KINGSTONE COMPANIES, INC.

Previous wording

We offer property and casualty insurance products through our wholly-owned subsidiary, Kingstone Insurance Company (“KICO”). KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO is actively writing personal lines and commercial auto insurance in New York, and in 2025 was the 11th largest writer of homeowners insurance in New York. KICO is also licensed in the states of New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine. Our wholly-owned subsidiary, Kingstone America Insurance Company ("KAIC"), was licensed to write property and casualty insurance by the state of Connecticut on May 1, 2026. We expect KAIC to begin writing policies in the latter part of 2026. For the three months ended March 31, 2026 and 2025, respectively, 98.7% and 98.3% of KICO’s direct premiums written came from the New York policies.

Current wording

We offer property and casualty insurance products through our wholly-owned subsidiary, Kingstone Insurance Company (“KICO”). KICO is a New York domiciled carrier writing business through retail and wholesale agents and brokers. KICO is actively writing personal lines and commercial auto physical damage insurance in New York, and in 2025 was the 11th largest writer of homeowners insurance in New York. Beginning in June 2026, KICO began writing homeowners coverage in California on a non-admitted basis. KICO is also licensed in the states of New Jersey, Rhode Island, Massachusetts, Connecticut, Pennsylvania, New Hampshire, and Maine. Our wholly-owned subsidiary, Kingstone America Insurance Company ("KAIC"), was licensed to write property and casualty insurance by the state of Connecticut on May 1, 2026. We expect KAIC to begin writing policies in Connecticut in the second half of 2026. For the three months ended June 30, 2026 and 2025, respectively, 98.5% and 97.9% of KICO’s direct premiums written came from the New York policies. For the six months ended June 30, 2026 and 2025, respectively, 98.6% and 98.1% of KICO’s direct premiums written came from the New York policies.

Previous wording

In addition, our wholly-owned subsidiary, Cosi Agency, Inc. (“Cosi”), a multi-state licensed general agency, receives commission revenue from KICO for the policies it places with others and pays commissions to these agencies. In April 2026, Cosi became licensed in California, and we expect to expand our underwriting operations to California during 2026 through the policies Cosi writes. Cosi retains the profit between the commission revenue received and the commission expense paid (“Net Cosi Revenue”). Commission expense is reduced by Net Cosi Revenue. Cosi-related operating expenses are minimal and are included in other operating expenses.

Current wording

In addition, our wholly-owned subsidiary, Cosi Agency, Inc. (“Cosi”), a multi-state licensed general agency, receives commission revenue from KICO for the policies it places with others and pays commissions to these agencies. In April 2026, Cosi became licensed in California, and we expect to expand our underwriting operations in California during the remainder of 2026 through the policies Cosi writes. Cosi retains the profit between the commission revenue received and the commission expense paid (“Net Cosi Revenue”). Commission expense is reduced by Net Cosi Revenue. Cosi-related operating expenses are primarily employment costs and are included in other operating expenses.

Previous wording

Other operating expenses include our corporate expenses as a holding company. These corporate expenses include legal and auditing fees, executive employment costs and equity compensation, directors' fees, and other costs directly associated with being a public company.

Current wording

Other operating expenses include our corporate expenses as a holding company and Cosi expenses. These corporate expenses include legal and auditing fees, executive employment costs and equity compensation, directors' fees, and other costs directly associated with being a public company.

Previous wording

In May 2019, due to the poor performance of these lines, we placed a moratorium on new commercial lines and new commercial umbrella submissions while we further reviewed this business. In July 2019, due to the continuing poor performance of these lines, we made the decision to no longer underwrite commercial lines or commercial umbrella risks. In-force policies as of July 31, 2019 for these lines were non-renewed at the end of their annual terms. As of March 31, 2026 and December 31, 2025, there were no commercial liability policies in-force. As of March 31, 2026, these expired policies represented approximately 9.9% of loss and LAE reserves net of reinsurance recoverables. See discussion below under “Additional Financial Information”.

Current wording

In May 2019, due to the poor performance of these lines, we placed a moratorium on new commercial lines and new commercial umbrella submissions while we further reviewed this business. In July 2019, due to the continuing poor performance of these lines, we made the decision to no longer underwrite commercial lines or commercial umbrella risks. In-force policies as of July 31, 2019 for these lines were non-renewed at the end of their annual terms. As of June 30, 2026 and December 31, 2025, there were no commercial liability policies in-force. As of June 30, 2026, these expired policies represented approximately 9.3% of loss and LAE reserves net of reinsurance recoverables. See discussion below under “Additional Financial Information”.

Previous wording

Underwriting (loss) income: Underwriting (loss) income is net pre-tax (loss) income attributable to our insurance underwriting business before investment activity. It excludes net investment income, net realized gains from investments, gain on sale of real estate, depreciation and amortization, and interest expense (net premiums earned less expenses included in combined ratio). Underwriting (loss) income is a measure of an insurance company’s overall operating profitability before items such as investment income, depreciation and amortization, interest expense and income taxes.

