Presurance Holdings, Inc.

Previous wording

The CIS Sale has had and will continue to have a significant negative impact on revenues for the Company going forward. With the previously mentioned strategic shift away from underwriting revenues, the Company was relying on the growth of commission revenue to replace the lost revenue from underwriting. Now that the Wholesale Agency segment has been sold, the Company will need to rely entirely on underwriting revenues. These revenues have continued to decline in the past year. For example, gross written premiums were $37.2 million for the six months ended June 30, 2025, compared to $43.3 million for the six months ended June 30, 2024.

Current wording

The CIS Sale has had and will continue to have a significant negative impact on revenues for the Company going forward. With the previously mentioned strategic shift away from underwriting revenues, the Company was relying on the growth of commission revenue to replace the lost revenue from underwriting. Now that the Wholesale Agency segment has been sold, the Company will need to rely entirely on underwriting revenues. These revenues have continued to decline in the past year. For example, gross written premiums were $51.9 million for the nine months ended September 30, 2025, compared to $58.4 million for the nine months ended September 30, 2024.

Previous wording

In connection with the CIS Sale, 68 of the Company’s 77 employees were transferred to the Buyer, including Nicholas Petcoff, the Company’s then current Chief Executive Officer, as well as all of the underwriting, claims and IT teams, and a portion of the finance staff and other operating staff. As part of the completion of the CIS Sale, Mr. Petcoff resigned from his role as Chief Executive Officer and as a director on August 30, 2024. Concurrently, Brian Roney, President of the Company, was appointed as the Company’s new Chief Executive Officer. The Company entered into a transition services agreement with the buyer to allow both parties to share resources for a certain period of time, generally less than twelve months, in order to effectuate an orderly separation of the internal systems and operations. The net cost to the Company was $225,000 which expense will be recognized over the period the services are provided.

Current wording

In connection with the CIS Sale, 68 of the Company’s 77 employees were transferred to the Buyer, including Nicholas Petcoff, the Company’s then Chief Executive Officer, as well as all of the underwriting, claims and IT teams, and a portion of the finance staff and other operating staff. As part of the completion of the CIS Sale, Mr. Petcoff resigned from his role as Chief Executive Officer and as a director on August 30, 2024. Concurrently, Brian Roney, President of the Company, was appointed as the Company’s new Chief Executive Officer. The Company entered into a transition services agreement with the buyer to allow both parties to share resources for a certain period of time, generally less than twelve months, in order to effectuate an orderly separation of the internal systems and operations. The net cost to the Company was $104,000 in 2024 and $118,000 for the nine months ended September 30, 2025. The transition services agreement is substantially complete.

Previous wording

The contingent consideration payments, in order of achievability are $5.0 million, $10.0 million and $10.0 million. The contingent consideration included in the gain on sale was calculated based on the fair value of the three contingent payments as of August 30, 2024, in accordance with ASC 820 - Fair Value Measurement. The first contingent payment was earned as of September 30, 2024, and received in December 2024. The second contingent payment was earned and received during the second quarter of 2025. The third contingent payment, equaling $10.0 million, is expected to be earned by December 2025, but is still subject to uncertainty. The Company determined the fair value of the third contingent payments to be $7.8 million, as of June 30, 2025. As fair value estimates change over time, subsequent measurement adjustments will be reflected in income or loss in the period of change. See Note 3 ~Fair Value Measurementsfor further details.

Current wording

The contingent consideration payments, in order of achievability are $5.0 million, $10.0 million and $10.0 million. The contingent consideration included in the gain on sale was calculated based on the fair value of the three contingent payments as of August 30, 2024, in accordance with ASC 820 - Fair Value Measurement. The first contingent payment was earned as of September 30, 2024, and received in December 2024. The second contingent payment was earned and received during the second quarter of 2025. The third contingent payment, equaling $10.0 million, is expected to be paid by September 2026, but is still subject to uncertainty. The Company determined the fair value of the third contingent payment to be $6.3 million, as of September 30, 2025. As fair value estimates change over time, subsequent measurement adjustments will be reflected in income or loss in the period of change. See Note 3 ~Fair Value Measurementsfor further details.

