing for completion of the pending reviews is uncertain and not within the Company’s control, but in light of progress made toward satisfaction of closing conditions, at the time of this filing, the Company continues to anticipate closing the transaction by June 30, 2026.

Our Specialty P&C segment includes our MPL insurance operations, which represent the largest product line in our consolidated gross premiums written (71% in 2025). The healthcare market in the U.S. is continuing to consolidate, which brings competitive challenges and opportunities. This consolidation initially took the form of hospitals acquiring physician practices and later the growth of physician groups owned by outside investors. As these trends continue, most physicians no longer practice medicine as owners of an independent practice. Large single and multi-specialty practices often operate in many states. Healthcare delivery settings are changing with the growth of retail delivery by advanced practice healthcare professionals as well as physicians practicing in distributed clinics, pharmacies, large consumer stores and online. The shifts within the healthcare settings continue to impact the overall market for medical professional liability products due to their differing risk profiles. We are focused on serving those segments of the market where we believe we can achieve our profitability objectives over time. In addition, we face consolidation within the distribution system, requiring us to adapt to fewer, larger intermediaries.

Over the past several years, we have also responded to rising severity in the medical professional liability market, driven by social inflation and eroding tort reforms that have been adversely affecting the loss environment. We believe we have stayed ahead of many in the space in achieving rate levels in MPL that outpace severity trends, achieving a cumulative premium change of more than 80% since 2018 in the medical professional liability market. We also continue to forgo renewal and new business opportunities in this loss environment that we believe do not meet our expectation of rate adequacy. As a result, retention of existing insureds remains under pressure as competitors in selected markets continue to be willing to write business at rate levels we believe are insufficient in this loss environment.

Along with our pricing actions, we remain focused on disciplined underwriting and managing claims to address these market conditions. Innovation tools also continue to enhance our risk selection, pricing decisions and workflows. Work is ongoing to maximize the use of predictive analytics to leverage our extensive data and to identify specific geographic markets and specialty sub-sectors where there are opportunities to write business that has the potential to meet our profitability objectives. We are also committed to ensuring that our insured and distribution partners find us easy to do business with - helping distinguish us in the marketplace.

Our Specialty P&C segment also includes medical technology liability insurance, which contributed 4% to consolidated gross premiums written in 2025. It is less affected by the trends impacting the healthcare sector and has the potential to increase its market share over time, although we may see slower growth if investments in healthcare-related research declines due to federal policy changes.

Our second largest product line is workers' compensation insurance which represents 23% of our consolidated gross premiums written in 2025, including alternative market premiums, which are eliminated in consolidation. The workers’ compensation market is highly competitive and multi-line insurers continue to leverage workers’ compensation in their product offerings, which has resulted in a reduction of new business writings. Our workers' compensation product offerings are designed to provide flexibility in offering solutions to our customers at a competitive price; however, the rates we charge our policyholders remain pressured by the continuation of loss cost decreases in the states within our operating territories, and most states in which we operate have approved additional loss cost decreases for 2026. We have observed higher than expected loss trends in our average cost per claim, which we primarily attributed to increased medical costs driven by wage inflation and medical advancements. In response, we have implemented various medical cost management initiatives in 2025 to address medical cost severity. These initiatives are intended to enhance medical outcomes for injured workers, improve our case reserve estimation capabilities and lighten the administrative burdens of our claims professionals. The initiatives include the utilization of a medical document intelligence platform that assists with directing care to best-performing providers to help identify high severity claims early in the in claims' life cycle. Since implementing these initiatives, we have observed improvements in the average medical cost per claim, the benefit of which was more than offset by higher severity trends (see discussion that follows in Critical Accounting Estimates under the heading "Reserve for Losses and Loss Adjustment Expenses").

We believe our focus on our organization's Mission, Vision and Core Values enhances our market position and differentiates us from other insurers. We will continue to uphold our values of integrity, leadership, relationships and enthusiasm in all of our activities. We will honor these values in the performance of our Mission and pursuit of our Vision. We believe a commitment to our Mission and Vision in the service of our customers will continue to improve retention and add new insureds.

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Key Performance Measures

We are committed to disciplined underwriting, pricing and loss reserving practices as well as strategically managing our investment portfolio. We are also committed to maintaining prudent operating and financial leverage. We recognize the importance that our customers and producers place on the financial strength of our insurance subsidiaries, and we manage our business to protect our financial security.

In evaluating our performance, we consider a number of performance measures, including the following:

•The operating ratio which is calculated as net losses and loss adjustment expenses incurred plus underwriting, policy acquisition and operating expenses incurred less net investment income divided by net premiums earned (the combined ratio less the investment income ratio). This ratio provides the combined effect of underwriting profitability and investment income.

•The net loss ratio which is calculated as net losses and loss adjustment expenses incurred divided by net premiums earned and is a component of underwriting profitability.

•The underwriting expense ratio which is calculated as underwriting, policy acquisition and operating expenses incurred divided by net premiums earned and is a component of underwriting profitability.

•The combined ratio which is the sum of the net loss ratio and the underwriting expense ratio and measures underwriting profitability.

•The investment income ratio which is calculated as net investment income divided by net premiums earned and measures the contribution investment earnings provide to our overall profitability.

•The effective tax rate which is calculated as total income tax expense (benefit) divided by income (loss) before income taxes.

•Non-GAAP operating income (loss) which is widely used to evaluate performance within the insurance sector. In calculating Non-GAAP operating income (loss), we exclude the effects of items that do not reflect normal operating results. We believe Non-GAAP operating income (loss) presents a useful view of the performance of our ongoing core insurance operations; however, it should be considered in conjunction with net income (loss) computed in accordance with GAAP. See a reconciliation to its GAAP counterpart in the Executive Summary of Operations section under the heading “Non-GAAP Financial Measures” that follows.

•ROE which is calculated as net income (loss) divided by the average of beginning and ending total shareholders’ equity. This ratio measures our overall after-tax profitability and shows how efficiently capital is being used.

•Non-GAAP operating ROE which is calculated as Non-GAAP operating income (loss) divided by the average of beginning and ending total shareholders’ equity. Non-GAAP operating ROE measures the overall after-tax profitability of our ongoing core insurance operations and shows how efficiently capital is being used; however, it should be considered in conjunction with ROE computed in accordance with GAAP. See a reconciliation to its GAAP counterpart in the Executive Summary of Operations section under the heading “Non-GAAP Financial Measures” that follows.

•Book value per share which is calculated as total GAAP shareholders’ equity divided by the total number of common shares outstanding at the balance sheet date. This ratio measures the net worth of the Company to shareholders on a per-share basis. Growth in book value per share is an indicator of overall profitability.

•Non-GAAP adjusted book value per share which is a Non-GAAP measure widely used within the insurance sector and is calculated as total shareholders’ equity, excluding AOCI, divided by the total number of common shares outstanding at the balance sheet date. This Non-GAAP calculation measures the net worth of the Company to shareholders on a per share basis excluding AOCI to eliminate the temporary and potentially significant effects of fluctuations in interest rates on our fixed income portfolio; however, it should be considered in conjunction with book value per share computed in accordance with GAAP. See a reconciliation to its GAAP counterpart in the Executive Summary of Operations section under the heading “Non-GAAP Financial Measures” that follows.

In particular, we focus on our combined ratio and investment returns, both of which directly affect our ROE, operating ratio and growth in our book value per share.

Critical Accounting Estimates

Our Consolidated Financial Statements are prepared in conformity with GAAP. Preparation of these financial statements requires us to make estimates and assumptions that affect the amounts we report on those statements. We evaluate these estimates and assumptions on an ongoing basis based on current and historical developments, market conditions, industry trends and other information that we believe to be reasonable under the circumstances. We can make no assurance that actual results

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will conform to our estimates and assumptions; reported results of operations may be materially affected by changes in these estimates and assumptions.

Management considers the following accounting estimates to be critical because they involve significant judgment by management and those judgments could result in a material effect on our financial statements.

Reserve for Losses and Loss Adjustment Expenses

The largest component of our liabilities is our reserve for losses and loss adjustment expenses ("reserve for losses" or "reserve"), and the largest component of expense for our operations is incurred losses and loss adjustment expenses (also referred to as “losses and loss adjustment expenses,” “incurred losses,” “losses incurred” and “losses”). Incurred losses reported in any period reflect our estimate of losses incurred related to the premiums earned in that period as well as any changes to our previous estimate of the reserve required for prior periods.

As of December 31, 2025, our reserve is comprised almost entirely of long-tail exposures. The estimation of long-tailed losses is inherently complex and is subject to significant judgment on the part of management. Due to the nature of our claims, our loss costs, even for claims with similar characteristics, can vary significantly depending upon many factors, including but not limited to the specific characteristics of the claim and the manner or jurisdiction in which the claim is resolved. Long-tailed insurance is characterized by the extended period of time typically required both to assess the viability of a claim and potential damages, if any, and to reach a resolution of the claim. The claims resolution process may extend to more than five years. The combination of continually changing conditions and the extended time required for claim resolution results in a loss cost estimation process that requires actuarial skill and the application of significant judgment, and such estimates require periodic modification.

Our reserve is established by management after taking into consideration a variety of factors including premium rates, historical paid and incurred loss development trends and our evaluation of the current loss environment including frequency, severity, expected effects of inflation (monetary, social and medical), general economic and social trends, and the legal and political environment. We also take into consideration the conclusions reached by our internal and consulting actuaries. We update and review the data underlying the estimation of our reserve for losses each reporting period and make adjustments to loss estimation assumptions that we believe best reflect emerging data. Both our internal and consulting actuaries perform an in-depth review of our reserve for losses on at least a semi-annual basis using the loss and exposure data of our insurance subsidiaries.

We partition our reserves by accident year, which is the year in which the claim becomes our liability. For claims-made policies, the insured event generally becomes a liability when the event is first reported to us. For occurrence policies, the insured event becomes a liability when the event takes place. For retroactive coverages, the insured event becomes a liability at inception of the underlying contract. As claims are incurred (reported) and claim payments are made, they are aggregated by accident year for analysis purposes. We also partition our reserves by reserve type: case reserves and IBNR reserves. Case reserves are established by our claims departments based upon the particular circumstances of each reported claim and represent our estimate of the future loss costs (often referred to as expected losses) that will be paid on reported claims. Case reserves are decremented as claim payments are made and are periodically adjusted upward or downward as estimates regarding the amount of future losses are revised; reported loss for an individual claim is the case reserve at any point in time plus the claim payments that have been made to date. IBNR reserves are estimated by accident year by our actuarial department and represent our estimate in the aggregate of future development on losses that have been reported to us and our estimate of losses that have been incurred but not reported to us.

Our reserving process can be broadly grouped into three areas: the establishment of the reserve for the current accident year (the initial reserve), the re-estimation of the reserve for prior accident years (development of prior accident years) and the establishment of the initial reserve for risks assumed in business combinations, applicable only in periods in which acquisitions occur (the acquired reserve). A summary of the activity in our net reserve for losses during 2025 and 2024 is provided under the heading "Losses" in the Liquidity and Capital Resources and Financial Condition section that follows.

Current Accident Year - Initial Reserve

Considerable judgment is required in establishing our initial reserve for any current accident year period, as there is limited data available upon which to base our estimate (see further discussion that follows under the heading "Use of Judgment"). Our process for setting an initial reserve considers the unique characteristics of each product, but in general we rely heavily on the loss assumptions that were used to price business, as our pricing reflects our analysis of loss costs that we expect to incur relative to the insurance product being priced.

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Specialty P&C Segment. Loss costs within this segment are impacted by many factors including but not limited to the nature of the claim, including whether or not the claim is an individual or a mass tort claim, the personal situation of the claimant or the claimant's family, the outcome of jury trials including the impacts of social inflation, the legislative and judicial climate where any potential litigation may occur, general economic and social trends and the trend of healthcare costs. Within our Specialty P&C segment, for our Medical Professional Liability business (86% of our consolidated gross reserve for losses and loss adjustment expenses as of December 31, 2025), we set an initial reserve using a loss ratio approach based upon our evaluation of the current loss environment including frequency, severity, monetary inflation, social inflation and legal trends. See further discussion in our Segment Results - Specialty Property & Casualty section that follows under the heading "Losses and Loss Adjustment Expenses."

The risks insured in our Medical Technology Liability business (3% of our consolidated gross reserve for losses and loss adjustment expenses as of December 31, 2025) are more varied, and policies are individually priced based on the risk characteristics of the policy and the account. The insured risks range from startup operations to large multinational entities, and the larger entities often have significant deductibles or self-insured retentions. Reserves are established using our most recently developed actuarial estimates of losses expected to be incurred based on factors which include results from prior analysis of similar business, industry indications, observed trends and judgment. Claims in this line of business primarily involve bodily injury to individuals and are affected by factors similar to those of our MPL line of business. For the Medical Technology Liability business, we also establish an initial reserve using a loss ratio approach, including a provision in consideration of historical loss volatility that this line of business has exhibited.

Workers' Compensation Insurance Segment. Many factors affect the ultimate losses incurred for our workers' compensation coverages (6% of our consolidated gross reserve for losses and loss adjustment expenses as of December 31, 2025) including but not limited to the type and severity of the injury, the age, health and occupation of the injured worker, the estimated length of disability, medical treatment and related costs, and the jurisdiction and workers' compensation laws of the state of the injury occurrence.

We use various actuarial methodologies in developing our workers’ compensation reserve, combined with a review of the payroll exposure base. For the current accident year, given the lack of seasoned information, the different actuarial methodologies produce results with significant variability; therefore, more emphasis is placed on supplementing results from the actuarial methodologies with trends in exposure base, medical expense inflation, general inflation, severity and claim counts, among other things, to select an ultimate loss indication.

Segregated Portfolio Cell Reinsurance Segment. The factors that affect the ultimate losses incurred for the workers' compensation and medical professional liability coverages assumed by the SPCs at Inova Re and Eastern Re (2% of our consolidated gross reserve for losses and loss adjustment expenses as of December 31, 2025) are consistent with that of our Workers’ Compensation Insurance and Specialty P&C segments, respectively.

Development of Prior Accident Years

In addition to setting the initial reserve for the current accident year, we reassess the amount of reserve required for prior accident years each period.

The foundation of our reserve re-estimation process is an actuarial analysis that is performed by both our internal and consulting actuaries. This detailed analysis projects ultimate losses based on partitions which include line of business, geography, coverage layer and accident year. The procedure uses the most representative data for each partition, capturing its unique patterns of development and trends. We believe that the use of consulting actuaries provides an independent view of our loss data as well as a broader perspective on industry loss trends.

The analyses performed by our internal actuarial team and the consulting actuaries analyzes each partition of our business in a variety of ways and uses multiple actuarial methodologies in performing these analyses, including:

•Bornhuetter-Ferguson (Paid and Reported) Method

•Paid Development Method

•Reported (Incurred) Development Method

•Average Paid Value Method

•Average Reported Value Method

A brief description of each method follows.

Bornhuetter-Ferguson Method. We use both the Paid and the Reported Bornhuetter-Ferguson Methods. The Paid Method assigns partial weight to initial expected losses for each accident year (initial expected losses being the first established case and IBNR reserves for a specific accident year) and partial weight to paid to date losses. The Reported Method assigns partial weight to the initial expected losses and partial weight to current reported losses. The weights assigned to the initial expected losses decrease as the accident year matures.

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Paid Development and Reported (Incurred) Development Methods. These methods use historical, cumulative losses (paid losses for the Paid Development Method, reported losses for the Reported (Incurred) Development Method) by accident year and develop those actual losses to estimated ultimate losses based upon the assumption that each accident year will develop to estimated ultimate cost in a manner that is analogous to prior years, adjusted as deemed appropriate for the expected effects of known changes in the claim payment environment (and case reserving environment for the Reported (Incurred) Development Method); and to the extent necessary, supplemented by analyses of the development of broader industry data.

Average Paid Value and Average Reported Value Methods. In these methods, average claim cost data (paid claim cost for the Average Paid Value Method and reported claim cost for the Reported Value Method) is developed to an ultimate average cost level by report year based on historical data. Claim counts are similarly developed to an ultimate count level. The average claim cost (after rounding and adjustment, if necessary, to accommodate report year data that is not considered to be predictive) is then multiplied by the ultimate claim counts by report year to derive ultimate loss and ALAE.

We use various actuarial methods in the process of setting reserves. Each actuarial method generally returns a different value, and for the more recent accident years the variations among the different methodologies can be significant. Generally, methods such as the Bornhuetter-Ferguson Method are used on more recent accident years where we have less data on which to base our analysis. As time progresses and we have an increased amount of data for a given accident year, we begin to give more confidence to the development and average methods, as these methods typically rely more heavily on our own historical data. These methods emphasize different aspects of loss reserve estimation and provide a variety of perspectives for our decisions.

Certain of the methodologies utilized to estimate the ultimate losses for each partition of our reserves consider the actual amounts paid. Paid data is particularly influential when a large portion of known claims have been closed, as is the case for older accident years. In selecting a point estimate for each partition, management considers the extent to which trends are emerging consistently for all partitions and known industry trends. Thus, actual, rather than estimated severity trends are given more consideration. If actual severity trends are lower than those estimated at the time that reserves were previously established, the recognition of favorable development is indicated. This is particularly true for older accident years where our actuarial methodologies give more weight to actual loss costs (severity).

The various actuarial methods discussed above are applied in a consistent manner from period to period. For each partition of our reserves, we evaluate the results of the various methods, along with the supplementary statistical data regarding such factors as closed with and without indemnity ratios, claim severity trends, the expected duration of such trends, changes in the legal and legislative environment and the current economic environment to develop a point estimate based upon management's judgment and past experience. The series of selected point estimates is then combined to produce an overall point estimate for ultimate losses.

We utilize the selected point estimates of ultimate losses to develop estimates of ultimate losses recoverable from reinsurers, based on the terms and conditions of our reinsurance agreements. An overall estimate of the amount receivable from reinsurers is determined by combining the individual estimates. Our net reserve estimate is the gross reserve point estimate less the estimated reinsurance recovery.

For our Workers’ Compensation Insurance segment and for the workers' compensation exposures in our Segregated Portfolio Cell Reinsurance segment, we utilize the Reported (Incurred) Development Method, Paid Development Method and Bornhuetter-Ferguson Method, to develop our reserve for each accident year. The actuarial review includes the stratification of claims data (lost time claims, medical only claims) using different variations that allow us to identify trends that may not be readily identifiable if the data was evaluated only in the aggregate. Reported and paid loss development factors are key assumptions in the reserve estimation process and are influenced by our historical reported and paid loss development patterns. As accident years mature, the various actuarial methodologies produce more consistent loss estimates.

Acquired Reserve

The acquisition of NORCAL on May 5, 2021 increased our gross reserves by $1.2 billion which was the fair value of NORCAL's gross loss reserve at the time of acquisition. The fair value estimate of NORCAL's gross reserve for losses and loss adjustment expenses was based on three components: an actuarial estimate of the expected future net cash flows, a reduction to those cash flows for the time value of money determined utilizing the U.S. Treasury Yield Curve and a risk margin adjustment to reflect the net present value of profit that an investor would demand in return for the assumption of the development risk associated with the reserve. The fair value of NORCAL's gross reserve, including the risk margin adjustment, exceeded the actuarial estimate of NORCAL’s undiscounted gross loss reserve by approximately $42.2 million as of May 5, 2021. This fair value adjustment was recorded to the reserve for losses and loss adjustment expenses and will be amortized over a period utilizing loss payment patterns as a reduction to prior accident year net losses and loss adjustment expenses. We also recorded other adjustments to NORCAL’s reserve as a result of purchase accounting including negative VOBA on NORCAL’s assumed unearned premium and assumed DDR reserve.

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Use of Judgment/Variability of Loss Reserves

The process of estimating reserves involves a high degree of judgment and is subject to a number of variables. These variables can be affected by both views of internal and external events, such as changes in views of monetary and social inflation, legal trends and legislative changes, as well as differentiating views of individuals involved in the reserve estimation process, among others. We continually refine our estimates in a regular, ongoing process as historical loss experience develops and additional claims are reported and settled. Our objective is to consider all significant facts and circumstances known at the time.

Our loss reserves may be impacted by social inflation, which is generally described as the rising costs of insurance claims resulting from factors including, but not limited to, increasing litigation, broader definitions of liability, more plaintiff-friendly legal decisions, jury behavior, third-party litigation financing, and larger compensatory jury awards and non-economic damages. These factors could lead to greater than anticipated claims and claim handling expenses which could exceed our established reserves causing us to increase our loss reserves.