Current wording

Underwriting income: Underwriting income is net pre-tax income attributable to our insurance underwriting business before investment activity. It excludes net investment income, net realized gains from investments, gain on sale of real estate, depreciation and amortization, and interest expense (net premiums earned less expenses included in combined ratio). Underwriting income is a measure of an insurance company’s overall operating profitability before items such as investment income, depreciation and amortization, interest expense and income taxes.

Previous wording

Net (loss) income from insurance underwriting business on a standalone basis: Net (loss) income from insurance underwriting business on a standalone basis is a non-GAAP measure, which is computed as GAAP net (loss) income without the effect of holding company operations on GAAP net (loss) income. Management believes that this measure is useful to investors, and it is used by management to reveal the trends in our insurance underwriting business that may be obscured by holding company operations. Holding company operations cause our GAAP net (loss) income to vary significantly between periods as a result of their magnitude and can have a significant impact on GAAP net (loss) income. Management believes that this measure is useful for investors to evaluate this component separately when reviewing our underwriting performance. The most directly comparable GAAP measure is GAAP net (loss) income. Net (loss) income from insurance underwriting business on a standalone basis should not be considered a substitute for GAAP net (loss) income and does not reflect our GAAP net (loss) income.

Current wording

Net income from insurance underwriting business on a standalone basis: Net income from insurance underwriting business on a standalone basis is a non-GAAP measure, which is computed as GAAP net income without the effect of holding company operations on GAAP net income. Management believes that this measure is useful to investors, and it is used by management to reveal the trends in our insurance underwriting business that may be obscured by holding company operations. Holding company operations cause our GAAP net income to vary significantly between periods as a result of their magnitude and can have a significant impact on GAAP net income. Management believes that this measure is useful for investors to evaluate this component separately when reviewing our underwriting performance. The most directly comparable GAAP measure is GAAP net income. Net income from insurance underwriting business on a standalone basis should not be considered a substitute for GAAP net income and does not reflect our GAAP net income.

Previous wording

Our effective tax rate is based on GAAP income at statutory tax rates, adjusted for non-taxable and non-deductible items, and tax credits. Changes in estimates used in preparing the condensed consolidated statements of operations and comprehensive (loss) income could result in significant changes to our deferred tax asset or liability.

Current wording

Our effective tax rate is based on GAAP income at statutory tax rates, adjusted for non-taxable and non-deductible items, and tax credits. Changes in estimates used in preparing the condensed consolidated statements of income and comprehensive income could result in significant changes to our deferred tax asset or liability.

Previous wording

Deferred tax assets or liabilities are recognized for estimated future tax consequences which result in differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. These assets and liabilities are carried at the enacted tax rates expected to apply when the asset or liability is expected to be recovered or settled. Changes in estimates and assumptions in the condensed consolidated statements of operations and comprehensive (loss) income, or changes in the enacted tax rate, could result in significant variances between our carried deferred tax and tax recognized on the recovery or settlement of the asset or liability.

Current wording

Deferred tax assets or liabilities are recognized for estimated future tax consequences which result in differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. These assets and liabilities are carried at the enacted tax rates expected to apply when the asset or liability is expected to be recovered or settled. Changes in estimates and assumptions in the condensed consolidated statements of income and comprehensive income, or changes in the enacted tax rate, could result in significant variances between our carried deferred tax and tax recognized on the recovery or settlement of the asset or liability.

Previous wording

Bonds are classified as held-to-maturity (“HTM”) or available-for-sale (“AFS”), and stocks are generally classified as AFS. Investments classified as HTM are carried at amortized cost, which requires very little judgement. Investments in stocks classified as AFS are generally carried at fair value with an unrealized gain/loss recorded in net income. Investments in bonds classified as AFS are generally carried at fair value with an unrealized gain/loss recorded in accumulated other comprehensive income. Actual results could vary significantly from the fair values recognized in the condensed consolidated statements of operations and comprehensive (loss) income.

Current wording

Bonds are classified as held-to-maturity (“HTM”) or available-for-sale (“AFS”), and stocks are generally classified as AFS. Investments classified as HTM are carried at amortized cost, which requires very little judgement. Investments in stocks classified as AFS are generally carried at fair value with an unrealized gain/loss recorded in net income. Investments in bonds classified as AFS are generally carried at fair value with an unrealized gain/loss recorded in accumulated other comprehensive income. Actual results could vary significantly from the fair values recognized in the condensed consolidated statements of income and comprehensive income.

Previous wording

See the tables below for our policies in force as of March 31, 2026 and 2025 and direct written premiums for the three months ended March 31, 2026 and 2025. For the three months ended March 31, 2026, our direct written premiums increased by 19.6% compared to the three months ended March 31, 2025, while policies in force increased by 7.2% as of March 31, 2026 as compared to March 31, 2025.

Current wording

See the tables below for our policies in force as of June 30, 2026 and 2025 and direct written premiums for the six months ended June 30, 2026 and 2025. For the six months ended June 30, 2026, our direct written premiums increased by 19.2% compared to the six months ended June 30, 2025, while policies in force increased by 9.9% as of June 30, 2026 as compared to June 30, 2025.