Previous wording

With the completion of the disposal of the agency business, we have just two agency relationships: with CIS and SSU. CIS has control over almost all of our commercial lines premium volume and it is expected that CIS will remove all of the remaining commercial lines business to another insurer as some point in the future. SSU has control of our remaining homeowners book of business and could move that business to another insurer or insurers. This greatly amplifies our concentration of risk relative to our marketing and distribution network. Refer to the Company's 2024 Annual Report on Form 10-K, filed on March 28, 2025 for further details on the Company's structure.

Current wording

With the completion of the disposal of the agency business, we have just two agency relationships with CIS and SSU. CIS has control over almost all of our commercial lines premium volume and has removed all of the remaining commercial lines business to other insurers. SSU has control of our remaining homeowners book of business and could move that business to other insurers as well. This greatly amplifies our concentration of risk relative to our marketing and distribution network. Refer to the Company's 2024 Annual Report on Form 10-K, filed on March 28, 2025 for further details on the Company's structure.

Previous wording

Our staff is now only eleven people. We are relying heavily upon the CIS and SSU teams to handle underwriting, claims, and information technology services. Much of this is managed either through program administration agreements with CIS and SSU or a claims administration agreement with CIS. The policy management system also conveyed with CIS, which we can continue to use for our existing business, but may not be available for any new programs we may consider. CIS and SSU also handle all billing and collections. We no longer have the capacity to operate a direct bill process.

Current wording

Our staff is now only twelve people. We are relying heavily upon the CIS and SSU teams to handle underwriting, claims, and information technology services. Much of this is managed either through program administration agreements with CIS and SSU or a claims administration agreement with CIS. The policy management system was conveyed with CIS, which we can continue to use for our existing business, but may not be available for any new programs we may consider. CIS and SSU also handle all billing and collections. We no longer have the capacity to operate a direct bill process.

Previous wording

On March 25, 2024, Kroll downgraded the financial strength ratings of CIC and WPIC. Kroll has given CIC an insurance financial strength rating of BB- with a negative outlook. Kroll has given WPIC an insurance financial strength rating of B with a negative outlook. A BB- and a B rating indicates that the insurer's financial condition is low quality. Concurrently, the Company withdrew its participation in the rating process, and is no longer rated by Kroll.

Current wording

On March 25, 2024, Kroll downgraded the financial strength ratings of TIC and WPIC. Kroll had given TIC an insurance financial strength rating of BB- with a negative outlook. Kroll had given WPIC an insurance financial strength rating of B with a negative outlook. A BB- and a B rating indicates that the insurer's financial condition is low quality. Concurrently, the Company withdrew its participation in the rating process, and is no longer rated by Kroll.

Previous wording

On March 14, 2024, A.M. Best downgraded the financial strength ratings of CIC and WPIC to C. A rating of C means A.M. Best considers both companies to have a "weak" ability to meet ongoing financial obligations. Concurrently, the Company withdrew its participation in the rating process, and is no longer rated by A.M. Best.

Current wording

On March 14, 2024, A.M. Best downgraded the financial strength ratings of TIC and WPIC to C. A rating of C means A.M. Best considers both companies to have a "weak" ability to meet ongoing financial obligations. Concurrently, the Company withdrew its participation in the rating process, and is no longer rated by A.M. Best.

Previous wording

We are an insurance holding company that markets and services our product offerings through specialty commercial and specialty personal insurance business lines. Currently, we are authorized to write insurance as an excess and surplus lines carrier in 44 states, including the District of Columbia. We are licensed to write insurance as an admitted carrier in 42 states, including the District of Columbia. As of June 30, 2025, we offer insurance products primarily in Texas, Illinois and Indiana, for homeowners lines and Nevada and Michigan for other lines.

Current wording

We are an insurance holding company that markets and services our product offerings through specialty commercial and specialty personal insurance business lines. Currently, we are authorized to write insurance as an excess and surplus lines carrier in 44 states, including the District of Columbia. We are licensed to write insurance as an admitted carrier in 42 states, including the District of Columbia. As of September 30, 2025, we offer insurance products primarily in Texas, Illinois and Indiana, for homeowners lines and Nevada and Michigan for other lines. However, we expect the Nevada and Michigan business to go into run-off in the near term.

Previous wording

Our expenses consist primarily of losses and loss adjustment expenses, agents’ commissions, and other underwriting and administrative expenses. Historically, we have organized our operations in three insurance businesses: commercial insurance lines, personal lines, and agency business. Together, the commercial and personal lines refer to “underwriting” operations that take insurance risk, and the agency business refers to non-risk insurance business.