The effects of monetary and medical inflation could cause the cost of claims to rise in the future. Our loss reserves include assumptions about future payments for settlement of claims and claims handling expenses, such as medical treatments and litigation costs. For our workers' compensation reserves, healthcare wage inflation and medical advancements may also increase the cost of claims. To the extent inflation causes these costs to increase above reserves established for these claims, we will be required to increase our loss reserves with a corresponding reduction in our financial results in the period in which the need for additional reserves is identified.

MPL. Over the past several years the most influential factor affecting the analysis of our MPL reserves and the related development recognized has been an observed increase in claim severity for the broader medical professional liability industry as well as higher initial loss expectations on incurred claims. The severity trend is an explicit component of our pricing models and directly impacts the reserving process. Our estimate of this trend and our expectations about changes in this trend impact a variety of factors, from the selection of expected loss ratios to the ultimate point estimates established by management.

Because of the implicit and wide-ranging nature of severity trend assumptions on the loss reserving process, it is not practical to specifically isolate the impact of changing severity trends. However, because severity is an explicit component of our MPL pricing process we can better isolate the impact that changing severity can have on our loss costs and loss ratios in regards to our pricing models for this business component. Our current MPL pricing models assume severity trends in the range of 3% to 5% depending on state, territory and specialty. In some portions of our MPL business, we have observed and reflected higher severity trends in our estimates of losses and loss adjustment expenses.

Due to the long-tailed nature of our claims and the previously discussed historical volatility of loss costs, selection of a severity trend assumption is a subjective process that is inherently likely to prove inaccurate over time. Given the long tail and volatility, we are generally cautious in making changes to the severity assumptions within our pricing models. All open claims and accident years are generally impacted by a change in the severity trend, which compounds the effect of such a change.

Although the future degree and impact of the ultimate severity trend remains uncertain due to the long-tailed nature of our business, we have given consideration to observed loss costs in setting our rates. For our MPL business, this practice has recently resulted in rate increases reflecting the rising loss cost environment, and we anticipate further renewal pricing increases due to increasing loss severity.

Workers' Compensation. In our workers’ compensation business, severity is not an explicit component of our pricing process, as loss costs are established by the states in which we operate. We do, however, have the ability in certain states to apply for increases in our loss cost multipliers to adjust for company specific loss experience that is higher than state loss cost changes. In our reserving process, we consider the loss severity trends in evaluating both our current and expected loss development. Historically, we have been able to minimize the impact of higher severity trends as a result of our early intervention and case management strategies in our claims process, which results in claims being resolved more quickly than the industry norm. In the second half of 2023 and throughout 2024, we observed higher than expected loss trends in our average cost per claim, which we primarily attributed to increased medical costs driven by wage inflation and medical advancements. We implemented various medical cost management initiatives during 2025 to address the medical cost severity and we have observed improvements in the average medical cost per claim. However, an increase in severity-related claim activity on large losses more than offset medical cost savings related to these initiatives. In response to this trend, we increased our full year current accident year net loss ratio from 75% at September 30, 2025 to 77% at December 31, 2025.

As previously noted, the number of data points and variables considered and the subjective process followed in establishing our loss reserve makes it impractical to isolate individual variables and demonstrate their impact on our estimate of loss reserves. However, to provide a better understanding of the potential variability in our reserves, we have modeled implied reserve ranges around our single point net reserve estimates for our various lines of business assuming different confidence levels. The ranges have been developed by aggregating the expected volatility of losses across partitions of our business to

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obtain a consolidated distribution of potential reserve outcomes. The aggregation of this data takes into consideration correlations among our geographic and specialty mix of business. The result of the correlation approach to aggregation is that the ranges are narrower than the sum of the ranges determined for each partition.

We have used this modeled statistical distribution to calculate an 80% and 60% confidence interval for the potential outcome of our consolidated net reserve for losses. The high and low end points of the distributions are as follows:

Low End Point

Carried Net Reserve

High End Point

80% Confidence Level

$1.994 billion

$2.684 billion

$3.489 billion

60% Confidence Level

$2.179 billion

$2.684 billion

$3.137 billion

Any change in our estimate of net ultimate losses for prior years is reflected in net income (loss) in the period in which such changes are made. Due to the size of our consolidated reserve for losses and the large number of claims outstanding at any point in time, even a small percentage adjustment to our total reserve estimate could have a material effect on our results of operations for the period in which the adjustment is made.

Loss Development by Line of Business

Professional Liability

Our professional liability business is primarily comprised of our MPL line of business and, to a lesser extent, our legal professional liability business which is currently in run-off. As a result of the higher severity environment in our MPL line of business, we saw our closed-with-indemnity-payment ratio (i.e., the number of suits closed with an indemnity or loss payment as compared to the total number of closed suits) for our claims increase from 28% in 2015 to 35% in 2025.

The following table presents additional information about the loss development for our professional liability business, excluding loss development for MPL coverages assumed by the SPCs at Inova Re and Eastern Re. Furthermore, loss development for our professional liability business for the years ended December 31, 2025, 2024 and 2023 excludes the amortization of purchase accounting fair value adjustments.

($ in thousands)

2025

2024

2023

Accident Years

Estimated Ultimate Losses, Net of Reinsurance, December 31, 2025

Reserve Development (favorable) unfavorable

% of Known Claims Closed

Reserve Development (favorable) unfavorable

% of Known Claims Closed

Reserve Development (favorable) unfavorable

% of Known Claims Closed

2025

$

596,065 

N/A

24.1 

%

N/A

N/A

N/A

N/A

2024

$

584,618 

$

741 

51.9 

%

N/A

24.5 

%

N/A

N/A

2023

$

655,621 

$

12,252 

70.1 

%

$

6,146 

52.7 

%

N/A

24.7 

%

2022

$

598,959 

$

(14,797)

81.9 

%

$

(1,362)

70.8 

%

$

(10,151)

55.0 

%

2021

$

659,679 

$

(18,128)

87.8 

%

$

(10,207)

82.1 

%

$

(11,690)

71.6 

%

2020

$

841,423 

$

(26,805)

93.0 

%

$

(14,686)

89.3 

%

$

44,061 

82.5 

%

2019

$

855,393 

$

(20,215)

96.0 

%

$

(3,536)

93.7 

%

$

5,220 

90.4 

%

2018

$

851,417 

$

(1,261)

97.3 

%

$

2,782 

96.3 

%

$

413 

93.6 

%

2017

$

717,217 

$

(1,156)

98.7 

%

$

2,273 

96.5 

%

$

(8,265)

95.4 

%

2016

$

728,729 

$

(7,277)

98.2 

%

$

(2,555)

91.7 

%

$

(2,922)

92.3 

%

Prior to 2016

$

13,823,916 

$

1,746 

$

(12,781)

$

(7,057)

•We recognized net favorable reserve development of $74.9 million during the year ended December 31, 2025 primarily due to lower than expected loss emergence principally related to accident years 2019 through 2022.

•Not included in the table above, is $3.4 million, $5.3 million and $8.3 million of amortization of the purchase accounting fair value adjustment on NORCAL's assumed net reserve and amortization of the negative VOBA associated with NORCAL's DDR reserve which is recorded as a reduction to prior accident year net losses and loss adjustment expenses in 2025, 2024 and 2023, respectively.

•Not included in the above table is $0.7 million of favorable development recognized in 2025 and $0.3 million and $1.3 million of unfavorable development recognized in 2024 and 2023, respectively, in our Segregated Portfolio Cell Reinsurance segment related to MPL coverages assumed by the SPCs at Inova Re and Eastern Re, as previously discussed.

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Medical Technology Liability

The nature of the risks insured and volatility of the loss experience in the Medical Technology Liability line of business has produced more variable loss development, as presented in the following table:

($ in thousands)

2025

2024

2023

Accident Years

Estimated Ultimate Losses, Net of Reinsurance, December 31, 2025

Reserve Development (favorable) unfavorable

% of Known Claims Closed

Reserve Development (favorable) unfavorable

% of Known Claims Closed

Reserve Development (favorable) unfavorable

% of Known Claims Closed

2025

$

18,630 

N/A

41.1 

%

N/A

N/A

N/A

N/A

2024

$

19,011 

$

424 

77.4 

%

N/A

49.8 

%

N/A

N/A

2023

$

12,517 

$

(4,738)

72.8 

%

$

(1,609)

55.3 

%

N/A

28.0 

%

2022

$

11,670 

$

(2,424)

89.6 

%

$

(2,141)

80.2 

%

$

(1,448)

59.6 

%

2021

$

11,316 

$

(2,018)

82.2 

%

$

836 

77.2 

%

$

(1,647)

73.0 

%

2020

$

9,697 

$

(332)

86.7 

%

$

(1,098)

84.0 

%

$

(1,442)

80.1 

%

2019

$

13,501 

$

973 

63.3 

%

$

(953)

62.2 

%

$

1,235 

61.3 

%

2018

$

8,081 

$

(1,158)

90.4 

%

$

186 

89.5 

%

$

499 

89.5 

%

2017

$

6,668 

$

(178)

99.0 

%

$

(65)

99.0 

%

$

(1,056)

99.0 

%

2016

$

8,436 

$

(366)

100.0 

%

$

173 

99.5 

%

$

(517)

99.5 

%

Prior to 2016

$

614,610 

$

(184)

$

171 

$

377 

•Approximately $9.2 million of the $10.0 million total net favorable development recognized in 2025 related to the 2021 through 2023 accident years. The development for the 2021 through 2023 accident years represents a 20.5% reduction to the ultimates established for those reserves at December 31, 2024.

•In 2025, 2024 and 2023, the development was largely attributable to favorable results from claims closed during the year. As time has elapsed we have recognized that actual loss experience has on average been better than estimated. We have been cautious in recognizing the improvement, but as claims have matured and claims are closed or have become more certain for the remaining open claims, we have revised reserve estimates. We believe the need for a cautious approach is required as outcomes are uncertain and results can be significantly affected by outcomes for a small number of cases.

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Workers' Compensation

Claims in our workers’ compensation line of business have historically closed at a faster rate than in our MPL or Medical Technology Liability lines of business. This faster disposition rate, along with a lower net retention after the application of reinsurance, has resulted in less volatility in loss estimates on a net basis. However, a change in the number of individually-severe claims can create volatility in a given accident year. The following table presents additional information about the loss development for our workers' compensation line of business, excluding changes in the AAD liability in our Workers' Compensation Insurance segment as it is not attributable to a specific accident year:

($ in thousands)

2025

2024

2023

Accident Years

Estimated Ultimate Losses, Net of Reinsurance, December 31, 2025

Reserve Development (favorable) unfavorable

% of Known Claims Closed

Reserve Development (favorable) unfavorable

% of Known Claims Closed

Reserve Development (favorable) unfavorable

% of Known Claims Closed

2025

$

143,144 

N/A

39.0 

%

N/A

N/A

N/A

N/A

2024

$

146,391 

$

(4,565)

80.4 

%

N/A

43.0 

%

N/A

N/A

2023

$

146,725 

$

(1,268)

91.8 

%

$

(1,576)

79.5 

%

N/A

40.3

%

2022

$

151,787 

$

(16)

95.4 

%

$

(116)

91.3 

%

$

9,016 

81.3 

%

2021

$

144,693 

$

(1,176)

97.4 

%

$

(1,255)

95.7 

%

$

1,217 

92.8 

%

2020

$

135,328 

$

172 

98.8 

%

$

(255)

98.2 

%

$

(2,318)

96.7 

%

2019

$

146,155 

$

(566)

98.8 

%

$

(1,183)

98.3 

%

$

(2,119)

97.9 

%

2018

$

155,672 

$

(395)

99.0 

%

$

(1,266)

98.5 

%

$

(1,819)

98.1 

%

2017

$

125,034 

$

(1)

99.2 

%

$

(479)

98.8 

%

$

(711)

98.7 

%

2016

$

107,215 

$

(23)

99.2 

%

$

(13)

99.1 

%

$

(231)

99.0 

%

Prior to 2016

$

1,006,108 

$

(1,098)

$

2,557 

$

979 

•In 2025, we recognized $1.8 million of net favorable development in our Workers' Compensation Insurance segment and we recognized $7.1 million of net favorable development in our Segregated Portfolio Cell Reinsurance segment related to workers' compensation business.

Reinsurance

We use insurance and reinsurance (collectively, “reinsurance”) to provide capacity to write larger limits of liability, to provide reimbursement for losses incurred under the higher limit coverages we offer, to provide protection against losses in excess of policy limits and, in the case of risk sharing arrangements, to align our objectives with those of our strategic business partners and to provide custom insurance solutions for large customer groups. The purchase of reinsurance does not relieve us from the ultimate risk on our policies; however, it does provide reimbursement for certain losses we pay.

We make a determination of the amount of insurance risk we choose to retain based upon numerous factors, including our risk tolerance and the capital we have to support it, the price and availability of reinsurance, the volume of business, our level of experience with a particular set of exposures and our analysis of the potential underwriting results. We purchase excess of loss reinsurance to limit the amount of risk we retain and we do so from a number of companies to mitigate concentrations of credit risk. As of December 31, 2025, there is no reinsurer, on an individual basis, for which our recoverables for both paid and unpaid claims (net of amounts due to the reinsurer) and our prepaid balances are more than $48 million, in the aggregate. We utilize reinsurance brokers to assist us in the placement of these reinsurance programs and in the analysis of the credit quality of our reinsurers. The determination of which reinsurers we choose to do business with is based upon an evaluation of their then current financial strength, rating, stability and claims payment practices.

We evaluate each of our ceded reinsurance contracts at inception to confirm that there is sufficient risk transfer to allow the contract to be accounted for as reinsurance under current accounting guidance. At December 31, 2025, all ceded contracts were accounted for as risk transferring contracts.

Our receivable from reinsurers on unpaid losses and loss adjustment expenses represents our estimate of the amount of our reserve for losses that will be recoverable under our reinsurance programs. We base our estimate of funds recoverable upon our expectation of ultimate losses and the portion of those losses that we estimate to be allocable to reinsurers based upon the terms and conditions of our reinsurance agreements. Our assessment of the collectability of the recorded amounts receivable from reinsurers considers the payment history of the reinsurer, publicly available financial and rating agency data, our interpretation of the underlying contracts and policies and responses by reinsurers.

Given the uncertainty inherent in our estimates of losses and related amounts recoverable from reinsurers, these estimates may vary significantly from the ultimate outcome.

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Under the terms of certain of our reinsurance agreements, the amount of premium that we cede to our reinsurers is based in part on the losses we recover under the agreements. Therefore, we make an estimate of premiums ceded under these reinsurance agreements subject to certain minimums and maximums. Any adjustments to our estimates of losses recoverable under our reinsurance agreements or the premiums owed under our agreements are reflected in current operations. Due to the size of our reinsurance balances, an adjustment to these estimates could have a material effect on our results of operations for the period in which the adjustment is made.

Our reinsurance receivables are exposed to credit losses but to date have not experienced any significant amount of credit losses. To partially mitigate our exposure to credit losses, reinsurance receivables totaling approximately $117.6 million were collateralized by letters of credit or funds withheld as of December 31, 2025. We measure expected credit losses on our reinsurance receivables on a collective basis when similar risk characteristics exist or on an individual basis if we determine a receivable does not share similar risk characteristics. We measure expected credit losses associated with our reinsurance receivables (related to both paid and unpaid losses) at the consolidated level as our reinsurance receivables share similar risk characteristics including type of financial asset, type of industry and similar historical and expected credit loss patterns. We measure expected credit losses over the average contractual term of our reinsurance receivables utilizing a loss rate method. Historical internal credit loss experience is the basis for our assessment of expected credit losses; however, we may also consider historical credit loss information from external sources. We also consider reasonable and supportable forecasts of future economic conditions in our estimate of expected credit losses. Expected credit losses associated with our reinsurance receivables (related to both paid and unpaid losses) were nominal in amount as of December 31, 2025 and 2024. No reinsurance balances were written off for credit reasons during the years ended December 31, 2025 or 2024. Should our expected credit loss analysis or other facts or circumstances lead us to believe that any reinsurer may not meet its obligations to us, adjustments to the allowance for expected credit losses or to reinsurance receivables would be reflected in current operations. Such an adjustment has the potential to be material to the results of operations in the period in which it is recorded; however, we would not expect such an adjustment to have a material effect on our capital position or our liquidity. For further information on our allowance for expected credit losses related to our receivables from reinsurers see Note 1 of the Notes to Consolidated Financial Statements.

Investment Valuations

We record the majority of our investments at fair value as shown in the table below. At December 31, 2025, the distribution of our investments based on GAAP fair value hierarchies (levels) was as follows:

Distribution by GAAP Fair Value Hierarchy

Level 1

Level 2

Level 3

Not Categorized

Total

Investments

Investments recorded at:

Fair value

7%

83%

2%

5%

97%

Other valuations

3%

Total Investments

100%

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. All of our fixed maturity and equity investments are carried at fair value. The fair value of our short-term securities approximates the cost of the securities due to their short-term nature.

Because of the number of securities we own and the complexity of developing accurate fair values, we utilize multiple independent pricing services to assist us in establishing the fair value of individual securities. The pricing services provide fair values based on exchange-traded prices, if available. If an exchange-traded price is not available, the pricing services, if possible, provide a fair value that is based on multiple broker/dealer quotes or that has been developed using pricing models. Pricing models vary by asset class and utilize currently available market data for securities comparable to ours to estimate a fair value for our securities. The pricing services scrutinize market data for consistency with other relevant market information before including the data in the pricing models. The pricing services disclose the types of pricing models used and the inputs used for each asset class. Determining fair values using these pricing models requires the use of judgment to identify appropriate comparable securities and to choose a valuation methodology that is appropriate for the asset class and available data.

The pricing services provide a single value per instrument quoted. We review the values provided for reasonableness each quarter by comparing market yields generated by the supplied value versus market yields observed in the marketplace. We also compare yields indicated by the provided values to appropriate benchmark yields and review for values that are unchanged or that reflect an unanticipated variation as compared to prior period values. We utilize a primary pricing service for each security type and compare provided information for consistency with alternate pricing services, known market data and information

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from our own trades, considering both values and valuation trends. We also review weekly trades versus the prices supplied by the services. If a supplied value appears unreasonable, we discuss the valuation in question with the pricing service and make adjustments if deemed necessary. Historically our review has not resulted in any material changes to the values supplied by the pricing services. The pricing services do not provide a fair value unless an exchange-traded price or multiple observable inputs are available. As a result, the pricing services may provide a fair value for a security in some periods but not others, depending upon the level of recent market activity for the security or comparable securities.

Level 1 Investments

Fair values for a majority of our equity securities and portions of our short-term and convertible securities are determined using exchange-traded prices. There is little judgment involved when fair value is determined using an exchange-traded price. In accordance with GAAP, we classify securities valued using an exchange-traded price as Level 1 securities.

Level 2 Investments

Most fixed income securities do not trade daily; thus, exchange-traded prices are generally not available for these securities. However, market information (often referred to as observable inputs or market data, including but not limited to, last reported trade, non-binding broker quotes, bids, benchmark yield curves, issuer spreads, two-sided markets, benchmark securities, offers and recent data regarding assumed prepayment speeds, cash flow and loan performance data) is available for most of our fixed income securities. We determine fair value for a large portion of our fixed income securities using available market information. In accordance with GAAP, we classify securities valued based on multiple market observable inputs as Level 2 securities.

Level 3 Investments

When a pricing service does not provide a value for one of our fixed maturity securities, management estimates fair value using either a single non-binding broker quote or pricing models that utilize market based assumptions which have limited observable inputs. The process involves significant judgment in selecting the appropriate data and modeling techniques to use in the valuation process. In accordance with GAAP, we classify securities valued using limited observable inputs as Level 3 securities.

Fair Values Not Categorized

We hold interests in certain investment funds, primarily LPs/LLCs, which measure fund assets at fair value on a recurring basis and provide us with a NAV for our interest. As a practical expedient, we consider the NAV provided to approximate the fair value of our interest. In accordance with GAAP, we do not categorize these investments within the fair value hierarchy.

Nonrecurring Fair Value Measurements

We measure the fair value of certain assets on a nonrecurring basis when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. These assets include investments carried principally at cost, investments in tax credit partnerships, fixed assets, goodwill and other intangible assets. These assets would also include any equity method investments that do not provide a NAV. We did not have any assets or liabilities that were measured at fair value on a nonrecurring basis at December 31, 2025 or December 31, 2024.

Investments - Other Valuation Methodologies

Certain of our investments, in accordance with GAAP for the type of investment, are measured using methodologies other than fair value. At December 31, 2025, these investments represented approximately 3% of total investments and are detailed in the following table. Additional information about these investments is provided in Note 2 and Note 3 of the Notes to Consolidated Financial Statements.