Previous wording

Relative to geographic expansion, we have conducted a thorough study of selected geographies and states with the help of industry-leading third-party advisors and overlaid important lessons learned from our past challenges to ensure that we do not face such challenges again. We plan to pursue prudent growth at a measured pace in our chosen new states, testing and validating rate adequacy commensurate with risk factors in the new geographies. Our current plan is to go live in California and Connecticut in 2026, and two additional states in 2027.

Current wording

Relative to geographic expansion, we have conducted a thorough study of selected geographies and states with the help of industry-leading third-party advisors and overlaid important lessons learned from our past challenges to ensure that we do not face such challenges again. We plan to pursue prudent growth at a measured pace in our chosen new states, testing and validating rate adequacy commensurate with risk factors in the new geographies. Under our current plan we went live in California in June 2026, and expect to go live in Connecticut in the second half of 2026.

Previous wording

Effective January 1, 2025, we entered into a 16% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2025 through January 1, 2026 (“2025/2026 Treaty”). Upon expiration of the 2025/2026 Treaty on January 1, 2026, we entered into a new 5% quota share reinsurance treaty for our personal lines business written in all states except California (for which the Company entered into a new 30% quota share reinsurance treaty) covering the period from January 1, 2026 through January 1,

Current wording

Effective January 1, 2025, we entered into a 16% quota share reinsurance treaty for our personal lines business, covering the period from January 1, 2025 through January 1, 2026 (“2025/2026 Treaty”). Upon expiration of the 2025/2026 Treaty on January 1, 2026, we entered into a new 5% quota share reinsurance treaty for our personal lines business written in all states except California (for which we entered into a new 30% quota share reinsurance treaty) covering the period from January 1, 2026 through January 1, 2027 (“2026/2027 Treaty”). Our personal lines business was subject to the 2026/2027 Treaty in the Six Months of 2026, and the 2025/2026

Previous wording

2027 (“2026/2027 Treaty”). Our personal lines business was subject to the 2026/2027 Treaty in the Three Months of 2026, and the 2025/2026 Treaty in the Three Months of 2025. In the Three Months of 2026, our premiums ceded under quota share treaties decreased by $6,134,000 in comparison to premiums ceded under quota share treaties in the Three Months of 2025 (see table above). The decrease in the Three Months of 2026 was attributable to the decrease in the quota share ceding percentage rate, offset by an increase in direct written premiums subject to the 2026/2027 Treaty compared to direct premiums written subject to the 2025/2026 Treaty. The inception of the 2026/2027 Treaty was recorded as a cutoff, resulting in the return of $13,277,000 from reinsurers to us of previously ceded premiums written that were unearned as of January 1, 2026. The inception of the 2025/2026 Treaty was recorded as a cutoff, resulting in the return of $11,471,000 from reinsurers to us of previously ceded premiums written that were unearned as of January 1, 2025.

Current wording

Treaty in the Six Months of 2025. In the Six Months of 2026, our premiums ceded under quota share treaties decreased by $10,743,000 in comparison to premiums ceded under quota share treaties in the Six Months of 2025 (see table above). The decrease in the Six Months of 2026 was attributable to the decrease in the quota share ceding percentage rate, offset by an increase in direct written premiums subject to the 2026/2027 Treaty compared to direct premiums written subject to the 2025/2026 Treaty. The inception of the 2026/2027 Treaty was recorded as a cutoff, resulting in the return of $13,277,000 from reinsurers to us of previously ceded premiums written that were unearned as of January 1, 2026. The inception of the 2025/2026 Treaty was recorded as a cutoff, resulting in the return of $11,471,000 from reinsurers to us of previously ceded premiums written that were unearned as of January 1, 2025.

Previous wording

Net investment income was $3,338,000 in the Three Months of 2026 compared to $2,049,000 in the Three Months of 2025, an increase of $1,289,000, or 62.9%, primarily due to an increase in cash generated from operations invested in fixed-income securities and an increase in average yield on non-cash invested assets. The average yield on non-cash invested assets was 4.3% as of March 31, 2026 compared to 3.7% as of March 31, 2025.

Current wording

Net investment income was $6,766,000 in the Six Months of 2026 compared to $4,349,000 in the Six Months of 2025, an increase of $2,417,000, or 55.6%, primarily due to an increase in cash generated from operations invested in fixed-income securities and an increase in average yield on non-cash invested assets. The average yield on non-cash invested assets was 4.4% as of June 30, 2026 compared to 4.0% as of June 30, 2025.

Previous wording

Cash and invested assets were $324,793,000 as of March 31, 2026 compared to $321,867,000 as of March 31, 2025, an increase of $2,926,000, primarily driven by cash flows from operations.

Current wording

Cash and invested assets were $350,981,000 as of June 30, 2026 compared to $273,550,000 as of June 30, 2025, an increase of $77,431,000, primarily driven by cash flows from operations.