Current wording

Our expenses consist primarily of losses and loss adjustment expenses, agents’ commissions, and other underwriting and administrative expenses. Historically, we have organized our operations in three insurance businesses: commercial insurance lines, personal lines, and agency business prior to the CIS Sale. Together, the commercial and personal lines refer to “underwriting” operations that take insurance risk, and the agency business refers to non-risk insurance business.

Previous wording

In certain circumstances, we are required to make estimates and assumptions that affect amounts reported in our condensed consolidated financial statements and related footnotes. We evaluate these estimates and assumptions periodically on an on-going basis based on a variety of factors. There can be no assurance, however, that actual results will not be materially different than our estimates and assumptions, and that reported results of operations will not be affected by accounting adjustments needed to reflect changes in these estimates and assumptions. During the six months ended June 30, 2025, there were no material changes to our critical accounting policies and estimating methodologies, which are disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2025.

Current wording

In certain circumstances, we are required to make estimates and assumptions that affect amounts reported in our condensed consolidated financial statements and related footnotes. We evaluate these estimates and assumptions periodically on an on-going basis based on a variety of factors. There can be no assurance, however, that actual results will not be materially different than our estimates and assumptions, and that reported results of operations will not be affected by accounting adjustments needed to reflect changes in these estimates and assumptions. During the nine months ended September 30, 2025, there were no material changes to our critical accounting policies and estimating methodologies, which are disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2025.

Previous wording

The Company reported $21.1 million of gross written premiums in the second quarter of 2025, representing a 11.1% increase as compared to the same period in 2024. Our personal lines gross written premiums increased by $5.7 million, or 46.8%, to $17.9 million in the second quarter of 2025, compared to $12.2 million for the same period in 2024. Commercial lines gross written premiums decreased by $3.6 million, or 53.0%, to $3.2 million in the second quarter of 2025, compared to $6.8 million for the same period in 2024.

Current wording

The Company reported $14.6 million of gross written premiums in the third quarter of 2025, representing a 2.9% decrease as compared to the same period in 2024. Our personal lines gross written premiums increased by $91,000, or 0.8%, to $11.2 million in the third quarter of 2025, compared to $11.1 million for the same period in 2024. Commercial lines gross written premiums decreased by $535,000, or 13.3%, to $3.5 million in the third quarter of 2025, compared to $4.0 million for the same period in 2024.

Previous wording

The Company reported net income from continuing operations of $2.1 million, or $0.17 per share for the three months ended June 30, 2025, compared to a net loss from continuing operations of $3.7 million, or $0.31 per share for the same period in 2024.

Current wording

The Company reported a net loss from continuing operations of $4.0 million, or $0.32 per share for the three months ended September 30, 2025, compared to a net loss from continuing operations of $6.9 million, or $0.60 per share for the same period in 2024.

Previous wording

The Company reported net income from continuing operations of $2.6 million, or $0.21 per share for the six months ended June 30, 2025, compared to a net loss from continuing operations of $2.2 million, or $0.18 per share for the same period in 2024.

Current wording

The Company reported a net loss from continuing operations of $1.4 million, or $0.11 per share for the nine months ended September 30, 2025, compared to a net loss from continuing operations of $9.0 million, or $0.81 per share for the same period in 2024.

Previous wording

The Company reported net income allocable to common shareholders of $2.1 million, or $0.17 per share for the three months ended June 30, 2025, compared to a net loss allocable to common shareholders of $4.0 million, or $0.32 per share for the same period in 2024.

Current wording

The Company reported a net loss allocable to common shareholders of $4.0 million, or $0.32 per share for the three months ended September 30, 2025, compared to net income allocable to common shareholders of $52.8 million, or $4.32 per share for the same period in 2024.

Previous wording

The Company reported net income allocable to common shareholders of $2.6 million, or $0.21 per share for the six months ended June 30, 2025, compared to a net loss allocable to common shareholders of $3.9 million, or $0.32 per share for the same period in 2024.

Current wording

The Company reported a net loss allocable to common shareholders of $1.4 million, or $0.11 per share for the nine months ended September 30, 2025, compared to net income allocable to common shareholders of $48.9 million, or $4.00 per share for the same period in 2024.

