HCI Group, Inc.

Note 1 -- Nature of Operations

HCI Group, Inc., together with its subsidiaries (“HCI” or the “Company”), is primarily engaged in the property and casualty insurance business through two insurance companies, Homeowners Choice Property & Casualty Insurance Company, Inc. (“HCPCI”) and TypTap Insurance Company (“TTIC”). The Company provides various homeowners’ property and casualty insurance products for properties located in the State of Florida, which is the Company's primary market, as well as in other states in the northeast and southeast regions of the United States (“U.S.”). A third insurance subsidiary, perRisk Insurance Company (“perRisk”), is domiciled in Arizona and has not yet commenced its surplus lines insurance business.

The Company's insurance operations are supported by other insurance-related subsidiaries within the consolidated group. Exzeo Group, Inc. (formerly known as TypTap Insurance Group, Inc.) (“Exzeo”), a majority-owned subsidiary, provides turn-key insurance technology and operations solutions based on a proprietary platform of purpose-built software and data analytics applications that are specifically designed for the property and casualty insurance ecosystem. The Company utilizes Exzeo's internally developed software technologies to identify profitable underwriting opportunities, drive efficiency in claim processing and settlements, and streamline operations across our insurance operations and other insurance-related businesses.

The Company also provides attorney-in-fact (“AIF”) services for Condo Owners Reciprocal Exchange (“CORE”) and Tailrow Insurance Exchange (“Tailrow”), both of which represent reciprocal insurance exchanges owned by their policyholders. Although the Company does not have any equity interest in CORE and Tailrow, the Company is required to consolidate them as their primary beneficiary. Refer to Note 14 “Variable Interest Entities” for additional information. In addition, the Company's commercial real estate subsidiary is primarily engaged in the business of developing and operating commercial properties for investment purposes or for internal use.

HCI Group, Inc. was incorporated in the State of Florida in 2006 and its common stock is currently listed on the New York Stock Exchange “NYSE” under the symbol “HCI.”

Note 2 -- Summary of Significant Accounting Policies

Basis of Presentation. The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Principles of Consolidation. The accompanying consolidated financial statements include the accounts of HCI Group, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In addition, the Company evaluates its relationships or investments for consolidation pursuant to authoritative accounting guidance related to the consolidation of variable interest entities (“VIE”) under the Variable Interest Model prescribed by the Financial Accounting Standards Board (“FASB”). A VIE is consolidated when the Company has the power to direct activities that most significantly impact the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Use of Estimates. The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. The Company's estimates are based on the relevant information available at the end of each period. Actual results could differ materially from these estimates under different assumptions or market conditions. The Company's estimates specific to losses and loss adjustment expenses, reinsurance recoverable, income taxes, stock-based compensation expense, and limited partnership investments involve the most significant judgments and estimates related to the consolidated financial statements.

Cash and Cash Equivalents. The Company considers all highly liquid investments with original maturities of less than three months from the time of purchase to be cash and cash equivalents.

Restricted Cash. Restricted cash represents funds in the Company’s sole ownership held by certain states in which the Company’s insurance subsidiaries conduct business to meet the states' regulatory requirements, and are not available for immediate business use. Funds withheld in an account for which the Company is a co-owner but not the named beneficiary are not considered restricted cash and are included in funds withheld for assumed business on the consolidated balance sheets.

Available-for-Sale Fixed-Maturity Securities. Fixed-maturity securities that are available-for-sale primarily relate to debt securities. The Company’s available-for-sale fixed-maturity securities are carried at fair value. Changes in the fair value of available-for-sale fixed-maturity securities representing unrealized gains or losses, other than credit losses, are excluded from the consolidated statements of income and are reported in the consolidated balance sheets as a component of accumulated other comprehensive income (loss), net of deferred income taxes. Realized investment gains and losses from sales are reported in the consolidated statements of income as net realized investment gains or losses and are recorded on the trade date and are determined using the first-in first-out (“FIFO”) method. Investment income is recognized as earned and discounts or premiums arising from the purchase of debt securities are recognized in net investment income using the interest method over the estimated remaining term of the security. Gains and losses from call redemptions and repayments are recorded to net investment income.

The Company reviews available-for-sale fixed-maturity securities for impairment on a quarterly basis. When reviewing impaired securities, the Company considers its ability and intent to hold these securities and whether it is probable that the Company will be required to sell these securities prior to their anticipated recovery or maturity. For the available-for-sale fixed-maturity securities that the Company intends to sell or it is probable that the Company will have to sell before recovery or maturity, the unrealized losses are recognized as impairment losses in income.

Impaired securities where the Company has the ability and intent to hold until recovery and believes it is not probable that the Company will be required to sell these securities prior to their anticipated recovery or maturity, are evaluated for the existence of credit-related losses. When determining impairment due to a credit-related loss, the Company carefully considers factors such as the issuer’s financial ratios and condition, the security’s current ratings and maturity date, the failure of the issuer to make a scheduled payment, and overall market conditions in estimating the cash flows expected to be collected. The expected cash flows discounted at the effective interest rate of the security implicit at the date of acquisition are then compared with the security’s amortized cost at the measurement date. A credit loss is incurred when the present value of the expected cash flows is less than the security’s amortized cost. If such credit-related losses exist, an allowance for credit losses is established with a charge in the consolidated statements of income. Subsequent changes in the allowance, whether favorable or unfavorable, are recorded on the consolidated statements of income. Any remaining impairment loss related to other non-credit factors such as changes in interest rates or market conditions is reflected as a component of accumulated other comprehensive income (loss).

Allowance for Credit Losses. Allowance for credit losses represents an estimation of potential losses that the Company may experience due to credit risk. The allowance for credit losses account is a contra account of a financial asset to reflect the net amount expected to be collected. Any increase or decrease in the allowance for credit losses related to investments is recognized and reflected as credit losses on investments in the Company’s consolidated statements of income. For all other financial assets, credit loss expense is included in other operating expenses. When the risk of credit loss becomes certain, the allowance for credit losses account will be written off against the financial asset. Under the Current Expected Credit Loss (“CECL”) model, the Company measures all expected credit losses related to relevant financial assets based on historical experience, current conditions, and reasonable and supportable forecasts which incorporate forward-looking information. The Company primarily uses a discounted cash flow method and a rating-based method in estimating credit losses at a reporting date for financial assets under the scope of the CECL model. The discounted cash flow method is a valuation method used to estimate the value of a financial asset based on its future cash flows. The Company uses this method to determine the expected credit losses for available-for-sale fixed-maturity securities. In addition, the Company elected not to measure an allowance for credit losses for accrued interest receivable as any uncollectible amount is adjusted to interest income on a monthly basis. The exposure to credit losses for certain financial assets related to non-insurance business is considered immaterial to the Company’s financial position.

For certain financial assets related to insurance business such as reinsurance recoverable and reinsurance receivable for premium refund, the Company uses a rating-based method, which is a modified version of the probability of default method. It requires two key inputs: a) the liquidation rate and b) the amount of loss exposure. The liquidation rate, which is published annually, is the ratio of impaired insurance companies that were eventually liquidated to the group of insurance companies considered by A.M. Best in its study. The amount of loss exposure represents the future billing balance, net of any collateral, spread over the projected periods that are based on the Company’s historical claim payment pattern. The rating-based method measures credit losses by multiplying the future billings grouped by insurance rating over the projected periods by their corresponding liquidation rates by insurance rating.

For paid reinsurance recoverable which is due within 90 days after billing, the Company will rely heavily on each reinsurer’s credit rating, recent financial condition, and historical collection problems, if any, in determining the expected credit loss. For risk attributable to disagreements between an insurer and reinsurer regarding a difference in interpretation of provisions in a reinsurance agreement (“dispute risk”), the Company will continue to use an incurred loss method to estimate losses. As of December 31, 2025 and 2024, there were no dispute risks associated with the reinsurance recoverable balance.

Equity Securities. Equity securities represent ownership interests held by the Company in entities for investment purposes. Unrealized holding gains and losses related to equity securities are reported in the consolidated statements of income as net unrealized investment gains and losses. Realized investment gains and losses from sales are reported in the consolidated statements of income as net realized investment gains or losses and are recorded on the trade date and are determined using the FIFO method.

Limited Partnership Investments. The Company has interests in limited partnerships that are not registered under the United States Securities Act of 1933, as amended, the securities laws of any state or the securities laws of any other jurisdictions. The partnership interests cannot be resold in the public market and any withdrawal is subject to the terms and conditions of the partnership agreements. The Company has no influence over partnership operating and financial policies. The Company uses the equity method to account for the investments with ownership interest greater than five percent. For the investments with ownership interest atfive percent or less, the Company uses the net asset value method to estimate the fair value of these investments. The Company generally recognizes its share of the limited partnerships’ earnings or losses on a three-month lag. Due to the lag, the Company may record an adjustment to the Company’s most recent share of net asset value when the amount can be reasonably estimated and a significant adverse impact on the net asset value is expected as a result of a major economic event.

Net investment income or loss from limited partnerships represents a net aggregate amount of operating results allocated to the Company based on the percentage of ownership interest in each limited partnership. These limited partnerships measure their investments at fair value and reflect the related unrealized gains and losses in their statements of income. Accordingly, the application of the equity method and the net asset value method result in the carrying value of limited partnership investments to approximate their estimated fair value as of each reporting date.

Distributions from limited partnership investments that represent a return on investment are classified as operating cash flows in the consolidated statements of cash flows while distributions from limited partnership investments that represent a return of capital are classified as investing cash flows in the consolidated statements of cash flows.

Real Estate Investments. Real estate investments include real estate and the related assets purchased for investment purposes. Real estate and the related depreciable assets are stated at historical cost less accumulated depreciation. Depreciation expense for real estate investments is included in net investment income in the consolidated statements of income and is calculated on a straight-line basis over the estimated useful lives. Real estate investments are evaluated for impairment when events or circumstances indicate the carrying value of the real estate may not be recoverable.

Deferred Policy Acquisition Costs. Deferred policy acquisition costs (“DAC”) represent direct costs to acquire insurance contracts and consist of premium taxes, inspection fees, and commissions paid to outside agents at the time of collection of the policy premium. DAC may also include expenses associated with the transition of policies from other insurers for replacement policies and the issuance of renewal policies under the Company’s own rates and terms. DAC is amortized over the life of the related policy in relation to the amount of gross premiums earned. Ceding commission and related costs paid associated with assumed business are also deferred and amortized over the life of the reinsurance agreement. The amortization of DAC is included in policy acquisition and other underwriting expenses in the consolidated statements of income.

DAC is reviewed to determine if it is recoverable based on future premium income, investment income, unpaid losses and loss adjustment expenses, and certain other costs expected to be incurred as premiums are earned. If DAC is determined to be unrecoverable, it is expensed at the time of determination. The amount of DAC considered recoverable could be reduced in the near term if the estimates of total gross premium earned are reduced or permanently impaired as a result of the disposition of a line of business. The amount of amortization of DAC could be revised in the near term if any of the gross premium earned estimates discussed above are revised.

Property and Equipment. Property and equipment is stated at historical cost less accumulated depreciation. Depreciation expense is included in other operating expenses in the consolidated statements of income and is calculated on a straight-line basis over the estimated useful lives as follows:

Expenditures for improvements are capitalized to the property accounts. Replacements and maintenance and repairs that do not improve or extend the life of the respective assets are expensed as incurred. The Company capitalizes both internal and external costs for internally developed software during the application development stage. During the preliminary project and post-implementation stage, internal-use software development costs are expensed as incurred. Capitalized software costs are depreciated on a straight-line basis over the estimated useful life ofseven years.