(In millions)

Carrying Value

GAAP Measurement Method

Other investments:

Other, principally FHLB capital stock

$

7.2 

Principally Cost

Investment in unconsolidated subsidiaries:

Investments in tax credit partnerships

0.1 

Equity

Equity method investments, primarily LPs/LLCs

31.0 

Equity

31.1 

BOLI

82.8 

Cash surrender value

Total investments - Other valuation methodologies

$

121.1 

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Impairments

We evaluate our available-for-sale investment securities, which at December 31, 2025 and December 31, 2024 consisted entirely of fixed maturity securities, on at least a quarterly basis for the purpose of determining whether declines in fair value below recorded cost basis represent an impairment loss. We consider a credit-related impairment loss to have occurred:

•if there is intent to sell the security;

•if it is more likely than not that the security will be required to be sold before full recovery of its amortized cost basis; or

•if the entire amortized basis of the security is not expected to be recovered.

The assessment of whether the amortized cost basis of a security is expected to be recovered requires management to make assumptions regarding various matters affecting future cash flows. The choice of assumptions is subjective and requires the use of judgment. Actual credit losses experienced in future periods may differ from management’s current estimates of those credit losses. Methodologies used to estimate the present value of expected cash flows are:

The estimate of expected cash flows is determined by projecting a recovery value and a recovery time frame and assessing whether further principal and interest will be received. We consider various factors in projecting recovery values and recovery time frames, including the following:

•third-party research and credit rating reports;

•the current credit standing of the issuer, including credit rating downgrades, whether before or after the balance sheet date;

•the extent to which the decline in fair value is attributable to credit risk specifically associated with the security or its issuer;

•internal assessments and the assessments of external portfolio managers regarding specific circumstances surrounding an investment, which indicate the investment is more or less likely to recover its amortized cost than other investments with a similar structure;

•for asset-backed securities, the origination date of the underlying loans, the remaining average life, the probability that credit performance of the underlying loans will deteriorate in the future and our assessment of the quality of the collateral underlying the loan;

•failure of the issuer of the security to make scheduled interest or principal payments;

•any changes to the rating of the security by a rating agency;

•recoveries or additional declines in fair value subsequent to the balance sheet date;

•adverse legal or regulatory events;

•significant deterioration in the market environment that may affect the value of collateral (e.g., decline in real estate prices);

•significant deterioration in economic conditions; and

•disruption in the business model resulting from changes in technology or new entrants to the industry.

If deemed appropriate and necessary, a discounted cash flow analysis is performed to confirm whether a credit loss exists and, if so, the amount of the credit loss. We use the single best estimate approach for available-for-sale debt securities and consider all reasonably available data points, including industry analyses, credit ratings, expected defaults and the remaining payment terms of the debt security. For fixed rate available-for-sale debt securities, cash flows are discounted at the security's effective interest rate implicit in the security at the date of acquisition. If the available-for-sale debt security’s contractual interest rate varies based on subsequent changes in an independent factor, such as an index or rate, for example, the prime rate, the SOFR, or the U.S. Treasury bill weekly average, that security’s effective interest rate is calculated based on the factor as it changes over the life of the security. If we intend to sell a debt security or believe we will more likely than not be required to sell a debt security before the amortized cost basis is recovered, any existing allowance will be written off against the security's amortized cost basis, with any remaining difference between the debt security's amortized cost basis and fair value recognized as an impairment loss in earnings.

Exclusive of securities where there is an intent to sell or where it is not more likely than not that the security will be required to be sold before recovery of its amortized cost basis, impairment for debt securities is separated into a credit component and a non-credit component. The credit component of an impairment is the difference between the security’s amortized cost basis and the present value of its expected future cash flows, while the non-credit component is the remaining difference between the security’s fair value and the present value of expected future cash flows. An allowance for expected credit losses will be recorded for the expected credit losses through income and the non-credit component is recognized in OCI. The amount of impairment recognized is limited to the excess of the amortized cost over the fair value of the available-for-sale debt security.

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Deferred Taxes

Deferred federal income taxes arise from the recognition of temporary differences between the basis of assets and liabilities determined for financial reporting purposes and the basis determined for income tax purposes. Our temporary differences principally relate to our loss reserves, unearned and advanced premiums, DPAC, NOL and tax credit carryforwards, compensation related items, unrealized investment gains (losses) and basis differences on fixed assets, intangible assets and operating leases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to be in effect when such benefits are realized. We review our deferred tax assets quarterly for impairment. If we determine that it is more likely than not that some or all of a deferred tax asset will not be realized, a valuation allowance is recorded to reduce the carrying value of the asset. In assessing the need for a valuation allowance, management is required to make certain judgments and assumptions about our future operations based on historical experience and information as of the measurement period regarding reversal of existing temporary differences, carryback capacity, future taxable income of the appropriate character (including its capital and operating characteristics) and tax planning strategies.

A large portion of our deferred tax asset at December 31, 2025 is related to net unrealized investment losses on our fixed maturities due to the significant effect of fluctuations in interest rates that began in 2022. Future changes in interest rates could cause significant fluctuations in the deferred tax asset. Any loss realized prior to recovery would require sufficient income of the appropriate character (i.e., capital gains), and in the appropriate time frame, to realize the tax benefit. We believe that we have the intent and ability to hold these securities until their recovery. Our projected positive operating income, including the investment income generated from holding our debt securities until maturity, support our ability to implement this tax planning strategy.

A valuation allowance was established in a prior year against the deferred tax asset related to the NOL carryforwards for our U.K. operations and against a portion of the deferred tax asset related to our U.S. state NOL carryforwards. Management concluded that it was more likely than not that these deferred tax assets will not be realized. We also established a valuation allowance in a prior year against the deferred tax assets of certain SPCs at our wholly owned Cayman Islands reinsurance subsidiary, Inova Re. Due to the cumulative losses incurred in recent years by these SPCs, management concluded that a valuation allowance was required. As of December 31, 2025, management concluded that the previously recorded valuation allowances were still required against the deferred tax assets related to the NOL carryforwards for our U.K. operations, against the deferred tax assets related to some of our U.S. state NOL carryforwards and the deferred tax assets of certain SPCs at Inova Re. Management’s assessment of the need for these valuation allowances at December 31, 2025 included an analysis of all available sources of income. See further discussion on ProAssurance’s deferred tax assets in Note 5 of the Notes to Consolidated Financial Statements.

U.S. Tax Legislation

One Big Beautiful Bill Act

The OBBBA was signed into law on July 4, 2025 and included extensions and modifications to various domestic and international tax provisions that were originally enacted under the TCJA. Under current accounting guidance, the effects of changes in tax law are accounted for in the period of enactment or the date the President signs the bill. These changes do not have a material impact on our effective tax rate or on our current or deferred taxes.

Liquidity and Capital Resources and Financial Condition

Overview

ProAssurance Corporation is a holding company and is a legal entity separate and distinct from its subsidiaries. As a holding company, our principal source of external revenue is our investment revenues. In addition, dividends from our operating subsidiaries represent another source of funds for our obligations, including debt service. We also charge our core domestic operating subsidiaries within our Specialty P&C and Workers' Compensation Insurance segments a management fee based on the extent to which services are provided to the subsidiary and the amount of gross premium written by the subsidiary. At December 31, 2025, we held cash and liquid investments of approximately $166 million outside our insurance subsidiaries that were available for use without regulatory approval or other restriction. As of February 18, 2026, we also have an additional $125 million in permitted borrowings available under our Revolving Credit Agreement as well as the possibility of a $50 million accordion feature, if successfully subscribed, as discussed in this section under the heading "Debt."

During 2025, our operating subsidiaries paid dividends to us of $113 million. Our insurance subsidiaries, in the aggregate, are permitted to pay dividends of approximately $164 million over the course of 2026 without prior approval of state insurance regulators. However, the payment of any dividend requires prior notice to the insurance regulator in the state of domicile, and the regulator may reduce or prevent the dividend if, in its judgment, payment of the dividend would have an adverse effect on the surplus of the insurance subsidiary. We make the decision to pay dividends from an insurance subsidiary based on the

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capital needs of that subsidiary and may pay less than the permitted dividend or may also request permission to pay an additional amount (an extraordinary dividend).

Cash Flows

Cash flows between periods compare as follows:

Year Ended December 31

(In thousands)

2025

2024

Change

Net cash provided by (used in):

Operating activities

$

(25,620)

$

(10,715)

$

(14,905)

Investing activities

19,436 

10,672 

8,764 

Financing activities

(12,203)

(10,974)

(1,229)

Increase (decrease) in cash and cash equivalents

$

(18,387)

$

(11,017)

$

(7,370)

The principal components of our operating cash flows are the excess of premiums collected and net investment income over losses paid and operating costs, including income taxes. Timing delays exist between the collection of premiums and the payment of losses associated with the premiums. Premiums are generally collected within the twelve-month period after the policy is written, while our claim payments are generally paid over a more extended period of time. Likewise, timing delays exist between the payment of claims and the collection of any associated reinsurance recoveries.

Operating cash flows decreased in 2025 as compared to 2024. The change in operating cash flows was primarily due to:

•A decrease in net premium receipts of $31.8 million primarily driven by a lower volume of written premium due to the proactive actions we have taken in certain lines of business to improve profitability, partially offset by a decrease in premiums paid for reinsurance.

•An increase in cash paid for operating expenses of $25.1 million driven by higher incentive based compensation and transaction-related costs associated with the proposed merger transaction with The Doctors Company (see Note 1 of the Notes to the Consolidated Financial Statements).

The decrease in operating cash flows was partially offset by:

•A decrease in paid net losses of $33.8 million driven by our Specialty P&C segment which reflected a lower number of claims resolved with large indemnity payments as compared to the prior year period.

•An increase in cash received from investment income of $7.2 million driven by higher average book yields as we take advantage of the current interest rate environment as our portfolio matures and an increase in distributed earnings and redemptions from our portfolio of investments in LPs/LLCs.

The remaining variance in operating cash flows in 2025 as compared to 2024 was composed of individually insignificant components.

We manage our investing cash flows to ensure that we will have sufficient liquidity to meet our obligations, taking into consideration the timing of cash flows from our investments, including interest payments, dividends and principal payments, as well as the expected cash flows to be generated by our operations as discussed in this section under the heading "Investing Activities and Related Cash Flows."

Our financing cash flows are primarily comprised of repayment of debt as well as capital contributions received from or return of capital to external SPC participants. See further discussion of debt in this section under the heading "Financing Activities and Related Cash Flows."

Operating Activities and Related Cash Flows

Losses

The following table, known as the Analysis of Reserve Development, presents information over the preceding ten years regarding the payment of our losses as well as changes to (the development of) our estimates of losses during that time period. As noted in the table, we have completed various acquisitions over the ten year period which have affected original and re-estimated gross and net reserve balances as well as loss payments.

The table includes losses on both a direct and an assumed basis and is net of anticipated reinsurance recoverables. The gross liability for losses before reinsurance, as shown on the balance sheet, and the reconciliation of that gross liability to amounts net of reinsurance are reflected below the table. We do not discount our reserve for losses to present value. Information presented in the table is cumulative and, accordingly, each amount includes the effects of all changes in amounts for prior years.

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The table presents the development of our balance sheet reserve for losses; it does not present accident year or policy year development data. Conditions and trends that have affected the development of liabilities in the past may not necessarily occur in the future. Accordingly, it is not appropriate to extrapolate future redundancies or deficiencies based on this table.

The following may be helpful in understanding the Analysis of Reserve Development:

•The line entitled “Reserve for losses, undiscounted and net of reinsurance recoverables” reflects our reserve for losses and loss adjustment expense, less the receivables from reinsurers, each as reported in our Consolidated Balance Sheets at the end of each year (the Balance Sheet Reserves).

•The section entitled “Cumulative net paid, as of” reflects the cumulative amounts paid as of the end of each succeeding year with respect to the previously recorded Balance Sheet Reserves.

•The section entitled “Re-estimated net liability as of” reflects the re-estimated amount of the liability previously recorded as Balance Sheet Reserves that includes the cumulative amounts paid and an estimate of the remaining net liability based upon claims experience as of the end of each succeeding year (the Net Re-estimated Liability).

•The line entitled “Net cumulative redundancy (deficiency)” reflects the difference between the previously recorded Balance Sheet Reserve for each applicable year and the Net Re-estimated Liability relating thereto as of the end of the most recent fiscal year.

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Analysis of Reserve Development

December 31

(In thousands)

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Reserve for losses, undiscounted and net of reinsurance recoverables

$

1,730,308 

$

1,681,423 

$

1,659,971 

$

1,709,129 

$

1,878,140 

$

1,945,099 

$

3,059,328 

$

2,973,196 

$

2,888,655 

$

2,775,805 

$

2,663,810 

Cumulative net paid, as of:

One Year Later

370,973 

354,526 

387,389 

428,940 

466,904 

454,902 

756,601 

773,912 

727,893 

682,439 

Two Years Later

616,016 

621,783 

668,340 

734,638 

790,989 

813,768 

1,371,326 

1,342,670 

1,260,421 

Three Years Later

799,689 

800,331 

857,177 

952,309 

1,046,573 

1,101,050 

1,790,959 

1,735,870 

Four Years Later

898,844 

930,769 

990,023 

1,133,462 

1,249,196 

1,288,873 

2,084,368 

Five Years Later

974,104 

1,004,951 

1,085,267 

1,265,971 

1,373,263 

1,423,442 

Six Years Later

1,018,148 

1,061,488 

1,162,371 

1,337,095 

1,453,834 

Seven Years Later

1,051,495 

1,110,311 

1,198,522 

1,382,424 

Eight Years Later

1,078,647 

1,130,936 

1,217,283 

Nine Years Later

1,092,023 

1,143,482 

Ten Years Later

1,101,055 

Re-estimated net liability as of:

End of Year

1,730,308 

1,681,423 

1,659,971 

1,709,129 

1,878,140 

1,945,099 

3,059,328 

2,973,196 

2,888,655 

2,775,805 

One Year Later

1,587,029 

1,547,876 

1,565,867 

1,696,893 

1,827,153 

1,902,813 

3,015,241 

2,975,793 

2,841,623 

2,677,020 

Two Years Later

1,460,660 

1,444,619 

1,487,905 

1,656,615 

1,805,433 

1,885,456 

3,025,786 

2,928,757 

2,751,105 

Three Years Later

1,356,075 

1,337,571 

1,446,571 

1,647,283 

1,792,202 

1,890,578 

2,982,007 

2,831,964 

Four Years Later

1,257,650 

1,306,274 

1,432,477 

1,632,836 

1,768,451 

1,872,584 

2,902,295 

Five Years Later

1,231,713 

1,299,032 

1,415,077 

1,605,374 

1,746,868 

1,845,609 

Six Years Later

1,230,562 

1,287,731 

1,394,624 

1,593,134 

1,740,595 

Seven Years Later

1,217,713 

1,277,884 

1,384,216 

1,588,479 

Eight Years Later

1,216,727 

1,274,519 

1,381,199 

Nine Years Later

1,212,329 

1,273,957 

Ten Years Later

1,215,835 

Net cumulative redundancy (deficiency)

$

514,473 

$

407,466 

$

278,772 

$

120,650 

$

137,545 

$

99,490 

$

157,033 

$

141,232 

$

137,550 

$

98,785 

Original gross liability - end of year

$

1,990,266 

$

1,961,436 

$

1,971,303 

$

2,037,274 

$

2,243,133 

$

2,295,279 

$

3,469,417 

$

3,373,260 

$

3,303,558 

$

3,155,771 

Reinsurance recoverables

(259,958)

(280,013)

(311,332)

(328,145)

(364,993)

(350,180)

(410,089)

(400,064)

(414,903)

(379,966)

Original net liability - end of year

$

1,730,308 

$

1,681,423 

$

1,659,971 

$

1,709,129 

$

1,878,140 

$

1,945,099 

$

3,059,328 

$

2,973,196 

$

2,888,655 

$

2,775,805 

Gross re-estimated liability - latest

$

1,445,425 

$

1,520,111 

$

1,633,653 

$

1,878,560 

$

2,073,248 

$

2,179,288 

$

3,319,842 

$

3,238,788 

$

3,120,738 

$

3,026,107 

Re-estimated reinsurance recoverables

(229,590)

(246,154)

(252,454)

(290,081)

(332,653)

(333,679)

(417,547)

(406,824)

(369,633)

(349,087)

Net re-estimated liability - latest

$

1,215,835 

$

1,273,957 

$

1,381,199 

$

1,588,479 

$

1,740,595 

$

1,845,609 

$

2,902,295 

$

2,831,964 

$

2,751,105 

$

2,677,020 

Gross cumulative redundancy (deficiency)

$

544,841 

$

441,325 

$

337,650 

$

158,714 

$

169,885 

$

115,991 

$

149,575 

$

134,472 

$

182,820 

$

129,664 

See table notes on following page.

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Table Notes

•We have elected to present reserve history for acquired entities on a prospective basis in the table above; therefore, certain items will not agree to the following table which details activity in our net reserve for losses.

•Given the Lloyd's Syndicates operations are in run-off and the reserve is relatively small on a standalone basis as compared to our consolidated reserve, we have elected to exclude its reserve history for all periods presented in the table above, which is consistent with prior year; therefore, certain items will not agree to the following table which details activity in our net reserve for losses.

•Reserves for 2021 include gross and net reserves acquired in 2021 business combinations of $1.2 billion and $1.1 billion, respectively.

In each year reflected in the table, we have estimated our reserve for losses utilizing the management and actuarial processes discussed under the heading "Reserve for Losses and Loss Adjustment Expenses" in the Critical Accounting Estimates section. Factors that have contributed to the variation in loss development are primarily related to the extended period of time required to resolve professional liability claims and include the following:

•The MPL legal environment deteriorated in the late 1990’s and severity began to increase at a greater pace than anticipated in our rates and reserve estimates. We addressed the adverse severity trends through increased rates, stricter underwriting and modifications to claims handling procedures, and reflected this adverse severity trend when we established our initial reserves for subsequent years.

•These adverse severity trends later moderated, with that moderation becoming more pronounced beginning in 2009. We were cautious in giving full recognition to indications that the pace of severity increase had slowed, however we gave measured recognition of the improved trend in our reserve estimates. The favorable development was most pronounced for years 2004 to 2008, as the initial reserves for these accident years were established prior to substantial indication that severity trends were moderating. We gave stronger recognition to the lower severity trend as time elapsed and a greater percentage of claims were closed.

•A general decline in claims frequency has also been a contributor to favorable loss development. A significant portion of our policies through 2003 were issued on an occurrence basis, and a smaller portion of our ongoing business results from the issuance of extended reporting endorsements which have occurrence-like exposure. As claims frequency declined, the number of reported claims related to these coverages was less than originally expected.

•Beginning in 2017, we identified potential higher severity trends in the broader MPL industry. These trends were also reflected in increases in estimates of ultimate losses for open MPL claims for earlier accident years, which resulted in a lower amount of favorable development recognized in 2018 and 2017 as compared to prior years.

•During 2019 the loss experience in our Specialty book in our Specialty P&C segment deteriorated further, particularly in regard to the reserves we established for a large national healthcare account that experienced losses far exceeding the assumptions we made when underwriting the account, beginning in 2016. As a result, we strengthened our Specialty reserves through the recognition of net unfavorable development on prior accident years and a higher current accident year net loss ratio in our Specialty P&C segment in 2019.

•Beginning in the second half of 2023 and throughout 2024, we observed higher than expected loss trends in our average cost per claim in our Workers' Compensation Insurance segment, which we primarily attributed to increased medical costs driven by wage inflation and medical advancements. We implemented various medical cost management initiatives during 2025 to address the medical cost severity and we have observed improvements in the average medical cost per claim. However, an increase in severity-related claim activity on large losses more than offset medical cost savings related to these initiatives. In response to this trend, we increased our full year current accident year net loss ratio in our Workers' Compensation Insurance segment from 75% at September 30, 2025 to 77% at December 31, 2025.

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Activity in our net reserve for losses during 2025, 2024 and 2023 is summarized below:

Year Ended December 31

(In thousands)

2025

2024

2023

Balance, beginning of year

$

3,257,696 

$

3,401,281 

$

3,471,147 

Less reinsurance recoverables on unpaid losses and loss adjustment expenses

409,069 

445,573 

431,889 

Net balance, beginning of year

2,848,627 

2,955,708 

3,039,258 

Net losses:

Current year(1)

755,732 

779,650 

794,848 

(Favorable) unfavorable development of reserves established in prior years, net(1)

(90,314)

(40,215)

5,646 

Total

665,418 

739,435 

800,494 

Paid related to:

Current year

(102,589)

(106,443)

(105,133)

Prior years

(743,592)

(733,248)

(782,048)

Total paid

(846,181)

(839,691)

(887,181)

Foreign currency exchange rate (gains) losses(2)

15,920 

(6,825)

3,137 

Net balance, end of year

2,683,784 

2,848,627 

2,955,708 

Plus reinsurance recoverables on unpaid losses and loss adjustment expenses

334,612 

409,069 

445,573 

Balance, end of year

$

3,018,396 

$

3,257,696 

$

3,401,281 

(1) Net prior accident year reserve development recognized for the years ended December 31, 2025, 2024 and 2023 included certain purchase accounting adjustments associated with our acquisition of NORCAL. See Note 6 of the Notes to Consolidated Financial Statements for additional information.