Previous wording

Adjusted operating income per share is a non-GAAP measure that represents net income allocable to common shareholders excluding net realized investment gains or losses, change in fair value of equity securities, change in fair value of contingent considerations, gain on CIS sale and net income from discontinued operations. Adjusted operating loss was $2.1 million, or $0.17 per share for the three months ended June 30, 2025, compared to an adjusted operating loss of $3.4 million, or $0.28 per share for the same period in 2024.

Current wording

Adjusted operating income or loss per share is a non-GAAP measure that represents net income or loss excluding net realized investment gains or losses, change in fair value of equity securities, change in fair value of contingent considerations, change in contingent consideration bonus expense and net income or loss from discontinued operations. Adjusted operating loss was $2.7 million, or $0.22 per share for the three months ended September 30, 2025, compared to an adjusted operating loss of $6.9 million, or $0.56 per share for the same period in 2024.

Previous wording

Adjusted operating loss was $5.8 million, or $0.47 per share for the six months ended June 30, 2025, compared to an adjusted operating loss of $1.9 million or $0.15 per share for the same period in 2024.

Current wording

Adjusted operating loss was $8.5 million, or $0.69 per share for the nine months ended September 30, 2025, compared to an adjusted operating loss of $8.7 million or $0.71 per share for the same period in 2024.

Previous wording

Our underwriting combined ratio was 121.1% and 123.6% for the three months ended June 30, 2025 and 2024, respectively.

Current wording

Our underwriting combined ratio was 141.2% and 143.1% for the three months ended September 30, 2025 and 2024, respectively.

Previous wording

Our underwriting combined ratio was 131.2% and 110.0% for the six months ended June 30, 2025 and 2024, respectively.

Current wording

Our underwriting combined ratio was 133.6% and 120.0% for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

Commercial lines gross written premiums decreased $3.6 million, or 53.0%, to $3.2 million in the second quarter of 2025, as compared to $6.8 million for the second quarter of 2024. As of September 1, 2024, we no longer write any hospitality or small business commercial lines business. These lines are in run-off, and earned a small amount of premium during the second quarter of 2025. We currently do not expect to write a significant amount of other commercial lines in the near term.

Current wording

Commercial lines gross written premiums decreased $535,000, or 13.3%, to $3.5 million in the third quarter of 2025, as compared to $4.0 million for the third quarter of 2024. As of September 1, 2024, we no longer write any hospitality or small business commercial lines business. These lines are in run-off, and earned a small amount of premium during the third quarter of 2025. We currently do not expect to write a significant amount of other commercial lines in the near term.

Previous wording

Personal lines gross written premiums increased $5.7 million, or 46.8%, to $17.9 million in the second quarter of 2025, as compared to $12.2 million for the same period in 2024. The increase was due to the organic growth in the low-value dwelling book of business in Texas and in the Midwest which, combined, grew by $7.3 million in the second quarter of 2025, compared to the same period in 2024. This increase was offset by our exit in Oklahoma homeowners business. We plan to continue to write the Midwest and Texas homeowners programs but we do not expect continued growth to be significant.

Current wording

Personal lines gross written premiums increased $91,000, or 0.8%, to $11.2 million in the third quarter of 2025, as compared to $11.1 million for the same period in 2024. The increase was due to the organic growth in the low-value dwelling book of business in Texas, which grew by $312,000 in the third quarter of 2025, compared to the same period in 2024. This increase was offset by our exit in Oklahoma homeowners business. We plan to continue to write the Texas homeowners programs but we do not expect continued growth to be significant.

Previous wording

Net written premiums decreased $11.9 million, or 89.6%, to $1.4 million for the three months ended June 30, 2025, as compared to $13.2 million for the same period in 2024. The decline in net written premiums during the quarter was primarily due to the $16.4 million of premiums ceded under a new 50% quota share agreement for our homeowners book of business effective June 1, 2025. At inception, we also ceded 50% of the homeowners unearned premiums. In addition, there was continued reduction of the commercial lines business as it is substantially all in run-off.

Current wording

Net written premiums decreased $5.7 million, or 51.4%, to $5.4 million for the three months ended September 30, 2025, as compared to $11.2 million for the same period in 2024. The decline in net written premiums during the quarter was primarily due to the $4.1 million of premiums ceded under a new 50% quota share agreement for our homeowners book of business effective June 1, 2025. At inception, we also ceded 50% of the homeowners unearned premiums. In addition, there was continued reduction of the commercial lines business as it is substantially all in run-off.