Impairment of Long-Lived Assets. Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company groups assets at the lowest level for which cash flows are separately identified. The Company assesses the recoverability of an asset group by determining whether the assets can be recovered from undiscounted future cash flows. If the expected undiscounted future cash flows of an asset group are less than its carrying amount, an impairment loss is recognized based on the amount by which the carrying amount exceeds the fair value less costs to sell. The calculation of the fair value less costs to sell of an asset group is based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk. There were no material impairments of long-lived assets during the periods presented.

Leases. The Company leases office equipment, storage units, and office space from non-affiliates. In assessing whether a contract is or contains a lease, the Company first determines whether there is an identified asset in the contract. The Company then determines whether the contract conveys the right to obtain substantially all of the economic benefits from use of the identified asset or the right to direct the use of the identified asset. The Company elects not to record any lease with a term of 12 months or less on the consolidated balance sheet. For such short-term leases, the Company recognizes the lease payments in expense on a straight-line basis over the lease term.

If the contract is or contains a lease and the Company has the right to control the use of the identified asset, the right-of-use (“ROU”) asset and the lease liability is measured from the lease component of the contract and recognized on the consolidated balance sheet. In measuring the lease liability, the Company uses its incremental borrowing rate for a loan secured by a similar asset that has a term similar to the lease term to discount the lease payments. The contract is further evaluated to determine the classification of the lease as to whether it is finance or operating. If the lease is a finance lease, the ROU asset is depreciated to depreciation expense over the shorter of the useful life of the asset or the lease term. Interest expense is recorded in connection with the lease liability using the effective interest method. If the lease is an operating lease, the ROU asset is amortized to lease expense on a straight-line basis over the lease term. For the presentation of finance leases on the Company’s consolidated balance sheets, ROU assets and corresponding lease liabilities are included with property and equipment, net, and long-term debt, respectively. For the presentation of operating leases on the Company’s consolidated balance sheets, ROU assets and corresponding lease liabilities are included in other assets and accrued expenses and other liabilities, respectively. The Company does not have any material operating or financing lease arrangements in which it is the lessee.

The Company as a lessor leases its commercial and retail properties, boat slips, and docks to non-affiliates at various terms. If the contract gives the Company’s customer the right to control the use of the identified asset, revenue is recognized on a straight-line basis over the lease term. Initial direct costs incurred by the Company are deferred and amortized on a straight-line basis over the lease term. The Company also records an unbilled receivable, which is the amount by which straight-line revenue exceeds the amount billed in accordance with the lease. The underlying assets are presented as real estate investments in the consolidated balance sheets.

Intangible Assets. Intangible assets related to real estate investments consist of the value attributable to the acquired in-place leases and the anchor tenant relationships. The value attributable to the anchor tenant relationship represents the economic benefits of having a nationally recognized retailer as the lead tenant, which draws consumer traffic and other tenants to the retail center. These intangibles are amortized on a straight-line basis over the related lease term. Amortization of the intangible assets related to real estate investments is reflected in net investment income in the consolidated statements of income.

Intangible assets also include the fair value of consideration the Company paid and is estimated to pay in exchange for the renewal rights and non-compete intangible assets acquired from the seller. In the renewal rights transactions, the Company purchased the right, but not the obligation, to offer homeowners insurance coverage to all policyholders of the seller in certain states on the agreed-upon policy replacement date. The renewal rights agreements also contain a non-compete clause whereby the seller agrees not to offer homeowners insurance policies in these states through a specified date. These intangible assets are amortized on a straight-line basis over their estimated useful lives. Amortization of the renewal rights and non-compete intangible assets is reflected in other operating expenses in the consolidated statements of income.

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. In the event the Company determines the carrying value is not recoverable, an impairment loss is recorded in the Company’s consolidated statements of income. There were no material impairments of intangible assets during the periods presented.

Funds Withheld for Assumed Business. Pursuant to the Company’s quota share reinsurance agreements with United Property & Casualty Insurance Company (“United”), trust accounts were established for the benefit of United as beneficiary. The trust balances represent the net amount owed to the Company under the reinsurance agreements. The trusts consist of a) funds deposited to establish the accounts and b) premiums, including any subsequent premium adjustment, and are reduced by commissions and paid losses and loss adjustment expenses. The assets within the trust accounts consist primarily of cash. Funds remaining at the completion of the quota share agreements are to be distributed according to the trust agreements. Prior to United being placed into receivership by the State of Florida on February 27, 2023, United had the exclusive and unconditional right to withdraw funds from the trust accounts on demand with written notice in compliance with the quota share reinsurance agreements. The funds are now under the control of the receiver.

Lease Acquisition Costs. Lease acquisition costs represent capitalized costs of finding and acquiring tenants such as leasing commissions, legal, and marketing expenses. The costs are included in other assets on the consolidated balance sheets. The Company amortizes these costs in other operating expenses on a straight-line basis over the term of a lease.

Long-Term Debt. Long-term debt includes debt instruments and finance lease liabilities. A debt instrument is generally classified as a liability and carried at amortized cost, net of any issuance costs. Debt issuance costs are capitalized and amortized to interest expense over the expected life of the debt instrument using the effective interest method. At issuance, a debt instrument with embedded features such as conversion and redemption options is evaluated to determine whether bifurcation and derivative accounting is applicable. Any embedded feature other than the conversion option is evaluated at issuance to determine if it is probable that such embedded feature will be exercised. If the Company concludes that the exercisability of that embedded feature is not probable, the embedded feature is considered to be non-substantive and would not impact the initial measurement and expected life of the debt instrument.

Redeemable Noncontrolling Interests. A redeemable noncontrolling interest relates to the portion of the economic interest of a subsidiary or consolidated VIE that is not owned by the Company and for which the redemption of the interest is outside the control of the Company. Redeemable noncontrolling interests are presented in temporary equity (mezzanine) section of the consolidated balance sheets.

CORE and Tailrow are each considered to be a consolidated VIE. The redeemable noncontrolling interests in CORE and Tailrow represent a refundable portion of subscriber surplus contributions. In general, a reciprocal insurance exchange collects surplus contributions in addition to policy premiums from its policyholders referred to as subscribers. The purpose of the surplus contribution is to support the reciprocal insurance exchange's financial strength and lower their cost of capital. The surplus contribution made during a policy term may be returned on a pro-rata basis to a subscriber in the event of policy cancellation. As the term of an insurance policy progresses, a portion of the surplus contribution is reclassified from redeemable noncontrolling interest to the noncontrolling interest as the surplus contributions become non-refundable.

Prior to redemption in the first quarter of 2024, Exzeo issued Series A preferred stock to an investor (“Exzeo Series A Preferred Stock”), which contained rights in dividends, voting, conversion, participation, liquidation preference and redemption. The Exzeo Series A Preferred Stock was classified as temporary equity (mezzanine) on the consolidated balance sheets as the redemption features were not solely within the Company's control. At issuance, the Series A Preferred Stock was recorded at fair value, net of issuance costs, applying a residual fair value method. Subsequent to issuance, the carrying amount was adjusted each reporting period for (i) accrued dividends (ii) dividend payments, and (iii) accretion required to reflect the increasing contractual dividend rate over the life of the instrument. Dividends were contractually payable in cash or in kind and were accrued monthly based on the assumption of cash settlement. In periods when redemption became probable or determinable, the carrying amount was adjusted to the greater of (i) the contractual redemption amount or (ii) fair value at the reporting date. Such adjustments were treated as deemed dividends when calculating net income attributable to common stockholders. The effect of dividends and increasing dividend rates were recorded to net income or loss attributable to redeemable noncontrolling interests in the consolidated statements of income.

Noncontrolling Interests. A noncontrolling interest relates to the portion of the economic interest of a subsidiary or consolidated VIE that is not owned by the Company. Accordingly, the Company has noncontrolling interests attributable to Exzeo, CORE, and Tailrow. Noncontrolling interests are adjusted for the net income or loss of the subsidiary or consolidated VIE that is not owned by the Company, which is reflected as income or loss attributable to noncontrolling interests in the consolidated statements of income, as well as any associated changes in accumulated other comprehensive income or loss. Additionally, noncontrolling interests are periodically adjusted for transactions which change the Company's economic interest of a subsidiary or consolidated VIE. The Company includes stock-compensation associated with stock-based awards granted by a subsidiary or consolidated VIE in noncontrolling interests.

Losses and Loss Adjustment Expenses. The Company accrues for losses and loss adjustment expenses (“LAE”) in the period in which the underlying loss event occurred. LAE are costs associated with the investigation, evaluation, adjustment, and settlement of insurance claims and can be either allocated, costs directly attributable to a specific claim, or unallocated, costs that cannot be directly attributed to a specific claim. Reserves for losses and LAE are determined by establishing liabilities in amounts estimated to cover incurred losses and LAE. Such reserves are determined based on the assessment of claims reported and the development of pending claims. These reserves are based on individual case estimates for the reported losses and LAE and estimates of such amounts that are incurred but not reported.

The estimates of unpaid losses and LAE are subject to trends in claim severity and frequency and are continually reviewed. As part of the process, the Company reviews historical data and considers various factors, including known and anticipated regulatory and legal developments, changes in social attitudes, inflation and economic conditions. As experience develops and other data becomes available, these estimates are revised, as required, resulting in increases or decreases to the existing unpaid losses and LAE. Adjustments are reflected in the results of operations in the period in which they are made and the liabilities may deviate substantially from prior estimates. Losses and LAE ceded to or recovered from reinsurers are recorded as a reduction to losses and LAE on the consolidated statements of income. Accordingly, losses and LAE in the consolidated statements of income are net of reinsurance.

Advance Premiums. Premium payments received prior to the policy effective date are recorded as advance premiums. Once the policy is in force, the premiums are recorded as described under “Premium Revenue” below.

Premiums Receivable. Premiums receivable represent the amount of premiums due from policyholders for insurance coverage. Premiums are recorded as receivable in the Company’s general ledger on the effective date of the policy. Premiums are billed to the policyholder 45-60 days in advance of the effective date. The policyholder is given a 30-day grace period after the effective date to pay the premium before the insurance coverage is cancelled. If the policyholder does not pay the premium, the Company can cancel the policy and has no obligation to provide insurance coverage. Unpaid renewal policies are cancelled at midnight on the last day of the period for which the policyholder has paid. The unearned premium liability for the cancelled policy is reversed along with the premium receivable balance. Therefore, there isno unpaid earned premium and credit loss associated with the cancelled policy.

However, when the 30-day grace period falls between two reporting periods, the premium receivable balance at the end of the first reporting period may potentially be overstated for not considering the policy that is subsequently cancelled during the following reporting period. To mitigate the overstatement issue, the Company estimates the monetary impact from the subsequent policy cancellation by multiplying the historical cancellation rate to the premiums receivable balance at the reporting date. An allowance for uncollectible premiums, which offsets the balance of premiums receivable, is established by reducing the unearned premiums liability and earned revenues.

As of December 31, 2025 and 2024, allowances for uncollectible premiums were $4,469 and $5,891 respectively.

Reinsurance Ceded. In the normal course of business, the Company seeks to reduce the loss that may arise from catastrophes or other events by reinsuring certain levels of risk in various areas of exposure with other insurance enterprises or reinsurers. The Company contracts with a number of reinsurers to secure its annual reinsurance coverage, which generally becomes effective June 1st of each year. The Company purchases reinsurance each year taking into consideration probable maximum losses and reinsurance market conditions. Amounts recoverable from reinsurers are estimated in a manner consistent with the applicable reinsurance contract or contracts. Premiums ceded to other companies have been reported as a reduction of gross premiums earned to arrive at net premiums earned. Prepaid reinsurance premiums represent the unexpired portion of premiums ceded to reinsurers.