(2) Foreign currency exchange rate (gains) losses are related to foreign currency denominated loss reserves associated with international insurance exposures in our Specialty P&C segment, primarily related to a strategic partnership with an international medical professional liability insured. Foreign currency exchange rate (gains) losses on foreign currency denominated loss reserves are reflected through net income (loss) as a component of other income (expense) in the Consolidated Statements of Income and Comprehensive Income and reported in our Corporate segment.

At December 31, 2025 our gross reserve for losses included case reserves of approximately $1.9 billion and IBNR reserves of approximately $1.1 billion. Our consolidated gross reserve for losses on a GAAP basis exceeds the combined gross reserves of our insurance subsidiaries on a statutory basis by approximately $125 million, which is principally due to the portion of the GAAP reserve for losses that is reflected for statutory accounting purposes as unearned premiums. These unearned premiums are applicable to extended reporting endorsements (“tail” coverage) issued without a premium charge upon death, disability or retirement of an insured who meets certain qualifications.

Reinsurance

Within our Specialty P&C segment, we use insurance and reinsurance (collectively, “reinsurance”) to provide capacity to write larger limits of liability, to provide reimbursement for losses incurred under the higher limit coverages we offer and to provide protection against losses in excess of policy limits. Within our Workers' Compensation Insurance segment, we use reinsurance to reduce our net liability on individual risks, to mitigate the effect of significant loss occurrences (including catastrophic events), to stabilize underwriting results and to increase underwriting capacity by decreasing leverage. In both our Specialty P&C and Workers' Compensation Insurance segments, we use reinsurance in risk sharing arrangements to align our objectives with those of our strategic business partners and to provide custom insurance solutions for large customer groups. The purchase of reinsurance does not relieve us from the ultimate risk on our policies; however, it does provide reimbursement for certain losses we pay. We pay our reinsurers a premium in exchange for reinsurance of the risk. In certain of our excess of loss arrangements, the premium due to the reinsurer is determined by the loss experience of the business reinsured, subject to certain minimum and maximum amounts. Until all loss amounts are known, we estimate the premium due to the reinsurer. Changes to the estimate of premium owed under reinsurance agreements related to prior periods are recorded in the period in which the change in estimate occurs and can have a significant effect on net premiums earned.

We offer alternative market solutions whereby we cede certain premiums from our Workers' Compensation Insurance and Specialty P&C segments to either the SPCs at Inova Re, one of our Cayman Islands reinsurance subsidiaries which is reported

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in our Segregated Portfolio Cell Reinsurance segment, or captive insurers unaffiliated with ProAssurance for two programs. The majority of these policies are reinsured to the SPCs at Inova Re, net of a ceding commission. See further discussion on our SPC operations in the Segment Results - Segregated Portfolio Cell Reinsurance section that follows. The alternative market workers' compensation policies are ceded from our Workers' Compensation Insurance segment to the SPCs under 100% quota share reinsurance agreements. The alternative market medical professional liability policies are ceded from our Specialty P&C segment to the SPCs under either excess of loss or quota share reinsurance agreements, depending on the structure of the individual program. The portion of the risk that is not ceded to an SPC is retained in our Specialty P&C segment and may also be reinsured under our standard medical professional liability reinsurance program, depending on the policy limits provided. The remaining premium written in our alternative market business is 100% ceded to unaffiliated captive insurers.

Excess of Loss Reinsurance Agreements

We generally reinsure risks under treaties (our excess of loss reinsurance agreements) pursuant to which the reinsurers agree to assume all or a portion of all risks that we insure above our individual risk retention levels, up to the maximum individual limits offered. These agreements are negotiated and renewed annually. Our Medical Professional Liability and Medical Technology Liability treaties renew annually on October 1 and our workers' compensation treaty renews annually on May 1. Our MPL and Medical Technology Liability treaties renewed October 1, 2025. For our MPL treaty, there was a decrease in reinstatement premiums provisions and a slight reduction to the gross rate paid under the renewed treaty. Retention of our Medical Technology Liability coverages in excess of $2 million increased to 6% from 0% of the next $8 million of risk. All other terms were consistent with the expiring treaties. Our traditional workers' compensation treaty renewed May 1, 2025 at a lower contract rate than the previous treaty. All other material terms were consistent with the expiring treaty. The significant coverages provided by our current excess of loss reinsurance agreements are depicted in the following table.

Current Excess of Loss Reinsurance Agreements

Medical

Professional Liability

Medical Technology &

Life Sciences Products

Workers'

Compensation - Traditional

(1) Effective October 1, 2025, total reinsured limits decreased to $19M from $24M. Since we were not writing policies with these higher limits of coverage, the reduction in limit is not significant. One prepaid limit reinstatement of $16M and a second limit reinstatement of up to $16M for the second layer, subject to reinstatement premium, which attaches after the first reinstatement has been completely exhausted. Historically, the prepaid limit reinstatement and second limit reinstatement ranged from $16M to $21M. All limit reinstatements thereafter require no additional premium. Effective October 1, 2021, limits can be reinstated a maximum of four times.

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(2) Prior to October 1, 2020, retention was $1M.

(3) Historically, retention has ranged from 0% to 32.5%.

(4) Historically, retention has ranged from $1M to $2M.

(5) Subject to a limit of $20M per individual claimant. If an individual loss were to exceed this level the Company would retain this excess exposure. Historically, the limit per individual claimant has ranged from $15M to $20M.

(6) Historically, retention has ranged from $0.5M to $0.75M.

Large MPL risks that are above the limits of our basic reinsurance treaties may be reinsured on a facultative basis, whereby the reinsurer agrees to insure a particular risk up to a designated limit. We also have in place a number of risk sharing arrangements that apply to the first $1 million of losses for certain large healthcare systems and other insurance entities.

Other Reinsurance Arrangements

For the workers' compensation business ceded to Inova Re; each SPC has in place its own reinsurance arrangements, which are illustrated in the following table.

Segregated Portfolio Cell Reinsurance

Per Occurrence Coverage

Aggregate Coverage

(1) The attachment point is based on a percentage of written premium within individual cells, ranges from 85% to 94%, and varies by cell.

Each SPC has participants and the profit or loss of each cell accrues fully to these cell participants. As previously discussed, we participate in certain SPCs to a varying degree. Each SPC maintains a loss fund initially equal to the difference between premium assumed by the cell and the ceding commission. The external participants of each cell provide collateral to us, typically in the form of a letter of credit that is initially equal to the difference between the loss fund of the SPC (amount of funds available to pay losses after deduction of ceding commission) and the aggregate attachment point of the reinsurance. Over time, an SPC's retained profits are considered in the determination of the collateral amount required to be provided by the cell's external participants.

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Taxes

We are subject to the tax laws and regulations of the U.S., Cayman Islands and U.K. We file a consolidated U.S. federal income tax return that includes the parent company and its U.S. subsidiaries, except for ProAssurance American Mutual, A Risk Retention Group. Our filing obligations include a requirement to make quarterly payments of estimated taxes to the IRS using the corporate tax rate effective for the tax year. During the second quarter of 2025, we made an income tax extension payment of $2.8 million for the 2024 tax year.

In response to COVID-19, the CARES Act was signed into law on March 27, 2020 and contains several provisions for corporations, including the initial version of the ERC. In December 2020 and March 2021, the ERC was extended and expanded from 50% of qualified wages to 70%. The 2020 rules limited qualified wages to $10,000 per employee and applied to employers with 100 or fewer full-time employees in 2019. The rules were expanded in 2021 to raise the qualified wage limit to $10,000 per employee, per quarter. As an eligible employer under the provisions of the CARES Act, NORCAL filed a claim for a payroll tax refund during the second quarter of 2023, based on eligible wages paid during 2020, that resulted in a tax refund of $4.4 million, including $0.6 million of related interest accrued, which was received in April 2025.

As a result of the NORCAL acquisition, we have U.S. federal NOL carryforwards, which were approximately $14.5 million as of December 31, 2025. These NOL carryforwards are subject to limitation by Internal Revenue Code Section 382 and will begin to expire in 2035.

Investing Activities and Related Cash Flows

Our investments at December 31, 2025 and December 31, 2024 are comprised as follows:

December 31, 2025

December 31, 2024

($ in thousands)

Carrying

Value

% of Total Investment

Carrying

Value

% of Total Investment

Fixed maturities, available-for-sale:

U.S. Treasury obligations

$

219,402 

5 

%

$

243,903 

5 

%

U.S. Government-sponsored enterprise obligations

9,852 

1 

%

14,894 

1 

%

State and municipal bonds

430,063 

10 

%

446,601 

10 

%

Corporate debt

1,761,514 

40 

%

1,727,775 

40 

%

Residential mortgage-backed securities

591,841 

12 

%

478,799 

11 

%

Commercial mortgage-backed securities

213,481 

5 

%

208,513 

5 

%

Other asset-backed securities

459,634 

10 

%

461,722 

10 

%

Total fixed maturities, available-for-sale

3,685,787 

83 

%

3,582,207 

82 

%

Fixed maturities, trading

14,316 

1 

%

53,157 

1 

%

Total fixed maturities

3,700,103 

84 

%

3,635,364 

83 

%

Equity investments(1)

106,988 

2 

%

130,158 

3 

%

Short-term investments

285,629 

6 

%

254,922 

5 

%

BOLI

82,787 

1 

%

80,179 

2 

%

Investment in unconsolidated subsidiaries

245,472 

6 

%

259,538 

6 

%

Other investments

8,400 

1 

%

7,266 

1 

%

Total investments

$

4,429,379 

100 

%

$

4,367,427 

100 

%

(1)Includes $81.1 million and $101.2 million of investment grade bond funds as of December 31, 2025 and 2024, respectively, which are not subject to significant equity price risk.

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At December 31, 2025, 99% of our investments in available-for-sale fixed maturity securities were rated and the average rating was A+. The distribution of our investments in available-for-sale fixed maturity securities by rating were as follows:    

December 31, 2025

December 31, 2024

($ in thousands)

Carrying

Value

% of Total Investment

Carrying

Value

% of Total Investment

Rating*

AAA

$

528,439 

15 

%

$

571,139 

16 

%

AA+

773,522 

21 

%

710,841 

20 

%

AA

196,993 

5 

%

208,986 

6 

%

AA-

164,155 

4 

%

174,349 

5 

%

A+

230,910 

6 

%

248,353 

7 

%

A

414,323 

11 

%

413,259 

11 

%

A-

421,987 

11 

%

381,746 

11 

%

BBB+

223,928 

6 

%

197,142 

5 

%

BBB

317,972 

9 

%

297,266 

8 

%

BBB-

159,128 

4 

%

138,693 

4 

%

Below investment grade

253,604 

7 

%

239,577 

6 

%

Not rated

826 

1 

%

856 

1 

%

Total

$

3,685,787 

100 

%

$

3,582,207 

100 

%

*Average of three NRSRO sources, presented as an S&P equivalent. Source: S&P, Copyright ©2026, S&P Global Market Intelligence

We manage our investments to ensure that we will have sufficient liquidity to meet our obligations, taking into consideration the timing of cash flows from our investments, including interest payments, dividends and principal payments, as well as the expected cash flows to be generated or used by our operations. In addition to the interest and dividends we will receive from our investments, we anticipate that between $80 million and $170 million of our portfolio will mature (or be paid down) each quarter over the next twelve months and become available, if needed, to meet our cash flow requirements. Our reinvestment rate of cash flows compared to recent years is more intermittent due to anticipated higher severity and paid loss trends in our MPL line of business and our Workers' Compensation Insurance segment. From time to time our cash balances will fluctuate depending on the actual timing of paid losses. The primary outflow of cash at our insurance subsidiaries is related to paid losses and operating costs, including income taxes. The payment of individual claims cannot be predicted with certainty; therefore, we rely upon the history of paid claims in estimating the timing of future claims payments with consideration given to current and anticipated industry trends and macroeconomic conditions. To the extent that we may have an unanticipated shortfall in cash, we may either liquidate securities or borrow funds under existing borrowing arrangements through our Revolving Credit Agreement and the FHLB system. As of February 18, 2026, $175 million could be made available for use through our Revolving Credit Agreement, as discussed in this section under the heading "Debt." Given the duration of our investments, we do not foresee a shortfall that would require us to meet operating cash needs through additional borrowings. Additional information regarding our Revolving Credit Agreement is detailed in Note 9 of the Notes to Consolidated Financial Statements.

At December 31, 2025, our FAL was comprised of cash and cash equivalents and investment securities deposited with Lloyd's which had a fair value of $15.1 million. During 2025, we had a net increase in our FAL of $3.1 million primarily to support accumulated losses from prior years of account, stemming from aviation and catastrophe related losses. Additional information regarding our FAL is detailed in Note 3 of the Notes to Consolidated Financial Statements.

Our investment portfolio continues to be primarily composed of high quality fixed income securities with approximately 92% of our fixed maturities being investment grade securities as determined by national rating agencies. The weighted average effective duration of our fixed maturity securities at December 31, 2025 was 3.37 years; the weighted average effective duration of our fixed maturity securities combined with our short-term securities was 3.13 years.

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The carrying value and unfunded commitments for certain of our investments were as follows:

Carrying Value

December 31, 2025

($ in thousands, except expected funding period)

December 31, 2025

December 31, 2024

Unfunded Commitment

Expected funding period in years

Qualified affordable housing project tax credit partnerships(1)

$

53 

$

247 

$

26 

1

All other investments, primarily investment fund LPs/LLCs

245,419 

259,291 

203,608 

4

Total

$

245,472 

$

259,538 

$

203,634 

(1) The carrying value reflects our total commitments (both funded and unfunded) to the partnerships, less any amortization, since our initial investment. We fund these investments based on funding schedules maintained by the partnerships.

Investment fund LPs/LLCs are by nature less liquid and may involve more risk than other investments. We manage our risk through diversification of asset class and geographic location. At December 31, 2025, we had investments in 33 separate investment funds with a total carrying value of $245.4 million which represented approximately 6% of our total investments. Our investment fund LPs/LLCs generate earnings from trading portfolios, secured debt, debt securities, multi-strategy funds and private equity investments, and the performance of these LPs/LLCs is affected by the volatility of equity and credit markets. For our investments in LPs/LLCs, we record our allocable portion of the partnership operating income or loss as the results of the LPs/LLCs become available, typically following the end of a reporting period. As of December 31, 2025, our total funding commitments legally outstanding related to our investments in LPs/LLCs were approximately $203.6 million; however, we anticipate capital of approximately $120 million to be drawn based on our current estimates.

Financing Activities and Related Cash Flows

Treasury Shares

Treasury share activity for 2025, 2024 and 2023 was as follows:

(Share amounts in thousands)

2025

2024

2023

Treasury shares at the beginning of the period

12,607 

12,607 

9,464 

Shares reacquired, at cost of $50.5 million for 2023

— 

— 

3,143 

Treasury shares at the end of the period

12,607 

12,607 

12,607 

We did not repurchase any common shares subsequent to December 31, 2025, and as of February 18, 2026, our remaining Board authorization was approximately $55.9 million.

Debt

Our outstanding debt consisted of the following:

($ in thousands)

December 31,

2025

December 31,

2024

Contribution Certificates

$

182,500 

$

181,163 

Revolving Credit Agreement

125,000 

125,000 

Term Loan

114,063 

120,313 

Total principal

421,563 

426,476 

Less unamortized debt issuance costs

1,146 

1,603 

Debt less unamortized debt issuance costs

$

420,417 

$

424,873 

Additional information regarding our debt is provided in Note 9 of the Notes to Consolidated Financial Statements.

To manage our exposure to interest rate risk due to variability in the base rate on borrowings under the Revolving Credit Agreement and Term Loan, we entered into two forward-starting interest rate swap agreements ("Interest Rate Swaps"). Additional information regarding our Interest Rate Swaps is provided in Note 10 of the Notes to Consolidated Financial Statements.

Two of our insurance subsidiaries are members of an FHLB. Through membership, those subsidiaries have access to secured cash advances which can be used for liquidity purposes or other operational needs. In order for us to use FHLB proceeds, regulatory approvals may be required depending on the nature of the transaction. To date, those subsidiaries have not materially utilized their membership for borrowing purposes.

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Results of Operations - Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

Selected consolidated financial data for each period is summarized in the table below.

Year Ended December 31

($ in thousands, except per share data)

2025

2024

Change

Revenues:

Net premiums written

$

916,913 

$

953,675 

$

(36,762)

Net premiums earned

$

934,236 

$

968,250 

$

(34,014)

Net investment result

172,774 

166,741 

6,033 

Net investment gains (losses)

(5,486)

1,903 

(7,389)

Other income (expense)

(3,496)

13,510 

(17,006)

Total revenues

1,098,028 

1,150,404 

(52,376)

Expenses:

Net losses and loss adjustment expenses

665,418 

739,435 

(74,017)

Underwriting, policy acquisition and operating expenses

330,417 

319,339 

11,078 

SPC U.S. federal income tax expense (benefit)

2,413 

1,766 

647 

SPC dividend expense (income)

6,873 

4,444 

2,429 

Interest expense

20,838 

22,342 

(1,504)

Total expenses

1,025,959 

1,087,326 

(61,367)

Income (loss) before income taxes

72,069 

63,078 

8,991 

Income tax expense (benefit)

21,154 

10,334 

10,820 

Net income (loss)

$

50,915 

$

52,744 

$

(1,829)

Non-GAAP operating income (loss)

$

83,863 

$

50,171 

$

33,692 

Earnings (loss) per share:

Basic

$

0.99 

$

1.03 

$

(0.04)

Diluted

$

0.99 

$

1.03 

$

(0.04)

Non-GAAP operating income (loss) per share:

Basic

$

1.63 

$

0.98 

$

0.65 

Diluted

$

1.62 

$

0.98 

$

0.64 

Net loss ratio

71.2 

%

76.4

%

(5.2 pts)

Underwriting expense ratio

35.4 

%

33.0

%

2.4 pts

Combined ratio

106.6 

%

109.4

%

(2.8 pts)

Non-GAAP combined ratio(1)

104.2 

%

109.0

%

(4.8 pts)

Operating ratio

89.8 

%

94.5

%

(4.7 pts)

Non-GAAP operating ratio(1)

87.4

%

93.7

%

(6.3 pts)

Effective tax rate

29.4

%

16.4

%

13.0 pts

Return on equity(2)

4.0

%

4.6

%

(0.6 pts)

Non-GAAP operating return on equity(2)

6.6

%

4.4

%

2.2 pts

(1) Refer to the Executive Summary of Operations section under the heading "Non-GAAP Adjusted Key Ratios" for a reconciliation of our key ratios to Non-GAAP adjusted key ratios.

(2) See further discussion on this calculation in the Executive Summary of Operations section under the heading "Non-GAAP Operating ROE."

In all tables that follow, the abbreviation "nm" indicates that the information or the percentage change is not meaningful.

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Table of Contents

Executive Summary of Operations

The following sections provide an overview of our consolidated and segment results of operations for the year ended December 31, 2025 as compared to the year ended December 31, 2024. See the Segment Results sections that follow for additional information regarding each segment's results. For a full discussion of the changes in the financial condition, results of operations and cash flows for the year ended December 31, 2024 as compared to the year ended December 31, 2023, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of ProAssurance's December 31, 2024 report on Form 10-K.

Revenues

The following table shows our consolidated and segment net premiums earned:

Year Ended December 31

($ in thousands)

2025

2024

Change

Net premiums earned

Specialty P&C

$

724,198 

$

747,942 

$

(23,744)

(3.2

%)

Workers' Compensation Insurance

164,351 

167,610 

(3,259)

(1.9

%)

Segregated Portfolio Cell Reinsurance

45,687 

52,698 

(7,011)

(13.3

%)

Consolidated total

$

934,236 

$

968,250 

$

(34,014)

(3.5

%)

For the year ended December 31, 2025, consolidated net premiums earned decreased $34.0 million as compared to 2024.