Previous wording

Net losses and LAE decreased by $8.7 million, or 57.0%, to $6.6 million during the second quarter of 2025, compared to $15.3 million for the same period in 2024. The decrease was mostly attributable to a $6.5 million decrease in current accident year losses due to a significant reduction in net earned premiums as shown above. The decrease in current accident year losses was further added to by a $2.3 million decrease in adverse development on prior-year loss reserves.

Current wording

Net losses and LAE decreased by $8.8 million, or 57.8%, to $6.4 million during the third quarter of 2025, compared to $15.2 million for the same period in 2024. The $3.8 million decrease in current accident year losses during the third quarter of 2025, compared to the same period in 2024, was mostly due to a significant reduction in net earned premiums as commercial lines business is in runoff and we focus on the specialty homeowners business.

Previous wording

Our expense ratio increased by 20.2% during the second quarter of 2025, compared to the same period in 2024.

Current wording

Our expense ratio increased by 8.2% during the third quarter of 2025, to 47.5%, compared to 39.3% for the same period in 2024.

Previous wording

Policy acquisition costs are costs we incur to issue policies, which include commissions, premium taxes, underwriting reports and underwriter compensation costs. The Company offsets direct commissions with ceding commissions from reinsurers. The percentage of policy acquisition costs to net earned premiums and other income increased by 3.6% during the second quarter of 2025 to 23.9%, compared to 20.3% during the same period in 2024. The increase was primarily related to the increased commission rates under new producer agreements concurrent with the sale of CIS and SSU. Particularly for SSU, which is producing substantially all go-forward business, SSU took on the responsibility of managing the policy issuance, premium collections and systems of the homeowners book of business. This resulted in increased commission rates of approximately 6.0% to SSU to cover those costs.

Current wording

Policy acquisition costs are costs we incur to issue policies, which include commissions, premium taxes and underwriting reports. The Company offsets direct commissions with ceding commissions from reinsurers. The percentage of policy acquisition costs to net earned premiums and other income increased by 5.6% during the third quarter of 2025 to 27.8%, compared to 22.2% during the same period in 2024. The increase was primarily related to the increased commission rates under new producer agreements concurrent with the sale of CIS and SSU. SSU, which is producing substantially all go-forward business, now manages the policy issuance, premium collections and systems of the homeowners book of business.

Previous wording

Operating expenses consist primarily of employee compensation, information technology and occupancy costs, such as rent and utilities. Operating expenses as a percent of net earned premiums and other underwriting income increased by 16.6% during the second quarter of 2025 to 28.4%, compared to 11.8% for the same period in 2024. The increase in the ratio was mostly due to significantly lower net earned premiums, while legacy operational costs related to the run-off books of business still exist. Such legacy costs are expected to reduce over the next year.

Current wording

Operating expenses consist primarily of employee compensation, information technology and occupancy costs, such as rent and utilities. Operating expenses as a percent of net earned premiums and other underwriting income increased by 2.6% during the third quarter of 2025 to 19.7%, compared to 17.1% for the same period in 2024. The increase in the ratio was mostly due to significantly lower net earned premiums, while legacy operational costs related to the run-off books of business still exist. Such legacy costs are expected to reduce over the next year.

Previous wording

Results of Operations for the Six Months Ended June 30, 2025 and 2024

Current wording

Results of Operations for the Nine Months Ended September 30, 2025 and 2024

Previous wording

Our premiums are presented below for the six months ended June 30, 2025 and 2024 (dollars in thousands):

Current wording

Our premiums are presented below for the nine months ended September 30, 2025 and 2024 (dollars in thousands):

Previous wording

Gross written premiums increased $2.1 million, or 11.1%, to $21.1 million for the three months ended June 30, 2025, as compared to $19.0 million for the same period in 2024.

Current wording

Gross written premiums decreased $6.5 million, or 11.1%, to $51.9 million for the nine months ended September 30, 2025, as compared to $58.4 million for the same period in 2024.

Previous wording

Commercial lines gross written premiums decreased $14.3 million, or 73.2%, to $5.2 million for the six months ended June 30, 2025, as compared to $19.5 million for the same period in 2024. As of September 1, 2024, we no longer write any hospitality or small business commercial lines business. These lines are in run-off, and earned a small amount of premium during the first and second quarters of 2025. We currently do not expect to write a significant amount of other commercial lines in the near term.