From time to time, the Company may elect to pay a reinstatement premium to a reinsurer in order to restore an amount of reinsurance coverage limit exhausted by a loss event. When that occurs, the unamortized portion of the existing prepaid reinsurance premium associated with the first coverage limit will be immediately expensed. The reinstatement premium will be recognized as prepaid reinsurance premium which will be amortized to premiums ceded over the remaining coverage period of a contract.

One of the Company’s reinsurance contracts contained retrospective provisions including terms and conditions that adjust premiums based on the loss experience under the contract. In such cases, a with-and-without method is used to estimate the asset or liability amount to be recognized at each reporting date. The amount of the estimate is the difference between the net contract costs before and after the loss experience under the contract. Estimates related to premium adjustments are recognized in ceded premiums earned. These estimates are reviewed monthly based on the loss experience to date and as adjustments become necessary. Such adjustments in premiums ceded are reflected in the Company’s current operations and recorded in other assets until received upon the expiration of the contract.

The Company may receive ceding commissions from ceding gross written premiums to a third-party reinsurer under a reinsurance contract. The ceding commissions represent the reimbursement of the Company’s policy acquisition, underwriting and other operating expenses. Ceding commissions received cover a portion of premium taxes and agent commissions deferred by the Company and a portion of non-deferred acquisition costs and other underwriting expenses. Ceding commissions are recognized as income on a pro-rata basis over the terms of the policies reinsured, the amount of which is included in policy acquisition and other underwriting expenses in the consolidated statements of income. The unearned portion of ceding commissions that represents recovery of DAC is classified as a reduction of DAC whereas the remaining unearned balance is classified as deferred revenue in accrued expenses and other liabilities.

Reinsurance Assumed. From time to time, the Company agrees to assume risk from another insurance company. Reinsurance premiums, commission, cost allowance, and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums assumed from other insurance companies are included in gross premiums earned. Ceding commissions on assumed gross written premiums and related costs paid are reflected as DAC which is amortized as expense on a pro-rata basis over the life of the reinsurance agreement. This amortized expense is included in policy acquisition and other underwriting expenses in the consolidated statements of income.

Premium Revenue. Premium revenue includes premium from the direct issuance of policies to insureds or the renewal or replacement of insureds’ policies and assumed premium for providing coverage under reinsurance agreements. Premium revenue is earned on a daily pro-rata basis over the term of the policies and is included in gross premiums earned. Unearned premiums represent the portion of the premiums attributable to the unexpired policy term. The Company reviews its policy detail and establishes an allowance for any amount outstanding for more than 90 days.

Policy Fees. Policy fees represent nonrefundable fees for insurance coverage, which are intended to reimburse a portion of the costs incurred to underwrite the policy. Policy fees are recognized ratably over the policy coverage period.

Insurance Guaranty Association Assessments. The Company’s insurance subsidiaries may be assessed by state associations such as the Florida Insurance Guaranty Association (“FIGA”). The assessments are intended to be used for the payment of covered claims of insolvent insurance entities. The assessments are generally based on a percentage of premiums written during or following the year of insolvency. Liabilities are recognized when the assessments are probable to be imposed on the premiums on which they are expected to be based and the amounts can be reasonably estimated and are included in accrued expenses and other liabilities on the consolidated balance sheets. An insurer is generally permitted to recover the entire amount of assessments from in-force and future policyholders through policy surcharges. U.S. GAAP provides that the Company should record an asset based on the amount of written or obligated-to-write premiums and limited to the amounts recoverable over the life of the in-force policies.

Foreign Currency. Thefunctional currency of the Company’s Indian subsidiary is the U.S. dollar. As such, the monetary assets and liabilities of this subsidiary are remeasured into U.S. dollars at the exchange rate in effect on the balance sheet date. Non-monetary assetsand liabilities are remeasured using historical rates. Expenses recorded in the local currency are remeasured at the prevailing exchange rate. Exchange gains and losses resulting from these remeasurements are included in other operating expenses.

Income Taxes. The Company files consolidated federal and state income tax returns and allocate taxes among its subsidiaries in accordance with a written tax-allocation agreement.

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are recognized for the temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The effect on deferred income tax assets and liabilities of a change in tax laws is recognized in the results of operations in the period the new laws are enacted. A valuation allowance is recorded to reduce the carrying amount of deferred income tax assets to the estimated realization amount.

The valuation allowance for deferred income tax assets relates to the uncertainty of the utilization of U.S. federal, state and foreign deferred income tax assets. In evaluating the Company's ability to recover its deferred income tax assets, the Company considers all available positive and negative evidence, which include its past operating results, the existence of cumulative losses in the most recent years, and its forecast of future taxable income. In estimating future taxable income, the Company develops assumptions related to the amount of future pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company uses to manage its underlying businesses.

The Company recognizes positions taken or expected to be taken in a tax return in the consolidated financial statements when it is more-likely-than-not (i.e., a likelihood of more than 50%) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit with greater than 50% likelihood of being realized upon ultimate settlement. The Company records liabilities for positions that have been taken but do not meet the more-likely-than-not recognition threshold. The Company includes interest and penalties associated with unrecognized tax benefits as income tax expense and as a component of the recorded balance of unrecognized tax benefits.

Stock-Based Compensation. The Company issues stock-based compensation awards to employees and non-employee directors on a periodic basis in the form of stock options and restricted stock awards. The fair value of a stock-based award is determined on the date of grant and recognized over a period of time, depending on the type and conditions underlying the award.

For stock-based awards that contain only a service-based vesting condition, the grant date fair value of the award is recognized as compensation expense on a straight-line basis over the requisite service period. The fair value of a stock option is determined using the Black-Scholes option-pricing model, which uses the following significant inputs and assumptions: (i) the price per share of common stock, (ii) the exercise price, (iii) the risk-free interest rate, (iv) the dividend yield, (v) the contractual term, and (vi) the estimated volatility. These inputs are developed based on historical data and market information. The fair value of a restricted stock award is determined by the market price of the stock on the date of grant.

For restricted stock awards that contain a market-based vesting condition, fair value is determined using a Monte Carlo simulation model with the assistance of a third-party valuation specialist. Additionally, the grant date fair value of the award is recognized as compensation expense on a straight-line basis over the derived service period, which is also determined using a Monte Carlo simulation. The recognition of expense may be accelerated if the market conditions are met sooner than estimated.

For stock-based awards granted by a non-public subsidiary, an independent valuation specialist will assist in determining the fair value of the underlying stock price of the subsidiary using different valuation methods such as a Monte Carlo simulation model and a binomial distribution model. Inputs such as an estimated stock price of the Company's private subsidiary and expected price volatility used in these valuation methods are derived mathematically from a data analysis of many public peer companies with similar characteristics.

The Company's stock-based compensation awards are equity-classified with the associated compensation expense included in general and administrative personnel expenses in the consolidated statements of income. Stock-based compensation for awards granted under a subsidiary's stock-based compensation plan are included in noncontrolling interests in the consolidated balance sheets. The Company recognizes forfeitures as they occur and does not estimate forfeiture rates at grant date. Previously recognized compensation expense is reversed in the period an award is forfeited. Tax windfalls or tax shortfalls related to stock-based awards are recognized in the consolidated statements of income in the period the awards vest or are exercised.

Basic and Diluted Earnings Per Share. The Company applies the two-class method for computing and presenting earnings per share since the Company’s unvested restricted stock awards represent participating securities due to the right to share in dividends, if declared, equally with common stockholders. The two-class method allocates current period net income to common stock and participating securities based on (i) dividends declared and (ii) participation rights in the remaining undistributed income. For a majority-owned subsidiary, the Company’s proportionate share in that majority-owned subsidiary’s earnings per share is added to the computation of earnings per share on a consolidated basis.

Basic earnings per share is computed by dividing income attributable to common stockholders using the two-class method by the weighted-average number of shares of common stock outstanding during the period.

Diluted earnings per share gives effect to all securities having a dilutive effect on income attributable to common stockholders, weighted-average shares of common stock outstanding, or both. The effect from potential dilutive securities included, but was not limited to: (i) incremental shares of common stock calculated using the if-converted method for convertible debt instruments; (ii) incremental shares of common stock calculated using the treasury stock method for warrants and share-based compensation awards; (iii) adjustments to a majority-owned subsidiary's earnings per share due to its potentially dilutive securities; and (iv) the corresponding impact to income attributable to common stockholders associated with the preceding considerations. Netlosses are not allocated to participating securities as the participating securities do not have a contractual obligation to share in losses.

Statutory Accounting Practices. The Company’s U.S. insurance subsidiaries comply with statutory accounting practices prescribed by the National Association of Insurance Commissioners (“NAIC”) and as adopted or permitted by the Florida Department of Financial Services, Office of Insurance Regulation (“FLOIR”). There are no state prescribed or permitted practices that have been adopted by the Company’s U.S. subsidiaries. In addition, Claddaugh Casualty Insurance Company, Ltd. (“Claddaugh”), the Company’s wholly-owned Bermuda domiciled captive reinsurance subsidiary, prepares and files financial statements in accordance with the prescribed regulatory accounting practices of the Bermuda Monetary Authority.

Reclassification. Certain reclassifications of prior year amounts have been made to conform to the current year presentation.

Note 3 -- Recent Accounting Pronouncements

Adopted

Accounting Standards Update No. 2023-09. In December 2023, the FASB issued Accounting Standards Update No. 2023-09 (“ASU 2023-09”)Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update enhances income tax disclosures by requiring public entities to report income tax expense disaggregated by federal, state, and foreign taxes, with further detail on specific jurisdictions over a quantitative threshold. In addition, public entities must also separately disclose reconciling items equal to or greater than five percent of pretax income from operations by the applicable federal statutory rate. ASU 2023-09 is effective for public entities for annual periods beginning after December 15, 2024. The adoption of this update resulted in additional income tax disclosures.

Accounting Standards Update No. 2024-04. In November 2024, the FASB issued Accounting Standards Update No. 2024-04 (“ASU 2024-04”)Debt–Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. This update clarifies whether entities should apply extinguishment accounting or induced conversion accounting when recording the settlement of convertible debt instruments due to an induced conversion. ASU 2024-04 is effective for all entities for fiscal years beginning after December 15, 2025. Early adoption is permitted. The Company elected to early adopt this update effective January 1, 2025. The adoption of this update had no impact on the Company’s financial position or results of operation upon adoption as the new guidance applies prospectively from January 1, 2025.

Pending Adoption

Accounting Standards Update No. 2025-01 and 2024-03. In January 2025, the FASB issued Accounting Standards Update No. 2025-01 (“ASU 2025-01”)Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This update clarifies the effective date of Accounting Standards Update No. 2024-03 (“ASU 2024-03”)Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which was issued by the FASB in November 2024. For public business entities, ASU 2024-03 enhances disclosures by requiring the disaggregation of certain expense captions presented within the income statement, such as employee compensation and intangible asset amortization. In addition, the total relevant expense caption on the income statement must be reconciled to the aggregate of the separately disclosed expense categories with the difference represented by an “other items” amount which is qualitatively described. ASU 2024-03 is effective for all public business entities for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating its impact.