•For our Specialty P&C segment, net premiums earned decreased during 2025 driven by the pro rata effect of a decrease in the volume of premium written during the preceding twelve months, primarily due to proactive actions taken in certain lines to improve profitability, and our ceased participation in Syndicate 1729 for the 2024 underwriting year.

•For our Workers' Compensation Insurance segment, net premiums earned decreased in 2025 driven by changes in our carried EBUB estimate and lower audit premium. The decrease for 2025 was partially offset by the impact of a $1.6 million reduction in reinstatement premium during 2025 as compared to an increase of $0.7 million in 2024.

•Net premiums earned in our Segregated Portfolio Cell Reinsurance segment decreased during 2025 primarily due to the non-renewal of five SPCs during 2025 and the non-renewal of three SPCs during 2024.

The following table shows our consolidated net investment result:

Year Ended December 31

($ in thousands)

2025

2024

Change

Net investment income

$

156,498 

$

144,538 

$

11,960 

8.3

%

Equity in earnings (loss) of unconsolidated subsidiaries

16,276 

22,203 

(5,927)

(26.7

%)

Net investment result

$

172,774 

$

166,741 

$

6,033 

3.6

%

The increase in our consolidated net investment income for the year ended December 31, 2025 as compared to 2024 reflected higher average book yields as we continue to take advantage of the current interest rate environment. Our equity in earnings of unconsolidated subsidiaries decreased in 2025 as compared to 2024 driven by the performance of two LPs/LLCs. These results are typically reported on a one-quarter lag and the decrease reflected lower market valuations during the second and third quarters of 2025.

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The following table shows our total consolidated net investment gains (losses):

Year Ended December 31

($ in thousands)

2025

2024

Change

Net impairment losses recognized in earnings

$

(1,498)

$

(3,196)

$

1,698 

(53.1

%)

Contingent Consideration remeasurement gain(1)

— 

6,500 

(6,500)

(100.0

%)

Other net investment gains (losses)

(3,988)

(1,401)

(2,587)

(184.7

%)

Net investment gains (losses)

$

(5,486)

$

1,903 

$

(7,389)

(388.3

%)

(1) Represents the change in the fair value of contingent consideration issued in connection with the NORCAL acquisition. We do not consider this adjustment in assessing the financial performance of any of our segments and therefore, we have excluded it from the Segment Results sections that follow. See Note 15 of the Notes to Consolidated Financial Statements for a reconciliation of our segment results to our consolidated results.

For the years ended December 31, 2025 and 2024, we recognized credit-related impairment losses in earnings of $1.5 million and $3.2 million, respectively, primarily related to corporate bonds. Additional information regarding investment impairment losses is provided in Note 3 of the Notes to Consolidated Financial Statements.

We recognized $4.0 million and $1.4 million of other net investment losses for the years ended December 31, 2025 and 2024, respectively, driven by net realized losses from the sale of certain available-for-sale fixed maturities and, for the year ended December 31, 2024, unrealized holding losses resulting from changes in the fair value of our equity investments.

Consolidated other income (expense) for the year ended December 31, 2025 as compared to 2024 was comprised as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Foreign currency exchange rate gains (losses)

$

(10,882)

$

6,731 

$

(17,613)

(261.7

%)

Other

7,386 

6,779 

607 

9.0

%

Other income (expense)

$

(3,496)

$

13,510 

$

(17,006)

(125.9

%)

Excluding foreign currency exchange movements, other income increased for the year ended December 31, 2025 as compared to 2024 driven by gain of $2.2 million associated with the sale of our Franklin, TN property to an unrelated third party and proceeds of $1.0 million associated with the sale of the renewal rights related to our legal professional liability book of business to an unrelated third party in our Specialty P&C segment. Partially offsetting the increase in other income for 2025 was the impact of a $1.7 million adjustment to write-off certain previously capitalized real estate improvements associated with our Birmingham, AL property.

Foreign currency exchange rate gains (losses) are reported in our Corporate segment and are primarily related to foreign currency denominated balances associated with international insurance exposures, primarily related to our strategic partnership with an international medical professional liability insured in our Specialty P&C segment. Due to the size of the loss reserves associated with these international exposures, even nominal movements in exchange rates can lead to volatility in our results of operations.

Beginning in 2025, foreign currency exchange rate gains (losses) include the impacts of our utilization of foreign currency forward contracts. Historically, we mitigated foreign currency exchange exposure by matching the currency and duration of associated investments to the corresponding loss reserves. However, when we invest in foreign currency denominated available-for-sale fixed maturities, in accordance with GAAP, the change in market value due to changes in foreign currency exchange rates is reflected as part of OCI. Conversely, the impact of changes in foreign currency exchange rates on loss reserves is reflected through net income (loss) as a component of other income (expense).

During the first quarter of 2025 we changed our hedging strategy around foreign currency exchange exposures. Instead of investing in foreign currency denominated investments, we began utilizing foreign currency forward contracts. As these forward contracts are designated as economic hedges (non-hedging instruments), the change in fair value of these contracts is reflected through net income (loss) as a component of other income (expense) which is intended to hedge against foreign currency exchange rate gains (losses) related to foreign currency denominated balances also recognized within other income (expense) in the same period. Due to our change in hedging strategy, we sold a majority of our foreign currency denominated available-for-sale fixed maturities during the first quarter of 2025. Due to the sale of those investments, accumulated foreign currency exchange rate losses of $6.5 million were reclassified from AOCI to earnings and are included in other income (expense) in 2025. While the volatility in foreign currency exchange rates had an outsized impact on our results of operations in 2025, the overall impact on our financial position was nominal due to our hedging strategies.

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Expenses

The following table shows our consolidated and segment net loss ratios and net prior accident year reserve development.

Year Ended December 31

($ in millions)

2025

2024

Change

Current accident year net loss ratio

Consolidated ratio

80.9

%

80.5

%

0.4

 pts

Specialty P&C

82.7

%

82.3

%

0.4

 pts

Workers' Compensation Insurance

77.0

%

77.0

%

—

 pts

Segregated Portfolio Cell Reinsurance

65.8

%

66.8

%

(1.0

 pts)

Calendar year net loss ratio

Consolidated ratio

71.2

%

76.4

%

(5.2

 pts)

Specialty P&C

71.7

%

77.3

%

(5.6

 pts)

Workers' Compensation Insurance

75.3

%

76.7

%

(1.4

 pts)

Segregated Portfolio Cell Reinsurance

48.7

%

61.6

%

(12.9

 pts)

Favorable (unfavorable) reserve development, prior accident years

Consolidated

$

90.3

$

40.2

$

50.1

Specialty P&C

$

79.8

$

36.9

$

42.9

Workers' Compensation Insurance

$

2.7

$

0.5

$

2.2

Segregated Portfolio Cell Reinsurance

$

7.8

$

2.8

$

5.0

Our consolidated current accident year net loss ratio increased 0.4 percentage points for the year ended December 31, 2025 as compared to 2024.

•Our Specialty P&C segment's current accident year net loss ratio increased 0.4 percentage points for the year ended December 31, 2025 as compared to 2024 driven by higher loss severity and frequency trends in select jurisdictions, which have resulted in an increase to certain expected loss ratios during the fourth quarter of 2025, as well as changes in the mix of business. The increase in the segment's current accident year net loss ratio also reflected higher ULAE costs primarily due to higher compensation, equipment and software costs, partially offset by a decrease in our reserves related to DDR coverage endorsements due to a decrease in business eligible for tail coverage.

•The 2025 current accident year net loss ratio for our Workers' Compensation Insurance segment remained unchanged as compared to 2024. However, during the fourth quarter of 2025, we increased our full year current accident year net loss ratio from 75% at September 30, 2025 to 77% at December 31, 2025 reflecting higher severity-related claim activity on large losses, which more than offset medical cost savings related to medical cost management initiatives that were implemented in the first quarter of 2025.

•The improvement in the Segregated Portfolio Cell Reinsurance segment's current accident year net loss ratio for the year ended December 31, 2025 reflected a reduction in average claim severity and reported claim frequency, partially offset by changes in estimated program year aggregate reinsurance recoveries.

Our consolidated calendar year net loss ratio can be lower than or higher than our consolidated current accident year net loss ratio due to the recognition of either favorable or unfavorable prior accident year reserve development, respectively.

Total net prior accident year reserve development for 2025 and 2024 was as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Net favorable (unfavorable) reserve development

$

86,964

$

34,890

$

52,074 

149.3

%

NORCAL Acquisition - Purchase Accounting Amortization

3,350

5,325

(1,975)

(37.1

%)

Total net favorable (unfavorable) reserve development

$

90,314

$

40,215

$

50,099 

124.6

%

Excluding purchase accounting amortization, consolidated net favorable reserve development recognized in 2025 is largely attributable to lower than anticipated loss emergence in our MPL and Medical Technology Liability lines of business in our Specialty P&C segment and, to a lesser extent, the workers' compensation business in our Segregated Portfolio Cell Reinsurance segment, partially offset by net unfavorable reserve development associated with our discontinued Lloyd's

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Syndicates operations. See the Segment Results sections that follow for additional information regarding each segment's current accident year net loss ratio and net prior accident year reserve development.

Our consolidated and segment underwriting expense ratios were as follows:

Year Ended December 31

2025

2024

Change

Underwriting Expense Ratio

Consolidated(1)

35.4

%

33.0

%

2.4

 pts

Specialty P&C

27.7

%

27.3

%

0.4

 pts

Workers' Compensation Insurance

38.5

%

37.0

%

1.5

 pts

Segregated Portfolio Cell Reinsurance

35.3

%

34.3

%

1.0

 pts

Corporate(2)

3.8

%

3.8

%

—

 pts

(1) Consolidated operating expenses for 2025 include $16.4 million of transaction-related costs associated with the proposed merger transaction with The Doctors Company. Consolidated operating expenses for 2024 include $0.3 million of actuarial consulting fees paid in connection with the final determination of contingent consideration associated with the acquisition of NORCAL. These transaction-related costs are not included in a segment as we do not consider these costs in assessing the financial performance of any of our operating or reportable segments. See Note 15 of the Notes to Consolidated Financial Statements for a reconciliation of our segment results to our consolidated results.

(2) There are no net premiums earned associated with the Corporate segment. Ratios shown are the contribution of the Corporate segment to the consolidated ratio (Corporate operating expenses divided by consolidated net premiums earned).

The change in our consolidated underwriting expense ratio for the year ended December 31, 2025 as compared to 2024 was primarily attributable to the following:

(In percentage points)

Increase (Decrease) 2025 versus 2024

Estimated ratio increase (decrease) attributable to:

Change in Net Premiums Earned and DPAC amortization(1)

0.4 pts

Transaction-related costs

1.8 pts

Tail premium(2)

(0.4 pts)

All other, net

0.6 pts

Increase in the underwriting expense ratio

2.4 pts

(1) Excludes tail premium and the impact of ceded premium adjustments related to prior accident years. See further discussion on the ceded premium adjustments in the Segment Results - Specialty Property & Casualty section that follows under the heading "Ceded Premiums Ratio."

(2) Represents the impact of tail premium written in the period as these premiums are typically fully earned when written with minimal associated expenses.

Excluding the impact of the items specifically identified in the table above, our consolidated underwriting expense ratio increased by 0.6 percentage points in 2025 as compared to 2024 driven by higher incentive based compensation in our Specialty P&C segment, an increase in share-based compensation in our Corporate segment, an increase in health insurance costs as well as the pressure of lower earned premium, partially offset by lower professional fees.

As shown in the previous table, our consolidated underwriting expense ratio for 2025 reflected the impact of the change in net premiums earned, excluding tail premium and the impact of ceded premium adjustments related to prior accident years, in relation to the corresponding change in DPAC amortization, resulting in a 0.4 percentage point increase in the ratio as compared to 2024 driven by higher DPAC amortization in our Workers' Compensation Insurance segment largely due to an increase in state employer assessments.

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Table of Contents

Taxes

Our consolidated effective tax rates for the years ended December 31, 2025 and 2024 were as follows:

($ in thousands)

Year Ended December 31

2025

2024

Change

Income (loss) before income taxes

$

72,069 

$

63,078 

$

8,991 

14.3%

Income tax expense (benefit)

21,154 

10,334 

10,820 

104.7%

Net income (loss)

$

50,915 

$

52,744 

$

(1,829)

(3.5%)

Effective tax rate

29.4%

16.4%

13.0 pts

We recognized an income tax expense of $21.2 million and $10.3 million for the years ended December 31, 2025 and 2024, respectively. See further discussion on our effective tax rate in the Segment Results - Corporate section that follows under the heading "Taxes."

Operating Ratio

Our operating ratio is our combined ratio, less our investment income ratio. This ratio provides the combined effect of underwriting profitability and investment income. Our consolidated operating ratio for the years ended December 31, 2025 and 2024 was as follows:

Year Ended December 31

2025

2024

Change

Combined ratio

106.6

%

109.4

%

(2.8 

 pts)

Less: investment income ratio

16.8

%

14.9

%

1.9 

 pts

Operating ratio

89.8

%

94.5

%

(4.7 

 pts)

The primary drivers of the change in our consolidated operating ratio were as follows:

(In percentage points)

Increase (Decrease)

 2025 versus 2024

Estimated ratio increase (decrease) attributable to:

Change in prior accident year reserve development

(5.6 pts)

Investment income

(1.9 pts)

Transaction-related costs

1.8 pts

All other, net

1.0 pts

Decrease in the operating ratio

(4.7 pts)

Excluding the impact of the items specifically identified in the table above, our operating ratio in 2025 increased by approximately 1.0 percentage point as compared to 2024 driven by higher incentive based compensation in our Specialty P&C segment, an increase in share-based compensation in our Corporate segment, an increase in consolidated health insurance costs as well as the impact of an increase in our Specialty P&C segment's current accident year net loss ratio. See previous discussion in this section under the heading "Expenses" and further discussion in our Segment Results sections that follow.

Non-GAAP Financial Measures

Non-GAAP Operating Income (Loss)

Non-GAAP operating income (loss) is a financial measure that is widely used to evaluate performance within the insurance sector. In calculating Non-GAAP operating income (loss), we have excluded the effects of the items listed in the following table that do not reflect normal results. We believe Non-GAAP operating income (loss) presents a useful view of the performance of our ongoing core insurance operations; however, it should be considered in conjunction with net income (loss) computed in accordance with GAAP.

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Table of Contents

The following table is a reconciliation of net income (loss) to Non-GAAP operating income (loss):

Year Ended December 31

(In thousands, except per share data)

2025

2024

Net income (loss)

$

50,915 

$

52,744 

Items excluded in the calculation of Non-GAAP operating income (loss):

Net investment (gains) losses(1)

5,486 

(1,903)

Net investment gains (losses) attributable to SPCs in which no profit/loss is retained(2)

1,585 

1,773 

Transaction-related costs(3)

16,351 

320 

Foreign currency exchange rate (gains) losses(4)

10,882 

(6,731)

Non-operating income(5)

(3,162)

— 

Guaranty fund assessments (recoupments)

(491)

(873)

Non-core operations(6)

6,382 

5,330 

Pre-tax effect of exclusions

37,033 

(2,084)

Tax effect, at 21%(7)

(4,085)

(489)

After-tax effect of exclusions

32,948 

(2,573)

Non-GAAP operating income (loss)

$

83,863 

$

50,171 

Per diluted common share:

Net income (loss)

$

0.99 

$

1.03 

Effect of exclusions

0.63 

(0.05)

Non-GAAP operating income (loss) per diluted common share

$

1.62 

$

0.98 

(1) Net investment gains (losses) recognized in earnings are primarily driven by changes in the value of investments that are marked to fair value each period, the nature and timing of which are unrelated to our normal operating results. In addition, net investment gains (losses) for the year ended December 31, 2024 include the $6.5 million decrease to the contingent consideration liability.

(2) Net investment gains (losses) on investments related to SPCs are recognized in our Segregated Portfolio Cell Reinsurance segment. SPC results, including any net investment gain or loss, that are attributable to external cell participants are reflected in the SPC dividend expense (income). To be consistent with our exclusion of net investment gains (losses) recognized in earnings, we are excluding the portion of net investment gains (losses) that is included in the SPC dividend expense (income) which is attributable to the external cell participants.

(3) Transaction-related costs in 2025 are attributable to professional fees incurred in relation to the proposed merger transaction with The Doctors Company. Additional information regarding the proposed merger transaction with The Doctors Company is provided in Note 1 of the Notes to the Consolidated Financial Statements. Transaction-related costs in 2024 are attributable to actuarial consulting fees paid during the second quarter of 2024 in relation to the final determination of contingent consideration associated with the NORCAL acquisition. We are excluding these costs as they do not reflect normal operating results and are unique and non-recurring in nature.

(4) Foreign currency exchange rate gains (losses) are reported in our Corporate segment and are primarily related to foreign currency denominated balances associated with international insurance exposures, primarily related to our strategic partnership with an international medical professional liability insured in our Specialty P&C segment. Due to the size of the loss reserves associated with these international exposures, even nominal movements in exchange rates can lead to volatility in our results of operations. We exclude foreign currency exchange rate movements as the nature and timing of these changes are not indicative of our normal core operating results. See previous discussion in this section under the heading "Revenues."

(5) Non-operating income reflects proceeds of $1.0 million associated with the sale of the renewal rights related to our legal professional liability book of business to an unrelated third party in the second quarter of 2025 as well as a gain of $2.2 million associated with the sale of our Franklin, TN property to an unrelated third party in the first quarter of 2025. See additional discussion on the legal professional liability transaction in Part I Item 1. Business under the heading "Specialty Property and Casualty Segment". We are excluding these items as they do not reflect normal operating results and are unique and non-recurring in nature.

(6) Non-core operations include the net underwriting results from operations that are currently in run-off but do not qualify for Discontinued Operations accounting treatment under GAAP. These operations include our Lloyd's Syndicates operations from our previous participation in Syndicate 1729 and Syndicate 6131 as well as our legal professional liability book of business. Net investment gains (losses) recognized in earnings associated with these operations are included in the adjustment for consolidated net investment gains (losses) as described in footnote 1.

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Table of Contents

(7) Our statutory tax rate (21%) was applied to these items in calculating net income (loss). Changes in the contingent consideration liability are non-taxable and therefore have no associated income tax impact. The taxes associated with the net investment gains (losses) related to SPCs in our Segregated Portfolio Cell Reinsurance segment are paid by the individual SPCs and are not included in our consolidated tax provision or net income (loss); therefore, both the net investment gains (losses) from our Segregated Portfolio Cell Reinsurance segment and the adjustment to exclude the portion of net investment gains (losses) included in the SPC dividend expense (income) in the table above are not tax effected. There are no taxes associated with our Lloyd’s Syndicates operations in our consolidated tax provision due to the availability of net operating losses and the full valuation allowance recorded against the deferred tax assets. Accordingly, all adjustments related to our Lloyd's Syndicates operations in the table above are not tax effected. The portion of transaction-related costs that is tax deductible was tax effected at the statutory tax rate while the remaining non-deductible portion was not tax effected as there was no associated income tax benefit.

Non-GAAP Adjusted Key Ratios

Certain key performance ratios include the impact of certain before-tax effects of items that do not reflect normal operating results, as discussed in the previous table. We believe adjusting our key ratios for these items presents a useful view of the performance of our ongoing core insurance operations; however, it should be considered in conjunction with ratios computed in accordance with GAAP.

Our consolidated key ratios for the years ended December 31, 2025 and 2024 include the impact of net underwriting results related to non-core operations, guaranty fund assessments and transaction-related costs (see previous discussion on these items in the previous table). Non-core operations include an underwriting loss of $8.1 million and $4.7 million for the years ended December 31, 2025 and 2024, respectively, associated with our Lloyd's Syndicates operations. Also included in non-core operations is the underwriting income of $0.3 million associated with our legal professional liability book of business in 2025 as compared to an underwriting loss of $2.0 million in 2024.

The following table is a reconciliation of our consolidated key ratios to Non-GAAP adjusted key ratios for the years ended December 31, 2025 and 2024:

Year Ended December 31

Consolidated

2025

2024

As Reported

Non-GAAP operating adjustments

Non-GAAP Adjusted Ratios

As Reported

Non-GAAP operating adjustments

Non-GAAP Adjusted Ratios

Current accident year net loss ratio

80.9

%

0.4

 pts

81.3

%

80.5

%

0.6

 pts

81.1

%

Effect of prior accident years’ reserve development

(9.7

%)

(1.2

 pts)

(10.9

%)

(4.1

%)

(1.2

 pts)

(5.3

%)

Net loss ratio

71.2

%

(0.8

 pts)

70.4

%

76.4

%

(0.6

 pts)

75.8

%

Underwriting expense ratio

35.4

%

(1.6

 pts)

33.8

%

33.0

%

0.2

 pts

33.2

%

Combined ratio

106.6

%

(2.4

 pts)

104.2

%

109.4

%

(0.4

 pts)

109.0

%

Less: Investment Income Ratio

16.8

%

—

 pts

16.8

%

14.9

%

0.4

 pts

15.3

%

Operating ratio

89.8

%

(2.4

 pts)

87.4

%

94.5

%

(0.8

 pts)

93.7

%

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Table of Contents

Our Specialty P&C segment key ratios for the years ended December 31, 2025 and 2024 include the impact of net underwriting results related to non-core operations, as previously discussed, and guaranty fund assessments.