Previous wording

Net losses on investments were $1,015,000 in the Three Months of 2026 compared to net losses on investments of $138,000 in the Three Months of 2025. Unrealized losses on our equity securities and other investments in the Three Months of 2026 were $1,012,000, compared to unrealized losses on our equity securities and other investments of $136,000 in the Three Months of 2025. Net realized losses on sales of investments were $3,000 in the Three Months of 2026 compared to net realized losses on sales of investments of $2,000 in the Three Months of 2025.

Current wording

Net losses on investments were $775,000 in the Six Months of 2026 compared to net gains on investments of $408,000 in the Six Months of 2025. Unrealized losses on our equity securities and other investments in the Six Months of 2026 were $570,000, compared to unrealized gains on our equity securities and other investments of $414,000 in the Six Months of 2025. Net realized losses on sales of investments were $205,000 in the Six Months of 2026 compared to net realized losses on sales of investments of $6,000 in the Six Months of 2025.

Previous wording

Gain on sale of real estate was$0 in the Three Months of 2026 compared to $1,966,000 in the Three Months of 2025. On March 19, 2025 one of our subsidiaries closed on the sale of our headquarters building in Kingston, New York, along with an adjacent mixed-use property (collectively, the “Property”). The purchase price for the Property was $3,600,000. We are now renting a smaller facility in Kingston, New York.

Current wording

Gain on sale of real estate was $0 in the Six Months of 2026 compared to $1,966,000 in the Six Months of 2025. On March 19, 2025 one of our subsidiaries closed on the sale of our headquarters building in Kingston, New York, along with an adjacent mixed-use property (collectively, the “Property”). The purchase price for the Property was $3,600,000. We are now renting a smaller facility in Kingston, New York.

Previous wording

Other underwriting expenses were $8,361,000 in the Three Months of 2026 compared to $7,405,000 in the Three Months of 2025. The increase of $956,000, or 12.9%, was primarily due to increases in salaries and employment costs as described below, an increase in premium taxes due to the growth in direct earned premiums, and an increase in DFS regulatory fees.

Current wording

Other underwriting expenses were $17,016,000 in the Six Months of 2026 compared to $15,133,000 in the Six Months of 2025. The increase of $1,883,000, or 12.4%, was primarily due to increases in salaries and employment costs as described below, an increase in premium taxes due to the growth in direct earned premiums, and an increase in DFS regulatory fees.

Previous wording

2025 pursuant to our employee bonus plan, and to our CEO and CFO pursuant to their respective employment agreements. The increase in professional fees is due to legal fees incurred related to board level projects and additional accounting expenses incurred related to our new requirement for the audit of our internal control over financial reporting. The reduction in loss on extinguishment of debt loss is due to writing off the balance of unamortized debt issue costs upon the prepayment of the 2024 Notes in the Three Months of 2025 as disclosed in Note 7 to the condensed consolidated financial statements.

Current wording

The increase in the Six Months of 2026 of $1,434,000, or 65.5%, as compared to the Six Months of 2025 was primarily due to an increase in equity compensation and professional fees, partially offset by a decrease in loss on extinguishment of debt. The increase in equity compensation is due to additional restricted stock awards granted to our senior leadership team as of December 31, 2025 pursuant to our employee bonus plan, and to our CEO and CFO pursuant to their respective employment agreements. The increase in professional fees is due to legal fees incurred related to board level projects and additional accounting expenses incurred related to our new requirement for the audit of our internal control over financial reporting. The reduction in loss on extinguishment of debt loss is due to writing off the balance of unamortized debt issue costs upon the prepayment of the 2024 Notes in the Six Months of 2025 as disclosed in Note 7 to the condensed consolidated financial statements.

Previous wording

Interest expense in the Three Months of 2026 was $70,000 compared to $227,000 in the Three Months of 2025, a decrease of $157,000 or 69.2%. In the Three Months of 2025, as disclosed in Note 7 to the condensed consolidated financial statements, we incurred interest expense in connection with the 2024 Notes which were paid off in the first Three Months of 2025. In addition, we also incurred interest expense on the 2022 equipment financing.

Current wording

Interest expense in the Six Months of 2026 was $129,000 compared to $305,000 in the Six Months of 2025, a decrease of $176,000 or 57.7%. In the Six Months of 2025, as disclosed in Note 7 to the condensed consolidated financial statements, we incurred interest expense in connection with the 2024 Notes which were paid off in the first quarter of 2025. In addition, we also incurred interest expense on the 2022 equipment financing.

Previous wording

Income tax (benefit) in the Three Months of 2026 was $(1,593,000), which resulted in an effective tax rate of 21.5%. Income tax expense in the Three Months of 2025 was $836,000, which resulted in an effective tax rate of 17.7%. The difference in effective tax rate is due to the effect of permanent differences in the Three Months of 2026 compared to the Three Months of 2025. In the Three Months of 2026, the vesting of restricted stock awards resulted in an income tax benefit, due to the increase in the stock price on the vesting date as compared to the grant date, which had the effect of reducing the effective tax rate. In the Three Months of 2025, the vesting of restricted stock awards resulted in an income tax benefit, due to the increase in the stock price on the vesting date as compared to the grant date, which had the effect of reducing the effective tax rate. In the Three Months of 2026, the increase in stock price was not as great as the increase in the Three Months of 2025 on the vesting of restricted stock awards, resulting in a lower tax benefit, which had the effect of increasing the effective tax rate when compared to the prior year.