Accounting Standards Update No. 2025-05. In July 2025, the FASB issued Accounting Standards Update No. 2025-05 (“ASU 2025-05”)Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This update simplifies the estimation of current expected credit losses on current accounts receivable and current contract assets related to revenue from contracts with customers by allowing all entities to assume that current conditions as of the balance sheet date will not change for the remaining life of the current accounts receivable and current contract assets. ASU 2025-05 is effective for all entities for fiscal years and interim periods beginning after December 15, 2025. Early adoption is permitted. The Company is evaluating its impact.

Accounting Standards Update No. 2025-06. In September 2025, the FASB issued Accounting Standards Update No. 2025-06 (“ASU 2025-06”)Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This update enhances guidance on the capitalization of software development costs by eliminating project phase based criteria and clarifying the conditions signifying significant development uncertainty used by entities to evaluate when the probable-to-complete recognition threshold is met. ASU 2025-06 is effective for all entities for fiscal years and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating its impact.

Note 4 -- Cash and Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Company’s consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:

The majority of the Company’s cash and cash equivalents are held at major financial institutions. Certain account balances exceed the Federal Deposit Insurance Corporation insurance limits of $250 per account. As a result, there is a concentration of credit risk related to amounts in excess of the insurance limits. The Company regularly monitors the financial stability of these financial institutions and believes that there is no exposure to any significant credit risk in cash and cash equivalents.

Note 5 -- Investments

Available-for-Sale Fixed-Maturity Securities

The Company holds investments in fixed-maturity securities that are classified as available-for-sale. As of December 31, 2025 and 2024, the cost or amortized cost, allowance for credit loss, gross unrealized gains and losses, and estimated fair value of the Company’s available-for-sale fixed-maturity securities by security type were as follows:

Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties. The scheduled contractual maturities of available-for-sale fixed-maturity securities as of December 31, 2025 and 2024 are as follows, with securities not due at a single maturity date shown separately:

Securities on Deposit

The fair value of available-for-sale fixed-maturity securities on deposit with various regulatory authorities as of December 31, 2025 and 2024 was $1,807 and $1,794, respectively.

Sales of Available-for-Sale Fixed-Maturity Securities

Proceeds received, and the gross realized gains and losses from sales of available-for-sale fixed-maturity securities, during 2025, 2024, and 2023 were as follows:

Gross Unrealized Losses for Available-for-Sale Fixed-Maturity Securities

Available-for-sale fixed maturity securities with gross unrealized loss positions as of December 31, 2025 and 2024, aggregated by investment category and length of time the individual securities have been in a continuous loss position, were as follows:

As of December 31, 2025 and 2024, there were 47 and 56 available-for-sale fixed-maturity securities, respectively, in an unrealized loss position.

Allowance for Credit Losses of Available-for-Sale Fixed-Maturity Securities

The Company regularly reviews its individual available-for-sale fixed-maturity securities for credit impairment. The Company considers various factors in determining whether a credit loss exists for each individual security, including:

•

the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or earnings;

•

the extent to which the market value of the security has been below its cost or amortized cost;

•

general market conditions and industry or sector specific factors and other qualitative factors;

•

nonpayment by the issuer of its contractually obligated interest and principal payments; and

•

the Company’s intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs.

There was no balance or activity in the allowance for credit losses of available-for-sale fixed maturity securities during 2025, 2024, and 2023.

Equity Securities

The Company holds investments in equity securities measured at fair values which are readily determinable. As of December 31, 2025 and 2024, the cost, gross unrealized gains and losses, and estimated fair value of the Company’s equity securities were as follows:

The table below presents the portion of unrealized gains and losses in the Company’s consolidated statements of income related to equity securities still held:

Sales of Equity Securities

Proceeds received, and the gross realized gains and losses from sales of equity securities, during 2025, 2024, and 2023 were as follows:

Limited Partnership Investments

The Company has interests in limited partnerships that are not registered or readily tradeable on a securities exchange. These partnerships are private equity funds managed by general partners who make decisions with regard to financial policies and operations. As such, the Company is not the primary beneficiary and does not consolidate these partnerships. The following table provides information related to the Company’s investments in limited partnerships:

(a)

Represents the Company’s percentage investment in the fund at each balance sheet date.

(b)

Except under certain circumstances, withdrawals from the funds or any assignments are not permitted. Distributions, except income from late admission of a new limited partner, will be received when underlying investments of the funds are liquidated.

(c)

The term is expected to be two years following the maturity of the fund’s outstanding leverage. Although the capital commitment period has expired, follow-on investments and pending commitments may require additional fundings.

(d)

Effective July 1, 2023, this investment is in the process of winding down. Although the capital commitment period has ended, the general partner could still request an additional funding under certain circumstances.

(e)

At the fund manager’s discretion, the term of the fund may be extended for up totwo additionalone-year periods.

(f)

Expected to have aten-year term. The capital commitment period has expired but the general partner may request additional funding for follow-on investment.

(g)

With the consent of a supermajority of partners, the term of the fund may be extended for up tothree additionalone-year periods.

(h)

Expected to have aneight-year term from the commencement date, which can be extended for up totwo additionalone-year periods with the consent of either the advisory committee or a majority of limited partners.

(i)

The capital commitment period has ended but an additional funding may be requested.

(j)

The term is expected to end November 27, 2027. The term may be extended for up tofour additionalone-year periods at the general partner’s discretion, and up totwo additionalone-year periods with the consent of the advisory committee.

(k)

Expected to have aneight-year term after the final admission date. The term may be extended for an additionalone-year period at the general partner’s discretion, and up totwo additionalone-year periods with the consent of either the advisory committee or a majority of limited partners.

The following is the summary of aggregated unaudited financial information of limited partnerships included in the investment strategy table above, which in certain cases is presented on a three-month lag due to the unavailability of information at the Company’s respective balance sheet dates. The financial statements of these limited partnerships are audited annually.

*Includes net change in unrealized gains or losses on investments.

During 2025, the Company recognized net investment loss of $820. During 2024 and 2023, the Company recognized net investment income of $597 and $661, respectively.

During 2025, 2024, and 2023, distributions of return on investment from limited partnership investments totaled $1, $1,020, and $1,148, respectively, and distributions of return of capital from limited partnership investments totaled $2,291, $3,591, and $3,115, respectively.

As of December 31, 2025 and 2024, the Company’s net cumulative contributed capital to the limited partnership investments totaled $18,697 and $20,987, respectively, and the Company’s maximum exposure to loss aggregated $17,690 and $20,801, respectively.

Real estate investments consist of the following as of December 31, 2025 and 2024:

During 2025, the Company purchased commercial property in St. Petersburg, Florida for approximately $19,000. There were no newly acquired properties during 2024. During 2023, the Company purchased vacant land, which was developed into a retail shopping center and placed into service during 2025 in Haines City, Florida for $3,393, of which $1,582 was recognized as real estate investments and $1,811 was recognized as intangible assets, as well as commercial real estate in Tampa, Florida for $17,270, of which $4,446 was related to below market rent that was primarily recognized in net investment income during 2024.

During 2025, proceeds from sales of real estate investments were $2,013 and resulted in gains of $440 related to the sale of land. There were no sales of real estate investments during 2024. During 2023, proceeds from sales of real estate investments were $21,746 and resulted in gains of $8,811 as well as the derecognition of long-term debt due to assumption of $8,979 and the derecognition of intangible assets of $2,200 related to the sales of the retail shopping centers in Melbourne, Florida and Sorrento, Florida.

Depreciation expense related to real estate investments was $2,032, $1,113, and $1,147 during 2025, 2024, and 2023, respectively.

Net Investment Income

Net investment income, by source, is summarized as follows:

Note 6 -- Fair Value Measurements

The Company records and discloses certain financial assets at their estimated fair values. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets.

Level 2 – Other inputs that are observable for the asset, either directly or indirectly such as quoted prices for identical assets that are not observable throughout the full term of the asset.

Level 3 – Inputs that are unobservable.

Valuation Methodology

Cash and Cash Equivalents

Cash and cash equivalents primarily consist of money-market funds and certificates of deposit maturing within three months from the time of purchase. Their carrying value approximates fair value due to the short maturity and high liquidity of these funds.

Restricted Cash

Restricted cash represents cash held by state authorities and the carrying value approximates fair value.

Available-for-Sale Fixed-Maturity and Equity Securities

Estimated fair values of the Company’s available-for-sale fixed-maturity and equity securities are determined in accordance with U.S. GAAP, using valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair values are generally measured using quoted prices in active markets for identical securities or other inputs that are observable either directly or indirectly, such as quoted prices for similar securities. In those instances where observable inputs are not available, fair values are measured using unobservable inputs. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the security and are developed based on the best information available in the circumstances. Fair value estimates derived from unobservable inputs are significantly affected by the assumptions used, including the discount rates and the estimated amounts and timing of future cash flows. The derived fair value estimates cannot be substantiated by comparison to independent markets and are not necessarily indicative of the amounts that would be realized in a current market exchange.

The estimated fair values for securities are determined by management, utilizing prices obtained from an independent pricing service and information provided by brokers, which are level 1 or level 2 inputs depending on the asset class. Management reviews the assumptions and methods utilized by the pricing service and then compares the relevant data and pricing to broker-provided data. The

Company gains assurance of the overall reasonableness and consistent application of the assumptions and methodologies, and compliance with accounting standards for fair value determination through ongoing monitoring of the reported fair values.

Other Investments

The following table summarizes other investments held by the Company and the method used in estimating the fair value:

Revolving Credit Facility

From time to time, the Company has an amount outstanding under a revolving credit facility. The interest rate is variable and is periodically adjusted based on the Secured Overnight Financing Right (“SOFR”) plus a ten basis points adjustment plus a margin based on the debt-to-capital ratio. As a result, carrying value approximates fair value.

Long-Term Debt

The following table summarizes components of the Company’s long-term debt and methods used in estimating their fair values:

*Converted during 2025. See Note 11“Long-Term Debt” for additional information.

Assets Measured at Estimated Fair Value on a Recurring Basis

The following tables present information about the Company’s financial assets measured at estimated fair value on a recurring basis. The tables indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of December 31, 2025 and 2024:

Assets and Liabilities Carried at Other Than Fair Value

The following tables present fair value information for assets and liabilities that are carried on the consolidated balance sheets at amounts other than fair value as of December 31, 2025 and 2024:

Note 7 -- Deferred Policy Acquisition Costs

The following table summarizes the activity with respect to DAC:

Note 8 -- Property and Equipment, Net

Property and equipment, net consists of the following:

Depreciation expense for property and equipment was $4,238, $3,759 and $3,296 during 2025, 2024, and 2023, respectively.

Note 9 -- Intangible Assets, Net

Intangible assets, net consist of the following:

(a)Fully amortized.

During the periods presented, the recognition and derecognition of intangible assets have occurred in connection with real estate investment transactions. See Real Estate Investments under Note 5 -- “Investments” for further discussion.

Amortization expense for intangible assets was $2,523, $2,453 and $2,530 during 2025, 2024, and 2023, respectively.

The remaining weighted-average amortization periods for the intangible assets as of December 31, 2025 are summarized in the table below:

Amortization expense for intangible assets after December 31, 2025 is as follows:

Note 10 -- Revolving Credit Facility

The Company had a $36,000 and $44,000 outstanding balance under a senior secured revolving credit facility with Fifth Third Bank (“Revolving Credit Facility”) as of December 31, 2025 and 2024, respectively. The Revolving Credit Facility, as amended on November 5, 2025, currently provides borrowing capacity of up to $150,000 and expires on November 5, 2030. Borrowings under the Revolving Credit Facility bear interest at an annual rate equal to the one or three month SOFR plus a ten basis points adjustment plus a margin based on the debt-to-capital ratio, with interest payments due in arrears on January 1, April 1, July 1, and October 1. In addition, the Company is subject to an unused commitment fee.