The following table is a reconciliation of our Specialty P&C segment key ratios to Non-GAAP adjusted key ratios for the years ended December 31, 2025 and 2024:

Year Ended December 31

Specialty P&C segment

2025

2024

Segment As Reported

Non-GAAP operating adjustments

Non-GAAP Adjusted Ratios

Segment As Reported

Non-GAAP operating adjustments

Non-GAAP Adjusted Ratios

Current accident year net loss ratio

82.7

%

0.6

 pts

83.3

%

82.3

%

0.8

 pts

83.1

%

Effect of prior accident years’ reserve development

(11.0

%)

(1.7

 pts)

(12.7

%)

(5.0

%)

(1.5

 pts)

(6.5

%)

Net loss ratio

71.7

%

(1.1

 pts)

70.6

%

77.3

%

(0.7

 pts)

76.6

%

Underwriting expense ratio

27.7

%

—

 pts

27.7 

%

27.3

%

—

 pts

27.3

%

Combined ratio

99.4

%

(1.1

 pts)

98.3

%

104.6

%

(0.7

 pts)

103.9

%

Non-GAAP Operating ROE

Non-GAAP operating ROE is a financial measure that is calculated as Non-GAAP operating income (loss) divided by the average of beginning and ending total shareholders’ equity. As previously discussed, in calculating Non-GAAP operating income (loss), we have excluded the effects of certain items that do not reflect normal results. Non-GAAP operating ROE measures the overall after-tax profitability of our ongoing core insurance operations and shows how efficiently capital is being used; however, it should be considered in conjunction with ROE computed in accordance with GAAP. The following table is a reconciliation of ROE to Non-GAAP operating ROE for the years ended December 31, 2025 and 2024:

Year Ended December 31

2025

2024

Change

ROE

4.0 

%

4.6 

%

(0.6

 pts)

Effect of items excluded in the calculation of Non-GAAP operating ROE

2.6 

%

(0.2 

%)

2.8 

 pts

Non-GAAP operating ROE

6.6 

%

4.4 

%

2.2 

 pts

Non-GAAP operating ROE in 2025 increased by 2.2 percentage points as compared to 2024 driven by a higher amount of prior accident year reserve development in our Specialty P&C and Segregated Portfolio Cell Reinsurance segments as well as an increase in our net investment income due to higher average book yields as we take advantage of the current interest rate environment. See previous discussions in this section under the heading "Executive Summary of Operations" and further discussion in our Segment Results sections that follow.

Non-GAAP Adjusted Book Value per Share

Book value per share is calculated as total GAAP shareholders’ equity divided by the total number of common shares outstanding at the balance sheet date. This ratio measures the net worth of the Company to shareholders on a per share basis.

Non-GAAP adjusted book value per share is a Non-GAAP measure widely used within the insurance sector and is calculated as total shareholders’ equity, excluding AOCI, divided by the total number of common shares outstanding at the balance sheet date. This Non-GAAP calculation measures the net worth of the Company to shareholders on a per share basis excluding AOCI to eliminate the temporary and potentially significant effects of fluctuations in interest rates on our fixed income portfolio; however, it should be considered in conjunction with book value per share computed in accordance with GAAP. Higher interest rates have led to significant unrealized holding losses on our available-for-sale fixed maturity investments resulting in volatility in AOCI in recent years. See Note 11 of the Notes to Consolidated Financial Statements for additional information.

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Table of Contents

The following table is a reconciliation of our book value per share to Non-GAAP adjusted book value per share at December 31, 2025 and December 31, 2024:

Book Value Per Share

Book Value Per Share at December 31, 2024

$

23.49 

Less: AOCI Per Share(1)

(3.37)

Non-GAAP Adjusted Book Value Per Share at December 31, 2024

26.86

Increase (decrease) to Non-GAAP Adjusted Book Value Per Share during the year ended December 31, 2025 attributable to:

Net income (loss)

0.99 

Other(2)

(0.03)

Non-GAAP Adjusted Book Value Per Share at December 31, 2025

27.82 

Add: AOCI Per Share(1)

(1.58)

Book Value Per Share at December 31, 2025

$

26.24 

(1) Primarily the impact of accumulated unrealized investment gains (losses) on our available-for-sale fixed maturity investments. See Note 11 of the Notes to Consolidated Financial Statements for additional information.

(2) Primarily the impact of an increase in common shares outstanding due to share-based compensation.

Book value increased $2.75 per share from December 31, 2024 to December 31, 2025 driven by the change in AOCI of $1.79 per share largely due to unrealized holding gains on our fixed income investment portfolio which flow directly to AOCI due to a decrease in interest rates since the end of 2024.

The increase of $0.96 per share in Non-GAAP adjusted book value per share from December 31, 2024 to December 31, 2025 reflected net income of $0.99 per share recognized during the year ended December 31, 2025, partially offset by the impact of share-based compensation and changes in common shares outstanding.

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Table of Contents

Segment Results - Specialty Property & Casualty

Our Specialty P&C segment focuses on Medical Professional Liability insurance and Medical Technology Liability insurance as discussed in Note 15 of the Notes to Consolidated Financial Statements. The Specialty P&C segment also includes the underwriting results from our Lloyd's Syndicates business and our legal professional liability book of business, both of which are currently in run-off. As previously discussed under the heading "ProAssurance Overview," we changed the composition of our operating and reportable segments during the first quarter of 2025. As a result, we now report the financial results of our subsidiary IAO, Inc. d/b/a ProAssurance Agency in the Specialty P&C segment which were previously reported in the Corporate segment. All prior period segment information has been recast to conform to the current period presentation and the change in presentation had no impact on previously reported consolidated financial results. See further information regarding this presentation change in Note 15 of the Notes to Consolidated Financial Statements.

Segment results reflected the pre-tax profit or loss from these operations including the amortization of certain purchase accounting adjustments. Segment results included the following:

Year Ended December 31

($ in thousands)

2025

2024

Change

Net premiums written

$

705,768

$

737,502

$

(31,734)

(4.3

%)

Net premiums earned

$

724,198

$

747,942

$

(23,744)

(3.2

%)

Other income (expense)

6,321

6,588

(267)

(4.1

%)

Net losses and loss adjustment expenses

(519,375)

(578,486)

59,111

(10.2

%)

Underwriting, policy acquisition and operating expenses

(200,436)

(204,142)

3,706

(1.8

%)

Segment results

$

10,708

$

(28,098)

$

38,806

138.1

%

Net loss ratio

71.7 

%

77.3 

%

(5.6

 pts)

Underwriting expense ratio

27.7 

%

27.3 

%

0.4

 pts

Non-GAAP Adjusted Ratios*

Net loss ratio

70.6 

%

76.6 

%

(6.0

 pts)

Underwriting expense ratio

27.7 

%

27.3 

%

0.4

 pts

*See previous discussion under the heading "Non-GAAP Adjusted Key Ratios."

Premiums Written

Changes in our premium volume within our Specialty P&C segment are generally driven by three primary factors: (1) the amount of new business written, (2) our retention of existing business and (3) the premium charged for business that is renewed, which is affected by rates charged and by the amount and type of coverage an insured chooses to purchase. In addition, premium volume may periodically be affected by shifts in the timing of renewals between periods.

The medical professional liability market, which accounts for a majority of the revenues in this segment, remains challenging as physicians continue joining hospitals or larger group practices and, therefore, are no longer purchasing individual or group policies in the standard market. In addition, some competitors have chosen to compete primarily on price. Those carriers have accumulated an excess of capital since approximately 2004 driven largely by drops in claims frequency. They now use that capital to generate higher investment returns supporting operating income over underwriting income. Both factors may impact our ability to write new business and retain existing business. Furthermore, the insurance and reinsurance markets have historically been cyclical, characterized by extended periods of intense price competition and other periods of reduced capacity. The medical professional liability market has historically been particularly affected by these cycles. Underwriting cycles are driven, among other reasons, by excess capacity available to compete for the business. Changes in the frequency and severity of losses may also affect the cycles of the insurance and reinsurance markets significantly.

Gross, ceded and net premiums written were as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Gross premiums written

$

776,942 

$

807,463 

$

(30,521)

(3.8

%)

Less: Ceded premiums written

71,174 

69,961 

1,213 

1.7

%

Net premiums written

$

705,768 

$

737,502 

$

(31,734)

(4.3

%)

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Gross Premiums Written

Gross premiums written by component were as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Medical Professional Liability(1)(2)

$

720,733 

$

737,209 

$

(16,476)

(2.2

%)

Medical Technology Liability(3)

41,916 

44,936 

(3,020)

(6.7

%)

Lloyd's Syndicates(4)

67 

5,969 

(5,902)

(98.9

%)

Other(5)

14,226 

19,349 

(5,123)

(26.5

%)

Total Gross Premiums Written

$

776,942 

$

807,463 

$

(30,521)

(3.8

%)

(1) Medical Professional Liability premium was our greatest source of premium revenues in 2025 and 2024. The decrease in MPL premium for 2025 as compared to 2024 was driven by retention losses, partially offset by an increase in renewal pricing, new business written, an increase in premiums assumed on a quota share basis through a strategic partnership and, to a lesser extent, an increase in tail coverage premium. Retention losses during 2025 generally reflect our pursuit of rate adequacy in a competitive market where other carriers may not have the same profitability objectives, appreciate the rate need, or are attempting to gain market share despite near term underwriting losses which can be supported by investment returns from excess capital. Renewal pricing increases during 2025 reflect our response to the rising loss cost environment. See a description of our MPL line of business and additional discussion on competitive market conditions in Part I Item 1. Business under the heading "Specialty Property and Casualty Segment" and "Competition," respectively.

(2) We offer alternative risk and self-insurance products on a customized basis. Our custom alternative risk solutions include a turnkey captive solution whereby we cede either all or a portion of the alternative market premium, net of reinsurance, to two SPCs of our wholly owned Cayman Islands reinsurance subsidiary, Inova Re, which is reported in our Segregated Portfolio Cell Reinsurance segment. See further discussion on alternative market gross premiums written in our Segment Results - Segregated Portfolio Cell Reinsurance section under the heading "Gross Premiums Written" that follows.

(3) Our Medical Technology Liability business is marketed throughout the U.S.; coverage is offered on a primary or excess basis, within specified limits, to manufacturers and distributors of medical technology and life sciences products including entities conducting human clinical trials. In addition to the previously listed factors that affect our premium volume, our Medical Technology Liability premium is also impacted by the sales volume of insureds. Our Medical Technology Liability premium decreased in 2025 as compared to 2024 driven by retention losses, partially offset by new business written. Retention losses in 2025 are primarily attributable to an increase in competition on terms and pricing, insureds no longer needing coverage or going out of business, non-payment, merger activity within the industry and the broker losing the account.

(4) Our Lloyd's Syndicates business includes the results from our previous participation in Syndicate 1729 at Lloyd's of London, which is currently in run off. Effective September 2023, we elected to discontinue our participation in the results of Syndicate 1729 beginning with the 2024 underwriting year. For the 2023 underwriting year our participation in the results of Syndicate 1729 was approximately 5%. Our Lloyd’s Syndicates premium during 2025 reflected the impact of our ceased participation.

(5) This component of gross premiums written includes all other product lines within our Specialty P&C segment, primarily professional liability coverage to attorneys and their firms in select areas of practice. On April 15, 2025, we sold the renewal rights related to our legal professional liability book of business to an unrelated third party for $1.0 million. In connection with this transaction, we agreed to continue directly writing renewal policies for a limited period of time and entered into a 100% quota share reinsurance agreement with that third party for policies written on our paper after April 15, 2025. See additional information on the terms of the transaction in Part I Item 1. Business under the heading "Specialty Property and Casualty Segment".

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New business written, retention and the change in renewal pricing for our Specialty P&C segment and by major component, excluding Lloyd's Syndicates, are shown in the table below:

Year Ended December 31

2025

2024

($ in millions)

MPL

Medical Technology Liability

Other

Specialty P&C Segment

MPL

Medical Technology Liability

Other

Specialty P&C Segment

New business

$

29.7 

$

2.8 

$

0.1 

$

32.6 

$

26.8 

$

4.1 

$

0.5 

$

31.4 

Retention(1)

84 

%

87 

%

58 

%

84 

%

84 

%

91 

%

74 

%

84 

%

Change in renewal pricing(2)

9 

%

— 

%

3 

%

8 

%

10 

%

1 

%

4 

%

9 

%

(1) Calculated as annualized renewed premium divided by all annualized premium subject to renewal. Retention is affected by a number of factors. We may lose insureds to competitors or to alternative insurance mechanisms such as risk retention groups, captive arrangements or self-insurance entities (often when physicians join hospitals or large group practices) or due to pricing or other issues. We may choose not to renew an insured as a result of our underwriting evaluation. Insureds may also terminate coverage because they have left the practice of medicine for various reasons, principally for retirement, death or disability, but also for personal reasons. See further explanation of changes in retention above under the heading "Gross Premiums Written".

(2) We are committed to a rate structure that will allow us to fulfill our obligations to our insureds while generating competitive long-term returns for our shareholders. Our pricing continues to be based on expected losses as indicated by our historical loss data and available industry loss data. In recent years, this practice has resulted in rate increases and we anticipate further rate increases due to indications of increasing projected loss severity. Additionally, the pricing of our business includes the effects of filed rates, surcharges and discounts. Renewal pricing reflects changes in our exposure base, deductibles, self-insurance retention limits and other policy terms and conditions. See further explanation of changes in renewal pricing above under the heading "Gross Premiums Written".

Ceded Premiums Ratio

Ceded premiums represent the amounts owed to our reinsurers for their assumption of a portion of our losses. See previous discussion in our Liquidity and Capital Resources and Financial Condition section under the heading "Reinsurance" for information regarding our MPL and Medical Technology Liability excess of loss reinsurance arrangements.

We pay our reinsurers a ceding premium in exchange for their accepting the risk, and in certain of our excess of loss arrangements, the ultimate amount of which is determined by the loss experience of the business ceded, subject to certain minimum and maximum amounts. Given the length of time that it takes to resolve our claims, many years may elapse before all losses recoverable under a reinsurance arrangement are known. As a part of the process of estimating our loss reserve we also make estimates regarding the amounts recoverable under our reinsurance arrangements. As a result, we may have an adjustment to our estimate of expected losses and associated recoveries for prior year ceded losses under certain loss sensitive reinsurance agreements. During 2025, we decreased our estimate of ceded premiums owed related to prior accident years by $2.0 million, whereas we recorded a net increase in our estimate of ceded premiums owed to reinsurers by $1.4 million in 2024 due to an increase in our estimate of expected losses and associated recoveries for certain prior year ceded losses. Changes to estimates of premiums ceded related to prior accident years are fully earned in the period the changes in estimates occur.

As shown in the table below, our ceded premiums ratio was affected in both 2025 and 2024 by revisions to our estimate of premiums owed to reinsurers related to coverages provided in prior accident years. The ceded premiums ratio was as follows:

Year Ended December 31

2025

2024

Change

Ceded premiums ratio

9.2

%

8.7

%

0.5

 pts

Less the effect of adjustments in premiums owed under reinsurance agreements, prior accident years (as previously discussed)

(0.3

%)

0.2

%

(0.5

 pts)

Ratio, current accident year

9.5

%

8.5

%

1.0

 pts

The above table reflects ceded premiums written, excluding the effect of prior year ceded premium adjustments, as previously discussed, as a percentage of gross premiums written. The increase in our current accident year ceded premiums ratio for 2025 as compared to 2024 was driven by the impact of the aforementioned 100% quota share reinsurance agreement entered into during the second quarter of 2025 related to our legal professional liability policies. The increase in our current accident year ceded premiums ratio also reflected an increase in premiums ceded under our excess of loss reinsurance arrangements primarily due to the incorporation of podiatric and chiropractic policies into our MPL treaty effective October 1, 2024.

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Net Premiums Earned

Net premiums earned consist of gross premiums earned less the portion of earned premiums that we cede to our reinsurers for their assumption of a portion of our losses. Because premiums are generally earned pro rata over the entire policy period, fluctuations in premiums earned tend to lag those of premiums written. The majority of our policies carry a term of one year; however, some of our Medical Technology Liability policies have a multi-year term. Tail coverage premiums are generally 100% earned in the period written because the policies insure only incidents that occurred in prior periods and are not cancellable. Retroactive coverage premiums are 100% earned at the inception of the contract, as all of the associated underlying loss events occurred in the past. Additionally, any ceded premium changes due to changes to estimates of premiums owed under reinsurance agreements for prior accident years are fully earned in the period of change.

Net premiums earned were as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Gross premiums earned

$

792,753 

$

818,751 

$

(25,998)

(3.2

%)

Less: Ceded premiums earned

68,555 

70,809 

(2,254)

(3.2

%)

Net premiums earned

$

724,198 

$

747,942 

$

(23,744)

(3.2

%)

Gross premiums earned decreased in 2025 as compared to 2024 driven by the pro rata effect of a decrease in the volume of written premium during the preceding twelve months, primarily due to proactive actions taken in certain lines to improve profitability, and our ceased participation in Syndicate 1729 for the 2024 underwriting year.

Ceded premiums earned during 2025 and 2024 included prior accident year ceded premium adjustments of $2.0 million and $1.4 million, respectively, (see previous discussion under the heading "Ceded Premiums Ratio"). After removing the effect of the prior accident year ceded premium adjustment from both years, ceded premiums earned increased by $1.1 million in 2025 as compared to 2024, primarily attributable to the aforementioned 100% quota share reinsurance agreement related to our legal professional liability policies and an increase in premium ceded under our excess of loss arrangements.

Losses and Loss Adjustment Expenses

The determination of calendar year losses involves the actuarial evaluation of incurred losses for the current accident year and the actuarial re-evaluation of incurred losses for prior accident years.

Accident year refers to the accounting period in which the insured event becomes a liability of the insurer. For claims-made policies, which represent the majority of the premiums written in our Specialty P&C segment, the insured event generally becomes a liability when the event is first reported to us and the policy that is in effect at that time covers the claim. For occurrence policies, the insured event becomes a liability when the event takes place, even though the claim may be reported to us at a later date. For retroactive coverages, the insured event becomes a liability at the inception of the underlying contract. We believe that measuring losses on an accident year basis is the best measure of the underlying profitability of the premiums earned in that period, since it associates policy premiums earned with the estimate of the losses incurred related to those policy premiums.

The following tables summarize calendar year net loss ratios for our Specialty P&C segment by separating losses between the current accident year and all prior accident years.

Net Loss Ratios(1)

Year Ended December 31

2025

2024

Change

Calendar year net loss ratio

71.7

%

77.3

%

(5.6

 pts)

Less impact of prior accident years on the net loss ratio

(11.0

%)

(5.0

%)

(6.0

 pts)

Current accident year net loss ratio(2)

82.7 

%

82.3 

%

0.4

 pts

(1)Net losses, as specified, divided by net premiums earned.

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(2)As shown in the table above, our current accident year net loss ratio increased 0.4 percentage points for the year ended December 31, 2025 as compared to 2024 primarily attributable to the following:

(In percentage points)

Increase (Decrease)

2025 versus 2024

Estimated ratio increase (decrease) attributable to:

Non-core operations(1)

0.2 pts

Ceded Premium Adjustment, Prior Accident Years(2)

(0.5 pts)

Change in ULAE

0.3 pts

All other, net

0.4 pts

Increase in the current accident year net loss ratio

0.4 pts

(1) Non-core operations include our Lloyd's Syndicates operations and legal professional liability book of business, which are in run-off. See previous discussion on these non-core operations under the heading "Non-GAAP Financial Measures."

(2) See previous discussion under the heading "Ceded Premiums Ratio" for additional information.

•Excluding the impact of the items specifically identified in the table above, our current accident year net loss ratio for 2025 as compared to 2024 increased 0.4 percentage points driven by higher loss severity and frequency trends in select jurisdictions, which have resulted in an increase to certain expected loss ratios during the fourth quarter of 2025, as well as changes in the mix of business. The increase in our current accident year net loss ratio was partially offset by a decrease in our reserves related to DDR coverage endorsements due to a decrease in business eligible for tail coverage. In both 2025 and 2024, we decreased our reserves related to DDR coverage endorsements; however, the adjustment was greater in 2025 as compared to 2024.