Current wording

Commercial lines gross written premiums decreased $14.8 million, or 63.0%, to $8.7 million for the nine months ended September 30, 2025, as compared to $23.6 million for the same period in 2024. As of September 1, 2024, we no longer write any hospitality or small business commercial lines business. These lines are in run-off, and earned a small amount of premium during the first nine months of 2025. We currently do not expect to write a significant amount of other commercial lines in the near term.

Previous wording

Personal lines gross written premiums increased $8.3 million, or 34.9%, to $32.0 million for the six months ended June 30, 2025, as compared to $23.7 million for the same period in 2024. The increase was due to the organic growth in the low-value dwelling book of business in Texas and in the Midwest which, combined, grew by $14.4 million in the first six months of 2025, compared to the same period in 2024. This increase was offset by our exit in Oklahoma homeowners business. We plan to continue to write the Midwest and Texas homeowners programs but we do not expect continued growth to be significant.

Current wording

Personal lines gross written premiums increased $8.4 million, or 24.0%, to $43.2 million for the nine months ended September 30, 2025, as compared to $34.8 million for the same period in 2024. The increase was due to the organic growth in the low-value dwelling book of business in Texas and in the Midwest which, combined, grew by $14.4 million in the first nine months of 2025, compared to the same period in 2024. This increase was offset by our exit in Oklahoma homeowners business. We plan to continue to write the Midwest and Texas homeowners programs but we do not expect continued growth to be significant.

Previous wording

Net written premiums decreased $16.4 million, or 57.3%, to $12.3 million for the six months ended June 30, 2025, as compared to $28.6 million for the same period in 2024. Net written premiums declined, in part due to the run-off of most of the commercial lines business. In addition, we entered into a new 50% quota share agreement for the homeowners business, inclusive of the unearned premium, as of June 1, 2025, which significantly reduced the personal lines net written premium, even though there was substantial gross written premium growth.

Current wording

Net written premiums decreased $22.2 million, or 55.7%, to $17.7 million for the nine months ended September 30, 2025, as compared to $39.8 million for the same period in 2024. Net written premiums declined, in part due to the run-off of most of the commercial lines business. In addition, we entered into a new 50% quota share agreement for the homeowners business, inclusive of the unearned premium, as of June 1, 2025, which significantly reduced the personal lines net written premium, even though there was substantial gross written premium growth.

Previous wording

The tables below detail our losses and loss adjustment expenses and loss ratios in our underwriting business for the six months ended June 30, 2025 and 2024 (dollars in thousands):

Current wording

The tables below detail our losses and loss adjustment expenses and loss ratios in our underwriting business for the nine months ended September 30, 2025 and 2024 (dollars in thousands):

Previous wording

Net losses and LAE decreased by $10.0 million, or 38.6%, to $15.8 million during the six months ended June 30, 2025, compared to $25.8 million for the same period in 2024. The decrease was mostly attributable to a $8.3 million decrease in current accident year losses due to a significant reduction in net earned premiums as shown above. The decrease in current accident year losses was further added to by a $1.6 million decrease in adverse development on prior-year loss reserves.

Current wording

Net losses and LAE decreased by $18.7 million, or 45.7%, to $22.2 million during the nine months ended September 30, 2025, compared to $41.0 million for the same period in 2024. The decrease was mostly attributable to a $12.1 million decrease in current accident year losses due to a significant reduction in net earned premiums as shown above. The decrease in current accident year losses was further added to by a $6.7 million decrease in adverse development on prior-year loss reserves.

Previous wording

Our expense ratio increased by 18.1% for the six months ended June 30, 2025, compared to the same period in 2024.

Current wording

Our expense ratio increased by 15.3% for the nine months ended September 30, 2025, to 50.5%, compared to 35.2% for the same period in 2024.

Previous wording

Policy acquisition costs are costs we incur to issue policies, which include commissions, premium taxes, underwriting reports and underwriter compensation costs. The Company offsets direct commissions with ceding commissions from reinsurers. The percentage of policy acquisition costs to net earned premiums and other income increased by 5.4% during the six months ended June 30, 2025 to 24.9%, compared to 19.5% during the same period in 2024. The increase was primarily related to the increased commission rates under new producer agreements concurrent with the sale of CIS and SSU. Particularly for SSU, which is producing substantially all go-forward business, SSU took on the responsibility of managing the policy issuance, premium collections and systems of the homeowners book of business. This resulted in increased commission rates of approximately 6.0% to SSU to cover those costs.