Interest expense associated with the Revolving Credit Facility was $2,483, $3,247 and $82 during 2025, 2024, and 2023, respectively.

The Revolving Credit Facility is secured by the Company’s business assets, excluding Exzeo. Under the current terms of the agreement, the Company is subject to certain financial statement covenants as follows:(1) Minimum Tangible Net Worth (as defined in the underlying credit agreement) shall not be below $300,000 plus 50% of aggregate quarterly net income on a consolidated basis beginning September 30, 2025, (2) the maximum debt-to-capital ratio shall not exceed 40.0%, and (3) the Authorized Control Level Risk Based Capital Ratio of HCPCI and TTIC (as defined in the underlying credit agreement) shall not be less than 300% as of each year end.

As of December 31, 2025, the Company was in compliance with all required covenants and had an available borrowing capacity of $114,000.

Note 11 -- Long-Term Debt

The following table summarizes the Company’s long-term debt:

The following table summarizes future maturities of long-term debt as of December 31, 2025:

The following table summarizes interest expense related to long-term debt:

Convertible Senior Notes

During the first quarter of 2025, the Company notified the holders of its outstanding 4.75% Convertible Senior Notes due 2042 (the “Notes”) that the Company had elected to redeem the remaining $172,500 principal balance of the Notes. As a result, the Notes became immediately convertible into the Company’s common shares, with a redemption date of June 5, 2025. The conversion rate of the Notes was 12.6789 shares of common stock per $1 of principal. The Company converted $172,500 in aggregate principal into consideration of 2,187,063 shares of the Company’s common stock and $1,133 in cash. The cash consideration included an inducement payment of $1,125 and $8 paid in lieu of fractional shares. The Company recognized an expense related to the inducement payment of $1,125 in other operating expenses on the consolidated statements of income and as financing cash flows on the consolidated statements of cash flows.

During the first quarter of 2024, the Company notified the holders of its outstanding 4.25% Convertible Senior Notes due 2037 that the Company had elected to redeem the remaining $23,916 principal balance of the 4.25% Convertible Senior Notes. As a result of this notice, the 4.25% Convertible Senior Notes became immediately convertible into the Company’s common shares, with a redemption date of March 15, 2024. The conversion rate of the Company’s 4.25% Convertible Senior Notes was 16.5892 shares of common stock for each $1 in principal amount, which was the equivalent of approximately $60.25 per share. The Company converted $23,450 in aggregate principal of 4.25% Convertible Senior Notes for aggregate consideration of 389,087 shares of the Company’s common stock plus $1 cash consideration in lieu of fractional shares. The remaining 4.25% Convertible Senior Notes were redeemed for $466 on March 15, 2024.

Promissory Notes

4.55% Promissory Note

The loan is secured by commercial real estate in Tampa, Florida and an associated lease agreement. Approximately $41 of principal and interest is payable in 216 monthly installments. The promissory note may be repaid in full or in part after September 1, 2020 as long as the Company provides at least 30 days’ written notice and pays a prepayment consideration as specified in the loan agreement.

5.50% Promissory Note

On June 26, 2023, the Company entered into a ten-year secured loan agreement for proceeds of $12,000. The loan is secured by commercial real estate in Clearwater, Florida and the associated lease agreements. Approximately $74 of principal and interest is payable in 120 monthly installments. The promissory note may be repaid in full or in part after August 1, 2025 as long as the Company provides at least 30 days’ written notice and pays a prepayment consideration as specified in the loan agreement.

5.65% Promissory Note

On July 24, 2025, the Company entered into a $17,000 loan agreement. The loan is secured by commercial real estate in Haines City, Florida. Approximately $106 of principal and interest is payable in 119 monthly installments. The promissory note may be repaid in full as long as the Company provides at least 30 days’ written notice and pays a prepayment consideration as specified in the loan agreement.

Note 12 -- Reinsurance

Reinsurance obtained from other insurance companies

The Company cedes a portion of its homeowners’ insurance exposure to other entities under catastrophe excess of loss reinsurance contracts and a portion of its flood insurance exposure under one quota share reinsurance agreement. To mitigate exposure in its commercial residential insurance business, the Company utilizes both facultative reinsurance and catastrophe excess of loss reinsurance contracts. Ceded premiums under most catastrophe excess of loss reinsurance contracts are subject to revision resulting from subsequent adjustments in total insured value. Under the terms of the quota share reinsurance agreement, the Company is entitled to a 30% ceding commission on net ceded premiums written and a profit commission equal to 10% of net profit.

After receiving approval from the FLOIR in January 2023, the Company discontinued underwriting flood insurance policies in Florida. Since the approval, the Company has cancelled or not renewed the majority of its flood insurance policies. However, the Company is required to continue providing flood insurance coverage to policyholders with open claims until criteria set by the FLOIR for cancellation and non-renewal are met. The reason for discontinuation was primarily attributable to the increased costs and reduced availability of flood reinsurance. The discontinuation did not have a material impact to the Company’s results of operations.

The Company remains liable for claims payments in the event that any reinsurer is unable to meet its obligations under the reinsurance agreements. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographic regions, activities or economic characteristics of the reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. The Company contracts with a number of reinsurers to secure its annual reinsurance coverage, which generally becomes effective June 1st of each year. The Company purchases reinsurance each year taking into consideration its overall insurance exposure, modeled probable maximum losses, risk tolerance and retention levels, mandatory reinsurance coverage provided by the Florida Hurricane Catastrophe Fund (a tax-exempt state trust fund), and overall reinsurance market conditions.

The impact of the reinsurance contracts on premiums written and earned is as follows:

As of December 31, 2025 and 2024, total net amounts recoverable and receivable from reinsurers were $289,896 and $558,441, respectively. During 2025, the Company derecognized ceded losses of $122,525, primarily attributable to a favorable change in estimated losses from Hurricane Milton and Hurricane Helene, partially offset by an unfavorable change in estimated losses from Hurricane Ian. This resulted in a significant decrease in reinsurance recoverable for unpaid losses and loss adjustment expenses.

During 2024, ceded losses of $340,329 were recognized as a reduction in losses and loss adjustment expenses. Ceded losses for 2024 comprised $383,843 for Hurricane Milton, $18,000 for Hurricane Helene, $3,207 for Hurricane Sally, $446 for Tropical Storm Eta, and a $65,167 reduction in ceded losses for Hurricane Ian.

During 2023, the Company derecognized ceded losses of $94,863. This included a $104,614 reduction in ceded losses related to Hurricane Ian, partially offset by additional ceded losses of $5,416 for Hurricane Sally, $4,301 for Tropical Storm Eta, and $34 for other catastrophe and non-catastrophe claims.

As of December 31, 2025 and 2024, there were 48 and 44 reinsurers participating in the Company's reinsurance program, respectively. Approximately 65.3% of the reinsurance recoverable balance as of December 31, 2025 was receivable from four reinsurers, one of which was the Florida Hurricane Catastrophe Fund. The allowance for credit losses related to reinsurance recoverable was not material to the consolidated balance sheets or consolidated statements of income for the periods presented.

Prior to June 1, 2025, the Company had one multi-year reinsurance contract containing retrospective provisions, which adjusted premiums in the event of minimal or no losses. Due to the losses from Hurricane Helene and Hurricane Milton, the balance of previously accrued benefits under the multi-year reinsurance contract with retrospective provisions, amounting to $62,937, was reversed during 2024 with no further benefits to be accrued under the contract. As these retrospective provisions were fully exhausted, no benefits were accrued during 2025. During 2024, premiums ceded were increased by $44,289, resulting from the reversal of benefits accrued in prior years. During 2023, Company recognized reductions in premiums ceded of $27,972.

There wereno benefits accrued under a multi-year reinsurance contract with retrospective provisions as of December 31, 2025 and 2024.

Reinsurance provided to other insurance companies

United Property & Casualty Insurance Company

The Company formerly provided quota share reinsurance to United on its policies in the northeast and southeast regions of the U.S. United was placed into receivership by the State of Florida due to its financial insolvency. As a result, the Company ceased providing quota share reinsurance on United policies, together with other administrative services in March 2023.

Effective October 2, 2025, the Company entered into a commutation and release agreement related to one of its northeast quota share reinsurance contracts, with the Florida Department of Financial Services, acting as the receiver for United. Under the terms of the agreement, all liabilities and obligations under this quota-share reinsurance agreement for policies in the northeast region were fully settled. As part of the commutation, the Company made a payment of $1,200 to the receiver. The funds were drawn from the trust account for assumed business. As of December 31, 2025 and 2024, the Company had a net balance of $0 and $831, respectively, due to United related to the northeast region.

As of December 31, 2025 and 2024, the Company had a net balance of $1,438 for both periods due to United related to the southeast region. During 2023, $7,271 of assumed premiums written related to the southeast region’s insurance policies were derecognized, which primarily resulted from the return of the unearned portion of assumed written premiums subsequent to the Company’srenewal and/or replacement of insurance policies in the southeast region. In addition, the receiver of United had requested a withdrawal of $13,482 from a trust account holding funds withheld for assumed business for the southeast region during 2023. The withdrawal was in settlement of unearned premiums of $7,496, losses and LAE of $2,310, claims handling fees of $4,875, less ceding commission of $1,199. Of the total withdrawal, the Company received $4,875 in payment for reimbursement and fees receivable on October 26, 2023.

As of December 31, 2025 and 2024, the balance of funds withheld for assumed business related to the Company’s quota share reinsurance agreements with United was $5,254 and $11,690, respectively. The Company cannot predict the actions a receiver might take, which may include restrictions on, or use of, funds held in trust. Any such actions could have a material adverse effect on the Company’s financial position and results of operations.

Citizens Property Insurance Corporation

From time to time, the Company may participate in a “take-out program” through which the Company assumes insurance policies held by Citizens Property Insurance Corporation (“Citizens”), a Florida state-supported insurer. The take-out program is a legislatively mandated program designed to reduce the state’s risk exposure by encouraging private companies to assume policies from Citizens. The table below shows the number of policies and annualized gross premiums assumed from Citizens during the periods presented:

Note 13 -- Losses and Loss Adjustment Expenses

The Company establishes reserves for the estimated total unpaid costs of losses including LAE. Loss and LAE reserves reflect management’s best estimate of the total cost of (i) claims that have been reported, but not yet paid in full, and (ii) claims that have been incurred but not yet reported to the Company (“IBNR”). Reserves established by management represent an estimate of the outcome of future events and, as such, cannot be considered an exact calculation of our liability. Rather, loss and LAE reserves represent management’s best estimate of the Company’s liability based on the application of actuarial techniques and other projection methodologies and taking into consideration other facts and circumstances known at the balance sheet date. The process of establishing loss and LAE reserves is complex and inherently imprecise, as it involves the estimation of the outcome of future uncertain events. The impact of both internal and external variables on ultimate losses and LAE costs is difficult to estimate. In determining loss and LAE reserves, the Company gives careful consideration to all available data and actuarial analyses.

When a claim is reported to the Company, the claims personnel establish a “case reserve” for the estimated amount of the ultimate amount payable to settle the claim. This estimate reflects an informed judgment based upon general insurance reserving practices and on the experience and knowledge of the claims adjuster. The individual estimating the reserve considers the nature and value of the specific claim, the severity of injury or damage, location, and the policy provisions relating to the type of loss. Case reserves are adjusted as more information becomes available. It is the Company’s policy to settle each claim as expeditiously as possible.