Current wording

Income tax expense in the Six Months of 2026 was $2,449,000, which resulted in an effective tax rate of 20.2%. Income tax expense in the Six Months of 2025 was $3,750,000, which resulted in an effective tax rate of 19.9%. The difference in effective tax rate is due to the effect of permanent differences in the Six Months of 2026 compared to the Six Months of 2025. In the Six Months of 2026, the vesting of restricted stock awards and exercise of stock options resulted in an income tax benefit, due to the increase in the stock price on the vesting date and exercise date as compared to the grant date, which had the effect of reducing the effective tax rate. In the Six Months of 2025, the vesting of restricted stock awards and exercise of stock options resulted in an income tax benefit, due to the increase in the stock price on the vesting date and exercise date as compared to the grant date, which had the effect of reducing the effective tax rate. In the Six Months of 2026, the increase in stock price was not as great as the increase in the Six Months of 2025 on the vesting of restricted stock awards, resulting in a lower tax benefit, which had the effect of increasing the effective tax rate when compared to the prior year.

Previous wording

Net (loss) was $(5,808,000) in the Three Months of 2026 compared to net income of $3,883,000 in the Three Months of 2025. The decrease in net income of $9,691,000 was due to the items described above.

Current wording

Net income was $9,662,000 in the Six Months of 2026 compared to net income of $15,135,000 in the Six Months of 2025. The decrease in net income of $5,473,000 was due to the items described above.

Previous wording

Direct premiums written during the three months ended March 31, 2026 (“Three Months of 2026”) were $69,603,000 compared to $58,175,000 during the three months ended March 31, 2025 (“Three Months of 2025”). The increase of $11,428,000, or 19.6%, was primarily due to an increase in premiums from our personal lines business. Direct premiums written from our personal lines business for the Three Months of 2026 were $65,924,000, an increase of $11,611,000, or 21.4%, from $54,313,000 in the Three Months of 2025. The 21.4% increase in premiums from our personal lines business was primarily due to the organic growth from the Change in Market Dynamics in the New York market and to a lesser extent an increase in rates primarily from an increase in replacement costs.

Current wording

Direct premiums written during the three months ended June 30, 2026 (“Three Months of 2026”) were $72,494,000 compared to $61,062,000 during the three months ended June 30, 2025 (“Three Months of 2025”). The increase of $11,432,000, or 18.7%, was primarily due to an increase in premiums from our personal lines business. Direct premiums written from our personal lines business for Three Months of 2026 were $68,965,000, an increase of $11,209,000, or 19.4%, from $57,756,000 in Three Months of 2025. The 19.4% increase in premiums from our personal lines business was primarily due to organic growth, an increase in retention, and an increase in average premiums primarily from an increase in replacement costs.

Previous wording

Direct premiums written from our livery physical damage business for the Three Months of 2026 were $3,662,000, a decrease of $185,000, or 4.8%, from $3,847,000 in the Three Months of 2025. The decrease in direct premiums written for livery physical damage is due to a decrease in policies in force.

Current wording

Direct premiums written from our livery physical damage business for Three Months of 2026 were $3,518,000, an increase of $228,000, or 6.9%, from $3,290,000 in Three Months of 2025. The increase in livery physical damage direct premiums written was due to an increase in the values of the autos insured offset by a decrease in policies in force.

Previous wording

Net premiums written increased $16,584,000, or 27.2%, to $77,593,000 in the Three Months of 2026 from $61,009,000 in the Three Months of 2025. Net premiums written include direct premiums, less the amount of written premiums ceded under our reinsurance treaties (quota share, excess of loss, and catastrophe). The increase in the Three Months of 2026 is primarily due to changes to our personal lines quota share reinsurance treaty, the additional premiums due to the organic growth from the Change in Market Dynamics in the New York market and to a lesser extent an increase in rates primarily from an increase in replacement costs, See quota share reinsurance treaties discussion below.

Current wording

Net premiums written increased $15,578,000, or 29.8%, to $67,789,000 in Three Months of 2026 from $52,211,000 in Three Months of 2025. Net written premiums represent direct premiums written, less the amount of written premiums ceded under our reinsurance treaties (quota share, excess of loss, and catastrophe). The increase in Three Months of 2026 is primarily due to changes to our personal lines quota share reinsurance treaty resulting in an increase in retention, the additional premiums due to organic growth, and an increase in average premiums, primarily from an increase in replacement costs, See quota share reinsurance treaties discussion below.