Current wording

Policy acquisition costs are costs we incur to issue policies, which include commissions, premium taxes and underwriting reports. The Company offsets direct commissions with ceding commissions from reinsurers. The percentage of policy acquisition costs to net earned premiums and other income increased by 5.4% for the nine months ended September 30, 2025, to 25.7%, compared to 20.3% during the same period in 2024. The increase was primarily related to the increased commission rates under new producer agreements concurrent with the sale of CIS and SSU. SSU, which is producing substantially all go-forward business, now manages the policy issuance, premium collections and systems of the homeowners book of business.

Previous wording

Operating expenses consist primarily of employee compensation, information technology and occupancy costs, such as rent and utilities. Operating expenses as a percent of net earned premiums and other underwriting income increased by 12.7% during the six months ended June 30, 2025 to 26.6%, compared to 13.9% for the same period in 2024. The increase in the ratio was mostly due to significantly lower net earned premiums, while legacy operational costs related to the run-off books of business still exist. Such legacy costs are expected to reduce over the next year.

Current wording

Operating expenses consist primarily of employee compensation, information technology and occupancy costs, such as rent and utilities. Operating expenses as a percent of net earned premiums and other underwriting income increased by 9.9% during the nine months ended September 30, 2025 to 24.8%, compared to 14.9% for the same period in 2024. The increase in the ratio was mostly due to significantly lower net earned premiums, while legacy operational costs related to the run-off books of business still exist. Such legacy costs are expected to reduce over the next year.

Previous wording

We measure the performance of our consolidated results, in part, based on our underwriting gain or loss. The following table provides the underwriting gain or loss for the six months ended June 30, 2025 and 2024 (dollars in thousands):

Current wording

We measure the performance of our consolidated results, in part, based on our underwriting gain or loss. The following table provides the underwriting gain or loss for the nine months ended September 30, 2025 and 2024 (dollars in thousands):

Previous wording

At June 30, 2025, the Company had $58.3 million in cash, cash equivalents and short-term investments. Our principal sources of funds are insurance premiums, investment income and proceeds from maturities and sales of invested assets. These funds are primarily used to pay claims, commissions, employee compensation, taxes and other operating expenses, and service debt and mandatorily redeemable preferred stock.

Current wording

At September 30, 2025, the Company had $62.3 million in cash, cash equivalents and short-term investments. Our principal sources of funds are insurance premiums, investment income and proceeds from maturities and sales of invested assets. These funds are primarily used to pay claims, commissions, employee compensation, taxes and other operating expenses, and service debt and mandatorily redeemable preferred stock.

Previous wording

We conduct our business operations primarily through our Insurance Company Subsidiaries. Our ability to service debt and mandatorily redeemable preferred stock, and pay administrative expenses is primarily reliant upon our intercompany service fees paid by the Insurance Company Subsidiaries to the holding company for management, administrative, and information technology services provided to the Insurance Company Subsidiaries by the Parent Company. Secondarily, the Parent Company may receive dividends from the Insurance Company Subsidiaries; however, this is not the primary means in which the holding company supports its funding as state insurance laws restrict the ability of our Insurance Company Subsidiaries to declare dividends to the Parent Company. Generally, the limitations are based on the greater of statutory net income for the preceding year or 10% of statutory surplus at the end of the preceding year. There were no dividends paid from our Insurance Company Subsidiaries for the six months ended June 30, 2025 and 2024. We do not anticipate any dividends being paid to us from our insurance subsidiaries in the near term.

Current wording

We conduct our business operations primarily through our Insurance Company Subsidiaries. Our holding company's ability to service debt and mandatorily redeemable preferred stock, and pay administrative expenses is primarily reliant upon our intercompany service fees paid by the Insurance Company Subsidiaries to the holding company for management, administrative, and information technology services provided to the Insurance Company Subsidiaries by the Parent Company. Secondarily, the Parent Company may receive dividends from the Insurance Company Subsidiaries; however, this is not the primary means in which the holding company supports its funding as state insurance laws restrict the ability of our Insurance Company Subsidiaries to declare dividends to the Parent Company. Generally, the limitations are based on the greater of statutory net income for the preceding year or 10% of statutory surplus at the end of the preceding year. There were no dividends paid from our Insurance Company Subsidiaries for the nine months ended September 30, 2025 and 2024. We do not anticipate any dividends being paid to us from our insurance subsidiaries in the near term.