Reserves are closely monitored and are recalculated periodically using the most recent information on reported claims and a variety of actuarial techniques. Specifically, claims management personnel complete weekly and ongoing reviews of existing case reserves, new claims, changes to existing case reserves, and paid losses with respect to the current and prior years. As the Company continues to expand historical data regarding paid and incurred losses, the data is used to develop expected ultimate loss and LAE ratios, then these expected loss and LAE ratios are applied to earned premium to derive a reserve level for each line of business. In connection with the determination of these reserves, other specific factors such as recent weather-related losses, trends in historical reported and paid losses, and litigation and judicial trends regarding liability will also be considered. Therefore, the loss ratio method, among other methods, is used to project an ultimate loss expectation, and then the related loss history must be regularly evaluated and loss expectations updated, with the possibility of variability from the initial estimate of ultimate losses.

The Company maintains IBNR reserves to provide for claims that have been incurred but have not been reported and subsequent development on reported claims. The IBNR reserve is determined by estimating the Company’s ultimate net liability for both reported and unreported claims and then subtracting the case reserves and payments made to date for reported claims.

Loss and LAE Reserve Estimation Methods. The Company applies the following general methods in projecting reserves for losses and LAE:

•

Reported loss development;

•

Paid loss development;

•

Paid Bornhuetter-Ferguson method;

•

Reported Experience-Modified Bornhuetter-Ferguson method;

•

Paid Experience-Modified Bornhuetter-Ferguson method;

•

Loss ratio method;

•

Several variations of the Frequency-Severity method, depending on exposure; and

•

A factor load to loss and allocated LAE reserves for the unallocated LAE.

Selected reserves are based on a review of the indications from these methods as well as other considerations such as emergence since the most recent evaluation and number of open claims for a given accident period.

Currently, the estimated ultimate liability is calculated using the principles and procedures described above, which are applied to the lines of business written. However, because the establishment of loss and LAE reserves is an inherently uncertain process, ultimate losses and LAE may exceed the established loss and LAE reserves and have a material, adverse effect on our results of operations and financial condition. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the operating results of the period during which such adjustments are made.

The Company’s reported results, financial position and liquidity would be affected by likely changes in key assumptions that determine the net loss reserves. However, it is believed that a reasonably likely increase or decrease in the severity of claims could impact our net loss reserves.

Activity in the liability for losses and LAE is summarized as follows:

*Net balance represents beginning-of-year liability for unpaid losses and LAE less beginning-of-year reinsurance recoverable for unpaid losses and LAE.

The establishment of loss and LAE reserves is an inherently uncertain process and changes in loss and LAE reserve estimates are expected as these estimates are subject to the outcome of future events. Changes in estimates, or differences between estimates and amounts ultimately paid, are reflected in the operating results of the period during which such adjustments are made. During 2025, the Company decreased losses and LAE related to prior years by $7,515 primarily due to favorable development for non-catastrophe claims, partially offset by an increase in retention for catastrophic events. During 2024, the Company decreased losses and LAE related to prior years by $5,495 primarily due to favorable development for non-catastrophe claims. During 2023, the Company increased losses and LAE related to prior years by $18,854 primarily due to unfavorable development for catastrophic events in response to increased litigation.

During 2025, the Company did not experience any losses from catastrophic events and experienced an improvement in claim and litigation frequency as compared to prior periods. During 2024, losses and LAE included net estimated losses of $78,157, $43,000 and $6,500 due to Hurricane Milton, Hurricane Helene, and Hurricane Debby, respectively. During 2023, losses and LAE included net estimated losses of approximately $68,339 attributable to United-related policies and $7,875 related to policies assumed from Citizens.

The following is information about incurred and paid claims development as of December 31, 2025, net of reinsurance, as well as cumulative claim frequency and the total of incurred-but-not-reported liabilities plus expected development on reported claims included within the net incurred claims amounts. The information about incurred and paid claims development for the years ended December 31, 2024 to 2016 is presented as supplementary information and is unaudited.

Homeowners Multi-peril and Dwelling Fire Insurance (a)

(a)

Excludes losses from Wind-only insurance (2016 through 2025) and any hurricane and storm events prior to 2025.

(b)

Homeowners Wind-only Insurance (a)

(a)

Excludes losses from multi-peril and dwelling fire insurance (2016 through 2025) and any hurricane and storm events prior to 2025.

(b)

Losses Specific to Any Hurricane and Storm Events prior to 2025

(a)

The reconciliation of the net incurred and paid loss development tables to the liability for losses and loss adjustment expenses is as follows:

The following is supplementary and unaudited information about average historical claims duration as of December 31, 2025:

Note 14 -- Variable Interest Entities

The Company includes two consolidated VIEs related to reciprocal insurance exchanges, CORE and Tailrow. The reciprocal insurance exchanges are owned by their policyholders, referred to as subscribers, who gain ownership by buying an insurance policy and making a surplus contribution. Each subscriber has certain interests in the insurance exchanges which include the right to appoint an AIF, to vote for the subscribers’ advisory committees and to receive dividends or premium credits if the reciprocal insurance exchanges generate a surplus. At least two-thirds of the membership of the advisory committees must be subscribers who are independent of the AIF. The advisory committees are charged with overseeing the financial affairs of the reciprocal insurance exchanges.

Both CORE and Tailrow each received initial funding through the issuance of a subordinated surplus note to wholly-owned subsidiaries of HCI Group, Inc. as neither had any subscribers or sufficient surplus to fund their insurance operations at the time of formation. In addition, CORE and Tailrow each entered into an AIF agreement with Core Risk Managers, LLC (“CRM”) and Tailrow Risk Managers, LLC (“TRM”), respectively. Both CRM and TRM are wholly-owned subsidiaries of HCI Group, Inc. The AIF agreements, which were approved by the FLOIR, can be terminated at any time by mutual agreement of both parties or with cause, if the FLOIR or a court of competent jurisdiction determines that a material breach of the agreement has occurred. Under the AIF agreements, CRM and TRM have the power of attorney to directly or indirectly conduct the daily operations of CORE and Tailrow, respectively, by underwriting insurance policies, collecting premiums, investing funds, and processing claims. As such, subscribers do not possess the power to directly manage the operations of CORE and Tailrow. The AIF agreements also permit CRM and TRM to contract with service providers including other HCI Group, Inc. subsidiaries to perform certain functions.

The AIF agreements, together with the subordinated surplus notes, result in both CORE and Tailrow to be consolidated VIEs. As CORE and Tailrow are owned by their underlying policyholders, their net assets and results of operations are included in noncontrolling interests.

CORE

CORE was formed and issued a $25,000 subordinated surplus note with an annual interest rate of 9% during 2023. CORE commenced business operations during 2024.

As of December 31, 2025 and 2024, the Company’s maximum exposure to loss relating to CORE was $25,000. CORE’s assets are legally restricted for the purpose of fulfilling obligations specific to CORE and its creditors have no legal right to pursue additional sources of payment from the Company.

Tailrow

Tailrow was formed and issued a $25,000 subordinated surplus note with an annual interest rate of 9% during 2024. Tailrow commenced business operations during 2025.

As of December 31, 2025 and 2024, the Company’s maximum exposure to loss relating to Tailrow was $25,000. Tailrow’s assets are legally restricted for the purpose of fulfilling obligations specific to Tailrow and its creditors have no legal right to pursue additional sources of payment from the Company.

The following table summarizes the assets and liabilities related to the Company’s variable interests in consolidated VIEs which are included in the accompanying consolidated balance sheets:

Note 15 -- Segment Information

The Company hasfive reportable segments: Insurance Operations, Exzeo, Reciprocal Exchange Operations, Real Estate, and Corporate and Other. Due to their economic characteristics, the Company’s property and casualty insurance division and reinsurance operations, excluding the insurance operations under Reciprocal Exchange Operations, are grouped together into one reportable segment under Insurance Operations. The Exzeo segment includes insurance technology and operations solutions for property and casualty insurance carriers. The Reciprocal Exchange Operations segment represents the insurance operations of consolidated reciprocal insurance exchanges that are owned by their policyholders. The Real Estate segment relates to thecommercial real estate group that is primarily engaged in the business of developing and operating commercial properties for investment purposes or for internal use. The Corporate and Other segment represents the activities of the holding companies and any other operations that do not meet the quantitative and qualitative thresholds for a reportable segment.

The Company’s segments are based on the manner in which the Company’s Chief Executive Officer, who is the chief operating decision maker (the “CODM”), evaluates performance and makes decisions regarding the allocation of resources. The CODM evaluates performance and allocates resources using various measures primarily through reviews of various operational performance packages, investor presentations, and the Company’s SEC filings, as well as through the approval of the Company’s annual budget and forecast. The Company’s reported segment profit measure is income (loss) before income taxes as this measure is most consistent with the amounts included in the consolidated statements of income. Intersegment transactions are not eliminated from segment results while intrasegment transactions are eliminated from segment results. The accounting policies of the Company’s reportable segments are the same as those of the Company, except as otherwise noted. The determination of segments may change over time due to changes in operational emphasis, revenue, and results of operations.

The following tables present segment information reconciled to the Company’s consolidated statements of income for the periods presented:

(a)

(b)

Other revenue under corporate and other primarily consisted of management fees for attorney-in-fact services.

(c)

Gross premiums earned under insurance operations include $5,346 earned from the reciprocal exchange operations.

(d)

The income (loss) before income taxes in the reclassification/elimination column is attributable to intercompany transactions among operating segments. The insurance operations and the reciprocal exchange operations record service fee expenses based on earned premiums or other appropriate measures, while Exzeo and the AIF operations recognize service fee revenues according to revenue recognition standards. Although both service fee expenses and revenues are fully eliminated on consolidation, they do not completely offset each other in this presentation due to the different methods of recognition.

(e)

(a)

(b)

Other revenue under corporate and other primarily consisted of management fees for attorney-in-fact services.

(c)

Gross premiums earned under insurance operations include $4,116 earned from the reciprocal exchange operations.

(d)

The income (loss) before income taxes in the reclassification/elimination column is attributable to intercompany transactions among operating segments. The insurance operations and the reciprocal exchange operations record service fee expenses based on earned premiums or other appropriate measures, while Exzeo and the AIF operations recognize service fee revenues according to revenue recognition standards. Although both service fee expenses and revenues are fully eliminated on consolidation, they do not completely offset each other in this presentation due to the different methods of recognition.

(e)

(a)

No operation during 2023.

(b)

(c)

The income (loss) before income taxes in the reclassification/elimination column results from the recast of segment information.

(d)

The following table presents gross premium earned by geographic location:

The following table presents segment assets reconciled to the Company’s total assets on the consolidated balance sheets:

As of December 31, 2025 and 2024, substantially all of the Company’s assets were located in Florida.

Note 16 -- Income Taxes

The Company is subject to U.S. federal, various states, and foreign income tax jurisdictions. State income taxes are primarily related to the State of Florida while foreign income taxes are related to the Company's subsidiary in India. Additionally, CORE and Tailrow are each subject to their own U.S. federal and state income tax jurisdictions.