Previous wording

In the Three Months of 2026, our ceded excess of loss reinsurance premiums increased $213,000 compared to the ceded excess of loss premiums for the Three Months of 2025. Effective January 1, 2025, we renewed an underlying excess of loss reinsurance treaty (the “Underlying XOL Treaty”) covering the period from January 1, 2025 through June 30, 2025. The Underlying XOL Treaty provided 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms were excluded from the Underlying XOL Treaty. Effective July 1, 2025, the Underlying XOL Treaty was renewed along with the Company's excess of loss reinsurance treaty covering the period from July 1, 2025 through June 30, 2026. Combined, the renewed treaties provide 50% reinsurance coverage for losses of $250,000 in excess of $750,000, and 100% reinsurance coverage for losses in excess of $1,000,000 up to $9,000,000 together with facultative coverage. Retention was increased to $825,000 from $715,000 under the 2025/2026 Treaty.

Current wording

In the Three Months of 2026, our ceded excess of loss reinsurance premiums increased $138,000 compared to the ceded excess of loss premiums for Three Months 2025. Effective January 1, 2025, we renewed an underlying excess of loss reinsurance treaty (the “Underlying XOL Treaty”) covering the period from January 1, 2025 through June 30, 2025. The Underlying XOL Treaty provided 50% reinsurance coverage for losses of $400,000 in excess of $600,000. Losses from named storms were excluded from the Underlying XOL Treaty. Effective July 1, 2025, the Underlying XOL Treaty was renewed along with our excess of loss reinsurance treaty covering the period from July 1, 2025 through June 30, 2026. Combined, the renewed treaties provide 50% reinsurance coverage for losses of $250,000 in excess of $750,000, and 100% reinsurance coverage for losses in excess of $1,000,000 up to $9,000,000 together with facultative coverage. Retention was increased to $825,000 from $715,000 under the 2025/2026 Treaty.

Previous wording

Most of the premiums written under our personal lines policies are also subject to our catastrophe reinsurance treaties. An increase in our personal lines business historically gave rise to more property exposure, which increased our exposure to catastrophe risk; therefore, our premiums ceded under catastrophe treaties would increase. An increase in our personal lines business historically resulted in an increase in premiums ceded under our catastrophe treaties if reinsurance rates were stable or were increasing. With regard to treaties entered into on July 1, 2025 ("2025/2026 Catastrophe Treaty") and 2024 ("2024/2025 Catastrophe Treaty"), we recorded our catastrophe premiums written for the entire treaty period covering July 1 through June 30, resulting in the entire annual premium written being recorded in the third quarter of 2025 and 2024, respectively. The 2025/2026 Catastrophe Treaty covers 80% of losses on the first layer of 5,000,000 in excess of $5,000,000 (catastrophe coverage of $4,000,000), and losses of $440,000,000 in excess of $10,000,000 (catastrophe coverage of $430,000,000), for a total catastrophe coverage of $434,000,000. The 2024/2025 Catastrophe Treaty covered 95% of losses on the first layer of $5,000,000 in excess of $5,000,000 (catastrophe coverage of $4,750,000), and losses of $280,000,000 in excess of $10,000,000 (catastrophe coverage of $270,000,000), for a total catastrophe coverage of $274,750,000. Catastrophe coverage under the 2025/2026 Catastrophe Treaty increased by $159,250,000 compared to the 2024/2025 Catastrophe Treaty. As a result of recording the entire annual catastrophe premiums at the inception of the treaties, catastrophe premiums in subsequent quarters would be due to premium adjustments. In the Three Months of 2026, our premiums ceded under our catastrophe treaties was $764,000 in comparison to no premiums ceded under catastrophe treaties in the Three Months of 2025 (see table above). The change in the Three Months of 2026 was due reinstatement premiums related to winter catastrophe losses, offset by a no loss bonus from one of our reinsurers.

Current wording

Most of the premiums written under our personal lines policies are also subject to our catastrophe reinsurance treaties. An increase in our personal lines business historically gave rise to more property exposure, which increased our exposure to catastrophe risk; therefore, our premiums ceded under catastrophe treaties would increase. An increase in our personal lines business historically resulted in an increase in premiums ceded under our catastrophe treaties if reinsurance rates were stable or were increasing. With regard to treaties entered into on July 1, 2025 ("2025/2026 Catastrophe Treaty") and 2024 ("2024/2025 Catastrophe Treaty"), we recorded our catastrophe premiums written for the entire treaty period covering July 1 through June 30, resulting in the entire annual premium written being recorded in the third quarter of 2025 and 2024, respectively. The 2025/2026 Catastrophe Treaty covers 80% of losses on the first layer of 5,000,000 in excess of $5,000,000 (catastrophe coverage of $4,000,000), and losses of $440,000,000 in excess of $10,000,000 (catastrophe coverage of $430,000,000), for a total catastrophe coverage of $434,000,000. The 2024/2025 Catastrophe Treaty covered 95% of losses on the first layer of $5,000,000 in excess of $5,000,000 (catastrophe coverage of $4,750,000), and losses of $280,000,000 in excess of $10,000,000 (catastrophe coverage of $270,000,000), for a total catastrophe coverage of $274,750,000. Catastrophe coverage under the 2025/2026 Catastrophe Treaty increased by $159,250,000 compared to the 2024/2025 Catastrophe Treaty. As a result of recording the entire annual catastrophe premiums at the inception of the treaties, catastrophe premiums in subsequent quarters would be due to premium adjustments. In the Three Months of 2026, our premiums ceded under our catastrophe treaties was negative$80,000 in comparison to negative$406,000 ceded under catastrophe treaties in the Three Months of 2025 (see table above). The negative premiums in the Three Months of 2026 was due to reinstatement premiums related to winter catastrophe losses. The negative premiums in the Three Months of 2025 was due to a no loss bonus from one of our reinsurers.