•ULAE are costs that cannot be attributed to processing a specific claim and are allocated to net losses and loss adjustment expenses from underwriting and operating expenses. In 2025, ULAE increased primarily due to higher compensation, equipment and software costs.

We re-evaluate our previously established reserve each quarter based upon the most recently completed actuarial analysis supplemented by any new analysis, information or trends that have emerged since the date of that study. We also take into account currently available industry trend information. Our internal actuaries perform an in-depth review of our reserve for losses on at least a semi-annual basis using the loss and exposure data of our insurance subsidiaries.

We recognized net favorable (unfavorable) prior accident year reserve development as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Total net favorable (unfavorable) reserve development

$

79,774

$

36,932

$

42,842 

116.0

%

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The following table shows net favorable (unfavorable) development by component for the years ended December 31, 2025 and 2024:

•MPL: Net favorable reserve development recognized for the year ended December 31, 2025 was primarily due to lower than expected loss emergence principally related to accident years 2019 through 2022. We recognized net favorable reserve development for the year ended December 31, 2024 reflecting overall favorable trends in claim closing patterns relative to expectations, principally related to accident years 2019 through 2021.

•Medical Technology Liability: During both 2025 and 2024, we recognized net favorable reserve development due to lower than expected loss emergence. Net favorable development recognized in 2025 principally related to accident years 2021 through 2023 whereas development recognized in 2024 principally related to accident years 2022 and 2023.

•Lloyd's Syndicates Operations (Participation Discontinued): In 2025 and 2024, the net unfavorable prior accident year reserve development was driven by Syndicate 6131’s 2021 underwriting year for exposures related to aviation coverages in connection with Russia's invasion of Ukraine.

•Purchase Accounting Amortization: Net prior year reserve development for both periods presented included amortization of the purchase accounting fair value adjustment on NORCAL's assumed net reserve and amortization of the negative VOBA associated with NORCAL's DDR reserve, which is recorded as a reduction to net losses and loss adjustment expenses.

•Other: Net unfavorable prior accident year reserve development recognized in 2025 primarily represents an increase for an ECO/XPL claim in our legal professional liability book of business.

A detailed discussion of factors influencing our recognition of loss development is included in our Critical Accounting Estimates section under the heading "Reserve for Losses and Loss Adjustment Expenses." Assumptions used in establishing our reserve are regularly reviewed and updated by management as new data becomes available. Any adjustments necessary are reflected in the then current operations. Due to the size of our reserve, even a small percentage adjustment to the assumptions can have a material effect on our results of operations for the period in which the change is made.

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Underwriting, Policy Acquisition and Operating Expenses

Our Specialty P&C segment underwriting, policy acquisition and operating expenses were comprised as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

DPAC amortization

$

97,824 

$

102,125 

$

(4,301)

(4.2

%)

Management fees

3,702 

3,845 

(143)

(3.7

%)

Other underwriting and operating expenses

98,910 

98,172 

738 

0.8

%

Total

$

200,436 

$

204,142 

$

(3,706)

(1.8

%)

DPAC amortization decreased in 2025 as compared to 2024 driven by a decrease in our share of Syndicate 1729's DPAC amortization due to our ceased participation for the 2024 underwriting year as well as a decrease in agent commissions and brokerage expenses, largely due to a lower volume of premium written.

Management fees are charged pursuant to a management agreement by the Corporate segment to the core domestic insurance subsidiaries within our Specialty P&C segment for services provided based on the extent to which services are provided to the subsidiary and the amount of premium written by the subsidiary. While the terms of the management agreement were consistent between 2025 and 2024, fluctuations in the amount of premium written by each subsidiary can result in corresponding variations in the management fee charged to each subsidiary during a particular period.

Other underwriting and operating expenses increased in 2025 as compared to 2024 primarily attributable to higher compensation-related expenses, partially offset by lower professional fees, lower facilities expense and a decrease in our share of Syndicate 1729's operating expenses due to our ceased participation for the 2024 underwriting year. The increase in compensation-related expenses in 2025 as compared to 2024 primarily reflected higher incentive based compensation, an increase in health insurance costs and annual merit adjustments, partially offset by a decrease in employee headcount. The decrease in professional fees in 2025 was driven by a reduction in fees associated with a data analytics services agreement. The decrease in facilities expense in 2025 was due to the sale of our Franklin, TN property during the first quarter of 2025. The remaining variance in other underwriting and operating expenses for 2025 as compared to 2024 was comprised of individually insignificant components.

Underwriting Expense Ratio (the Expense Ratio)

Our expense ratio for the Specialty P&C segment was as follows:

Year Ended December 31

2025

2024

Change

Underwriting expense ratio

27.7

%

27.3

%

0.4

 pts

The change in our expense ratio in 2025 as compared to 2024 was primarily attributable to the following:

(In percentage points)

Increase (Decrease) 2025 versus 2024

Estimated ratio increase (decrease) attributable to:

Change in net premiums earned and DPAC amortization(1)

0.1 pts

Tail premium(2)

(0.3 pts)

All other, net

0.6 pts

Increase in the underwriting expense ratio

0.4 pts

(1) Excludes tail premium and the impact of ceded premium adjustments related to prior accident years. See previous discussion on the ceded premium adjustments under the heading "Ceded Premiums Ratio."

(2) Represents the impact of tail premium written in the period as these premiums are typically earned when written with minimal associated expenses.

Excluding the impact of the items specifically identified in the table above, our expense ratio increased 0.6 percentage points in 2025 as compared to 2024 driven by higher incentive based compensation and the pressure of lower earned premium, partially offset by lower professional fees and facilities expenses.

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Segment Results - Workers' Compensation Insurance

Our Workers' Compensation Insurance segment includes workers' compensation products provided to employers generally with 1,000 or fewer employees, as discussed in Note 15 of the Notes to Consolidated Financial Statements. Segment results included the following:

Year Ended December 31

($ in thousands)

2025

2024

Change

Net premiums written

$

167,258 

$

166,223 

$

1,035 

0.6

%

Net premiums earned

$

164,351 

$

167,610 

$

(3,259)

(1.9

%)

Other income

2,056 

1,887 

169 

9.0

%

Net losses and loss adjustment expenses

(123,795)

(128,483)

4,688 

(3.6

%)

Underwriting, policy acquisition and operating expenses

(63,295)

(61,999)

(1,296)

2.1

%

Segment results

$

(20,683)

$

(20,985)

$

302 

1.4

%

Net loss ratio

75.3%

76.7%

(1.4 pts)

Underwriting expense ratio

38.5%

37.0%

1.5 pts

Premiums Written

Our workers’ compensation premium volume is driven by five primary factors: (1) the amount of new business written, (2) retention of our existing book of business, (3) premium rates charged on our renewal book of business, (4) changes in payroll exposure and (5) audit premium.

Gross, ceded and net premiums written were as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Gross premiums written

$

235,763 

$

243,404 

$

(7,641)

(3.1

%)

Less: Ceded premiums written

68,505 

77,181 

(8,676)

(11.2

%)

Net premiums written

$

167,258 

$

166,223 

$

1,035 

0.6

%

Gross Premiums Written

Gross premiums written by product were as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Traditional business:

Direct

$

175,378 

$

173,273 

$

2,105 

1.2

%

Other

7,206 

5,950 

1,256 

21.1

%

Change in EBUB estimate

(1,600)

2,900 

(4,500)

(155.2

%)

Total traditional business(1)

180,984 

182,123 

(1,139)

(0.6

%)

Alternative market business(2)

54,779 

61,281 

(6,502)

(10.6

%)

Total

$

235,763 

$

243,404 

$

(7,641)

(3.1

%)

(1) Traditional gross premiums written decreased during 2025 as compared to 2024 driven by changes in the carried EBUB estimate, lower audit premium and retention losses, partially offset by higher new business writings and renewal premium related to policies previously written as alternative market business. Renewal business reflected premium retention of 84% and rate decreases of 1% for 2025. Rate decreases were more than offset by an increase in payroll exposure. The renewal premium previously written in our alternative market business totaled $3.9 million and related to alternative market programs that were non-renewed in 2025. Renewal and new business results continue to reflect the competitive workers' compensation market conditions, including the impact of compounded state loss cost reductions in our core operating territories.

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(2) A majority of alternative market premiums are ceded to SPCs in our Segregated Portfolio Cell Reinsurance segment. See further discussion on alternative market gross premiums written in our Segment Results - Segregated Portfolio Cell Reinsurance section under the heading "Gross Premiums Written" that follows. We retained sixteen of the twenty-one (three in the fourth quarter) workers' compensation alternative market programs that were up for renewal during the year ended December 31, 2025. Five agency-owned programs were non-renewed and placed in run-off in 2025.

New business, audit premium, renewal retention and renewal price changes for our traditional business and the alternative market business are shown in the table below:

Year Ended December 31

2025

2024

($ in millions)

Traditional Business

Alternative Market Business(3)

Segment

Results

Traditional Business

Alternative Market Business(3)

Segment

Results

New business

$

18.9 

$

3.7 

$

22.6 

$

17.5 

$

3.5 

$

21.0 

Audit premium (excluding EBUB)

$

10.5 

$

3.9 

$

14.4 

$

12.1 

$

3.7 

$

15.8 

Retention rate(1)

84

%

90

%

86

%

87

%

84

%

86

%

Change in renewal pricing(2)

(1

%)

(3

%)

(1

%)

(2

%)

(1

%)

(1

%)

(1) We calculate our workers' compensation retention as renewed premium divided by premium available to renew. Our retention rate can be impacted by various factors, including price or other competitive issues, insureds being acquired, or a decision not to renew based on our underwriting evaluation.

(2) The pricing of our business includes an assessment of the underlying policy exposure and market conditions. We continue to base our pricing on expected losses, as indicated by our historical loss data.

(3) Represents alternative market business ceded to SPCs in our Segregated Portfolio Cell Reinsurance segment.

Ceded Premiums Written

Ceded premiums written were as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Premiums ceded to SPCs(1)

$

48,301 

$

55,255 

$

(6,954)

(12.6

%)

Premiums ceded to external reinsurers(2)

13,726 

15,900 

(2,174)

(13.7

%)

Other(3)

6,478 

6,026 

452 

7.5

%

Total ceded premiums written

$

68,505 

$

77,181 

$

(8,676)

(11.2

%)

(1) Represents alternative market business that is ceded under 100% quota share reinsurance agreements to the SPCs in our Segregated Portfolio Cell Reinsurance segment. See further discussion on alternative market gross premiums written in our Segment Results - Segregated Portfolio Cell Reinsurance section under the heading "Gross Premiums Written" that follows.

(2) Premiums ceded under our traditional reinsurance treaty are based on premiums earned during the treaty period. The decrease for the year ended December 31, 2025 as compared to 2024 reflected a lower average reinsurance rate that took effect with the May 1, 2025 treaty renewal as well as a $1.6 million reduction in reinstatement premium recognized in 2025 as compared to an increase of $0.7 million in 2024. The 2025 reinstatement premium reduction is related to a large 2021 accident year claim reserve decrease.

(3) This component of ceded premiums written primarily represents alternative market business premiums ceded to unaffiliated captive insurers for two programs that are ceded under 100% quota share reinsurance agreements.

Ceded Premiums Ratio

Ceded premiums ratio was as follows:

Year Ended December 31

2025

2024

Change

Ceded premiums ratio, as reported

30.0

%

32.3

%

(2.3

 pts)

Less the effect of:

Premiums ceded to SPCs (100%)

19.1

%

20.9

%

(1.8

 pts)

Other

3.0

%

2.4

%

0.6

 pts

Ceded premiums ratio (related to external reinsurance), less the effects of above

7.9

%

9.0

%

(1.1

 pts)

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The above table reflects traditional ceded premiums earned as a percentage of traditional gross premiums earned. As discussed above, premiums ceded under our traditional reinsurance treaty are based on premiums earned during the treaty period. The decrease in the ceded premiums ratio in 2025 as compared to 2024 primarily reflects a lower average reinsurance rate that took effect with the May 1, 2025 treaty renewal as well as the $1.6 million reduction in reinstatement premium in 2025 as compared to an increase of $0.7 million in 2024, as previously discussed.

Net Premiums Earned

Net premiums earned consist of gross premiums earned less the portion of earned premiums that we cede to SPCs in our Segregated Portfolio Cell Reinsurance segment, external reinsurers and the unaffiliated captive insurers. Because premiums are generally earned pro rata over the entire policy period, fluctuations in premiums earned tend to lag those of premiums written. Our workers’ compensation policies are twelve month term policies, and premiums are earned on a pro rata basis over the policy period. Net premiums earned also include premium adjustments related to the audit of our insureds' payrolls, changes in our estimates related to EBUB and premium adjustments related to retrospectively-rated policies. Payroll audits are conducted subsequent to the end of the policy period and any related premium adjustments are recorded as fully earned in the current period. We evaluate our estimates related to EBUB and retrospectively-rated premium adjustments on a quarterly basis with any adjustments being included in written and earned premium in the current period.

Net premiums earned were as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Gross premiums earned

$

234,856 

$

247,745 

$

(12,889)

(5.2

%)

Less: Ceded premiums earned

70,505 

80,135 

(9,630)

(12.0

%)

Net premiums earned

$

164,351 

$

167,610 

$

(3,259)

(1.9

%)

Net premiums earned decreased during the year ended December 31, 2025 as compared to 2024 primarily driven by changes in the carried EBUB estimate and lower audit premium. Partially offsetting these factors for 2025 is the impact of the $1.6 million reduction in reinstatement premium as compared to an increase of $0.7 million in 2024, as previously discussed.

Losses and Loss Adjustment Expenses

We estimate our current accident year loss and loss adjustment expenses by developing actual reported losses using historical loss development factors, adjusted to reflect current and expected trends based on various internal analyses and supplemental information. The following table summarizes calendar year net loss ratios by separating losses between the current accident year and all prior accident years. Calendar year and current accident year net loss ratios by component were as follows:

Year Ended December 31

2025

2024

Change

Calendar year net loss ratio

75.3

%

76.7

%

(1.4

 pts)

Less impact of prior accident years on the net loss ratio

(1.7

%)

(0.3

%)

(1.4

 pts)

Current accident year net loss ratio

77.0

%

77.0

%

—

 pts

The 2025 current accident year net loss ratio remained unchanged compared to 2024. During the fourth quarter of 2025, we increased our full year current accident year net loss ratio to 77.0%, reflecting higher severity-related claim activity on large losses, which more than offset medical cost savings related to medical cost management initiatives. The current accident year loss ratio in 2025 was also impacted by the reduction in net premiums earned related to a reduction in the carried EBUB estimate, as previously discussed.

We recognized net favorable prior accident year reserve development of $2.7 million for the year ended December 31, 2025 as compared to $0.5 million of net favorable prior accident year reserve development for 2024. The net favorable reserve development recognized in 2025 reflected a reduction of the AAD liability, overall favorable trends in claim closing patterns in the 2024 accident year as well as a large claim reserve reduction from the 2021 accident year, which had previously exceeded the per person maximum limit under our reinsurance contract. In 2024, net favorable reserve development was driven by favorable prior accident year reserve development of $1.6 million, including the reduction of the AAD liability, partially offset by an adjustment to aggregate losses assumed from the Segregated Portfolio Cell Reinsurance segment of $1.1 million. The net favorable development recognized in 2024 reflected overall favorable trends in claim closing patterns in accident years 2017 through 2019 and 2023.

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Underwriting, Policy Acquisition and Operating Expenses

Underwriting, policy acquisition and operating expenses include the amortization of commissions, premium taxes and underwriting salaries, which are capitalized and deferred over the related workers’ compensation policy period, net of ceding commissions earned. The capitalization of underwriting salaries can vary as they are subject to the success rate of our contract acquisition efforts. These expenses also include a management fee charged by our Corporate segment, which represents intercompany charges pursuant to a management agreement. The management fee is based on the extent to which services are provided to the subsidiary and the amount of premium written by the subsidiary.

Our Workers' Compensation Insurance segment underwriting, policy acquisition and operating expenses were comprised as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

DPAC amortization(1)

$

31,548 

$

29,072 

$

2,476 

8.5

%

Management fees

1,773 

1,820 

(47)

(2.6

%)

Other underwriting and operating expenses(2)

41,336 

42,055 

(719)

(1.7

%)

SPC ceding commission offset(3)

(11,362)

(10,948)

(414)

3.8

%

Total

$

63,295 

$

61,999 

$

1,296 

2.1

%

(1) DPAC amortization increased for the year ended December 31, 2025 as compared to 2024, reflecting an increase in state employer assessment liabilities totaling $1.6 million. The increase in the liability reflected our expectation of assessments in excess of the amounts charged and collected from policyholders as determined and promulgated by states in which we operate. The increase in DPAC amortization also reflected the impact of refunds from guaranty fund assessments totaling $0.4 million and $0.9 million in 2025 and 2024, respectively.

(2) Other underwriting and operating expenses decreased for the year ended December 31, 2025 as compared to 2024 driven by lower incentive based compensation. The remaining variance in other underwriting and operating expenses in 2025 as compared to 2024 was comprised of individually insignificant components.

(3) As previously discussed, alternative market premiums written by our Workers' Compensation Insurance segment are 100% ceded, less a ceding commission, to either the SPCs in our Segregated Portfolio Cell Reinsurance segment or unaffiliated captive insurers. The ceding commission charged to the SPCs consists of an amount for fronting fees, cell rental fees, commissions, premium taxes, claims administration fees and risk management fees. The fronting fees, commissions, premium taxes and risk management fees are recorded as an offset to underwriting, policy acquisition and operating expenses. Cell rental fees are recorded as a component of other income and claims administration fees are recorded as ceded ULAE. SPC ceding commissions earned increased for the year ended December 31, 2025 as compared to 2024, primarily reflecting the prior year impact of an adjustment to ceding commissions charged to the SPCs in prior periods related to certain fees, partially offset by the reduction in alternative market written premium.

Underwriting Expense Ratio (the Expense Ratio)

The underwriting expense ratio included the impact of the following:

Year Ended December 31

2025

2024

Change

Underwriting expense ratio, as reported

38.5

%

37.0

%

1.5

 pts

Less estimated ratio increase (decrease) attributable to:

Impact of ceding commissions received from SPCs

4.7

%

5.5

%

(0.8

 pts)

Impact of audit premium

(1.4

%)

(2.1

%)

0.7

 pts

Impact of change in EBUB estimate

0.2

%

(0.5

%)

0.7

 pts

Underwriting expense ratio, less listed effects

35.0

%

34.1

%

0.9

 pts

Excluding the items noted in the table above, the expense ratio increased for the year ended December 31, 2025 primarily reflecting the impact of the state employer assessment adjustment, as previously discussed.

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Segment Results - Segregated Portfolio Cell Reinsurance

The Segregated Portfolio Cell Reinsurance segment includes the results (underwriting profit or loss, plus investment results, net of U.S. federal income taxes) of SPCs at Inova Re and Eastern Re, our Cayman Islands SPC operations, as discussed in Note 16 of the Notes to Consolidated Financial Statements. SPCs are segregated pools of assets and liabilities that provide an insurance facility for a defined set of risks. Assets of each SPC are solely for the benefit of that individual cell and each SPC is solely responsible for the liabilities of that individual cell. Assets of one SPC are statutorily protected from the creditors of the others. As of December 31, 2025, there were twenty-seven (twelve inactive) SPCs.

Segment results reflect our share of the underwriting and investment results of the SPCs in which we participate, and included the following:

Year Ended December 31

($ in thousands)

2025

2024

Change

Net premiums written

$

43,887 

$

49,950 

$

(6,063)

(12.1

%)

Net premiums earned

$

45,687 

$

52,698 

$

(7,011)

(13.3

%)

Net investment income

3,864 

3,608 

256 

7.1

%

Net investment gains (losses)

2,259 

2,369 

(110)

(4.6

%)

Other income (expenses)

25 

19 

6 

31.6

%

Net losses and loss adjustment expenses

(22,248)

(32,466)

10,218 

(31.5

%)

Underwriting, policy acquisition and operating expenses

(16,128)

(18,063)

1,935 

(10.7

%)

SPC U.S. federal income tax (expense) benefit(1)

(2,413)

(1,766)

(647)

36.6

%

SPC net results

11,046 

6,399 

4,647 

72.6

%

SPC dividend (expense) income(2)

(6,873)

(4,444)

(2,429)

54.7

%

Segment results(3)

$

4,173 

$

1,955 

$

2,218 

113.5

%

Net loss ratio

48.7%

61.6%

(12.9 pts)

Underwriting expense ratio

35.3%

34.3%

1.0 pts

(1) Represents the provision for U.S. federal income taxes for SPCs at Inova Re, which have elected to be taxed as a U.S. corporation under Section 953(d) of the Internal Revenue Code. U.S. federal income taxes are included in the total SPC net results and are paid by the individual SPCs.