Significant components of income tax expense for the periods presented were as follows:

Significant components of income taxes paid, net of refunds, for the periods presented were as follows:

The reconciliation between the income tax expense and the amount computed at the statutory U.S. federal income tax rate for the periods presented was as follows:

Significant components of the Company’s net deferred income tax liabilities were as follows:

The reconciliation of net deferred income tax liabilities shown in the preceding table to the amounts reported within the consolidated balance sheets for the periods presented was as follows:

As of December 31, 2025, it is more likely than not that the Company's deferred income tax assets will be realized, other than the deferred income tax asset related to the intercompany deferred loss that was recognized as a result of the sale of TTIC from Exzeo to HCI during 2024. As of December 31, 2025 and 2024, the intercompany deferred loss was $1,208 and $544, respectively, and had a full valuation allowance associated with it.

There wereno federal or state net operating loss carryforwards as of December 31, 2025 and 2024.

There wereno unrecognized tax benefits and the amount of any interest and penalties included in income tax expense was not material for the periods presented.

The Company's income tax filings are subject to audit by the relevant taxing authorities. These audits may culminate in proposed assessments which may ultimately result in a change to the estimated income taxes. The following is a summary of open tax years by jurisdiction:

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The OBBBA includes various provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA resulted in additional tax depreciation for 2025, resulting in a tax benefit of approximately $1,853 and additional deductible research and development costs for 2025, resulting in a tax benefit of approximately $386.

Note 17 -- Earnings Per Share

The computations of basic and diluted earnings per share for the periods presented were as follows:

(a)

(a)

(a)

For the periods presented, all potentially dilutive securities for Exzeo were excluded from Exzeo's diluted earnings per share computation because their (i) effect would be anti-dilutive, (ii) exercise price was “out-of-the-money,” or (iii) contingent exercise conditions were unsatisfied.

Note 18 -- Redeemable Noncontrolling Interests

Exzeo Series A Preferred Stock

On January 22, 2024, Exzeo entered into a Stock Redemption Agreement with Centerbridge Partners, L.P. (“Centerbridge”) which allowed Exzeo to redeem all of the Exzeo Series A Preferred Stock held by Centerbridge. The redemption totaled $100,000 plus accrued and unpaid dividends of approximately $2,923. At redemption, the difference between the consideration transferred of $102,923 and the redemption date carrying value of $96,695 was recorded as a deemed dividend and was included in net income attributable to redeemable noncontrolling interest. In connection with this redemption, the warrants held by Centerbridge were also modified. See Note 19 “Equity” for additional information.

During 2024, net income attributable to redeemable noncontrolling interests was $10,149, consisting of accrued cash dividends of $424, accretion related to increasing dividend rates of $111, an adjustment to maximum redemption value of $6,228, and a deemed dividend resulting from warrant modifications of $3,386. During 2023, net income attributable to redeemable noncontrolling interests was $9,370, consisting of accrued cash dividends of$7,263 and accretion related to increasing dividend rates of $2,107.

Subscriber Surplus Contributions

Subscriber surplus contributions in redeemable noncontrolling interests represent a refundable portion of the surplus contributions received from policyholders of CORE and Tailrow. The surplus contributions are reclassified to noncontrolling interest once they are no longer refundable.

The following table summarizes the activity of subscriber surplus contributions:

Note 19 -- Equity

Stockholders’ Equity

Common Stock

Each share of common stock entitles the stockholder to one vote.

In December 2023, the Company sold an aggregate of 1,150,000 shares of the Company’s common stock at a price of $78 per share to the public, pursuant to an underwriting agreement between the Company and Citizens JMP Securities, LLC, the representative of several underwriters participating in the underwriting agreement. After issuance costs, the Company received net proceeds of $84,572.

Stockholders are entitled to receive dividends when, as, and if declared by the Company’s Board of Directors out of funds legally available for that purpose. Unvested restricted stock awards have the right to share in dividends, if declared, equally with common stockholders on a nonforfeitable basis.

The following table represents the frequency and amount of all cash dividends declared on common stock for the periods presented:

Preferred Stock

As of December 31, 2025 and 2024, the Company had 20,000,000 preferred shares authorized, none of which were issued and outstanding.

Warrants

In connection with the redemption of the Exzeo Series A Preferred Stock held by Centerbridge in January 2024, the Company extended the expiration dates of 450,000 warrants to expire in 150,000 share increments on December 31, 2026, December 31, 2027, and December 31, 2028. The remaining 300,000 warrants retained their original expiration date of February 26, 2025 and were exercised in March 2024 through a cashless transaction, resulting in the issuance of 155,049 shares of common stock. The warrant modifications resulted in a $3,386 increase in the fair value of the warrants, which was recorded as a deemed dividend by decreasing retained income and increasing additional paid-in capital. The amount of deemed dividend was included in net income attributable to redeemable noncontrolling interest which was subtracted from net income when calculating net income available to common stockholders.

In November 2024, the 150,000 warrants with an expiration date of December 31, 2026 were exercised through a cashless transaction, resulting in the issuance of 79,460 shares of common stock. In November 2024, the 150,000 warrants with an expiration date of December 31, 2027 were exercised through a cashless transaction, resulting in the issuance of 77,787 shares of common stock. In December 2024,138,750 warrants with an expiration date of December 31, 2028 were exercised through a cashless transaction, resulting in the issuance of 73,971 shares of common stock.

As of December 31, 2025, there were 11,250 warrants outstanding and exercisableat an exercise price of $54.40 with an expiration date of December 31, 2028.

At-The-Market Facility

On January 22, 2024, the Company implemented an “at-the-market” facility (the “ATM Facility”) which gives the Company the ability to raise up to $75,000 through the issuance of new shares of common stock through a sales agent (the “Sales Agent”). The Company has no obligation to sell, and the Sales Agent has no obligation to buy or sell, any shares of common stock under the ATM Facility. As of December 31, 2025, the remaining availability under the ATM Facility was $75,000.

Noncontrolling Interests

Exzeo

On November 6, 2025, Exzeo closed its initial public offering, issuing 8,000,000 shares of common stock at a price of $21.00 per share for gross proceeds of $168,000. Underwriting and offering costs totaled $13,246 and were recorded as a reduction of the proceeds received. The net proceeds were allocated as $129,209 to additional paid-in capital and $25,545 to noncontrolling interest on the consolidated balance sheet with no recognition of a gain or loss on the consolidated statements of income. Underwriting and offering costs were reflected as cash flows from financing activities in the consolidated statements of cash flows. Offering costs related to third-parties were reflected separately from proceeds received in the consolidated statements of cash flows.

On July 1, 2024, HCI Group, Inc. entered into a Stock Purchase Agreement (“Purchase Agreement”) with Exzeo. Pursuant to the Purchase Agreement, Exzeo transferred all outstanding shares of TTIC to HCI Group, Inc. in exchange for the settlement of promissory notes. Because the transaction occurred between entities under common control and did not result in a change of control of TTIC, the transaction was accounted for as a common control transaction. The net assets of TTIC were derecognized by Exzeo and recognized by HCI Group, Inc. at their carrying amounts on the date of the transaction. The difference between the consideration transferred and the carrying amounts of the net assets was recognized in equity. As there was no change in HCI Group, Inc.’s ownership percentage in Exzeo, the change in noncontrolling interests in Exzeo was charged to noncontrolling interest expense and was not material. This organizational change was implemented to align all insurance operations under a single operating segment under the Company’s direct control, allowing Exzeo to primarily focus on its industry-leading technology and insurance management activities as an insurance solutions provider.

Dilution from subsidiary stock-based compensation in the consolidated statements of equity primarily relates to (i) the net settlement of Exzeo common shares surrendered by employees to satisfy payroll tax liabilities associated with the vesting of restricted stock awards issued under Exzeo's stock-based compensation plan and (ii) the change in ownership of Exzeo as a result of the vesting of restricted stock awards issued under Exzeo's stock-based compensation plan.

As of December 31, 2025, there were 90,926,720 shares of Exzeo’s common stock outstanding, of which 15,926,720 shares were not owned by HCI Group, Inc. Of the shares not owned by HCI Group, Inc.,2,541,593 represent unvested restricted stock awards granted to Exzeo's employees.

Subscriber Surplus Contributions

Subscriber surplus contributions in noncontrolling interests represent the non-refundable portion of the surplus contributions received from policyholders of CORE and Tailrow. The surplus contributions are reclassified from redeemable noncontrolling interest once they are no longer refundable. As CORE and Tailrow are owned by their underlying policyholders, their net assets are included in noncontrolling interests.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) relates to the unrealized gains or losses of available-for-sale fixed-maturity securities carried at fair value, net of tax. Accumulated other comprehensive income (loss) is reclassified to either net investment income or net realized investment gains (losses) in the consolidated statements of income as payments or sales occur related to available-for-sale fixed-maturity securities, respectively. Other comprehensive income (loss) represents the net change in accumulated other comprehensive income (loss).

Prior to the transfer of TTIC from Exzeo to HCI Group, Inc. during 2024, a portion of accumulated other comprehensive income (loss) was attributable to noncontrolling interests. Subsequent to the transfer, there was no accumulated other comprehensive income (loss) attributable to noncontrolling interests.

The following table summarizes the activity with respect to accumulated other comprehensive income (loss) during 2025:

The components of other comprehensive income, inclusive of the related tax effects, during 2024 and 2023 were as follows:

Note 20 -- Stock-Based Compensation

The Company grants stock-based awards to participants under HCI Group, Inc.'s 2012 Omnibus Incentive Plan (“HCI Plan”) and Exzeo Group, Inc.'s 2025 Omnibus Incentive Plan (“Exzeo Plan”). Stock-based compensation expense is included in general and administrative personnel expense in the consolidated statements of income and consisted of the following for the periods presented:

Stock-based compensation awards are classified as equity and awards related to the Exzeo Plan are included as a component of noncontrolling interest.

HCI Plan

As of December 31, 2025, there were 644,301 shares available for issuance under the HCI Plan to employees, directors, consultants, and advisors of the Company.

Stock Options

Stock options granted under the HCI Plan generally vest over a period offour years and are exercisable over the contractual term often years.

The following table summarizes activity related to stock options granted under the HCI Plan during 2025:

In September 2023, the Company awarded its Chief Executive Officer stock options under the HCI Plan with market-based vesting conditions to purchase 150,000 shares of its common stock, which had a grant date fair value of $12.50. In December 2023, the award met the conditions for vesting and as a result, the unrecognized compensation balance related to the award was fully recognized. There wereno stock options granted under the HCI Plan during 2025 and 2024.

There were no stock options under the HCI Plan that were exercised during 2025, 2024, and 2023.

There wereno deferred tax benefits related to stock options under the HCI Plan during 2025, 2024, and 2023.

As of December 31, 2025, there wasno unrecognized compensation expense related to stock options under the HCI Plan.

The following table provides assumptions used in the pricing model to estimate the fair value of the stock options granted under the HCI Plan during 2023:

Restricted Stock Awards

Restricted stock awards granted under the HCI Plan may include service, performance, and market-based conditions. The requisite service period for restricted stock awards granted under the HCI Plan is generally three orfour years.

The following table summarizes activity related to restricted stock awards under the HCI Plan during 2025, 2024, and 2023:

In April 2024, the Company granted its Chief Executive Officer 200,000 restricted stock awards under the HCI Plan. These restricted stock awards will vest equally over a period of four years, with vesting dates of March 15, 2025, 2026, 2027, and 2028, under the condition that the price per share reaches $200 for a period of 30 consecutive trading days. There were no restricted stock awards granted under the HCI Plan with market-based vesting conditions during 2025 or 2023.

In May 2025,193,500 restricted stock awards under the HCI Plan satisfied the required market condition for vesting as the price per share exceeded $140 for a period of 30 consecutive trading days. Consequently, the remaining unrecognized compensation cost is being recognized on a straight‑line basis over the twelve‑month period beginning on the date the market condition was achieved.