Previous wording

Net premiums earned increased $12,346,000, or 28.4%, to $55,869,000 in the Three Months of 2026 from $43,523,000 in the Three Months of 2025. The increase was due to the 11 percentage point reduction in quota share rates discussed above, and the increase in premiums from the Change in Market Dynamics, partially offset by an increase in catastrophe premiums due to the increase in catastrophe coverage reflected in ceded catastrophe premiums earned.

Current wording

Net premiums earned increased $14,252,000, or 30.8%, to $60,467,000 in Three Months of 2026 from $46,215,000 in Three Months of 2025. The increase was due to an increase in retention related to the 11 percentage point reduction in quota share rates discussed above, and the increase in premiums from organic growth, partially offset by an increase in catastrophe premiums due to the increase in catastrophe coverage reflected in ceded catastrophe premiums earned.

Previous wording

Ceding commission revenue was $1,404,000 in the Three Months of 2026 compared to $2,959,000 in the Three Months of 2025. The decrease of $1,555,000 is explained below in the discussion of provisional ceding commissions earned and contingent ceding commissions earned.

Current wording

Ceding commission revenue was $1,533,000 in Three Months of 2026 compared to $3,081,000 in Three Months of 2025. The decrease of $1,548,000 is explained below in the discussion of provisional ceding commissions earned and contingent ceding commissions earned.

Previous wording

In the Three Months of 2026, we earned provisional ceding commissions of $1,277,000 from personal lines earned premiums ceded under the 2026/2027 Treaty, and in the Three Months of 2025, we earned provisional ceding commissions of $3,252,000 from personal lines earned premiums ceded under the 2025/2026 Treaty. The decrease of $1,975,000 in provisional ceding commissions earned was due to the decrease in premiums ceded under these treaties during the Three Months of 2026 compared to the Three Months of 2025, offset by an increase in ceding commission rates under the 2026/2027 Treaty.

Current wording

In Three Months of 2026, we earned provisional ceding commissions of $1,352,000 from personal lines earned premiums ceded under the 2026/2027 Treaty, and in Three Months of 2025, we earned provisional ceding commissions of $3,388,000 from personal lines earned premiums ceded under the 2025/2026 Treaty. The decrease of $2,036,000 in provisional ceding commissions earned was due to the decrease in premiums ceded under these treaties during the Three Months of 2026 compared to the Three Months of 2025, offset by an increase in ceding commission rates under the 2026/2027 Treaty.

Previous wording

1.7 points. Favorable prior accident year reserve development decreased the net loss ratio by 2.3 points during the Three Months of 2026 as compared to decreasing the net loss ratio by 1.4 points during the Three Months of 2025. For the Three Months of 2026, property claims overall developed better than expected, driven primarily by reserve takedowns on several large fire claims from accident years 2024 and 2025 as well as a large subrogation recovery on a water damage claim from accident year 2023, resulting in favorable development. For the Three Months of 2025, the favorable prior accident year reserve development was attributable to reserve takedowns on several large fire and water damage claims from accident years 2022 through 2024.

Current wording

There was favorable prior year development of $1,636,000 for the Three Months of 2026, a decrease of 2.7 points on the net loss ratio. By comparison, the impact of favorable prior year development for the Three Months of 2025 was a decrease of 0.5 points to the net loss ratio. For the Three Months of 2026, property claims overall developed better than expected, driven primarily by reserve takedowns on fire and water damage claims from accident year 2025, resulting in favorable development. For the Three Months of 2025, the favorable development was attributable to reserve decreases on fire and water damage claims from accident years 2023 and 2024 as well as a large subrogation recovery on a water damage claim from accident year 2022.

Previous wording

Commission expense was $10,195,000 in the Three Months of 2026 or 14.6% of direct earned premiums. Commission expense was $9,313,000 in the Three Months of 2025 or 15.4% of direct earned premiums The increase of $882,000 in the Three Months of 2026 compared to the Three Months of 2025 was primarily due to an increase in direct earned premiums of $9,344,000, partially offset by a decrease of $255,000 for an accrual of estimated contingent commission based on the profitability of the business.

Current wording

Commission expense was $11,573,000 in the Three Months of 2026 or 15.7% of direct earned premiums. Commission expense was $10,630,000 in the Three Months 2025 or 16.9% of direct earned premiums. The increase of $943,000 was primarily due to an increase in direct earned premiums of $10,478,000, offset by a decrease of $470,000 in the Three Months of 2026 compared to the Three Months of 2025 for an accrual of estimated contingent commission based on the profitability of the business.