(2) Represents the net (profit) loss attributable to external cell participants.

(3) Represents our share of the net profit (loss) and OCI of the SPCs in which we participate.

Premiums Written

Premiums in our Segregated Portfolio Cell Reinsurance segment are assumed from either our Workers' Compensation Insurance or Specialty P&C segments. Premium volume is driven by five primary factors: (1) the amount of new business written, (2) retention of the existing book of business, (3) premium rates charged on the renewal book of business and, for workers' compensation business, (4) changes in payroll exposure and (5) audit premium.

Gross, ceded and net premiums written were as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Gross premiums written

$

51,052 

$

57,904 

$

(6,852)

(11.8

%)

Less: Ceded premiums written

7,165 

7,954 

(789)

(9.9

%)

Net premiums written

$

43,887 

$

49,950 

$

(6,063)

(12.1

%)

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Gross Premiums Written

Gross premiums written reflected reinsurance premiums assumed by component as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Workers' compensation

$

48,301 

$

55,255 

$

(6,954)

(12.6

%)

Medical professional liability

2,751 

2,649 

102 

3.9

%

Gross Premiums Written

$

51,052 

$

57,904 

$

(6,852)

(11.8

%)

Gross premiums written for the years ended December 31, 2025 and 2024 were primarily comprised of workers' compensation coverages assumed from our Workers' Compensation Insurance segment. We retained fourteen of the nineteen workers' compensation programs and both of the medical professional liability programs up for renewal for the year ended December 31, 2025. Workers' compensation gross premiums written decreased during the year ended December 31, 2025 as compared to 2024 primarily due to the non-renewal of five agency-owned programs in 2025, which accounted for $4.6 million of the decrease. A majority of policies expiring in these programs during 2025 were renewed as traditional business in our Workers' Compensation Insurance segment or in other alternative market programs. Policies that renewed as traditional business in our Workers' Compensation Insurance segment that were previously written as alternative market policies totaled $3.9 million for 2025. As of December 31, 2025, in-force premium related to policies in the non-renewed programs totaled $5.6 million and we expect to renew the majority of these policies as traditional business or in other alternative market programs in 2026.

Ceded Premiums Ratio

The ceded premiums ratio was as follows:

Year Ended December 31

2025

2024

Change

Ceded premiums ratio

14.8

%

14.4

%

0.4

 pts

For the workers' compensation business, each SPC has in place its own external reinsurance coverage. The medical professional liability business is assumed net of reinsurance from our Specialty P&C segment; therefore, there are no ceded premiums related to the medical professional liability business reflected in the table above. Workers' compensation premiums ceded under our SPC reinsurance treaty are based on premiums written during the program year that renews during the treaty period. The above table reflects ceded premiums as a percentage of gross premiums written. The ceded premiums ratio reflects the weighted average reinsurance rates of all SPC programs.

Net Premiums Earned

Net premiums earned consist of gross premiums earned less the portion of earned premiums that the SPCs cede to external reinsurers. Because premiums are generally earned pro rata over the entire policy period, fluctuations in premiums earned tend to lag those of premiums written. Policies ceded to the SPCs are twelve month term policies and premiums are earned on a pro rata basis over the policy period. Net premiums earned also include premium adjustments related to the audit of workers' compensation insureds' payrolls. Payroll audits are conducted subsequent to the end of the policy period and any related adjustments are recorded as fully earned in the current period.

Gross, ceded and net premiums earned were as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Gross premiums earned

$

53,116 

$

60,959 

$

(7,843)

(12.9

%)

Less: Ceded premiums earned

7,429 

8,261 

(832)

(10.1

%)

Net premiums earned

$

45,687 

$

52,698 

$

(7,011)

(13.3

%)

The decrease in net premiums earned during the year ended December 31, 2025 as compared to 2024 reflected the non-renewal of three SPCs during 2024 and the non-renewal of five SPCs during 2025, as previously discussed.

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Losses and Loss Adjustment Expenses

The following table summarizes the calendar year net loss ratios by separating losses between the current accident year and all prior accident years. The current accident year net loss ratio reflects the aggregate loss ratio for all programs. Loss reserves and associated reinsurance are estimated for each program on a quarterly basis. Each SPC has in place its own reinsurance agreement, and the attachment point of aggregate reinsurance coverage varies by program. Due to the size of some of the programs, quarterly loss results, including changes in estimated aggregate reinsurance, can create volatility in the current accident year net loss ratio from period to period.

Calendar year and current accident year net loss ratios for the years ended December 31, 2025 and 2024 were as follows:

Year Ended December 31

2025

2024

Change

Calendar year net loss ratio

48.7

%

61.6

%

(12.9

 pts)

Less impact of prior accident years on the net loss ratio

(17.1

%)

(5.2

%)

(11.9

 pts)

Current accident year net loss ratio

65.8

%

66.8

%

(1.0

 pts)

The current accident year net loss ratio decreased in 2025 as compared to 2024, primarily reflecting a reduction in average claim severity and reported claim frequency, partially offset by changes in estimated program year aggregate reinsurance recoveries, which decreased the loss ratio by 0.2 percentage points in 2025 as compared to 1.4 percentage points in 2024.

We recognized net favorable prior year reserve development of $7.8 million and $2.8 million for the years ended December 31, 2025 and 2024, respectively. The development in 2025 includes net favorable development in the workers' compensation business of $7.1 million and the medical professional liability business of $0.7 million. The net favorable development in the workers' compensation business in 2025 reflected favorable trends in claim closing patterns, primarily in accident years 2021 through 2024. The net favorable development in the medical professional liability business in 2025 primarily related to the 2023 and 2024 accident years. The development in 2024 includes net favorable development in the workers' compensation business of $3.1 million, partially offset by net unfavorable development of $0.3 million in the MPL business. The net favorable development in the workers' compensation business in 2024 reflected overall favorable trends in claim closing patterns, primarily in accident years 2018 through 2023. The net unfavorable development in the medical professional liability business in 2024 primarily reflected higher than expected claim frequency in the program that assumed both workers' compensation and medical professional liability insurance, which was non-renewed effective January 1, 2024. We do not participate in the underwriting results of this program.

Underwriting, Policy Acquisition and Operating Expenses

Underwriting Expense Ratio (the Expense Ratio)

See further information regarding our Segregated Portfolio Cell Reinsurance segment's underwriting, policy acquisition and operating expenses in Note 15 of the Notes to Consolidated Financial expenses. The underwriting expense ratio included the impact of the following:

Year Ended December 31

2025

2024

Change

Underwriting expense ratio, as reported

35.3

%

34.3

%

1.0

 pts

Less: impact of audit premium on expense ratio

(3.3

%)

(2.6

%)

(0.7

 pts)

Underwriting expense ratio, excluding the effect of audit premium

38.6

%

36.9

%

1.7

 pts

Excluding the effect of audit premium, the underwriting expense ratio increased for the year ended December 31, 2025 as compared to 2024 primarily reflecting a decrease in net premiums earned, as previously discussed.

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Segment Results - Corporate

Our Corporate segment includes our investment operations excluding those reported in our Segregated Portfolio Cell Reinsurance segment as discussed in Note 15 of the Notes to Consolidated Financial Statements. In addition, this segment includes corporate expenses, interest expense, U.S. and U.K. income taxes and foreign currency exchange rate gains and losses. As previously discussed under the heading "ProAssurance Overview," we changed the composition of our operating and reportable segments during the first quarter of 2025. As a result, we now report the financial results of our subsidiary IAO, Inc. d/b/a ProAssurance Agency in the Specialty P&C segment which were previously reported in the Corporate segment. All prior period segment information has been recast to conform to the current period presentation. The change in presentation had no impact on previously reported consolidated financial results. See further information regarding this presentation change in Note 15 of the Notes to Consolidated Financial Statements.

Segment results for the years ended December 31, 2025 and 2024 exclude transaction-related costs including the associated income tax benefit and, for the year ended December 31, 2024, the change in fair value of contingent consideration as we do not consider these items in assessing the financial performance of the segment. Transaction-related costs in 2025 are attributable to the proposed merger transaction with The Doctors Company. Transaction-related costs in 2024 are associated with actuarial consulting fees paid in relation to the final determination of contingent consideration associated with the NORCAL acquisition. For additional information on the proposed merger transaction with The Doctors Company, see Note 1 of the Notes to Consolidated Financial Statements. Segment results for our Corporate segment were net earnings of $72.0 million and $93.4 million for the years ended December 31, 2025 and 2024, respectively, and included the following:

Year Ended December 31

($ in thousands)

2025

2024

Change

Net investment income

$

152,634 

$

140,930 

$

11,704 

8.3

%

Equity in earnings (loss) of unconsolidated subsidiaries

$

16,276 

$

22,203 

$

(5,927)

(26.7

%)

Net investment gains (losses)

$

(7,745)

$

(7,206)

$

(539)

(7.5

%)

Other income (expense)

$

(10,813)

$

6,820 

$

(17,633)

(258.5

%)

Operating expense

$

35,292 

$

36,619 

$

(1,327)

(3.6

%)

Interest expense

$

20,838 

$

22,342 

$

(1,504)

(6.7

%)

Income tax expense (benefit)

$

22,229 

$

10,401 

$

11,828 

113.7

%

Net Investment Income

Net investment income is primarily derived from the income earned by our fixed maturity securities and also includes dividend income from equity securities, income from our short-term and cash equivalent investments, earnings from other investments and changes in the cash surrender value of BOLI contracts, net of investment fees and expenses.

Net investment income (loss) by investment category was as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Fixed maturities

$

143,763 

$

131,333 

$

12,430 

9.5

%

Equities

4,446 

4,758 

(312)

(6.6

%)

Short-term investments, including Other

9,923 

10,723 

(800)

(7.5

%)

BOLI

2,607 

2,316 

291 

12.6

%

Investment fees and expenses

(8,105)

(8,200)

95 

(1.2

%)

Net investment income

$

152,634 

$

140,930 

$

11,704 

8.3

%

Fixed Maturities

Income from our fixed maturities increased in 2025 as compared to 2024 driven by higher average book yields as we take advantage of the current interest rate environment as our portfolio matures. Average investment balances were relatively unchanged for 2025 as compared to 2024.

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Average yields for our fixed maturity portfolio were as follows:

Year Ended December 31

2025

2024

Average income yield

3.8%

3.5%

Average tax equivalent income yield

3.8%

3.5%

Short-term Investments and Other Investments

Short-term investments, which have a maturity at purchase of one year or less are carried at fair value, which approximates their cost basis, and are primarily composed of investments in U.S. treasury obligations, commercial paper, money market funds and a certificate of deposit. Income from our short-term and other investments decreased during 2025 as compared to 2024 primarily due to lower average investment balances and lower yields given the decrease in interest rates.

Equity in Earnings (Loss) of Unconsolidated Subsidiaries

Equity in earnings (loss) of unconsolidated subsidiaries was comprised as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

All other investments, primarily investment fund LPs/LLCs

$

15,443 

$

21,532 

$

(6,089)

(28.3

%)

Tax credit partnerships

833 

671 

162 

24.1

%

Equity in earnings (loss) of unconsolidated subsidiaries

$

16,276 

$

22,203 

$

(5,927)

(26.7

%)

We hold interests in certain LPs/LLCs that generate earnings from trading portfolios, secured debt, debt securities, multi-strategy funds and private equity investments. The performance of the LPs/LLCs is affected by the volatility of equity and credit markets. For our investments in LPs/LLCs, we record our allocable portion of the partnership operating income or loss as the results of the LPs/LLCs become available, typically following the end of a reporting period. Our investment results from our portfolio of investments in LPs/LLCs decreased for 2025 as compared to 2024 primarily due to the performance of two LPs/LLCs which reflected lower market valuations during the second and third quarters of 2025.

Our tax credit partnership investments are designed to generate returns in the form of tax credits and tax-deductible project operating losses and are comprised of qualified affordable housing project tax credit partnerships and a historic tax credit partnership. We account for our tax credit partnership investments under the equity method and record our allocable portion of the operating losses of the underlying properties based on estimates provided by the partnerships. These tax credit partnership investments are reaching the end of their lifecycle, therefore partnership operating losses and tax benefits associated with these investments have been and are expected to continue to be nominal in amount. However, we may receive distributions from time to time due to the sale of properties, as was the case in 2025 and 2024. See additional information on our tax credit partnership investments in Note 3 of the Notes to Consolidated Financial Statements.

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Table of Contents

Net Investment Gains (Losses)

The following table provides detailed information regarding our net investment gains (losses).

Year Ended December 31

(In thousands)

2025

2024

Total impairment losses

Corporate debt

$

(1,514)

$

(2,710)

Asset-backed securities

248 

(588)

Other investments

(590)

— 

Portion of impairment losses recognized in other comprehensive income before taxes:

Corporate debt

355 

102 

Asset-backed securities

3 

— 

Net impairment losses recognized in earnings

(1,498)

(3,196)

Gross realized gains, available-for-sale fixed maturities

1,985 

1,522 

Gross realized (losses), available-for-sale fixed maturities

(5,376)

(4,035)

Net realized gains (losses), trading fixed securities

51 

34 

Net realized gains (losses), equity investments

(2,034)

(704)

Net realized gains (losses), other investments

(55)

(826)

Change in unrealized holding gains (losses), trading fixed securities

(59)

445 

Change in unrealized holding gains (losses), equity investments

(366)

(1,495)

Change in unrealized holding gains (losses), convertible securities, carried at fair value as a part of other investments

(394)

866 

Other

1 

183 

Other net investment gains (losses)

(6,247)

(4,010)

Net investment gains (losses)

$

(7,745)

$

(7,206)

For the year ended December 31, 2025, we recognized $1.5 million of credit-related impairment losses in earnings and $0.4 million of non-credit impairment losses. The credit-related impairment losses in earnings in 2025 primarily related to corporate bonds in the consumer, communication and real estate sectors and a security in the technology sector. For the year ended December 31, 2024, we recognized credit-related impairment losses in earnings of $3.2 million primarily related to corporate bonds in the real estate sector and a nominal amount of non-credit impairment losses in OCI related to a bond in the consumer sector.

We recognized $6.2 million of other net investment losses for the year ended December 31, 2025 driven by net realized losses from the sale of certain available-for-sale fixed maturities and equity investments. We recognized $4.0 million of other net investment losses for the year ended December 31, 2024 driven by net realized losses from the sale of certain available-for-sale fixed maturities and, to a lesser extent, unrealized holding losses resulting from changes in the fair value of our equity investments.

Operating Expenses

Corporate segment operating expenses were comprised as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Operating expenses

$

40,767 

$

42,284 

$

(1,517)

(3.6

%)

Management fee offset

(5,475)

(5,665)

190 

(3.4

%)

Total

$

35,292 

$

36,619 

$

(1,327)

(3.6

%)

Operating expenses decreased during the year ended December 31, 2025 as compared to 2024 driven by a decrease in professional fees and various other operating expenses, none of which were individually significant, partially offset by an increase in compensation-related costs. The decrease in professional fees during 2025 primarily reflected a decrease in external audit fees and temporary personnel fees. The increase in compensation-related costs during 2025 primarily reflected an increase in share-based compensation expenses attributable to the effect of an increase in the value of projected long-term incentive awards during 2025 based upon the improvement of one of the associated performance metrics and the timing of grants of prior year share-based awards, partially offset by lower incentive based compensation.

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Table of Contents

Core domestic insurance subsidiaries within our Specialty P&C segment and our Workers' Compensation Insurance segment are charged a management fee by the Corporate segment for services provided to these subsidiaries. The management fee is based on the extent to which services are provided to the subsidiary and the amount of premium written by the subsidiary. Under the arrangement, the expenses associated with such services are reported as expenses of the Corporate segment, and the management fees charged are reported as an offset to Corporate operating expenses. While the terms of the arrangement were consistent between 2025 and 2024, fluctuations in the amount of premium written by each subsidiary can result in corresponding variations in the management fee charged to each subsidiary during a particular period.

Interest Expense

Interest expense for the years ended December 31, 2025 and 2024 was comprised as follows:

Year Ended December 31

($ in thousands)

2025

2024

Change

Contribution Certificates (including accretion)(1)

$

7,053 

$

7,517 

$

(464)

(6.2

%)

Revolving Credit Agreement (including fees and amortization)

8,586 

10,244 

(1,658)

(16.2

%)

Term Loan (including fees and amortization)

7,744 

9,508 

(1,764)

(18.6

%)

(Gain)/loss on cash flow hedges reclassified from AOCI

(2,545)

(4,927)

2,382 

(48.3

%)

Interest expense

$

20,838 

$

22,342 

$

(1,504)

(6.7

%)

(1) Includes accretion of approximately $1.3 million and $1.8 million for the years ended December 31, 2025 and 2024, respectively, which is recorded as an increase to interest expense as a result of the difference between the recorded acquisition date fair value and the principal balance of the Contribution Certificates associated with our acquisition of NORCAL.

Interest expense decreased during 2025 as compared to 2024 driven by lower interest expense on our Revolving Credit Agreement and Term Loan due to a decrease in the margin component of the rates based on an improvement in our debt to capitalization ratio as of June 30, 2024. The resulting decrease in interest expense became effective during the third quarter of 2024 and continued into 2025. Interest expense in both periods also includes the impact of our Interest Rate Swaps, which are designated as highly effective cash flow hedges to manage our exposure to interest rate risk due to variability in the base rates on the borrowings under both the Revolving Credit Agreement and Term Loan. See further discussion on our outstanding debt in Note 9 of the Notes to Consolidated Financial Statements and additional information regarding our Interest Rate Swaps is provided in Note 10 of the Notes to Consolidated Financial Statements.

Taxes

Tax expense allocated to our Corporate segment includes U.S. and U.K. tax expense including U.S. tax expense incurred from our corporate membership in Lloyd's of London, if any. The SPCs at Inova Re, one of our Cayman Islands reinsurance subsidiaries, have each made a 953(d) election under the U.S. Internal Revenue Code and are subject to U.S. federal income tax; therefore, tax expense allocated to our Corporate segment also includes tax expense incurred from any SPC at Inova Re in which we have a participation interest of 80% or greater as those SPCs are required to be included in our consolidated tax return. Consolidated tax expense (benefit) reflects the tax expense (benefit) of both segments and the tax impact of items excluded from segment reporting, as shown in the table below. Our consolidated effective tax rates for the years ended December 31, 2025 and 2024 were as follows:

Year Ended December 31

(In thousands)

2025

2024

Corporate segment income tax expense (benefit)

$

22,229 

$

10,401 

Income tax expense (benefit) - transaction-related costs*

(1,075)

(67)

Consolidated income tax expense (benefit)

$

21,154 

$

10,334 

Effective tax rate

29.4%

16.4%

*For 2025, represents the income tax benefit associated with the deductible professional fees incurred related to the proposed merger transaction with The Doctors Company (see Note 1 of the Notes to Consolidated Financial Statements). For 2024, transaction-related costs represent the income tax benefit associated with actuarial consulting fees paid in relation to the final determination of contingent consideration associated with the NORCAL acquisition. These costs are not included in a segment as we do not consider these costs in assessing the financial performance of any of our operating or reportable segments. See Note 15 of the Notes to Consolidated Financial Statements for a reconciliation of our segment results to our consolidated results.

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We recognized income tax expense of $21.2 million and $10.3 million in 2025 and 2024, respectively. Our effective tax rate for the year ended December 31, 2025 of 29.4% was different from the statutory federal income tax rate of 21% primarily due to the amount of executive compensation that is in excess of the statutory limitation in 2025, which increased the effective rate 4.5%. Further, our effective tax rate for the year ended December 31, 2025 was impacted by the non-deductible portion of transaction-related costs associated with the proposed merger transaction with The Doctors Company, which accounted for a 2.1% increase in the effective tax rate. Our effective tax rate for the year ended December 31, 2024 of 16.4% differed from the statutory federal income tax rate of 21% primarily due to the benefit of tax positions whose statute of limitations had expired, which accounted for a 4.8% decrease in the effective tax rate. There were no other individually significant items impacting our effective tax rates for 2025 and 2024. See Note 5 of the Notes to Consolidated Financial Statements for a reconciliation of our "expected" consolidated income tax expense to our actual consolidated income tax expense and the associated impact on our consolidated effective tax rate for the years ended December 31, 2025 and 2024.