As of December 31, 2025, there were 393,500 unvested restricted stock awards under the HCI Plan with market conditions, of which 200,000 did not meet the requisite market conditions.

As of December 31, 2025, there was approximately $20,870 of total unrecognized compensation expense related to unvested restricted stock awards under the HCI Plan. The Company expects to recognize the remaining compensation expense over a weighted-average period of 2.5 years.

The following table summarizes information about deferred tax benefits recognized and tax benefits realized related to restricted stock awards and paid dividends, and the fair value of vested restricted stock awards under the HCI Plan during 2025, 2024, and 2023:

The following table provides assumptions used in the pricing model to estimate the fair value of restricted stock awards granted under the HCI Plan with market-based vesting conditions granted during 2024:

Exzeo Plan

Prior to Exzeo's initial public offering, Exzeo maintained its 2021 Omnibus Plan under which shares of Exzeo common stock were authorized for issuance as stock-based compensation awards to employees, directors, consultants, and advisors of Exzeo. In connection with Exzeo's initial public offering, Exzeo terminated its 2021 Omnibus Plan and adopted the Exzeo Plan, which authorizes the issuance of up to 10,000,0000 shares of Exzeo's common stock. Awards outstanding under the Exzeo 2021 Omnibus Plan continue to be governed by the terms of that plan and are incremental to, and do not count against, the authorized share pool of the Exzeo Plan. As of December 31, 2025, there were 9,768,530 shares available for issuance under the Exzeo plan.

Exzeo Stock Options

As of December 31, 2025, there were 6,350,000 Exzeo stock options outstanding with a weighted-average exercise price of $23.00. All of the Exzeo stock options were fully vested, however,6,000,000 were non-exercisable without approval from HCI Group, Inc.'s board of directors.

Exzeo Restricted Stock Awards

As of December 31, 2025, there were 2,541,593 unvested Exzeo restricted stock awards outstanding with a weighted average grant date fair value of $4.68. There was approximately $11,747 of total unrecognized compensation expense related to unvested Exzeo restricted stock awards, which is expected to be recognized over a weighted-average period of 4.6 years.

Note 21 -- Commitments and Contingencies

Litigation and Other Legal Matters

The Company is party to litigation and other legal matters arising in the ordinary course of business. From time to time, the Company is also subject to regulatory and governmental examinations, information requests and subpoenas, inquiries, investigations, and threatened legal actions and proceedings.

The Company records accruals for losses that are probable and reasonably estimable. These accruals are based on a variety of factors such as judgment, probability of loss, and opinions of internal and external legal counsel. Legal costs in connection with litigation and other legal matters arising in the ordinary course of business are expensed as incurred.

Although the Company cannot predict with certainty the ultimate resolution of the litigation and other legal matters it is party to, the Company does not believe that any known or potential litigation and other legal matters will have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.

Rental Income

The Company as a lessor leases its commercial and retail properties, boat slips, and docks to non-affiliates at various term. Minimum rental payments, excluding lease incentives, to be received under operating leases for all properties owned as of December 31, 2025 were as follows:

In March 2025, the Company entered into an operating lease agreement for its 189,147-square-foot commercial property in Tampa, Florida. The lease commenced in June 2025 and has an initial term of 130 months, with options to renew fortwo additional 60-month periods. Total lease payments, net of lease incentives, over the initial term is expected to be $56,866.

Capital Commitments

As described in Note 5 “Investments” under Limited Partnership Investments, the Company is contractually committed to capital contributions for limited partnership interests. As of December 31, 2025, there was an aggregate unfunded balance of $3,652.

FIGA Assessments

In March 2022, the FLOIR approved an assessment for the FIGA which is necessary to secure funds for the payment of covered claims relating to the liquidation of one insurance company. The FIGA assessment is levied at 1.3% on collected premiums of all covered lines of business except auto insurance. The surcharge, which is collectible from a policyholder, was assessed on new and renewal policies with effective dates beginning July 1, 2022 through June 30, 2023.

In August 2022, the FLOIR approved a 2023 assessment for FIGA which is necessary to secure funds for the payment of covered claims relating to the liquidation of two insurance companies. The 2023 FIGA assessment is levied at 0.70% on collected premiums of all covered lines of business except auto insurance. The surcharge, which is collectible from a policyholder, was assessed on new and renewal policies with effective dates beginning January 1, 2023 through December 31, 2023.

In April 2023, the FLOIR approved an assessment for FIGA which is necessary to secure funds for the payment of covered claims relating to the liquidation of one insurance company. The FIGA assessment is levied at 1% on collected premiums of all covered lines of business except auto insurance. The surcharge, which is collectible from a policyholder, was assessed initially on new and renewal policies with effective dates beginning October 1, 2023 through September 30, 2024 and will continue annually until the end of the assessment year in which the Series 2023A Bonds issued by the Florida Insurance Assistance Interlocal Agency have been paid in full.

The Company’s insurance subsidiaries, as member insurers, are required to collect and remit the pass-through assessments to FIGA on a quarterly basis. As of December 31, 2025 and 2024, the FIGA assessments payable by the Company were $2,034 and $1,793, respectively.

Note 22 -- Quarterly Results of Operations (Unaudited)

The tables below summarize unaudited quarterly results of operations for 2025, 2024 and 2023.

Note 23 -- Regulatory Requirements and Restrictions

The Company has no restrictions on the ability to pay dividends to its stockholders. However, there are legal and regulatory constraints and requirements applicable to the Company's insurance subsidiaries that may restrict the availability of net assets for dividend distributions to the Company's stockholders.

As of December 31, 2025 and 2024, restricted net assets amounted to $516,547 and $340,083, respectively.

As CORE and Tailrow are owned by their underlying policyholders, their net assets are included in noncontrolling interests and are excluded from stockholders' equity in the consolidated balance sheets. Accordingly, statutory capital and surplus, statutory net income or loss, and other insurance regulatory information related to CORE and Tailrow are not presented.

U.S.-based

The Company’s U.S.-based insurance subsidiaries prepare their statutory financial statements in accordance with accounting principles prescribed or permitted by insurance regulatory authorities. Prescribed statutory accounting practices are those practices that are incorporated directly or by reference in state laws, regulations, and general administrative rules applicable to all insurance enterprises where they are domiciled. Permitted statutory accounting practices encompass all accounting practices that are not prescribed; such practices differ from state to state, may differ from entity to entity within a state, and may change in the future. Some states have adopted laws, regulations, accounting practices and procedures issued by the NAIC.

U.S. GAAP differs in certain respects from the accounting practices prescribed or permitted by insurance regulatory authorities (“statutory-basis”). Statutory-basis surplus differs from stockholders’ equity reported in accordance with U.S. GAAP primarily because policy acquisition costs are expensed when incurred and reinsurance brokerage income is recognized when received. In addition, the recognition of deferred income tax assets is based on different recoverability assumptions and material differences may also arise from the differing treatment of non-admitted assets and unrealized gains and losses from investments.

State statutes in the domiciliary states of the Company’s U.S.-based subsidiaries typically restrict annual dividend payments without prior regulatory approval.

The following tables present statutory-basis financial information determined in accordance with statutory accounting principles:

The Company’s U.S.-based insurance subsidiaries are subject to risk-based capital (“RBC”) requirements as specified by the NAIC or other regulatory authorities. Under those requirements, the amount of minimum capital and surplus maintained by a property and casualty insurance company is to be determined based on the various risks related to it. Pursuant to the RBC requirements, insurers having less statutory capital than required by the RBC calculation will be subject to varying degrees of regulatory action, depending on the level of capital inadequacy. As of December 31, 2025 and 2024, the Company’s U.S.-based insurance subsidiaries individually exceeded any applicable minimum RBC requirements and no corrective actions have been required.

In addition, Florida property and casualty insurance companies are required to adhere to prescribed premium-to-capital surplus ratios. Florida state law requires that the ratio of 90% of written premiums divided by surplus as to policyholders does not exceed 10 to 1 for gross written premiums or 4 to 1 for net written premiums. The ratios of gross and net written premiums to surplus, which the Company’s insurance subsidiaries have met the requirements for, are summarized below:

Bermuda

As of December 31, 2025, Claddaugh's minimum capital and surplus was $14,465, statutory capital and surplus was $127,663, and distribution allowed without approval was $34,181.

Claddaugh reported a statutory net income of $56,830, statutory net loss of $9,642, and statutory net income of $21,044 during 2025, 2024, and 2023, respectively.

Note 24 -- Related Party Transactions

HCPCI, TTIC, CORE, and Tailrow have reinstatement premium protection reinsurance contracts (“RPP”) with various reinsurers for the 2025-2026 treaty year. The purpose of the RPP contracts is to indemnify HCPCI, TTIC, CORE, and Tailrow for the reinstatement premium which HCPCI, TTIC, CORE, and Tailrow pay or become liable to pay under the reinstatement provisions of the respective excess of loss reinsurance contracts. For one of the RPP contracts, Oxbridge Reinsurance Limited (“Oxbridge”) participates as a subscribing reinsurer with HCPCI and Tailrow as collective reinsureds. One of the Company’s non-employee directors, Jay Madhu, serves as Oxbridge’s Chairman of its Board of Directors and Chief Executive Officer and is an investor in that company. For its participation on the RPP contract, Oxbridge’s annual premium is $1,033 and is paid by HCPCI and Tailrow over four installments. Management believes the premium rate is competitive with market rates. A trust account has been established with HCPCI and Tailrow as collective beneficiaries and Oxbridge as grantor. Each of the four premium installments is deposited into the trust account in order to fully collateralize Oxbridge’s obligations under the RPP contract. Trust assets may be withdrawn by HCPCI and Tailrow to indemnify HCPCI and Tailrow for Oxbridge’s obligations under the provisions of the RPP contract. Total premiums to Oxbridge were $1,099 for both the 2023-2024 and 2024-2025 treaty years.

Note 25 -- Condensed Financial Information of HCI Group, Inc.

The condensed financial statements of HCI Group, Inc. have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X, as the restricted net assets of subsidiaries of HCI Group, Inc. exceeds 25% of the Company's consolidated net assets. The ability of HCI Group, Inc.'s insurance subsidiaries to pay dividends may be restricted due torestrictions imposed by insurance statutes and regulations.

The condensed financial statements of HCI Group, Inc. have been prepared using the same accounting principles and policies described in the other notes to the consolidated financial statements with the only exception being that the parent company accounts for its subsidiaries using the equity method of accounting. These condensed financial statements should be read in conjunction with the Company's consolidated financial statements and related notes thereto.

Condensed financial information of HCI Group, Inc. is as follows:

Balance Sheets

Statements of Income

Statements of Cash Flows

Statements of Cash Flows – (Continued)

Notes to Condensed Financial Statements (Parent Company Only)

During 2025, there was a non-cash increase in investment in subsidiaries of $126,070 primarily due to Exzeo's initial public offering in November 2025.

See Note 11 “Long-Term Debt” for additional information on the conversion of the Notes.

Note 26 -- Subsequent Events

On January 14, 2026, the Company’s Board of Directors declared a quarterly dividend of $0.40 per common share. The dividends are payable on March 20, 2026 to stockholders of record on February 20, 2026.

In February 2026, the FLOIR approved to terminate the 1%FIGA assessment levied beginning October 1, 2023. The 1% FIGA assessment will still be charged on policies renewing through September 30, 2026, but will terminate on October 1, 2026.