Previous wording

Our largest single component of other underwriting expenses is salaries and employment costs, with costs of $3,865,000 in the Three Months of 2026 compared to $3,351,000 in the Three Months of 2025. Salaries and employment costs were 6.9 points of the net underwriting expense ratio in the Three Months of 2026, a reduction of 0.8 points from 7.7 points in the Three Months of 2025 primarily due to the economies of scale with the increase in net premiums earned. The dollar increase in salaries and employment costs was due to annual salary increases, and strengthening of our professional team by investing in hiring talent with insurance industry experience due to the growth in premiums written and anticipated new business in accordance with our 5-Year Growth Plan.

Current wording

Our largest single component of other underwriting expenses is salaries and employment costs, with costs of $4,288,000 in the Three Months of 2026 compared to $4,081,000 in the Three Months of 2025. Salaries and employment costs were 7.1 points of the net underwriting expense ratio in the Three Months of 2026, a reduction of 1.7 points from 8.8 points in the Three Months of 2025 primarily due to the economies of scale with the increase in net premiums earned. The dollar increase in salaries and employment costs was due to annual salary increases, and strengthening of our professional team by investing in hiring talent with insurance industry experience due to the growth in premiums written and anticipated new business in accordance with our 5-Year Growth Plan.

Previous wording

Our net underwriting expense ratio in the Three Months of 2026 was 30.4%, compared with 31.3% in the Three Months of 2025. The following table shows the individual components of our net underwriting expense ratio for the periods indicated:

Current wording

Our net underwriting expense ratio in the Three Months of 2026 was 30.6% compared to 32.7% in the Three Months of 2025. The following table shows the individual components of our net underwriting expense ratio for the periods indicated:

Previous wording

Other operating expenses were $2,261,000 for the Three Months of 2026 compared to $1,036,000 for the Three Months of 2025. The following table shows a breakdown of the significant components of other operating expenses for the periods indicated:

Current wording

Other operating expenses were $1,362,000 for the Three Months of 2026 compared to $1,153,000 for the Three Months of 2025. The following table shows a breakdown of the significant components of other operating expenses for the periods indicated:

Previous wording

The increase in the Three Months of 2026 of $1,225,000, or 118.2%, as compared to the Three Months of 2025 was primarily due to an increase in equity compensation and professional fees, partially offset by a decrease in loss on extinguishment of debt. The increase in equity compensation is due to additional restricted stock awards granted to our senior leadership team as of December 31,

Current wording

The increase in the Three Months of 2026 of $209,000, or 18.1%, as compared to the Three Months of 2025 was primarily due to an increase in equity compensation and professional fees. The increase in equity compensation is due to additional restricted stock awards granted to our senior leadership team as of December 31, 2025 pursuant to our employee bonus plan, and to our CEO and CFO pursuant to their respective employment agreements. The increase in professional fees is due to legal fees incurred related to board level projects and additional accounting expenses incurred related to our new requirement for the audit of our internal control over financial reporting.

Previous wording

Depreciation and amortization was $716,000 in the Three Months of 2026 compared to $624,000 in the Three Months of 2025. The increase of $92,000, or 14.7%, in depreciation and amortization was primarily due to the difference between additional depreciation on software acquired compared to software being fully depreciated.

Current wording

Depreciation and amortization was $761,000 in the Three Months of 2026 compared to $613,000 in the Three Months of 2025. The increase of $148,000, or 24.1%, in depreciation and amortization was primarily due to the difference between additional depreciation on software acquired compared to software being fully depreciated.

Previous wording

(1)Direct premiums written and net premiums written are non-GAAP measures, defined above under "Key GAAP and Non-GAAP Measures". See "Non-GAAP Financial Measures" below for a reconciliation of direct written premiums, and net written premiums to the GAAP measure of net premiums earned.

Current wording

(1)Direct premiums written and net premiums written are non-GAAP measures, defined above under "Key GAAP and Non-GAAP Measures". See "Non-GAAP Financial Measures" below for a reconciliation of direct premiums written and net premiums written to the GAAP measure of net premiums earned.

Previous wording

(4)See discussion above with regard to “Net Loss and LAE”, as to catastrophe losses in the three months ended March 31, 2026 and 2025.

Current wording

(4)See discussion above with regard to “Net Loss and LAE”, as to catastrophe losses in the three months and six months ended June 30, 2026 and 2025.

Previous wording

(1) Net (loss) income from insurance underwriting business on a standalone basis is a non-GAAP measure, which is computed as GAAP net (loss) income without the effect of holding company operations on GAAP net (loss) income. See "Non-GAAP Financial Measures" for a reconciliation of net (loss) income from insurance underwriting business on a standalone basis to the GAAP measure of net (loss) income.

Current wording

(1) Net income from insurance underwriting business on a standalone basis is a non-GAAP measure, which is computed as GAAP net income without the effect of holding company operations on GAAP net income. See "Non-GAAP Financial Measures" for a reconciliation of net income from insurance underwriting business on a standalone basis to the GAAP measure of net income.